Note: This document has been translated from the Japanese original version to English
for reference purposes only. In the event of any discrepancy between this translated
document and the Japanese original, the Japanese original shall prevail.

Corporate Governance Report
Nippon Sanso Holdings Corporation

Last updated: June 20th, 2024

Nippon Sanso Holdings Corporation
Toshihiko Hamada, Representative Director, President CEO
Contact: +81-3-5788-8500
TSE Code: 4091
https://www.nipponsanso-hd.co.jp
The corporate governance of Nippon Sanso Holdings Corporation (the “Company”) is
described below:

I. Basic thinking on corporate governance, capital structure, corporate
attributes and other basic information
1. Basic Thinking on Corporate Governance
From the perspective of ensuring sustainable growth of the Company and long-term increaseof corporate value, taking into account the positions of shareholders and other stakeholders,customers, employees, and local communities, the Company believes that the essence ofcorporate governance involves ensuring transparency and fairness of decision-making,making effective use of the management resources available, and maximizing the efficiency
and strength of management through prompt and decisive decision-making. The Company
will work toward a full implementation of correct corporate governance based on the basic
approach below.
(1) The Company will respect shareholders’ rights and ensure their equality.
(2) The Company will consider the benefits of shareholders and other stakeholders and work
appropriately in partnership with those stakeholders.
(3) The Company will ensure transparency by releasing appropriate corporate information at
appropriate times.
(4) By separating supervisory and executive functions, the Company will improve
effectiveness of the Board of Directors’ supervisory function over the Company’s businessexecutions.
(5) The Company will engage in constructive dialogue with shareholders in order to contributeto the sustainable growth of the Group and the medium- to long-term improvement ofcorporate value.
[Reasons for Not Implementing the Principles of the Corporate Governance Code]
The Company has implemented all principles of the Corporate Governance Code.

1

[Disclosure Based on the Principles of the Corporate Governance Code] [Updated][Principle 1.4 Cross-Shareholdings]
The Company has established its policy on strategic holdings of listed stock and basic rules
on exercising voting rights in relation to strategic stock holdings in Article 4 of Principles ofCorporate Governance available on its corporate website. The Board of Directors annually
carries out a comprehensive assessment of each of strategic stock holdings bothquantitatively, by using the Return on Invested Capital (ROIC) indicator, and qualitatively, by
analyzing its business needs and other matters, and thereby verify whether there aresufficient reasons for each individual stock holding.
(https://www.nipponsanso-hd.co.jp/Portals/0/images/company/governance/nippon-sansoholdings-corporate-governance-principles_en.pdf)[Principle 1.7 Related Party Transactions]
The Company has established the framework of procedures for related party transactions in
Article 5 of Principles of Corporate Governance available on the Company’s website.
(https://www.nipponsanso-hd.co.jp/Portals/0/images/company/governance/nippon-sansoholdings-corporate-governance-principles_en.pdf)[Supplementary Principle 2.4.1 Ensuring Diversity in the Promotion of Core Human
Resources and Other Elements][Ensuring Diversity]
The Nippon Sanso Holdings Group has in place its “Global Policy on Respecting Human
Rights, Contributing to Communities, Employment, Labor and Health.” Under the “Code of
Conduct” based on the policy, all officers and employees are striving to establish anenvironment in which they can work while respecting diversity. Based on the recognition that
ensuring diversity is important to the Group’s development, we will be committed to thefollowing initiatives.
[Promotion of Women’s Active Participation]
Two of nine directors of the company are woman and the ratio of women to its total
employees is 20.9% at the end of fiscal year ended in March 2024. As a goal of the MediumTerm Management Plan, we have set the fiscal year ending March 2026 targets of 22% ormore in the ratio of women to the Group’s total employees (20.2% at the end of fiscal year
ended in March 2024) and 18% or more in the ratio of women to its total employees inmanagerial positions (15.4% as of the same date). In Taiyo Nippon Sanso Corporation, amajor operating company in Japan that had been lagging behind in its efforts, the Women's
Advancement Promotion Project launched in October 2022 has been expanded into the“Diversity and Inclusion Promotion Office” in April 2024, and we have begun providing
unconscious bias training for management with the aim of fostering a corporate culture in2

which the company and all employees can work together to thrive as a diverse workforce,
including women. With the aim of further promoting female participation in the workforce, wewill actively hire women, improve our systems to allow for flexible working styles, and provide
training to develop female leaders.
[Mid-career Recruitment]
In the Group’s overseas affiliated companies, most officers and employees are mid-careerhires, and we recognize that diversity is ensured continuously. In fiscal year ended in March
2024, Nippon Sanso Holdings Corporation and its main business company, Taiyo Nippon
Sanso Corporation, proactively recruited mid-career professionals equipped with necessary
skills, employing 45 of them. The ratio of mid-career officers and employees to the company’s
total officers and employees is 22.0 % and the ratio of mid-career officers to the company’s
total employees in managerial position is 18.2% at the end of fiscal year ended in March
2024. In the future as well, we will seek to employ mid-career professionals necessary fromthe viewpoint of placing the right person in the right position.
[Recruitment of Foreign Nationals]
The Group is operating globally, and employees of foreign nationality account for most of
employees in the Group companies except for the domestic operation of Taiyo Nippon Sanso
and Thermos groups, with their ratio reaching about 70% as of the end of fiscal year ended
in March 2024. As for the Nippon Sanso Holdings, two of its nine Board members and oneof its nine executive officers are foreign nationals. Globally oriented management is in placeat the company, with important meetings and decision-making are basically conducted in
English. It has five non-Japanese employees, or 5% of the total, as of the end of fiscal year
ended in March 2024. Looking ahead, we will strive to realize proactive personnel exchanges
with overseas business companies, setting up a structure matching a global holding company.
[Employment of Persons with Disabilities]
Taiyo Nippon Sanso Corporation, the main domestic business company, has beenproactively hiring people with disabilities, and the ratio of people with disabilities to total
employees is 2.52% that achieves the legally mandated 2.5% target of their employment.
We will continue to strive to employ such human resources and establish an easy-to-workenvironment in an effort to contribute to expansion of their working opportunities.
[Principle 2.6 Roles of Corporate Pension Funds as Asset Owners]
Taiyo Nippon Sanso Corporation (TNSC) which is the core business company of theCompany group has established the Corporate Pension Managing Committee that has
been engaged in deliberation of the management of corporate pension. TNSC has managed
the corporate pension fund in accordance with the basic policy of managing pension reserves
and based on the strategic asset contribution ratio necessary for achieving the target of thepension asset management in order to ensure stable management of the employee’s assets,3

