May 29, 2018

Notice of Convocation
The 152nd Ordinary General Meeting of Shareholders

Teijin Limited

Disclaimer: Please note that the following is a translation of the original Japanese documents prepared for theconvenience of our non-Japanese shareholders with voting rights. Although this translation is intended to be complete
and accurate, the Japanese original shall take precedence in the case of any discrepancies between this translation andthe original. Certain information regarding voting procedures that is not applicable for shareholders resident outside
Japan has been omitted or modified as applicable. In addition, these materials will not facilitate your status as aregistered shareholder authorized to attend the Ordinary General Meeting of Shareholders. Every shareholder attending
the Ordinary General Meeting of Shareholders is required to present the Voting Card, which is sent to the registeredshareholder together with the original Notice of Convocation in Japanese, to the receptionist at the meeting.

Contents
Notice of Convocation of the 152nd Ordinary General Meeting of Shareholders
Reference Documents for the General Meeting of Shareholders
Proposal and Reference
Proposal : Election of Nine (9) Directors
Attached Reports
Reports on Operations for the 152nd Fiscal Year
1. Current Status of the Teijin Group(1) Progress and Results of Operations(2) Changes in Assets and Profit and Loss
(3) Capital Investments(4) Financing(5) Management Policies and Tasks Ahead(6) Primary Businesses(7) Primary Business Places(8) Employees(9) Significant Subsidiaries(10) Primary Lenders and Amount of Borrowings
2. Matters Regarding the Shares of the Company
3. Stock Acquisition Rights
4. Directors and Statutory Auditors
5. Accounting Auditor
6. Corporate Governance System
7. Systems to Ensure Appropriate Business Operations and the Status of its Implementation
8. Basic Policy Regarding the Control of the Company
9. Policy Regarding the Determination of Dividends from Retained Earnings
10. Financial Statement(1) Consolidated Balance Sheets(2) Consolidated Statements of Income(3) Consolidated Statements of Changes in Net Assets
Consolidated Statements of Comprehensive Income (Reference)
Consolidated Statements of Cash Flows (Reference)1

(Securities code: 3401)
May 29, 2018
Dear Shareholders
Jun Suzuki
President and Representative Director
Teijin Limited
2-4, Nakanoshima 3-chome,
Kita-ku, Osaka 530-8605,
Japan
Notice of Convocation ofnd

the 152 Ordinary General Meeting of Shareholders

You are cordially invited to attend the 152nd Ordinary General Meeting of Shareholders of Teijin Limited (“theCompany”) to be held as set forth below.

If you do not expect to attend the meeting, you may vote on the proposal for voting using the following method.
Please refer to the following “Reference Documents for the General Meeting of Shareholders,” and exercise
your voting rights by 5 p.m., Tuesday, June 19, 2018. (Japan Time)[In case of voting by Mail]
Please indicate your approval or disapproval of the proposal on the enclosed Document for the
Exercise of Voting Rights, and mail the document so that it arrives by the above deadline.

[In case of voting by Internet etc.]
Please access to the web-site to exercising voting rights (https://evote.tr.mufg.jp/) through personal Computer or
Smartphone with the log-in ID and temporary password indicated in the enclosed Document for the Exercise of
Voting Rights, and input your approval or disapproval of the proposals according to the instructions on the window.
And you may access to the web-site to exercise voting rights from the Company’s web-site.

2

Details
1. Date and Time of the Meeting:
Wednesday, June 20, 2018, at 10 a.m.(Japan Time)(The door opens at 9 a.m.)
2. Place:
The Westin Osaka, 2nd Floor, Rose Room, 1-20, Oyodonaka 1-chome, Kita-ku, Osaka , Japan

3. Purposes
Reports:
The Reports on Operation, Consolidated Financial Statements, Non-Consolidated Financial Statements and theReport by the Accounting Auditor and the Board of Statutory Auditors of the results of audit on the Consolidated
Financial Statements, for the 152nd Fiscal Year (April 1, 2017 to March 31, 2018)
Proposal : Election of Nine (9) Directors

4. Decision on Convocation(1) If you do not indicate either approval or disapproval on the Document for the Exercise of Voting
Rights, we shall treat such “no answer” as your “approval” on the proposal.
(2) In the event of an overlap in the exercise of voting rights via the Document for the Exercise of Voting
Rights and the Internet voting system, the exercise of voting rights via the Internet voting system shall prevail.
(3) If you vote more than once using the same method, your last vote shall prevail.
5. Attachments to Notice of Convocation and Reference Documents for the General Meeting of Shareholders
If any revision should be required to the Business Report, Consolidated Financial Statements, Non-Consolidated
Financial Statements, or Reference Documents for the General Meeting of Shareholders, such revision will be postedon the Company’s website. (https://www.teijin.com/)• If you attend the General Meeting of Shareholders, please submit the attached Document for the Exercise of
Voting Rights to the reception of the meeting.
・If you attend the General Meeting of Shareholders by proxy, you may exercise your voting rights byauthorizing one(1) other shareholder with voting rights to act as its proxy as stipulated in the Company’s
Article of Incorporation.

3

Reference Documents for the General Meeting of Shareholders
Proposal and Reference
Proposal : Election of Nine (9) Directors
The terms of office of ten (10) Directors,— Shigeo Ohyagi, Jun Suzuki, Kazuhiro Yamamoto, Hiroshi Uno,
Yasumichi Takesue, Yoshihisa Sonobe, Yutaka Iimura, Nobuo Seki, Kenichiro Senoh and Fumio Ohtsubo —will
expire at the conclusion of this General Meeting of Shareholders.
Shareholders are therefore requested to elect the following nine (9) Directors (of whom seven (7) are up for
reelection).
The candidates for Director are as follows.
No.

Candidate’s Name
(Date of Birth)【Reappointment】

Jun Suzuki

Number ofCompany’s
Shares Owned

Personal History, Positions andSignificant Concurrent Positions
Apr. 1983

Joined Teijin Limited

Apr. 2011

President, Teijin Holdings Netherlands B.V.

Apr. 2012

Corporate Officer, Teijin Limited

Apr. 2013

Executive Officer, Teijin Limited

Jun. 2013

Director, Executive Officer, Teijin Limited

Apr. 2014

President & Representative Director (Incumbent)(February 19,1958)

1

34,900<Participation in Board of

Sharesdirectors meetings>
CEO (Chief Executive officer) (Incumbent)
12 times out of 12 (100%)<Significant Concurrent Positions>
Officer, Japan Association of Corporate Executives (Keizai Doyukai)<Reason of the nomination of the candidate for director>
After assuming the post of President & Representative Director (CEO) in April 2014, Jun Suzuki formulated a revised medium-term plan in November ofthe same year, and promoted the completion of structural reforms on which his predecessor worked. He formulated a new medium-term plan in February
2017 and he is promoting growth strategies for the future.
Apr. 1975

Joined Teijin Limited

Jun. 2011

Corporate Officer, Teijin Limited
President & Representative Director, CEO,

【Reappointment】

Kazuhiro Yamamoto

Corporation
Apr. 2014(September 27, 1952)

2

Infocom

Executive Officer, Teijin Limited
CFO (Chief Finance Officer) (Incumbent)<Participation in Board ofJun. 2015

Director, Executive Officer, Teijin Limited

directors meetings>

Apr. 2016

Director, Senior Executive Officer, Teijin Limited

12 times out of 12 (100%)

Apr. 2017

Representative Director, Executive Vice President , Teijin

8,800
SharesLimited (Incumbent)
CIIO(Chief Information & Innovation Officer)(Incumbent)<Reason of the nomination of the candidate for director>
In 2011, Kazuhiro Yamamoto assumed the post of Corporate Officer, Teijin Limited and served as President & Representative Director, CEO of Infocom
Corporation which is a listed subsidiary. He assumed the posts of Executive Officer, Teijin limited in April 2014, Director, Executive Officer in June 2015,
Director, Senior Executive Officer in April 2016, and Executive Vice President in April 2017. While serving as CFO and CIIO, he is putting effort into costmanagement, IR activities, information strategy, etc.

4

No.