while properly controlling conflict of interests. Furthermore, TNSC has appointed the best
trustees based on the strategic asset contribution ratio, evaluated the quantitative andqualitative aspects of the trustees designated by TNSC, and disclosed to employees thesummary of performance by trustee, including the investment results of corporate pension
fund.
[Principle 3.1 (1) Full Disclosure]
The Company has formulated its corporate philosophy and published it on its corporatewebsite.
(https://www.nipponsanso-hd.co.jp/en/company/mission.html)
The Company has formulated its Four-Year Medium-Term Management Plan “NS Vision2026～Enabling the Future” final fiscal year of which is fiscal 2025 ending March 2026 andpublished it on its corporate website.
https://www.nipponsanso-hd.co.jp/en/ir/management/plan.html[Principle 3.1 (2) Full Disclosure]
The Company has formulated Principles of Corporate Governance as its basic thinking andpolicy on corporate governance and published it on its corporate website.
(https://www.nipponsanso-hd.co.jp/Portals/0/images/company/governance/nippon-sansoholdings-corporate-governance-principles_en.pdf)[Principle 3.1 (3) Full Disclosure]
As regards the policy and procedures for the Board of Directors’ determining of the
remuneration of management personnel and directors, please refer to “Disclosure of Policy
on Determining Remuneration Amounts and Calculation Methods” in the subsection “Director
Remuneration” under the section “1. Matters on Organizational Composition and Operation”
under the part “Ⅱ. Business Management Organization and Other Corporate Governance
Systems regarding Decision-making, Execution of Business, and Oversight in Management”
of this report.
[Principle 3-1(4) Full Disclosure]
The Company has defined its policy and procedures for the Board of Directors’ appointmentof executive officers and nominating candidates of directors and Audit & Supervisory Board
members in Articles 13 through 15 of Principles of Corporate Governance available on its
corporate website.
(https://www.nipponsanso-hd.co.jp/Portals/0/images/company/governance/nippon-sansoholdings-corporate-governance-principles_en.pdf)[Principle 3-1(5) Explanations with respect to the individual appointments/dismissals andnominations of executive officers, candidates of directors and Audit & Supervisory Board
members]
Explanation of the reason for nominating as candidate for directors and Audit & Supervisory4

Board members is made in the proposal for the election of directors and election of Audit &Supervisory Board members stipulated in the reference documentation for the General
Meeting of Shareholders. In the case the candidates are scheduled to be appointed as
executive officers at the board meeting to be held after the General Meeting of Shareholders,the explanation is made taking such appointment into consideration. The Company has
published the notice of convocation for the 20th Ordinary General Meeting of Shareholders
that includes reference documentation on its corporate website.
(https://www.nipponsanso-hd.co.jp/en/ir/stock/meeting.html)[Supplementary Principle 3.1.3 Disclosure of Company Initiatives on Sustainability]
The Company details its sustainability initiatives on its corporate website.
https://www.nipponsanso-hd.co.jp/en/sustainability/
The Company details its human capital investment on its corporate website.
- The Nippon Sanso Holdings Group’s Human Resource Strategy
https://www.nipponsanso-hd.co.jp/en/sustainability/society/talent_strategy/- Message from Head of the HR Division
Message from Head of the HR Division | Sustainability |Nippon Sanso Holdings Corporation(nipponsanso-hd.co.jp)
Also, Taiyo Nippon Sanso Corporation, a principal operating company of the Group, explains
investment in intellectual property on its website.
(https://www.tn-sanso.co.jp/jp/rd/intellectual [in Japanese])
The Company collects and analyzes the necessary data on the impact of climate changerelated risks and earning opportunities on its business activities, profits, and other factors inaccordance with the Task Force on Climate-related Financial Disclosures (TCFD)
recommendations. The results are presented on its corporate website. Note that TCFDbased disclosure complies with the principle that applies to the companies listed on the Prime
Market.
(https://www.nipponsanso-hd.co.jp/en/sustainability/initiative/)[Principle 4.1.1 Roles and Responsibilities of the Board]
The Company has defined the scope and content of the matters for which the authority isdelegated to the management in Article 7.3 of Principles of Corporate Governance available
on its corporate website.
(https://www.nipponsanso-hd.co.jp/Portals/0/images/company/governance/nippon-sansoholdings-corporate-governance-principles_en.pdf)
5

[Principle 4.9 Independence Standards and Qualification for Independent Directors]
The Company has defined the independence standards for independent outside directors in
Attachment 1 to Principles of Corporate Governance available on the Company’s website.
(https://www.nipponsanso-hd.co.jp/Portals/0/images/company/governance/nippon-sansoholdings-corporate-governance-principles_en.pdf)[Supplementary Principle 4.10.1 Nomination and Remuneration Committees]
The Company outlines the mandates, roles, policy regarding the independence, and such,of its Advisory Committee on Appointments and Remuneration later in this Report: see theSupplementary Explanation to Voluntary Establishment of Committee(s), Members andAttributes of Chairperson in the Directors section of “1. Matters on Organizational
Composition and Operation” under “II. Business Management Organization regarding
Decision-making, Execution of Business, and Oversight in Management/ Other Corporate
Governance Systems.” Note that this disclosure complies with the principle that applies tothe companies listed on the Prime Market.
[Supplementary Principle 4.11.1 Preconditions for Board and Audit & Supervisory Board
Effectiveness]
The Company has determined its view on the appropriate balance between knowledge,
experience, and skills, as well as diversity and appropriate size, of the Board of Directors asa whole, which is set out in Article 9 of the Principles of Corporate Governance available on
its website.
(https://www.nipponsanso-hd.co.jp/Portals/0/images/company/governance/nippon-sansoholdings-corporate-governance-principles_en.pdf)
In addition, the Company creates a skills matrix that shows the knowledge, experience, skills,
and other expertise possessed by individual directors, as presented on its corporate website.
(https://www.nipponsanso-hd.co.jp/en/company/officer_list/)
Skill matrix of candidate for directors is presented on pages 14 of the reference
documentation of the convocation notice for the 20th Ordinary General Meeting of
Shareholders held on June 19, 2024.
(https://www.nipponsanso-hd.co.jp/en/ir/stock/meeting.html)[Supplementary Principle 4.11.2 Preconditions for Board and Audit & Supervisory Board
Effectiveness]
Outside director Miri Hara is also serving as outside director of SECOM CO., LTD. Outside
director Katsumi Nagasawa is also serving as outside director of Sugino Machine Limited, aprivate company. None of outside Audit & Supervisory Board members has a concurrent
position of any other listed company.

6

[Supplementary Principle 4.11.3 Evaluation of Board of Directors’ Effectiveness]
The Company has published the process and result of evaluation of board of directors’
effectiveness on its corporate website.
(https://www.nipponsanso-hd.co.jp/Portals/0/images/company/governance/Evaluation-ofthe-Board-of-Directors-Effectiveness_20240516.en.pdf)[Supplementary Principle 4.14.2 Director and Audit & Supervisory Board Members Training]
The Company has defined its training policy for directors and Audit & Supervisory Board
members in Article 17 of Principles of Corporate Governance available on the Company’s
corporate website.
(https://www.nipponsanso-hd.co.jp/Portals/0/images/company/governance/nippon-sansoholdings-corporate-governance-principles_en.pdf)[Supplementary Principle 5.1 Dialogue with Shareholders]
The Company has formulated Nippon Sanso Holdings Group Investor Relations (IR) Policy(Basic Principles for Dialogue and Disclosures Concerning IR Activities) as a policy on the
structure and initiatives to facilitate constructive dialogue with shareholders and published iton the Company’s website.
(https://www.nipponsanso-hd.co.jp/en/ir/management/irpolicy.html)[Status of Dialogues with Shareholders and etc.]
The Company has posted the status of dialogues with shareholders and other investors on
the Company’s website.
(https://www.nipponsanso-hd.co.jp/en/sustainability/dialogue_with_stakeholders/)[Action to Implement Management that is Conscious of Cost of Capital and Stock Price]
The Company’s policy on cost of capital, capital efficiency and etc., have been published on
the Company’s website as “CFO Message”.
(https://www.nipponsanso-hd.co.jp/en/ir/management/cfo-message.html)

7

2. Capital Structure
Foreign Shareholding Ratio

10% or more and less than 20%[Status of Major Shareholders] [Updated]
Name / Company Name
Mitsubishi Chemical Group Corporation
The Master Trust Bank of Japan, Ltd. (trust
account)
Client shareholding association of Taiyo Nippon
Sanso Corporation
Custody Bank of Japan, Ltd. (trust account)
Meiji Yasuda Life Insurance Company
Mizuho Bank, Ltd.
The Bank of New York Mellon 140044
State Street Bank West Client – Treaty 505234
Ibiden Co., Ltd.
JP Morgan Chase Bank 385632

Number of Shares
Owned
218,996,766
29,632,600

Percentage
(%)
50.59
6.85

16,706,121

3.86

11,422,400
9,006,771
4,332,847
3,393,982
3,179,793
3,004,844
2,806,461

2.64
2.08
1.00
0.78
0.73
0.69
0.65

Controlling Shareholder (except for
Parent Company)

N/A

Parent Company

Mitsubishi Chemical Group Corporation (TSE
Code: 4188)

Supplementary Explanation [Updated]
Status of Major Shareholders is as of March 31, 2024.

8

3. Corporate Attributes
Listed Stock Market and Market
SectionFiscal Year-End
Type of Business
Number of Employees (consolidated)
as of the End of the Previous Fiscal
Year
Sales (consolidated) as of the End of
the Previous Fiscal Year
Number of Consolidated Subsidiaries
as of the End of the Previous Fiscal
Year

Tokyo Stock Exchange
Prime Market
MarchChemical
1000 or more

¥1 trillion or more
100 or more and less than 300

4. Policy on Measures to Protect Minority Shareholders in Conducting Transactions
with Controlling Shareholder
When entering into a transaction with its controlling shareholder, the Company has a policy
to define reasonable contractual conditions and prices in reference to other transactions andmarket prices. Furthermore, the Company will obtain approval of the Board of Directors forany material transaction with its controlling shareholder that is not included in the ordinary
course of business. The Company seeks to secure the objectivity and transparency of theBoard of Directors in deliberations on transactions with the controlling shareholder, byappointing five independent outside directors who are independent of the controllingshareholder so that they make up majority of the nine-member Board of Directors.
5. Other Special Circumstances which may have Material Impact on Corporate
Governance [Updated]
The Company, having Mitsubishi Chemical Group Corporation (MCG) as its parent company,
belongs to a corporate group led by MCG (MCG Group). The MCG Group’s business iscomposed of specialty materials, industrial gasses, healthcare, methyl methacrylate (MMA),
and basic materials. The Company Group is positioned as an entity in the industrial gasses
segment. Being the only one operating industrial gasses business in the MCG Group, theCompany Group does not compete with other companies in the MCG Group, and as of thismoment does not expect to do so in the future.
The Company concluded a basic agreement with the MCG on May 13, 2014. The basic
agreement stipulates that the MCG, under its Group Management Regulations, respects ourautonomy and is committed to supporting and cooperating with us. Accordingly, we makeour own business decisions and do not require MCG’s approval for any matters. The basic
agreement also includes provisions on maintaining the Company’s stock listing.
When there is a conflict of interest between our parent company and our other shareholders,
our directors act in a way to avoid harming the interest of the latter. We have five electedindependent outside directors, who constitute a majority in the 9-member board, and twoelected full-time, independent outside Audit & Supervisory Board members. These9independent individuals exercise oversight to ensure that conflicts of interest will not arise
between the parent company and other shareholders. Furthermore, we have voluntarily
established the Advisory Committee on Appointments and Remuneration that advises theBoard of Directors on the nomination of candidates for directors and Audit & Supervisory
Board members, as well as the appointment and dismissal of the CEO and other executive
officers. The committee is composed of six members—the president and five independent
outside directors—and is chaired by an independent outside director. This ensures our
independence from the parent company on management appointments.

Ⅱ . Business Management Organization regarding Decision-making,Execution of Business, and Oversight in Management/
Governance Systems

Other Corporate

1. Matters on Organizational Composition and Operation
Organization Form
Company with an Audit & Supervisory Board[Directors]
Maximum Number of Directors Stipulated in Articles ofIncorporation
Term of Office Stipulated in Articles of Incorporation
Chairperson of the Board
Number of Directors
Appointment of Outside Directors
Number of Outside Directors
Number of Independent Outside Directors

1015
One year
President CEO
9
Appointed
55Outside Directors’ Relationship with the Company (1) [Updated]
Name
Attribute
Relationship with the Company*a b c d e
f g h i jkMiri Hara
CertifiedTax〇
Accountant
Katsumi Nagasawa
Ex. Executive of△
Other Company
Masako Miyatake
Lawyer〇
Hideo Nakajima
Other〇
Katsuhito Yamaji
Ex. Executive of△
Other Company*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 Company or an executive thereof
f. Consultant, accountant or legal professional who receives a large amount of monetaryconsideration or other property from the Company besides compensation as a director/
audit & supervisory board member
g. Major shareholder of the Company (or an executive of the said major shareholder if theshareholder is a legal entity)
h. Executive of a client or supplier company of the Company (which does not correspond toany of d, e, or f) (the director himself/herself only)
i. Executive of a company, between which and the Company outside directors/ audit &supervisory board member are mutually appointed (the director himself/herself only)
j. Executive of a company or organization that receives a donation from the Company (thedirector himself/herself only)
k. Others

11Outside Directors’ Relationship with the Company (2) [Updated]
Name
Designation
Supplementary
Reasons of Appointment
asExplanation of
Independent
the RelationshipDirector
Miri Hara
Ms. Miri Hara has served as a director of realestate management company over many years,
and also has wide-ranging experience of serving
as Representative Certified Public Tax
Accountant of Tax Corporation, and an outside
director at a publicly listed company and thus theCompany considers her qualified to be an
outside director. On top of that, since she meets○―――both the Tokyo Stock Exchange's criteria for
determining independence and our company's"Independence Standards for Outside Directors
and Outside Audit & Supervisory Board
Members", the Company has selected her as anindependent director who is unlikely to haveconflicts of interest with general shareholders
based on such background.
KatsumiNagasawa○

Katsumi Nagasawa
is originally from
Hitachi, Ltd., abusiness partner of
the Company
Group, and served
as an executive at
the company until
his retirement inMarch 2019.

12

Mr. Katsumi Nagasawa had been engaged in the
nuclear power business for many years in
Hitachi Ltd., and subsequently served as acorporate executive officer of the company andas the chairman of the board of directors of its
group company, among other important
positions and thus the Company considers him
qualified to be an outside director. On top of that,since he meets both the Tokyo Stock Exchange's
criteria for determining independence and ourcompany's "Independence Standards for
Outside Directors and Audit & Supervisory Board
members", the Company has selected him as anindependent director who is unlikely to haveconflicts of interest with general shareholders
based on such background.

Name

Designationas
Independent
Director○

Supplementary
Explanation of
the Relationship

Reasons of Appointment

―――

Hideo
Nakajima○―――

Katsuhito
Yamaji○

Katsuhito Yamaji isoriginally from
Yamaha Motor Co.,
Ltd., a business
partner of theCompany Group,and served as an
executive at thecompany, but
retired from that
position in March2022 (he iscurrently an advisor
to the company).