Candidate’s Name
(Date of Birth)【Reappointment】

Personal History, Positions andSignificant Concurrent Positions
Apr. 1981

Joined Teijin Limited

Jun. 2009

Corporate Officer, Teijin Limited

Jun. 2011

Executive Officer, Teijin Limited

Apr. 2013

Senior Executive Officer, Teijin Limited

Hiroshi Uno

General Manager, Healthcare Business Group(September 18,1955)

3

Number ofCompany’s
Shares Owned

13,300President & Representative Director, Teijin Pharma<Participation in Board of

SharesLimiteddirectors meetings>
Jun. 2015

Director, Senior Executive Officer, Teijin Limited

12 times out of 12 (100%)(Incumbent)
Apr. 2017

Responsible for Healthcare Business of Teijin Group(Incumbent)<Reason of the nomination of the candidate for director>
Hiroshi Uno assumed the posts of Senior Executive Officer; Teijin Limited, General Manager, Healthcare Business Group; and President & Representative
Director, Teijin Pharma Limited in April 2013, Director, Senior Executive Officer, Teijin Limited in June 2015, and Responsible for Healthcare Business of
Teijin Group in April 2017, and has been working to expand revenue of the healthcare business which forms a part of the core strategies of the Company
and working on the integration of “healthcare”; “IT” and “composites and advanced fibers” which are the themes of the Company’s growth strategy.
Apr. 1980

Joined Teijin Limited

Jun. 2010

Corporate Officer, Teijin Limited
CHO (Chief Human Resources Officer)【Reappointment】
Apr. 2015

Yasumichi Takesue

General Manager, Electric Materials & Performance
Polymer Products Business Group(July 1,1956)

4

Apr. 2016

Executive Officer, Teijin Limited

Apr. 2017

Senior Executive Officer, Teijin Limited<Participation in Board of

9,000
Sharesdirectors meetings>
Responsible for Material Business of Teijin Group
12 times out of 12 (100%)(Incumbent)
Jun. 2017

Director, Senior Executive Officer, Teijin Limited(Incumbent)<Reason of the nomination of the candidate for director>
Yasumichi Takesue assumed the posts of Corporate Officer, Teijin Limited in June 2010 and under the title of CHO, he promoted the task of global humanresources and general affairs. He also assumed the posts of Executive Officer, Teijin Limited in April 2014 and General Manager, Electric Materials &Performance Polymer Products Business Group, in April 2015; Senior Executive Officer, Teijin Limited; and he became responsible for the Material
Business of Teijin Group in April 2017, Director, Senior Executive Officer, Teijin Limited in June 2017. He has been working to expand revenue of theMaterial Business which forms a part of the core strategies of Company.

5

No.

5

Candidate’s Name
(Date of Birth)

Personal History, Positions andSignificant Concurrent Positions

Number ofCompany’s
Shares Owned

Apr. 1980

Joined Teijin Limited【Reappointment】

Jun, 2009

Corporate Officer, Teijin Limited

Yoshihisa Sonobe

Apr. 2014

Corporate Strategy Officer, Teijin Limited(October 17,1956)

Jun. 2014

Director, Corporate Officer, Teijin Limited

6,800<Participation in Board ofApr. 2016

Director, Executive Officer Teijin Limited (Incumbent)

Sharesdirectors meetings>

Apr. 2017

Responsible for Corporate Strategy (Incumbent)

12 times out of 12 (100%)

Responsible for Global Strategy (Incumbent)
Responsible for Legal and Intellectual Property<Reason of the nomination of the candidate for director>
Yoshihisa Sonobe assumed the posts of Corporate Strategy Officer in April 2014, Director, Corporate Officer in June of the same year, Director, Executive
Officer in April, 2016, and he became responsible for Corporate Strategy and Global Strategy in April 2017. He has been working on the planning ofstrategies toward the achievement of structural reforms and growth strategy which are the most important issues for the Company.
【Reappointment】

Apr. 1970

Joined Chiyoda Corporation

Candidate for Outside

Apr. 1992

Vice-President, Chiyoda International Corporation

Director

Jun. 1997

Director, Chiyoda Corporation

Jun. 1998

Managing Director, Chiyoda Corporation

Aug. 2000

Senior Managing Director & Representative Director,

Nobuo Seki

Chiyoda Corporation(September 21,1944)

Apr. 2001

President & CEO, Chiyoda Corporation<Participation in Board ofApr. 2007

Chairman of the Board, Chiyoda Corporation

directors meetings>

Apr. 2009

General Corporate Advisor , Chiyoda Corporation

12 times out of 12 (100%)

Jun. 2012

Director, Teijin Limited (Incumbent)

5,500

6

SharesMember of the Advisory Board, Teijin Limited(Incumbent)
Jul. 2012

Adviser Chiyoda Corporation<Significant Concurrent Positions>
Outside Director, KAMEDA SEIKA Co., Ltd
Outside Director, Weathernews Inc.
Outside Director, Yokogawa Electric Corporation<Reason of the nomination of the candidate for director>
Nobuo Seki has served as President and Chairman of the Board of Chiyoda Corporation, and he is expected to provide advice on the Company’s business
operations based on his abundant business experience and high level insight.

6

No.

Candidate’s Name
(Date of Birth)【Reappointment】

Personal History, Positions andSignificant Concurrent Positions
Apr. 1971

Candidate for Outside
Director

Jun. 1998

Director, Matsushita Electric Works, Ltd.,

Jun. 2000

Managing Director, Matsushita Electric Works, Ltd.,

Jun. 2003

Representative Senior Managing Director, Matsushita
Electric Works, Ltd.,

Jun. 2006<Participation in Board of
directors meetings>

7

Joined Matsushita Electric Works, Ltd., (currently
Panasonic Corporation)

Fumio Ohtsubo(September 5, 1945)

Number ofCompany’s
Shares Owned

President, Representative Director, Matsushita ElectricWorks, Ltd.,

Jun. 2012

12 times out of 12 (100%)

Chairman of the Board, Representative Director,
Panasonic Corporation

3,000

Jul. 2013

Special Advisor, Panasonic Corporation (Incumbent)

SharesJun. 2016

Director, Teijin Limited (Incumbent)
Member of the Advisory Board, Teijin Limited(Incumbent)<Significant Concurrent Positions >Special Advisor, Panasonic Corporation
Outside Statutory Auditor The Kansai Electric Power Co., Inc.
Trustee, Nippon Life Ins.*
Director, Kansai University
Trustee, Japan-Indonesia Association, Inc.
<Reason of the nomination of the candidate for outside director>
Fumio Ohtsubo has served as President and Chairman of the Board of Panasonic Corporation, and he is expected to provide advice on the
Company’s business operations based on his abundant business experience and high level of insight.
The amount of transactions between Panasonic Corporation and the Company accounts for less than 1% of the consolidated net sales of either
company.
* Nippon Life has a Board of Trustees that serves as a management advisory body to ensure the appropriateness of management. Trustees areelected at the Meeting of Representatives from among policyholders and academic experts. Trustees give opinions on advisory matters andimportant management issues and deliberate on policyholder opinions regarding corporate management. The results of these opinions anddeliberations are reported at the Meeting of Representatives.”
Fumio Ohtsubo provides advice etc. to Nippon Life from the viewpoint of an outside expert, however, he is not directly engaged in management or
execution of business. Although the said company is one of the Company’s major shareholders, the Company recognizes that he satisfies therequirements of Independent Director stipulated by the Company..

7

No.

Candidate’s Name
(Date of Birth)

Personal History, Positions andSignificant Concurrent Positions【New Candidate】

Jul. 1971

Joined IBM Japan, Ltd

Candidate for Outside

Apr. 1995

Director, IBM Japan, Ltd

Director

Apr. 2000

Director, Executive Officer, IBM Japan, Ltd

Apr. 2004

Director, Senior Executive Officer. IBM Japan, Ltd

Apr. 2007

Board Chair, Japan Women’s Innovate Network

Number ofCompany’s
Shares Owned(Incumbent)
Jun. 2007

Director, Benesse Corporation

Apr. 2008

Director, Vice Chairman, Benesse Corporation
Representative Director, Chairman of the Board,

Yukako Uchinaga(July 5, 1945)

President & CEO, Berlitz Corporation
Oct. 2009

Director, Executive Vice President, Benesse Holdings,
Inc.