Having accumulated a wealth of experience as
an international lawyer over many years, Ms.
Masako Miyatake has been practicing law in thefields of international transactions, finance,
corporate governance, and litigation, arbitrationand conciliation. Furthermore, she served as an
outside director at another publicly listedcompany and thus the Company considers her
qualified to be an outside director. On top of that,since she meets both the Tokyo Stock
Exchange's
criteria
fordetermining
independenceandourcompany's"Independence Standards for Outside Directors
and Audit & Supervisory Board members", theCompany has selected her as an independent
director who is unlikely to have conflicts ofinterest with general shareholders based onsuch background.
Mr. Hideo Nakajima, currently assuming a
special advisor of a law firm that offers global
services, has held important positions at Ministryof Finance and Japan Fair Trade Commission
and thus the Company considers him qualified to
be an outside director. On top of that, since hemeets both the Tokyo Stock Exchange's criteria
for determining independence and ourcompany's "Independence Standards for
Outside Directors and Audit & Supervisory Board
members", the Company has selected him as anindependent director who is unlikely to haveconflicts of interest with general shareholders
based on such background.
Mr. Katsuhito Yamaji had worked for many years in
the area of technology development, production
and procurement in Yamaha Motor Co., Ltd., andsubsequently served as a director of the company
and thus the Company considers him qualified to
be an outside director. On top of that, since hemeets both the Tokyo Stock Exchange's criteria for
determining independence and our company's"Independence Standards for Outside Directors
and Audit & Supervisory Board members", theCompany has selected him as an independent
director who is unlikely to have conflicts of interest
with general shareholders based on suchbackground.

MasakoMiyatake13

Voluntary Establishment of Committee(s)Corresponding
toNomination
Committee
Remuneration Committee

Establishedor

Voluntary Establishment of Committee(s), Members and Attributes of Chairperson
Committee’s

All

Full-time

Internal

OutsideExternal

Other

Chair

Name

Committee

Members

Directors

Directors

experts

members

person

0

1

5

0

0

Members
Voluntary

Advisory

Committee

Committee on

Corresponding

Appointments

to Nomination

andCommittee

Remuneration

Voluntary

Advisory

Committee

Committee on

Corresponding

Appointments

to Remuneration

andCommittee

Remuneration

6

Outsidedirector

6

0

1

5

0

0

Outsidedirector

Supplementary Explanation
The Company’s Advisory Committee on Appointments and Remuneration is an organ thatadvises the Board of Directors. The six-member Committee consists of the representative
director and president CEO and the five independent outside directors, and is chaired by an
Independent Outside Director, Mr. Katsumi Nagasawa. This composition—namely,
independent outside directors making up the majority with the chairperson being one ofthem—ensures the Committee’s independence as well as its objectivity and transparency indecision-making. The Committee operates in compliance with the Regulations of theAdvisory Committee on Appointments and Remuneration of Nippon Sanso Holdings
Corporation approved by the Board of Directors. It is consulted by the Board of Directors onsuch matters as the selection of candidates for the office of director or member of the Audit& Supervisory Board, appointment and dismissal of executive officers, selection of a
successor to the representative director and president CEO, and revision of the internal
regulations on director remuneration. After deliberations on the matters consulted upon, theCommittee decides by a majority vote and reports the results to the Board of Directors.
[Audit & Supervisory Board Members]
Establishment of Audit & Supervisory Board
Maximum Number of Audit & Supervisory
Board Members Stipulated in Articles ofIncorporation
Number of Audit & Supervisory Board
Members

Established
5

4

14

Coordination among Audit & Supervisory Board Members, Independent Auditors andInternal Audit Departments
The Audit & Supervisory Board comprises four full-time members, three of whom are outside
members. Audit & Supervisory Board members attend meetings of the Board of Directors
and the Management Committee to oversee directors’ business execution objectively andform and express opinions impartially. The Audit & Supervisory Board conducts its audit incoordination with Independent Auditors and Corporate Audit Office. The Audit & Supervisory
Board receives reports from the Independent Auditors about their auditing plans and thestatus of their audit, and also receives reports from Corporate Audit Office about the resultsof internal audit.
Furthermore, the secretariat of the Audit & Supervisory Board staffed by full-time personnel
has been in place to help Audit & Supervisory Board members with their duties and thereby
ensure the effectiveness of audit conducted by the Audit & Supervisory Board.
Appointment of Outside Audit & Supervisory
Board Members
Number of Outside Audit & Supervisory
Board Members
Number of Independent Audit & Supervisory
Board Members

Appointed
32Outside Audit & Supervisory Board Member’s Relationship with the Company (1) [Updated]
Name
Attribute
Relationship with the Company*a b c d efg h i jkAkihiro Hashimoto
From another△△company
Kentaro Akashi
From another△△△△company
Kohei Ichiya
From another△△△company* Categories for “Relationship with the Company”* ”○” when the audit & supervisory board member presently falls or has recently fallen under
the category;“△” when the audit & supervisory board member fell under the category in the past
* “●” when a close relative of the audit & supervisory board member presently falls or has
recently fallen under the category;“▲”when a close relative of the audit & supervisory board member fell under the category
in the pasta. Executive of the Company or its subsidiaryb. Non-executive director or accounting advisor of the Company or its subsidiaries
c. Non-executive director or executive of a parent company of the Company
15

d. Audit & supervisory board member of a parent company of the Company
e. Executive of a fellow subsidiary company of the Company
f. A party whose major client or supplier is the Company or an executive thereof
g. Major client or supplier of the Company or an executive thereofh. Consultant, accountant or legal professional who receives a large amount of monetaryconsideration or other property from the Company besides compensation as an audit &supervisory board member
i. Major shareholder of the Company (or an executive of the said major shareholder if theshareholder is a legal entity)
j. Executive of a client or supplier company of the Company (which does not correspond toany of f, g, or h) (the audit & supervisory board member himself/herself only)
k. Executive of a company, between which and the Company outside directors/ audit &supervisory board member are mutually appointed (the audit & supervisory board member
himself/herself only)
l. Executive of a company or organization that receives a donation from the Company (theaudit & supervisory board member himself/herself only)
m. Others

16Outside Audit & Supervisory Board Member’s Relationship with the Company (2) [Updated]
Name
Designation
Supplementary Explanation
Reasons of Appointment
asof the RelationshipIndependent
Audit &
Supervisory
Board
memberAkihiroMr. Akihiro Hashimoto is Mr. Akihiro Hashimoto is appointed as an
Hashimotooriginally from Mizuho Bank, Outside Audit & Supervisory Board
Ltd., which is a major lender to member for his long-term experience at
the Company Group, and was financial institutions and his substantial
an executive of the bank until level of accounting and financial
his retirement in April 2014. As knowledge. On top of that, since heof the end of the fiscal year meets both the Tokyo Stock Exchange's
ending March 2024, the criteria for determining independence○
Company Group's outstanding and our company's "Independence
borrowings from the bank Standards for Outside Directors andamounted to 278,520 million Audit & Supervisory Board members",
yen.
the Company has selected him as an
He was also an executive of independent Audit & Supervisory Board
Sharp Corporation, a business member who is unlikely to have conflicts
partner of the Group, but retired of interest with general shareholders
from that position in June 2016. based on such background.
Kentaro○Kentaro Akashi is originally Mr. Kentaro Akashi is appointed as an
Akashifrom Mizuho Bank, Ltd., a Outside Audit & Supervisory Board
major lender to the Company member for his long-term experience atGroup, and was an executive financial institutions and his substantialof the bank until he retired from level of accounting and financial
that position in March 2014. As knowledge. On top of that, since heof the end of the fiscal year meets both the Tokyo Stock Exchange's
ending March 2024, the criteria for determining independence
Company Group's outstanding and our company's "Independence
borrowings from the bank Standards for Outside Directors andamounted to 278,520 million Audit & Supervisory Board members",
yen.
the Company has selected him as an
He was also an executive of independent Audit & Supervisory Board
Mizuho Securities Co., Ltd., a member who is unlikely to have conflicts
business partner of the of interest with general shareholders
Company Group, but retired based on such background.
from that position in May 2017.
Kohei
Kohei Ichiya is originally from Mr. Kohei Ichiya is appointed as an
IchiyaMitsubishi
Chemical Outside Audit & Supervisory Board
Corporation which is the member for his experience at accounting
Company’s fellow company departments
andcorporate
and was an executive of that management department of a chemicalcompany.
company and his substantial level of
As of the end of the fiscal year financial and accounting knowledge.
ending March 2024, theCompanyGroup
hadtransactions with Mitsubishi
Chemical Corporation totaling
6,524 million yen.
He also served as an executiveof our fellow company, Japan
Polychem Corporation, but
retired from that position in
March 2024.
17

[Independent Directors/ Audit & Supervisory Board member]
Number of Independent Directors/ Audit & 7
Supervisory Board member [Updated]
Other Matters relating to Independent Directors
The company has set out the "Independence Standards for Outside Directors and Outside
Audit & Supervisory Board Members" in Appendix 1 of the "Principles of Corporate
Governance " published on our website, for your reference.
(nippon-sanso-holdings-corporate-governance-principles_en.pdf (nipponsanso-hd.co.jp))[Incentives]
Implementation of incentive measures for Performance-linked bonuses
Directors
Supplementary Explanation on Relevant Matter [Updated]
The Board of Directors and the Audit and Supervisory Board consult with the Advisory
Committee on Appointment & Remuneration about the appropriateness of the remuneration
system for the directors and A&S Board members. The Advisory Committee on Appointment& Remuneration discusses the issue and submits the result to the Board of Directors and the
Audit and Supervisory Board.
Remunerations for directors consist of (i) fixed “Basic Monthly Remuneration,” which is abase salary specific to each rank; (ii) “Performance-linked Bonuses,” which vary according
to business results; and (iii) “Non-financial KPI-linked Bonuses,” which are linked to thedegree of achievement of “lost time injury frequency rate” and “rate of receiving compliancetraining” of non-financial KPIs set in the medium-term management plan. Remuneration for
directors is based, in principle, on the annual salary system, with the amount paid monthly
equivalent to one-12th of the annual salary. Revision of remuneration is reflected in thepayment made in July each year.
Of the remuneration, the amount of “(ii) Performance-linked Bonuses” is calculated
corresponding to the degree of achievement of each fiscal year’s budget based on mediumterm management plan targets and improvements in business results, and the amount of (iii)“Non-financial KPI-linked Bonuses” is calculated corresponding to the degree of achievementof certain targets among the non-financial KPI. They are reflected separately in the
remuneration paid from July of the following business year (for example, the amountcalculated based on the business results, etc., for FYE March 2023 (April 1, 2022 to March
31, 2023) is reflected in the directors’ remuneration paid from July 2023).
The proportion of (i) “Basic Monthly Remuneration,” (ii) “Performance-linked Bonuses,” and(iii) “Non-financial KPI-linked Bonuses” are approximately five to four to one, respectively.
With regard to compensation after July 2024, it was resolved at the Board of Directors
meeting held on June 19, 2024, to add indicators to both the “Performance-linked Bonuses”
and the “Non-financial KPI-linked Bonuses”, and to reflect " Performance-linked Bonuses”
and “Non-financial KPI-linked Bonuses” to directors who mainly serve as officers ofsubsidiaries in addition to the “Basic Monthly Remuneration,” that has been previously paid
to such directors.

18

The “Performance-linked Bonuses” will include ROCE after tax, which is one of thefinancial KPIs in the medium-term management plan. And the “Non-financial KPI-linked
Bonuses”, will include the “GHG reduced emissions though environmental product offer”.
With regard to the compensation of directors who mainly serve as officers of subsidiaries
directors, by adding Performance-linked Bonuses” and the “Non-financial KPI-linked
Bonuses” to their “Basic Monthly Remuneration,” the ratio of " Basic Monthly Remuneration",
Performance-linked Bonuses” and the “Non-financial KPI-linked Bonuses” will beapproximately 8:2. The newly added linked bonuses will be paid to directors in base amounts
by position from July 2024. And from July 2025, amounts linked to and calculated according
to the degree of achievement of each target will be paid to directors.
Also, outside directors receive the fixed “Basic Monthly Remuneration” only as
remuneration for directors of the Company.
The Performance-linked Bonuses and Non-financial KPI-linked Bonuses are determinedon the basis of the following formulas, respectively.
••

Performance-linked Bonuses (variable) = Rank-specific standard amount x “coefficient
based on evaluation related to Performance-linked Bonuses” *Non-financial KPI-linked Bonuses (variable) = Rank-specific standard amount x “coefficient
based on evaluation related to Non-financial KPI-linked Bonuses” (*)* The following figures are applied to the “coefficient based on evaluation related to
Performance-linked Bonuses” and “coefficient based on evaluation related to Nonfinancial KPI-linked Bonuses,” respectively, in order to judge the status ofachievements of medium-term management plan targets while strengthening theextent of their interlocking with the Company’s business results as well as improving
their objectivity and transparency.
[Coefficient based on evaluation related to Performance-linked Bonuses]➢ Degree of achievements of each fiscal year’s budget based on medium-term
management plan targets (consolidated revenue and consolidated core operating
profit margin)➢ Year-on-year improvements in business results (consolidated revenue,
consolidated core operating profit, and profit attributable to owners of the parent
company)➢ Year-on-year improvements in ROCE after tax (*)* Regarding “Year-on-year improvements in ROCE after tax” related portion, base amounts byposition will be paid to directors from July 2024. And from July 2025, amounts calculated by using
coefficient based on the degree of improvement over target will be paid to directors.

19

[Coefficient based on evaluation related to Non-financial KPI-linked Bonuses]➢ The degree of achievement each fiscal year of (certain) non-financial KPIs set in
the medium-term management plan (“progress in lost time injury rate for each fiscalyear”, “rate of receiving compliance training” and “rate of GHG reduced emissions
though environmental product offer” (*).)* Regarding “rate of GHG reduced emissions though environmental product offer” related portion,base amounts by position will be paid to directors from July 2024. And from July 2025, amounts
calculated by using coefficient based on the degree of progress over target will be paid to directors.