8

0

Apr. 2013

Honorary Chairperson, Berlitz Corporation

Sep. 2013

President & CEO, Globalization Research Institute Co.,

SharesLtd. (Incumbent)
Apr. 2014

Board Chair, Japan Diversity Network Association(Incumbent)<Significant Concurrent Positions >Board Chair, Japan Women’s Innovate Network
President & CEO, Globalization Research Institute Co., Ltd.
Board Chair, Japan Diversity Network Association
Outside Director, Aeon Co,. Ltd.
Outside Director, HOYA Corporation
Outside Director, DIC Corporation<Reason of the nomination of the candidate for outside director>
Yukako Uchinaga has extensive business experience, having served such roles as Director, Senior Executive Officer at IBM Japan, Ltd. andDirector, Executive Vice Chairman at Benesse Holdings, broad knowledge of the information technology field, and deep insight in mattersconcerning diversity, and based on this, she is expected to provide guidance and advice on the Company’s business operations.
The Company pays membership fees to Japan Women’s Innovative Network (“J-Win”), at which the candidate serves as President, however theamount of this transaction accounts for less than 0.1% of the consolidated net sales of the Teijin Group and it is less than 1% of the total
membership fee revenue that J-Win receives.

8

No.

Candidate’s Name
(Date of Birth)

Personal History, Positions andSignificant Concurrent Positions【New Candidate】

Apr. 1975

Joined Ministry of Foreign Affairs, Japan (MFA)

Candidate for Outside

Jun. 1997

Deputy Permanent Representative of Japan to the World

Director

9

Number ofCompany’s
Shares Owned

Trade Organization (WTO) in Geneva
Apr. 2003

Minister’s Secretariat (MFA)

Sep. 2005

Consul-General of Boston

Yoichi Suzuki

Dec. 2008

Director-General for economic Affairs of MFA(September 25, 1950)

Aug. 2010

Ambassador to Singapore

Aug. 2013

Ambassador to France

Jun. 2016

Government Representative and Ambassador in charge of0
Sharesthe Kansai region
Mar. 2017

Ambassador for International Economic Affairs andChief Negotiator for the Japan EU EPA

Apr. 2018

MFA retired<Reason of the nomination of the candidate for outside director>
Although Yoichi Suzuki does not have direct experience in corporate management, he has served at the Ministry of Foreign Affairs, and he isexpected beneficial to the business of the Company in terms of a global viewpoint, based on his ample wisdom and expertise. And so the Company
judges he can fulfill his duties appropriately as Outside Director.

Notes: 1. Nobuo Seki, Fumio Ohtsubo, Yukako Uchinaga and Yoichi Suzuki are candidates for Outside Directors. The
Company requires the candidate for Outside Director to satisfy all the requirements of Independent Director stipulatedby the Company. These four (4) candidates satisfy all such requirements. Since they also satisfy the requirements of
independence stipulated by Tokyo Stock Exchange Group, Inc., the Company has registered candidates for Outside
Director up for reappointment, Nobuo Seki and Fumio Ohtsubo at the Tokyo Stock Exchange as Independent Directors,
and it plans to register the new candidates for Outside Director, Yukako Uchinaga and Yoichi Suzuki at the same stock
exchange as Independent Directors. Refer to the 11-12 pages for the contents of the requirements of “Independent
Director” stipulated by the Company.
2. The Company has entered into liabilities limitation agreements with Nobuo Seki and Fumio Ohtsubo, who are
currently Directors (excluding Executive Directors), which limit the liabilities of each Director to ¥20 million or theminimum amount stipulated in Article 425, Paragraph 1, of the Companies Act, whichever is higher, in accordancewith the provisions of Article 427 of the Companies Act and the Company’s Articles of Incorporation.
If Yukako Uchinaga and Yoichi Suzuki election are approved, the Company will enter into a liabilities limitationagreement with them, which limits their liabilities to ¥20 million or the minimum amount stipulated in Article 425,
Paragraph 1, of the Companies Act, whichever is higher, in accordance with the provisions of Article 427 of theCompanies Act and the Company’s Articles of Incorporation.
3. There are no special interests between the candidates and the Company.
4. Panasonic Corporation (formerly Matsushita Electric Industrial Co., Ltd.), at which Candidate Fumio Ohtsubo served
as Director from June 1998 to June 2013, together with said company’s subsidiary Panasonic Avionics Corporation,
was subject to an investigation by the U.S. DOJ and the U.S. SEC based on the U.S. Foreign Corrupt Practices Act(FCPA) and other securities-related laws of the U.S. and in May this year agreed to pay approx. ¥30.0 billion in
relation to said investigation.

95. The chart below indicates the dates of the first appointment of the Outside Director for each candidate and the tenuresin position as Outside Director before the closing of this General Meeting of Shareholders.

Name

Date of First Appointment

Tenure in Position

Nobuo Seki

June 22,2012

6 years

Fumio Ohtsubo

June 22,2016

2years10

＜Reference＞
Teijin Limited Independent Director and Independent Statutory Auditor Requirements
On April 1, 2003, Teijin Limited (the Company) prescribed "Requirements for Independent Directors" for outside directors,
including candidates. These conditions for appointment are designed to increase the level of precision and ensure the transparencyof the management supervisory function of the Board of Directors. At the same time, the Company also prescribed "Requirements
for Independent Statutory Auditors," which covers outside statutory auditors and candidates. These requirements are intended toenhance the precision and transparency of the auditing of duties of internal directors and the management team. With regard to
independent director and independent statutory auditor requirements, the Company has formulated and operates regulations
concerning independent directors and independent statutory auditors of its own accord. The primary content of these requirements
is described below.
Note: Hereinafter, the "Teijin Group" is used to refer collectively to 1) "Teijin Limited," 2) "subsidiaries of Teijin Limited" and 3)"equal joint venture partners."
Independent Director and Independent Statutory Auditor Requirements(1) Persons having no significant special interests in the Teijin Group.
(2) Persons to whom items (a) through (e) below do not apply are deemed to be Independent Directors or Independent Statutory
Auditors having no significant special interest in the Teijin Group.
(a) Internal officers or employees and former internal officers or employees of the Teijin Group(b) Providers of specialized services to the Teijin Group(c) Persons having customer or business partner relations with the Teijin Group(d) Persons having "inter-directorship" relations with the Teijin Group(e) Persons having other special interests in the Teijin Group
Detailed Internal Standards Concerning Persons Falling under Items (a) through (e) above
Applicability of the category(a) Internal officers or employees and former internal officers or employees of the Teijin Group(1) In the event that the person does not satisfy the requirements under Company Law (Please refer to Company Law, Article 2,
No. 15 and 16) for outside director or outside statutory auditor of Teijin Limited(2) In the event that the person is a director of an "equal joint venture company," (including persons defined as "management
executives" in Note 1 below) or has held such a position within the past five years(3) In the event that a member of the person´s "family" (Note 2) is currently a director of the Teijin Group (including persons
defined as "management executives")(b) Providers of specialized services to the Teijin Group(1) In the event that the person or the person´s "family" provides accounting audit services to the Teijin Group or has done so
within the past five years, or in the event that the person or the person´s "family" is currently a member of an outside auditing firmthat provides accounting audit services to the Teijin Group or has been a member of such a firm within the past five years(2) In the event that the person or the person´s "family" provides, or has provided within the past three years, services other thanaccounting services that involved compensation of more than 7 million yen (or US$60,000) and fall into the following categories:(i) Lawyers, (ii) certified public tax accountants, (iii) chartered patent agents, (iv) judicial scriveners, (v) management, financial,technical or marketing consultants(c) Persons having customer or business partner relations with the Teijin Group11