Targets & results of indicators tied to Performance-linked Bonuses, etc. for directors(excluding outside directors and directors who mainly serve as officers of subsidiaries) in
FYE March 2024:
1. Performance-linked Bonuses (100%)(1) Degree of achievements of FYE March 2023 budget based on medium-term
management plan targets (41%)
Indicator forevaluation
Consolidated
revenue
Consolidated core
operating profit
marginWeight forevaluation
20.5%

FYE March 2023
TargetFYE March 2023
Results

950,000 mil. yen

1,186,683 mil. yen

20.5%
11.3%

10.4%

(2) FYE March 2023 performance improvements from FYE March 2022 results (59%)
Indicator for
Weight for
FYE March 2022
FYE March 2023
evaluation
evaluation
Results
Results
19.6%
Consolidated revenue
957,169 mil. yen
1,186,683 mil. yen
Consolidated core
operating profit
Net income
attributable to ownersof the parent

19.6%
19.6%

102,710 mil. yen

123,124 mil. yen

64,103 mil. yen

73,080 mil. yen

2. Non-financial KPI-linked Bonuses (100%)
Degree of achievement of (certain) non-financial KPIs set in the medium-term
management plan
Indicator for
Weight for
FYE March 2022
FYE March 2023
evaluation
evaluation
Results
Results
Lost time injury rate

70%

2.1

1.5

Rate of receiving
compliance training

30%

–

99%

The medium-term management plan sets the lost time injury rate target at 1.6 or less by
FYE March 2026. The target rate of receiving compliance training is 100% every fiscal
year.
20

Recipients of Stock Options
Supplementary Explanation on Relevant Matter
N/A[Director Remuneration]
DisclosureofIndividual
Remuneration

Directors’ No Individual Disclosure

Supplementary Explanation on Relevant Matter [Updated]
The Company discloses the total amount of remuneration for directors.
The total amount of remuneration for 11 directors was 207 million yen, including 60 million
yen for 7 outside directors.
Total amount of remunerations by type:・Basic Remuneration: 151 million yen, including 60 million yen for 7 outside directors
・Performance-linked Bonuses: 46 million yen
・Non-financial KPI-linked Bonuses: 9 million yen※ For the period from 1st April 2023 to 31 March 2024.
These amount includes remuneration for 2 director who retired during the year.
Policy on Determining Remuneration Established
AmountsandCalculation
Methods[Updated]
Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods
The total amount of remunerations for directors was limited to 800 million yen per year(including 50 million or less for outside directors, excluding their employee portion) under aresolution passed at the 11th Ordinary General Meeting of Shareholders held on June 23,
2015. Due to the increase in the number of outside directors, etc., a resolution was passed
at the 18th Ordinary General Meeting of Shareholders on June 17, 2022, to retain the limit of
800 million yen as remuneration for directors, of which the portion for outside directors willbe “up to 100 million yen on an annual basis”. The total amount of remunerations for Audit &Supervisory Board members is limited to 200 million yen per year under a resolution passed
at the 3rd Ordinary General Meeting of Shareholders held on June 28, 2007.
The amount of remuneration for each director is determined on the basis of the policy
described in [Incentives] and supplementary explanation of “Implementation of incentive
measures for Directors” The board of directors has approved internal regulation that reflected
the policy.
Directors who mainly serve as officers of subsidiaries directors were paid the fixed “BasicMonthly Remuneration” only as remuneration for directors of the Company. However, as
described in the “Supplementary Explanation on Relevant Matter” above, in addition to “BasicMonthly Remuneration", “Performance-linked Bonuses” and “Non-financial KPI-linked
Bonuses” will be added and be paid in base amounts by position from July 2024. And from
July 2025, amounts linked to and calculated according to the degree of achievement of eachtarget will be paid to such directors. Outside directors receive the fixed “Basic Monthly
Remuneration” only as remuneration for directors of the Company.
21

. Remuneration for directors is based in principle on an annual salary system, with theamount paid monthly equivalent to one-12th of the annual salary.
Representative Director and President who is authorized to decide the amount of eachdirector’s remuneration calculates it according to the internal regulations. The amount of
remuneration for directors is to be unambiguously calculated from their rank and performancebased on the internal regulations, and it is possible to verify the results of calculations by the
Representative Director and President. The result of the calculation is reported to theAdvisory Committee on Appointments & Remuneration.
The Company has established the advisory committee on appointments and remunerationthat consisted of six members that are Representative Director and President, fiveindependent outside directors and chaired by an independent outside director. The
Committee continuously discusses directors’ remuneration at the consultation of the boardof directors.
[Supporting System for Outside Directors and/or Audit & Supervisory Board Members][Updated]
For Audit & Supervisory Board members, full-time personnel are in place in the secretariat of
the Audit & Supervisory Board to help them perform their duties. For outside directors,
relevant materials are provided along with agenda items prior to a meeting of the Board of
Directors, and department in charge of an agenda item gives explanation where necessary.
Further, outside directors and the Audit & Supervisory Board regularly meet to exchange
information and share the same recognition concerning the Company’s business, internal
control, corporate governance and other matters.
[Status of Persons Who Have Retired from a Position Such as Representative Director
and President]
Retired Representative Director and President, etc. Holding Advisory or Any Other Positionin the Company [Updated]

Name

Title/
Position

Responsibilities

-

-

-

Working Form andConditions(Full-time/Part-time,
Paid/Unpaid, etc.)-

Date of
Retirement
from
Positionsuch asPresident-

total Number of Retired Representative Director and Presidents, etc.
Holding Advisory or Any Other Pension in the Company [Updated]
Other Matters

220Term of
Office-2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination, andRemuneration Decisions (Overview of Current Corporate Governance System)
The Board of Directors consists of nine members, five of whom are independent, andoperates to ensure correct business judgement. The Articles of Incorporation stipulates thatthe maximum number of directors on the Board of Directors is 15. The Board of Directors
holds a regular monthly meeting to discuss important matters and hear reports aboutbusiness activities. The Company has established the Advisory Committee on Appointments
and Remuneration as a discretionary advisory committee under the Board of Directors. The
member of the committee is President (CEO) and five outside directors and the Committee
is chaired by an outside director. The Board of Directors consults this committee regarding
the selection of candidates for the position of director and Audit & Supervisory Board member,the appointment and dismissal of President (CEO) and executive ofﬁcers, the choosing of
successors to President (CEO) and revisions of the internal regulations on director’scompensation, and seeks advice from the independent outside directors to ensure thetransparency and objectivity of decision making.
In accordance with the Articles of Incorporation of the Company and Article 427(1) of theCompanies Act, the Company has entered into agreements with each outside director to limit
their liability for damages stipulated in Article 423(1) of the Companies Act, and has set theirmaximum liability for damages in accordance with Article 425(1) of the Companies Act.
In addition to the Board of Directors, the Company has established the Management
Committee consisting of directors and concerned executive officers for prompt decision
making. The term of a director has been limited to one year in order to facilitate responsible
management in each fiscal year. The Audit & Supervisory Board comprises four full-timemembers and three of them are outside members. Audit & Supervisory Board members
attend meetings of the Board of Directors and the Management Committee to oversee
directors’ business execution objectively and form and express opinions impartially. The Audit& Supervisory Board conducts its audit in coordination with Independent Auditors andCorporate Audit Office as well. The Audit & Supervisory Board receives reports from the
Independent Auditors about their auditing plans and the status of their audit, and also
receives reports from Corporate Audit Office about the results of internal audit. Furthermore,
the secretariat of the Audit & Supervisory Board staffed by full-time personnel has been inplace to help Audit & Supervisory Board members with their duties and thereby ensure theeffectiveness of audit conducted by the Audit & Supervisory Board.
Five outside directors and two outside Audit & Supervisory Board members are independent.
The Company appoints Ernst & Young ShinNihon LLC as an accounting auditor. In addition
to that the Company has established Code of Conduct of Nippon Sanso Holdings Group andstrives to ensure compliance and business ethics of the group companies.
3. Reasons for Adoption of Current Corporate Governance System
The Company considers that the system described above in “2. Matters on Functions ofBusiness Execution, Auditing, Oversight, Nomination, and Remuneration Decisions” is themost appropriate corporate governance system for the Company in light of characteristics
and size of the Group’s business.
The Company has five outside directors. The Audit & Supervisory Board comprises four fulltime members, three of whom are outside. Having the five outside directors and two out of23

the three outside members of the Audit & Supervisory Board satisfies the independence
standard for outside directors/Audit & Supervisory Board members required by the Tokyo
Stock Exchange. The Company ensures the objectivity and fairness of management
oversight functions.