In the event that the person currently holds the position of Director or any of "Executives and top managers" (Note 4) in acompany or other for-profit organization in Japan or overseas that is presently a "major customer or business partner" (Note 3) of
the Teijin Group(d) Persons having "inter-directorship" relations with the Teijin Group(1) In the event that the relationship exists wherein the outside director currently holds the position of director in a company inJapan or overseas or holds a position in a for-profit organization that is equivalent to the director position, and a director of the
Teijin Group currently holds a director or equivalent executive position in that same organization(2) In the event that the relationship exists wherein the outside statutory auditor holds a director position in a company in Japan oroverseas or an equivalent executive position in a for-profit organization, and a director or statutory auditor of the Teijin Groupcurrently holds a director, statutory auditor or equivalent executive position in that same organization(e) Persons having other special interests in the Teijin Group(1) In the event that the person currently receives contributions, financing or debt guarantees from the Teijin Group(2) In the event that the person´s "family" currently receives contributions, financing or debt guarantees from the Teijin Groupamounting to 1 million yen or more
(3) In the event that the person or the person´s "family" currently holds the position of Director or any of "Executives and top
managers" (Note 4) in a company or for-profit organization in Japan or overseas that currently receives contributions, financing or
debt guarantees from the Teijin Group amounting to 1 million yen or more
The terminology used above is defined below.
Note 1: "Management executives" are employees who hold positions of importance, including operating officers, senior officers
or positions higher than general manager.
Note 2: "Family" includes spouses, children, people sharing the same household and other persons related by blood or marriage
within two degrees of consanguinity
Note 3: "Major customer or business partner" describes a person or an entity whose total annual transaction relationship, either asa seller or a purchaser, has exceeded 2% of consolidated net sales at any time within the past three years. (If the Teijin Group is
the seller, this amount refers to the percentage of consolidated net sales of Teijin Limited. If the Teijin Group is the buyer, thisamount refers to the percentage of consolidated net sales of the other party.)
Note 4: "Executives and top managers" are employees, counselors or advisors who hold positions of importance, including
statutory auditor, operating officer or positions higher than general manager.

This "Teijin Limited Independent Director and Independent Statutory Auditor Requirements" document is intended as a reference
to help deepen the reader´s understanding of the Teijin Group. This document is an overview of the Independent Director
Regulations and Independent Statutory Auditor Regulations as prescribed by the Company and is not a rigorously defined recordof these regulations, Company Law or any other legislation.

12

Attached Reports＜Reference>
In April 2017, Teijin Limited (“the Company”) reclassified its previous four reportable operating segments, Advanced
Fibers and Composites, Electronics Materials and Performance Polymer Products, Healthcare, and Trading and Retail,
into two reportable operating segments: the Materials Business and the Healthcare Business. This change was made inline with the Company’s reorganization to accelerate growth and transformation strategies based on the medium-term
management plan announced in February 2017. The figures for FY2016 have been recalculated in accordance with the
new segment classification for comparison purposes.

Reports on Operations for the 152nd Fiscal Year (April 1, 2017 to March 31, 2018)
1. Current State of the Teijin Group(1)Progress and Results of Operations
1) Progress and Results of Operating Activities①Sales and Income
Global economic conditions in FY2017, ended March 31, 2018, remained on a recovery path as a whole, despiteheightened geopolitical risks concerning North Korea. In the U.S., stock prices reached all-time highs, driven partly bystrong corporate earnings. Europe too saw an increase in exports as overseas business conditions turned upward. The
Japanese economy continued to stage a modest recovery, mainly due to an upturn in capital investment atop improved
corporate earnings, supported by firm overseas demand and rising internal demand.

In this environment, for FY 2017, consolidated net sales totaled ¥835.0 billion, an increase of 12.6% year on year. This
increase was primarily due to the impact of U.S.-based Continental Structural Plastics Holdings Corporation joining thecomposites business following its acquisition in January 2017. Operating income rose 23.6% to ¥69.8 billion andordinary income increased 21.3% to ¥67.8 billion. This was due partly to higher sales in each business, along with theimpact of recording consideration for the licensing out of an investigational antibody candidate targeting a possible newtreatment of Alzheimer’s disease. Profit attributable to owners of parent declined 9.1% to ¥45.6 billion, due partly to
one-time factors such as a decrease in tax expense in FY2016. Earnings per share declined ¥23.65 to ¥231.26.

②Analysis of Assets, Liabilities and Net Assets
Total assets as of March 31, 2018 amounted to ¥986.2 billion, up ¥22.1 billion from the end of FY2016. The main
reasons for the increase in total assets were an increase in working capital in connection with the growth and expansion ofeach business and rising raw material and fuel prices, among other factors, and an increase in unrealized gains on
investment securities in line with the higher market value of shares held.

Total liabilities amounted to ¥577.9 billion, down ¥34.3 billion from the end of FY2016. The main reasons for thisdecrease were the repayment of long-term loans payable and the reversal of provision for business structure improvement
recorded in preparation for the withdrawal from the U.S. home healthcare business.

13

Total net assets amounted to ¥408.2 billion, up ¥56.4 billion from the end of FY2016. This was mainly due to profit
attributable to owners of parent of ¥45.6 billion, along with an increase in foreign currency translation adjustment inconnection with the weaker yen and an increase in valuation difference on available-for-sale securities in line with thehigher market value of shares held.

Segment operating results (sales and operating income) of the Teijin Group are as follows.
(Billions of yen / %)Fiscal 2016
Material

Fiscal 2017

ChangePercentage¥228.1¥254.1+¥26.0+11.4%

287.3

293.2

+6.0

+2.1

Composites Others

24.5

77.5

+53.0

+216.4

Material Sub Total

539.8

624.8

+85.0

+15.7

Health Care

150.7

155.4

+4.7

+3.1

Others

50.8

54.8

+4.0

+7.9

Total

¥741.3¥835.0+¥93.7+12.6

Material

¥31.2

¥33.6

+¥2.4

+7.7

Health Care

24.8

35.9

+11.2

+45.1

Others

5.3

6.1

+0.8

+15.9

Elimination and corporate

(4.8)

(5.9)

-1.1

-

Total

¥ 56.5¥69.8+¥13.3+23.6

Polyester Fiber & Trading
Materialand Retail

Net sales
Operating income

14

Business Segment Results for fiscal 2017 were as follows:
I. Materials Business Field
In the Materials Business Field, sales were ¥624.8 billion, up ¥85.0 billion year on year and operating income was ¥33.6
billion, up ¥2.4 billion.
Material Business Group
Sales of aramid fibers expanded mainly for automotive applications, and sales were robust for high-performancepolycarbonate resin products.
In Aramid Fibers, sales of Twaron para-aramid fibers expanded firmly as a whole, centered on automotive applications,such as friction materials and rubber reinforcements, and optical fiber applications. Sales were firm for Technora
para-aramid fibers both for automotive applications in Japan and also for infrastructure-related applications overseas.
Sales of Teijinconex meta-aramid fibers were robust for use in automotive applications such as turbocharger hoses, aswell as protective clothing and industrial applications.

In Carbon fibers, Sales of TENAX carbon fibers continued to grow steadily for use in aircraft. Among other applications,
we drove growth in sales volume of compound applications, as well as sports and leisure applications in Asia. However,rising raw material and fuel prices pushed down earnings.

In Resin and Plastics Processing, market prices for our mainstay polycarbonate resin increased due to tightening supply
and demand. In this environment, high capacity utilization was maintained at our production sites for polycarbonate resinand compounds in Japan and abroad. In addition, we significantly expanded sales of high-performance products for the
automotive, semiconductor manufacturing-related, and optical lens fields, which have been key areas of focus in recent
years.

In Films, although overall sales declined due to the impact of the integration of domestic production facilities, we
expanded sales of Purex, which is used as a release film for manufacturing processes mainly for multilayer ceramic
capacitors for smartphones and automotive electronics.
Polyester Fibers & Trading and Retail Business Group
Functional materials for sports and outdoor use for Europe and the Americas held firm, while civil engineering materials
declined.

In Fiber Materials and Apparel, sales of functional fabrics remained favorable for sports and outdoor use for Europe andthe Americas. Firm sales were posted for uniforms. In functional textiles and apparel, performance was sluggish, due toinventory adjustments by major customers amid continued weakness in domestic market conditions.

In Industrial Textiles and Materials, we posted firm sales of automotive-related reinforcement materials, including
conveyor belts and automotive hoses, and synthetic leather car seat fabric. In fiber materials, there was a downturn insales of civil engineering materials as earthquake reconstruction demand and orders received for new infrastructure
construction settled down.
15Composites, Others
Firm sales of mass-produced automotive components in North America.

In Composites, we recorded firm sales of mass-produced automotive components led by Continental Structural Plastics
Holdings Corporation for pickup trucks and SUVs, that performed well in North America, and for large trucks, for which
the market showed signs of recovery. Continental Structural Plastics Holdings Corporation was acquired in January 2016
and was consolidated in the fourth quarter of FY2016.