Ⅲ. Measures Implemented for Shareholders and Other Stakeholders
1. Measures to Ensure Active General Meetings of Shareholders and Smooth Exerciseof Voting Rights [Updated]

Early Notification of General
Shareholder Meeting
Scheduling GMs Avoiding
Overlapping with Other
AGMs
Allowing Electronic Exerciseof Voting Rights
Participation in an Electronic
Voting Platform and Other
Measures for Enhancing theExercise of Voting Rights ofInstitutional Investors
Provision of Convocation
Notice (Summary)in English

Other

Supplementary Explanation
Notices of convocation for General Meetings ofShareholders are mailed to shareholders at the earliest
possible date prior to the date designated by law.
The Company sets the date for annual General Meetings ofShareholders early to avoid dates on which many othershareholders’ meetings are held.
To enhance the convenience for exercising shareholders’voting rights, the Company has allowed shareholders to
exercise their voting rights electronically.
The Company has used the platform provided by ICJ, Inc.
to enable institutional investors to exercise their voting
rights electronically.

The Company has notices of convocation (in the narrow
sense) of, and reference documentation for, General
Meetings of Shareholders, business reports, part offinancial statements, independent auditor’s audit report andaudit report of the audit and supervisory board translated
into English, and posts them on its website and the Tokyo
Stock Exchange’s Company Announcements Service,along with Japanese version of the notices of convocation.
We have posted a video of some of the proceedings fromthe General Meeting of Shareholders on our website after
the meeting.

24

2. IR Activities
Supplementary Explanation

Regular Investor Briefings
for Analysts and Institutional
Investors

Posting of IR Materials on
Corporate website

EstablishmentofDepartment
and/orManager in Charge of IR

Twice a year, following announcement of
the full year and the first half consolidated
business performance respectively, theCompany holds investor briefings withpresentations by President (CEO) foranalysts from securities firms andinstitutional investors. CFO explains
business result every quarter via
telephone conference on the date theresult is disclosed. In addition to that CFO
or IR manager participates conference
held by investors and makes presentationof company’s business and financial
result.
1. Financial Results
2. Notices of Convocation and Resolutionof General Meeting of Shareholders
3. Integrated Report
4. Annual Securities Report
5. Electronic Public Notice
OthersInvestor Relations of Group Finance andAccounting

Provision of
Explanations
by theCompany
Representative
Provided

3. Measures to Ensure Due Respect for Stakeholders
Supplementary Explanation
Stipulation of Internal Rules for Respecting The Group stipulates respect for thethe Position of Stakeholders
position of stakeholders in its Code of
Conduct and the related policies, all ofwhich are available on the Company’s
website.
Implementation of Environmental Activities, The Company prepares an Integrated
CSR Activities etc.
Reportfortheperformanceofenvironmental activities, CSR activities andother matters each year and publishes it on
its corporate website.

25

IV. Matters Related to the Internal Control System
1. Basic Thinking on Internal Control System and the Progress of System
Development[Updated]
Basic Policy on Internal Control System
The Board of Directors of the Company has approved a resolution as follows regarding aframework for ensuring the appropriateness of business (internal control system) pursuant
to provisions in the Ordinance for Enforcement of the Companies Act.
(1) A system to ensure that the execution of duties by directors and employees of theGroup comply with laws and regulations and the Articles of Incorporation.
・The directors of the Company shall determine the basic policy of compliance in the Groupand establish the organization and rules to ensure its effectiveness.
・The Group Chief Compliance Officer (hereinafter referred to as “Group CCO”) is assigned to theCompany, and a Regional Chief Compliance Officer (hereinafter referred to as “Regional CCO”)
is assigned to each region. The Group CCO is in charge of supervision of compliance promotion
activities in the Group, and the Regional CCO is in charge of supervision of compliance promotion
activities in its region.
・The Group CCO and Regional CCO shall strive to enhance and establish the Group's compliancepromotion activities.
・The “Global Compliance Committee” is held by the Group CCO on a regular basis, to share thecompliance promotion policy and contents of compliance promotion activities in each region, andto discuss on the respective issue as necessary.
・We will establish a whistleblowing system in Japan and overseas to ensure a system thatallows us to report compliance violations within the Group and the possibility of such
violations without suffering any disadvantages.
・In order to ensure the reliability of financial reporting, an internal control reporting systemshall be established and its effective and efficient operation and evaluation shall be carriedout.
・Internal audit department of the Company shall carry out an internal audit of the operational
status of the above organizations, institutions.
(2) Matters concerning the storage and management of information related to the
execution of duties by directors･ Information related to the execution of duties by directors will be appropriately stored andmanaged based on the Information Security Policy and other related requirements as
defined by the Group’s Information Security Management System.
26

･ The above storage and management shall maintain the information available to directors
and Audit & Supervisory Board Members.
・The Company’s internal audit department shall carry out an internal audit of the above operational
status.
(3) Regulations and other systems for managing the risk of loss for the Group・The directors of the Company shall determine the basic policy of risk management in theGroup and establish the organization and rules to ensure its effectiveness.
・Risk management shall be carried out by the department in charge of the relevant field,
and Global Risk Management Committee shall be established to select important risks forthe entire Group and formulate countermeasure.
・Internal audit department of the Company shall carry out an internal audit of the operational
status of the above organizations, institutions.
(4) A system to ensure the efficient execution of duties by the directors of the Group・In order to ensure the efficiency of the duties of the directors, the board of directors shallmake reasonable division of duties and appoint appropriate executive officers.
・The Representative Director and President shall execute his duties based on the basic policy
specified by the Board of Directors, and discuss and decide on the necessary issues at the
management meeting.
・The Global Strategy Review Committee shall formulate the Group's management strategy
and manage its progress.
・A long-term management vision and a group medium-term management plan shall be
formulated, quantitative and qualitative targets shall be set in order to achieve the plan,and performance management shall be carried out through quarterly monitoring.
(5) A System to ensure the appropriateness of operations in the Group・Based on the above policy, group management rules and other related rules,

we manage

its business, and compliance promotion, risk management and other systems that makeup the internal control system shall cover the entire group, and as a holding company, thecompany shall maintain and operate the internal control system while respecting theindependence of each group company. We shall support and manage it according to thesituation.
・Internal audit department of the company shall cooperate with the internal audit departmentof each company of the Group, and shall grasp and evaluate the maintenance status of
the internal control system of the Group through the audit of each company of the Group.

27

(6) A system for employees when Audit & Supervisory Board Members request theappointment of employees to assist them・As an organization that assists the duties of Audit & Supervisory Board Members, thesecretariat of the Audit & Supervisory Board Members, which is independent of thecommand and order of directors, shall be established and dedicated employees shall beassigned.
(7) Matters concerning the independence of employees in the previous item fromdirectors and ensuring the effectiveness of instructions given to such employees
・The employee of the secretariat of Audit & Supervisory Board Members in the preceding
item shall not receive the command and order of the directors when receiving an ordernecessary for audit work from Audit & Supervisory Board Members.
・The evaluation of the employee shall be carried out by the Audit & Supervisory Board
Members, and the prior consent of the Audit & Supervisory Board Members shall beobtained for the transfer and disciplinary action.
(8) A system for reporting to the Audit & Supervisory Board Members of the Company,
system for ensuring that the person who reported to the Audit & Supervisory Board
Members of the Company will not be treated unfavorably because of the report
・Audit & Supervisory Board Members and Directors shall hold regular meetings to share
information, and Directors and Employees shall report the following matters i. to v. to Audit& Supervisory Board Members without delay in addition to the legal matters.
・The directors and employees of the company and the directors, corporate auditors andemployees of each group company report to the department in charge of the company
regarding matters corresponding to iv. or v. below, and also report directly to the Audit &Supervisory Board Members or the Board of Corporate Auditors. It shall be possible.
・It is prohibited for a person who has made a report to the Audit & Supervisory Board
Members specified in this item to be treated unfavorably because of the reporti. Contents decided by the Directors regarding important matters that affect the
management of the Company or each Group company
ii. Results of internal audits conducted by the department in charge of the Company or eachGroup company
iii. Of the whistleblowing, the content that has a significant impact on the management of
the Company or each Group company
iv. Matters that violate compliance and have a significant impact on the management of theCompany or Group companies
28

v. Among matters related to quality defects and product defects, matters that have asignificant impact on the management of the Company or each Group company(9) Policy related to the processing of expenses or debts incurred in the execution ofduties by Audit & Supervisory Board Members
When an Audit & Supervisory Board Member make a request for prepayment or
reimbursement of expenses for the execution of their duties, they promptly apply unless it
is deemed that the expenses or obligations related to the request are not necessary forthe execution of his / her duties. Expenses or debts shall be dealt with.
(10) Other systems to ensure that audits by Audit & Supervisory Board Members are
conducted effectively
The Board of Auditors receives prior reports on the audit plans of Accounting Auditor andregularly receives reports on the Auditing Plan of Accounting Auditor in order to cooperatewith the internal audit department, supervise Accounting Auditor, and ensure theindependence of the Accounting Auditor from the directors. We shall maintain close
contact with each other by receiving reports of audit results.
2. Basic Thinking on Eliminating Anti-Social Forces and the Progress of System
Development
Basic Policy on Eliminating Anti-Social Forces
The Group’s Code of Conduct has the section titled “Rejection of Relationship with AntiSocial Forces” that specifies “the Group reacts resolutely towards anti-social forces andwill never have any relationship with anti-social forces. Moreover, the Group will resolutely
reject any unreasonable request made by anti-social forces or their equivalent and will not
try to solve the request with money.” The Company ensures that this principle is madeknown thoroughly to its officers and employees.

29

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

Not Adopted

Supplementary Explanation on Relevant Matter
N/A
2. Other Matters Concerning to Corporate Governance Organization [Updated]
1. Our Approach to Timely Disclosure
The Company has established the Nippon Sanso Group Code of Conduct to guide theconduct of all Group officers and employees, which stipulates that: we are aware of theimportance of accountability in corporate activities, where we reserve transparency; wealways maintain an open stance to internal and external stakeholders and endeavor todisclose information in an appropriate manner; we are truly open to views and criticism
concerning information disclosure and have good faith communication, which we optimize incorporate activities.
The Company has also maintained Nippon Sanso Holdings Group Investor Relations (IR)Policy (Basic Principles for Dialogue and Disclosures Concerning IR Activities) and published
it on its corporate website.
(https://www.nipponsanso-hd.co.jp/en/ir/management/irpolicy.html)
2. Overview of Timely Disclosure
The specifics of the Company’s system for timely disclosures are as follows:
General Manager of IR department is responsible for handling information for timely
disclosure, and Group Finance and Accounting Office are responsible for announcement
thereof.
(1) Disclosure of Information on Decision
Decisions made by the Board of Directors that, in the opinion of officer of Group Legal Office,fall under the information subject to timely disclosure shall be disclosed in a timely manner
by Group Finance and Accounting Office.
(2) Disclosure of Information on Occurrence of Material Fact
When any fact that might constitute a material fact has occurred, a business division that
becomes aware of the occurrence must report on it to officer of Group Legal Office, and then,where necessary, to President (CEO), the Board of Directors, and the Management
Committee. If officer of Group Legal Office determines that the occurrence of the material
fact falls under the information subject to timely disclosure, the information shall be disclosed
in a timely manner by Group Finance and Accounting Office.
(3) Financial Information
Information on financial results shall be disclosed in a timely manner by Group Finance andAccounting Office, under the instructions of chief financial officer (CFO) subject to priorapproval of the Board of Directors.

30

General Meeting of Shareholders
Appointment/dismissal

Appointment/dismissal

Appointment/dismissal

Audit

Consultation

Advisory CommitteeonAppointments
and Remuneration

lath

ReportingBoard of Directors
Nine members
five of whom are outside

Response
Supervision

Appointment/dismissal

Management
Committee

Global Strategy Review Meeting
Chairperson: Representative Director,
President CEO

Audit ofoperations
Audit ofaccounts

Global Risk Management Meeting
Chairperson: Representative Director,
President CEO

Corporate Audit
Coordination

Audit ofaccounts

Ofﬁce
Global Compliance Committee
Internal audit

Holding Company
companies

Chairperson: Group CCO

Divisions

Coordination

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and

AffiliatedBusiness

Independent auditors

Audit & Supervisory Board

Four members, three of whom are outside

Representative Director, President CEO

Important Notice – Trading of Nippon Sanso Holdings Corporation Common Stock, Disclaimer Regarding
Unsponsored American Depository Receipts
Nippon Sanso Holdings Corporation ("NSHD”) encourages anyone interested in buying or selling its common
stock to do so on the Tokyo Stock Exchange, which is where its common stock is listed and primarily trades.
NSHD’s disclosures are not intended to facilitate trades in, and should not be relied on for decisions to trade,
unsponsored American Depository Receipts (“ADRs”).
NSHD has not and does not participate in, support, encourage, or otherwise consent to the creation of any
unsponsored ADR programs or the issuance or trading of any ADRs issued thereunder in respect of its common
stock. NSHD does not represent to any ADR holder, bank or depositary institution, nor should any such person orentity form the belief, that (i) NSHD has any reporting obligations within the meaning of the U.S. Securities
Exchange Act of 1934 (“Exchange Act”) or (ii) NSHD’s website will contain on an ongoing basis all informationnecessary for NSHD to maintain an exemption from registering its common stock under the Exchange Act pursuant
to Rule 12g3-2(b) thereunder.
To the maximum extent permitted by applicable law, NSHD and its affiliates disclaim any responsibility or liability
to ADR holders, banks, depositary institutions, or any other entities or individuals in connection with any
unsponsored ADRs representing its common stock.

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