In Battery Materials, in LIELSORT lithium-ion battery (LIB) separators for consumer applications, sales to existingcustomers were sluggish, and delays were experienced in expanding sales to new customers.

II. Healthcare Business Field
In the Healthcare Business Field, sales were ¥155.4 billion, up ¥4.7 billion year on year and operating income was ¥35.9
billion, up ¥11.2 billion.

Favorable sales of FEBURIC in Pharmaceuticals, and solid rental volume for home oxygen therapy in Home Healthcare.

In Pharmaceuticals, sales of hyperuricemia and gout treatment FEBURIC (febuxostat), the transdermal anti-inflammatory
analgesic patch formulation LOQOA Tape and Somatuline®*, a treatment for acromegaly, continued to expand steadily. In
July 2017, Somatuline® received additional approval in Japan for the indication of gastro-entero-pancreatic
neuroendocrine tumors (GEP NET). Sales of febuxostat also continued to expand encouragingly overseas. Furthermore, in
May 2017, we entered into a worldwide license agreement with Merck & Co., Inc., U.S.A. for the development,
manufacture and commercialization of an investigational antibody candidate targeting tau, for a possible new treatment of
Alzheimer’s disease. Accordingly, we received a lump-sum payment as consideration for licensing out the investigational
antibody.
In Home Healthcare, we maintained a high level of rental volume for therapeutic oxygen concentrators for home oxygentherapy (HOT). This was done by enhancing the lineup and expanding the use of portable oxygen concentrators(Hi-Sanso Portable ɑ (alpha), Hi-Sanso Portable ɑ II), which are designed to expand the range of patients’ daily activities.
Rental volume for continuous positive airway pressure (CPAP) ventilators for the treatment of sleep apnea syndrome(SAS) continued to increase favorably, due to increasing the appeal of NemLink, a monitoring system for CPAP
ventilators that uses mobile phone networks, and to the use of the SAS-2100 Sleeping pattern analysis devices.

In the area of New Healthcare Initiatives, particularly in the field of implantable medical products, we are conducting an
artificial joints business. In FY2017, we augmented this field with bone-bonding materials and the orthopedic business,principally spine fixation devices and spine cages.

*

Somatuline® is the registered trademark of Ipsen Pharma, France.
16III. Others
In the Others, which does not qualify as a reportable operating segment, sales were ¥54.8 billion, up ¥4.0 billion year on
year and operating income was ¥6.1 billion, up ¥0.8 billion.
In the IT business, specifically in Digital Entertainment, we recorded a solid performance, highlighted by steady
expansion in sales of the Meccha Comics e-comics distribution service. Notably, we implemented initiatives such as an
exclusive pre-release e-comics distribution campaign through a collaboration project with a major publisher. This projectcontributed to sales growth mainly through the acquisition of new readers. In Business Solutions, specifically in thehealthcare-related business, a recovery in business performance in the hospital field contributed to sales growth.

2) Progress and Results of Non-Operating Activities
The progress and results of non-operating activities conducted by the Teijin Group (“the Group”) during the
fiscal year under review were as follows.
The Teijin Group aims for the sustainable development of both business and society. Of the issues related tosustainability including social and environmental problems, in 2015, we identified and took proactive initiatives onimportant CSR issues related to business activities, which are three governance issues, three environmental issues, andseven social issues. In 2016, the important issue of “CSR Procurement” was added to social issues. In one designatedissue, “Reducing Environmental Impact,” in addition to working to reduce its greenhouse gas emissions in
manufacturing both within Japan and abroad, the Group made further efforts to reduce waste, both by reducing thetotal amount of waste produced and by promoting various recycling programs, achieving a large overall reduction in
the amount of non-recyclable waste emissions. Furthermore, we have identified solutions of environmental value as animportant CSR issue, and we are supplying products and services that lower the environmental burden in order tocontribute toward reducing CO2 emissions and saving energy.
In its utilization of human resources, the Teijin Group aims to be an organization in which its diverse humanresources, comprising individuals with various values and experience, can realize their potential in greater ways inorder to enliven the organization and bring about innovation. The Group carries out efforts to promote diversity ofhuman resources, active roles for women, and diversity of working styles. In its promotion of active roles for women,
the Group established a special committee in 1999, and from 2000, the Group further pursued these activities by
establishing a dedicated organization. When hiring new graduates, the five major group companies in Japan follow a
guideline of aiming for at least 30% female intake. We have mostly achieved this goal with 32% female intake in
FY2017 and 29% female intake in FY2018. In addition, we are actively implementing initiatives aimed at reforming
the working styles of Group employees, and promoting the design of systems that support diverse working styles asappropriate for today’s society. The Teijin Group has introduced a system for scheduling reduced working hours and asystem for working at home for employees with child-raising or caregiving responsibilities, as well as a system for there-hiring of employees who retired for family reasons. We also formulated a system in FY2014 that recognizes athree-year leave period associated with a spouse being relocated overseas.
Furthermore, based on shared Group guidelines, the Teijin Group proactively approaches social contribution
17

activities in line with the characteristics of the different business groups and regions. Among these approaches, we
believe next-generation education is particularly important, and through the Teijin Kumura Scholarship systemprovided by the Teijin Scholarship Foundation, we have supported around 1,600 science and engineering students overmore than 60 years, and in 2010, launched a scholarship system in China.
Furthermore, we are working to support youth sports such as by being a sponsor of the All Japan High School
Soccer Tournament, and creating TEIJIN ACADEMY FUJI, a human resource development center in cooperation withJapan Football Association (JFA).
Additionally, we provide continual relief support for the areas affected by the Tohoku-Pacific Offshore Earthquake,as well as continually operating a range of initiatives to support employee volunteer activities.
These activities have been recognized through the inclusion of the Teijin Group in multiple social development
investment indices including the FTSE4Good, MSCI ESG Index and DJSI Asia Pacific.
Going forward, as a good corporate citizen, to realize both sustainable social and corporate development, we willcontinue to proactively participate in and support initiatives for the environment and social problems, as well as
various social contribution activities.

(2) Changes in Assets and Profit and Loss
Fiscal Period

149th Fiscal Period 150th Fiscal Period 151st Fiscal Period 152nd Fiscal Period
FY2014FY2015FY2016Items

FY2017(Current period)

Net sales

786,171790,748

741,291

834,985

39,086

67,13056,512

69,822

42,37860,31655,93367,820△8,08631,09050,13345,556△41.15158.15254.91231.26

823,694

823,429

964,053

986,184

303,635

314,412351,829408,237(Millions of yen)
Operating income(Millions of yen)
Ordinary income(Millions of yen)
Profit attributable to owners ofparent(Millions of yen)

Net earnings per share(Yen)
Total assets(Millions of yen)
Net assets(Millions of yen)

(3) Capital Investments
Capital investments by the Group in fiscal 2017 totaled ¥44.6 billion, mainly for growth and transformation strategies.
18

(4) Financing
The Company procured finance mainly through long-term debts in order to secure finance in a stable manner. Also, as aresult of efforts to reduce interest-bearing debt, interest-bearing debt such as loans and bonds amounted to ¥344.2 billion,a decrease of ¥32.0 billion from the end of the previous year.

(5) Management Policies and Tasks Ahead
1) Basic Management Policies of the Teijin GroupAs declared in the Teijin Group’s corporate philosophy, we are committed to enhancing the quality of life of people
everywhere through our deep insight into human nature and the application of our creative abilities. At the same time, ourcorporate philosophy commits us to Grow In Harmony With Society, and to Grow By Empowering Our People.
Accordingly, as our long-term vision, we pledge to create the new value needed by society by utilizing its workforce
diversity, thereby aiming to become an enterprise that is essential to tomorrow’s society.

2) Tasks Ahead and Medium & Long-Term strategies
In February 2017, the Teijin Group formulated and announced its new medium-term management plan for 2017-2019,“ALWAYS EVOLVING,” as a three-year action plan to realize its long-term vision. Guided by the medium-term
management plan, the Teijin Group will improve core earnings through growth strategies, establish new core businesses
through transformation strategies and strengthen its basic management systems to support those strategies.
a) Working to realize the long-term vision
The Teijin Group is aiming to achieve the following vision as an enterprise that is essential to tomorrow's society.
◆ An enterprise that helps to solve social issues
Teijin will strive to capture business opportunities leveraging its strengths from the issues facing society, and tostrengthen the management base.
Core priority fields for business development
Environmental value solutions
Safety, security and disastermitigation solutions
Demographic change andincreased health consciousness
solutions

Supply weight-reducing materials that enhance environmental
performance for transportation
Enhance disaster-readiness measures and social infrastructuredevelopment
Support health maintenance and enhancement in response to theprogression of demographic change and increasing lifestylediseases◆ An enterprise that achieves continuous transformation by anticipating changes in the external
environment
In an increasingly uncertain external environment, Teijin will take the initiative to contribute to evolution,
instead of chasing trends, for sustainable growth.
◆ An enterprise that continues to create new value at all times
Teijin will create products and services that accelerate the evolution of society.

19b) Business Strategies in Medium-Term Management Plan
Teijin will implement both growth and transformation strategies focusing on the materials and healthcare businessfields as the pillars of its operations and develop new businesses that are not yet contributing to profits at present into
its core earnings sources, without merely relying on the continuation of existing businesses.

c) Performance Targets
New key performance indicators (KPIs) will be established with an emphasis on both investment efficiency and earnings power.
ROE will be chosen as a profitability indicator and EBITDA will be chosen as a growth indicator. ROIC, based on operating
income, will be chosen as an indicator of efficiency of generating profits relative to capital invested. Also, in order to visualize andmonitor business portfolio transformation, net sales from transformation strategy projects and degree of diversity promotion will be
set as original KPIs, including non-financial information, with follow-up progress. The targets until FY 2019 are as follows.

ROE

10%+

ROIC based on operating income
EBITDA

8%+
Over ¥ 120 billion

Note: Return on equity (ROE) :Profit attributable to owners of the parent  Average* total shareholders’ equity* ([Beginning balance + Ending balance]  2)

Return on invested capital (ROIC) based on operating income :Operating income  Invested capital** (Total shareholders’ equity + Non-controlling interests + Interest-bearing debt – Cash and deposits)

Earnings before interest, tax, depreciation and amortization (EBITDA) :Operating income + Depreciation & amortization20

(6) Primary Businesses
The Teijin Group conducts various businesses including the manufacture and sale of the products below, operating in the
Materials, Health Care and Others segments.

(As of March 31, 2018)
Business Segments
Materials

Business Fields
Aramid Fibers

Principal Products and Businesses
Para-aramid fibers, Meta-aramid fibers,
High-performance polyethylene

Carbon Fibers

Carbon fibers, Oxidized PAN fibers

Plastics

Polycarbonate resin・sheet molding product
PET・PEN ･PBN resin, PPS resin, Frame-retardant agents

Materials

Films

PET・PEN film, Polycarbonate resin film, Transparent conductive
film

Polyester Fibers &Textiles and Apparel

Fiber materials, Textiles, Apparel products, General merchandise

Trading and RetailIndustrial Textiles

Fiber materials, Textiles, Nonwoven Fabric, Industrial and vehicle

and Materials

materials, Living and interior goods,
Resin・films, Packing and construction materials,

Composites, others

Composite products

The automotive composite products

Battery Materials

Lithium-ion battery separators

Pharmaceuticals

Treatment for Hyperuricemia and gout, Agent for Osteoporosis,
Agent for Infection, Sustained-release expectorant,
Transdermal anti-inflammatory analgesic patch formulation
Treatment for acromegaly and pituitary gigantism

Health Care

Home Health Care

Oxygen Concentrator for Home oxygen Therapy (HOT),
Continuous Positive Airway Pressure Unit (CPAP), UltrasoundBone Fracture Treatment Device

New Health Care

Medical equipment for joint prostheses, bone joining material, etc.,

IT Services

General Corporation information system, Information system for
hospital, Information system for Care Business, Document control
system, Web-ERP(Integration Business Software Package),

OthersEmergency Call / Safety Confirmation system, RPA
Net BusinessElectronic book delivery service, E-commerce of foods

Notes: PET (Polyethylene terephthalate), PEN (Polyethylene naphthalate), PBN (Polybutylene naphthalate),
PPS (Polyphenylene sulfide)21

(7) Primary Business Places(As of March 31, 2018)
Business

Function

Location

The Company

Headquarters

Osaka, Tokyo

Materials

Manufacturing

Ehime, Yamaguchi, Shizuoka, Tochigi, Hiroshimabases

U.S.A., Germany, the Netherlands, China ,Thailand, Indonesia

Operation bases Tokyo, Osaka, Aichi
U.S.A., Germany, the Netherlands, China, Thailand, Taiwan, Malaysia,
Indonesia. Brazil, India
Research bases Shizuoka, Ehime, Gifu, Chiba, Yamaguchi
Germany , the Netherlands ,Thailand, China

Materials

Polyester Fibers &Manufacturing

Ehime, Ishikawa, Fukui, Shiga, Fukuoka, Gifu

Trading and Retailbases

China, Thailand, Vietnam

Operation bases Tokyo, Osaka, Aichi, Niigata, Gifu
U.S.A., Germany, China, Vietnam, Indonesia, Myanmar, Mexico
Research bases Ehime
China, Thailand
Composites, Others Manufacturing
bases

Gifu
U.S.A., Mexico, South Korea

Operation bases Tokyo
U.S.A., Mexico, South Korea
Research bases Ehime
U.S.A., Germany, France
Health Care

Manufacturing

Yamaguchi, Okayama, Hyogo

bases
Operation bases 12 branches throughout Japan
Research bases Tokyo, Yamaguchi
U.S.A.
OthersOperation bases Tokyo, Osaka, Ehime, Yamaguchi

Note: The function of headquarters is indicated in The Company, and the manufacturing, operation and research bases areindicated in each business segments.

22(8) Employees(As of March 31, 2018)

Business segments

151st Fiscal Period

152nd Fiscal Period

FY2016FY2017(As of March 31, 2017) (As of March 31, 2018)(Current period)

Change in thenumber of
employees

Materials

13,341

14,487+1,146

Health Care

4,030

3,337

-693

Others

1,921

1,887

-34

19,292

19,711+419

Total
Notes:
1.

The number of employees stated above represents the numbers of employees in each segment.

2.

The number of employees stated above does not include temporary employees(2,301 employees for the 151st fiscal period and 2,240 employees for the 152nd fiscal period)

23

(9) Significant Subsidiaries(As of March 31, 2018)
Business segments

Subsidiary (Location of

CapitalThe Head Office)Materials

Investment
ratio (%)

Teijin Aramid B.V.

0.02 million ※100.00(the Netherlands)

euro

Teijin Corporation (Thailand)

730 million ※100.00

Limited (Thailand)baht

Toho Tenax Co., Ltd. (Tokyo)

¥500

99.75

millionToho Tenax EuropeGmbH(Germany)

Toho Tenax America, Inc.
(U.S.A.)

Principal business0.026 million ※100.00
euro

Production
andpara-aramid fibers

sales

Production and sales ofmeta -aramid fibers and resin
Production and sales of carbon
fibers and Oxidized PAN fibers
Production and sales of carbon
fibers

US$12.5 ※100.00
millionProcessing and sales of carbon
fibers, Production and sales of
Oxidized PAN fibers

Teijin Films Solutions Limited¥10,010(Tokyo)millionMaterials

Teijin Polycarbonate China

720 million

Ltd.(China)
Teijin Chemicals Plastic
Compounds Shanghai Ltd.
( China)

RMB
143 million¥2,000(Osaka)millionNantong Teijin Co., Ltd.

¥4,000Polyester(China)millionFibers &Teijin (Thailand) Limited

Trading and(Thailand)

RetailTeijin Polyester (Thailand)Composites

Health Care

100.00100.00100.00baht

Teijin Logistics Co., Ltd.

¥80

Production of polycarbonate
resin compound

100.00

Sales of textiles and others

100.00

Production and sales ofpolyester textile goods

baht

Limited (Thailand)

Production of polycarbonate
resin

800 million ※100.00

548 million

Production and sales ofpolyester films

RMB

Teijin Frontier Co., Ltd

Production and sales ofpolyester fibers

66.87

Production and sales ofpolyester fibers

100.00(Osaka)millionContinental Structural Plastics

US$829 ※100.00

Holdings Corporation(U.S.A.)

millionTeijin Pharma Limited¥10,000(Tokyo)million100.00Transportation and custody of
goods
Production and sales ofComposite products

Production and sales of
medicinal drugs and medical
equipment

Teijin Home Health Care Ltd(Tokyo)¥100 ※100.00
million24

ofHome health care services
providerBusiness segments

Subsidiary (Location of

CapitalThe Head Office)
OthersPrincipal businessratio (%)

Infocom Corporation¥1,590(Tokyo)millionTeijin Engineering Ltd.
(Osaka)Investment

¥475

58.08

Development and sales ofcomputer software, etc.

100.00

millionEngineering services, design andsales of plants and equipment

Notes: 1. The Teijin Group has 88 consolidated companies including the aforementioned 18 significant subsidiaries;
68 companies are accounted for via the equity method.
2.

※ indicates the investment ratio including investment by subsidiaries.

3.

For the Teijin Group’s shareholding of Braden Partners L.P. was completely sold on April 27, 2017(U.S Time), it was
excepted Significant Subsidiary.

4.

Teijin Corporation (Thailand) Limited (Thailand) was included in the significant subsidiaries from FY2017 because its
significance in the Group increased.

5.

The Company conducted the absorption-type merger with Toho Tenax Co., Ltd. with an effective date of April 1, 2018.

6.

In connection with the above merger, Toho Tenax Europe GmbH changed its name to Teijin Carbon GmbH and Toho Tenax
America, Inc. changed its name to Teijin Carbon America, Inc.

25

(10) Primary Lenders and Amount of Borrowings(As of March 31, 2018)
Primary Lenders

Balance of borrowings
Millions of yen

The Bank of Tokyo-Mitsubishi UFJ, Ltd.* ***101,288

Development Bank of Japan Inc.

25,000Mizuho Bank, Ltd. *23,865

Mitsubishi UFJ Trust & Banking Corporation*

10,554

Sumitomo Mitsui Banking Corporation *9,050

Notes: * indicates that the balance of borrowings includes loans from overseas affiliate banks.
**In addition to loans indicated in the balance of borrowings above, the Company borrows¥101,449 million under syndicated loans.

*** The Bank of Tokyo-Mitsubishi UFJ, Ltd. changed its trade name to MUFG Bank, Ltd. on April 1, 2018.
Repeated notes are omitted in this Business Report hereinafter.

2. Matters Regarding the Shares of the Company (as of March 31, 2018)(1) Authorized shares

600,000,000 shares(2) Issued shares

197,953,707 shares(3) Number of shareholders

87,516(4) Top 10 shareholders of the Company

Shareholders

Investment in the Company
Number of shares held

Shareholding ratio (%)

1

The Master Trust Bank of Japan, Ltd. (Trust account)

17,937,700

9.06

2

Japan Trustee Service Bank, Ltd.(Trust account )12,107,800

6.12

3

Nippon Life Insurance Company

7,045,501

3.56

4The Employee Stock Ownership Association of Teijin

4,761,720

2.40

5The Bank of Tokyo-Mitsubishi UFJ, Ltd.

4,138,987

2.09

6Japan Trustee Service Bank, Ltd.(Trust account 7)

3,534,500

1.78

7STATE STREET BANK WEST CLIENT – TREATY 505234

3,487,478

1.76

8Japan Trustee Service Bank, Ltd.(Trust account 5)

3,271,200

1.65

9STATE STREET BANK AND TRUST COMPANY 505001

2,515,777

1.27

10 Japan Trustee Service Bank, Ltd.(Trust account 1)

2,423,200

1.22

Note: The shareholding ratio has been calculated after excluding Treasury stocks (133,480 shares) from the Issued
shares.

26

3. Stock Acquisition Rights(1) Status of Stock Acquisition Rights as of the last day of the subject Fiscal YearTime of
Issue(Issue date)

5th(July 10,
2006)

6th
(July 5,2007)

7th
(July 7,2008)

8th
(July 9,2009)

9th
(July 9,
2010)

10th
(Mar 12,
2012)

11th
(Mar 15,
2013)

12th
(Mar 14,
2014)

13th
(Mar 18,
2015)

14th
(Mar 16,
2016)

15th
(Mar 17,
2017)

16th
(Mar 16,2018)

Number ofIssued Stock
Option (unit)

146

207

328

420

349

737

698

618

379

274

287

294

Class andNumber of
Shares(Common
Stock) to beacquired by the
Stock Option

29,20041,40065,60084,00069,800147,400

139,600

123,600

75,80054,80057,40058,800Issue Price ofStock Option(per share)¥3,315¥3,050¥1,535¥1,265¥1,305¥1,225¥980¥1,140¥1,925¥1,800¥1,955¥1,732

¥1

¥1

¥1

¥1

¥1

¥1

¥1

¥1

¥1

¥1

¥1

¥1

July 10,
2006～
July 9,2026

July 5,
2007～
July 4,
2027

July 7,
2008～
July 6,
2028

July 9,2009～
July 8,2029

July 9,2010～
July 8,2030

Mar 12,
2012~
Mar 11,
2032

Mar 15,2013~
Mar 14,2033

Mar 14,2014~
Mar 13,2034

Mar 18,2015~
Mar 17,2035

Mar 16,2016~
Mar 15,2036

Mar 17,2017~
Mar 16,2037

Mar 16,2018~
Mar 15,2038

Exercise
Price of
Stock
Option(per share)
Period during
which the Stock
Option may be
exercised

Of the above, total number of unexercised Stock Option held by Directors and Statutory Auditors of theCompany (breakdown by each issue of the Stock Option)(As of March 31, 2018)
Directors
Statutory Auditors
Number of
Issue
Number of Directors
Number of Units
Number of Units
Statutory Auditors
Holding Rights
Holding Rightsth
The 5 Issue of the Stock Option
4
1
th
The 6 Issue of the Stock Option
6
1
th
The 7 Issue of the Stock Option
16
1
th
5
1
The 8 Issue of the Stock Option
36
4
5
1
The 9th Issue of the Stock Option
34
4
th
12
1
The 10 Issue of the Stock Option
91
5
th
14
1
The 11 Issue of the Stock Option
123
6
th
12
1
The 12 Issue of the Stock Option
116
6
th
9
1
The 13 Issue of the Stock Option
103
6
th
8
1
The 14 Issue of the Stock Option
86
6th
The 15 Issue of the Stock Option
96
6
th
The 16 Issue of the Stock Option
98
6
Note:
1. No Stock Option is granted to any Outside Directors and Statutory Auditors.
2. The Stock Option held by the Statutory Auditor was distributed as a consideration of performance of duties as
Director or Corporate Officer prior to assuming the position of Statutory Auditor.

27

(2) Stock Option distributed during the subject Fiscal Year
Stock Option distributed during the subject Fiscal Year is stated in the 16th Issue of the Stock Option noted in (1)above.
Status of Stock Option distributed to employees of the Company in the 16th Issue of Stock Option.
No. of Unites
No. of Recipients
19624(3) Other important matters concerning Stock Acquisition Rights
Outlines of the Zero Coupon Convertible Bonds due to 2018 (bonds with stock acquisition rights) and the Zero
Coupon Convertible Bonds due to 2021 (bonds with stock acquisition rights), that were issued based on the resolution of
the meeting of the Board of Directors held on November 26, 2014 are stated below.
Title
The total amount ofdebenture
Issue date
Redemption fixed date
Number of stock acquisitionrightsType of shares to be issued
upon exercise of stockacquisition rights
Number of shares to beissued upon exercise of stockacquisition rights

Conversion price*

The contents and the valueof the assets invested on theoccasion of use of the stockacquisition rights

Exercise period of stockacquisition rights

Zero Coupon Convertible Bonds due
to 2018

Zero Coupon Convertible Bonds due
to 2021

20 billion yen

20 billion yen

December 12, 2014
December 12, 2018

December 12, 2014
December 10, 2021

2,000 units

2,000 units

Common shares of the Company

Common shares of the Company

The number is determined by
dividing the aggregate principal
amount of the bonds upon exercise of
the stock acquisition rights by theconversion price¥1,998.6 per share (subject toadjustment in certain
circumstances)
In case of the use of the stockacquisition rights, the Bond holder
will invest the bonds upon exercise of
the stock acquisition rights and theBonds price will equal to the facevalue price.
Between December 26, 2014 andNovember 28, 2018

The number is determined by
dividing the aggregate principal
amount of the bonds upon exercise of
the stock acquisition rights by theconversion price¥1,964.7 per share (subject toadjustment in certain
circumstances)
In case of the use of the stockacquisition rights, the Bond holder
will invest the bonds upon exercise of
the stock acquisition rights and theBonds price will equal to the facevalue price.
Between December 26, 2014 andNovember 26, 2021

Note: Adjustment of Conversion Price pursuant to Condition 5.2.4 of the terms and conditions of the Bonds due to theExtraordinary Dividend (as defined in such Condition 5.2.4) resulting from payment of a dividend of ¥60 per Share. The
payment of such dividend was approved at the board of directors of the Company on 9 May 2018.
(Effective date: As of April 1, 2018)28

4. Directors and Statutory Auditors(1) Directors and Statutory Auditors(As of March 31, 2018)
Post
Chairman of theName

Duty, state of significant positions concurrently held at other companies

Shigeo Ohyagi

Permanent Officer, Keidanren(Japan Business Federation)
Vice Chairman, Japan Association of Corporate Executives (Keizai

Board

Doyukai)

Director

Outside Director, Recruit Holdings Co., Ltd
Outside Statutory Auditor, JFE Holdings, Inc.
President,

Jun Suzuki

Representative

CEO (Chief Executive Officer)
Officer, Japan Association of Corporate Executives (Keizai Doyukai)

Director
Vice President,

Kazuhiro

CFO(Chief Financial Officer)

Representative

Yamamoto

CIIO

Hiroshi Uno

Responsible for Healthcare Business of Teijin Group

Yasumichi Takesue

Responsible for Materials Business of Teijin Group

Yoshihisa Sonobe

Responsible for Corporate Strategy Officer

Director
Senior Executive
Officer, Director
Senior Executive
Officer, Director
Executive Officer,
Director

Responsible for Global Strategy
Responsible for Legal and Intellectual Property

Director

Yutaka Iimura

Councilor, Ministry of Foreign Affairs, Japan
Vice-Chairman, Japan-Indonesia Association, Inc.
Adviser, Taisei Corporation
Special Participation, INPEX Corporation
Special Management Adviser, APP JAPAN Limited
Committee, Management Consultation, Tokyo University
Senior Fellow, National Graduate Institute For Policy Studies

Director

Nobuo Seki

Outside Director, KAMEDA SEIKA Co., Ltd.
Outside Director, Weathernews Inc.
Outside Director, Yokogawa Electric Corporation

Director

Kenichiro Senoh

President & Chairperson, The Industry-Academia Collaboration Initiative(NPO)
Outside Director, Mitsubishi Pencil Co., Ltd
Visiting Professor, Hitotsubashi University Graduate School of Commerceand Management (MBA program)Participation, The Japan Society for Research Policy and Innovation
Management
Director, Intellectual Property Association of Japan
29

Post
Director

Name
Fumio Ohtsubo

Duty, state of significant positions concurrently held at other companies
Panasonic Corporation Special Advisor
Outside Statutory Auditor Kansai Electric Power Co., Inc.
Trustee, Nippon Life Ins.
Director, Kansai University
Trustee, Japan-Indonesia Association, Inc.

Full-time

Atsushi Mugitani

Statutory Auditor
Full-time

Noriaki Endo

Statutory Auditor
Statutory Auditor

Nobuo Tanaka

Chairman, The Sasakawa Peaceful Fund
Outside Director, Chiyoda Corporation
Outside Statutory Auditor, Innotech Corporation

Statutory Auditor

Gen Ikegami

Representative, Gen Ikegami Certified Public Accountant Office, Certified
Public Accountant
Counsel, Certified Public Accountant Assosiation
Outside Director, TAC Co.,Ltd.

*Statutory Auditor

Hitomi Nakayama

Partner lawyer, Kasumigaseki-Sogo Law Offices
Director, Public Interest Incorporated Foundation “ Automotive Dispute
Resolution Center”
Auditor, Japan Electric Meters Inspection Corporation

Notes:
1.

The statutory auditor marked with * was newly elected at the 151st Ordinary General Meeting of Shareholders held on
June 22, 2017.

2.

Four (4) Directors— Yutaka Iimura, Nobuo Seki, Kenichiro Senoh and Fumio Ohtsubo—are outside directors. The
Company requires the candidate for outside director to satisfy the requirements of “Independent Director” stipulated by
the Company. These four (4) Directors satisfied all such requirements and maintained their independence throughout therelevant fiscal year. Because they also satisfy the requirements of independence as stipulated by Tokyo Stock ExchangeGroup, Inc., they were registered by the Company as “Independent Director/Auditor” at the stock exchanges. Refer topages 11-12 for the requirements of “Independent Director” which Company defines.

3.

There are no important interests between the Company and any of the entities at which the abovementioned outside
directors hold positions as director/statutory auditor etc.

4.

Three (3) Statutory Auditors— Nobuo Tanaka, Gen Ikegami and Hitomi Nakayama —are outside statutory auditors.
The Company requires the candidate for outside statutory auditor to satisfy the requirements of “Independent Statutory
Auditor” stipulated by the Company. These three (3) Statutory Auditors satisfied the all said requirements andmaintained their independence throughout the relevant fiscal year. Because they also satisfy the requirements of
independence as stipulated by Tokyo Stock Exchange Group, Inc., they were registered by the Company as“Independent Director/Auditor” at the stock exchanges. Refer to pages 11-12 for the requirements of “Independent
Statutory Auditor” which Company defines.

30

5.

There are no important interests between the Company and any of the companies at which the abovementioned outside

statutory auditors hold positions as director/ statutory auditor etc.
6.

Statutory Auditor Gen Ikegami is a Certified Public Accountant and has ample knowledge of finance and accounting.

7.

The following Director and Statutory Auditor retired as of June 22, 2017.
Director

Yo GotoStatutory Auditor

Noriko Hayashi

8. Changes in posts and duties of Directors during the subject fiscal year are as follows.
Name
Kazuhiro Yamamoto

Hiroshi Uno

New Post

Former Post

Representative Director, Vice

Senior Executive Officer, Director

President

CFO

CFO

General Manager, Accounting,

CIIO

Finance & Procurement Division

Senior Executive Officer, Director

Senior Executive Officer, Director

Responsible for Healthcare Business

General Manager, Healthcareof Teijin Group

Business Group

Date of Change
April 1, 2017

April 1, 2017

Representative Director, President,
Teijin Pharma Limited
Yasumichi Takesue

Senior Executive Officer, Director

Senior Executive Officer,

Responsible for Material Business of

Responsible for Material Business of

Teijin Group

Teijin Group

Director, Teijin Frontier Co., Ltd.

Director, Teijin Frontier Co., Ltd.

Director, Continental Structural

Director, Continental Structural

Plastics Holdings Corporation

Plastics Holdings Corporation

Senior Executive Officer,

Executive Officer

Responsible for Material Business ofGeneral Manager, Electric Materials

Teijin Group& Performance Polymer Products

Director, Teijin Frontier Co., Ltd.

Business Group

June 22, 2017

April 1, 2017

Director, Continental Structural
Plastics Holdings Corporation
Yoshihisa Sonobe

Executive Officer, Director

Executive Officer, Director

Responsible for Corporate Strategy

Corporate Strategy Officer

OfficerSupervisor of IT, Healthcare Project

Responsible for Global Strategy
Responsible for Legal andIntellectual Property

31

April 1, 2017

9. Changes in posts and duties of Directors following the subject fiscal year are as follows.
Name

New Post

Former Post

Date of Change

Shigeo Ohyagi

Director, Advisor

Director, Chairman of the Board

April 1, 2018

Yoshihisa Sonobe

Executive Officer, Director

Executive Officer, Director

April 1, 2018

Responsible for Corporate Strategy

Responsible for Corporate Strategy

Officer

Officer

Responsible for Global Strategy

Responsible for Global Strategy
Responsible for Legal andIntellectual Property(2) Liabilities Limitation Agreements

1) Liabilities Limitation Agreement with Directors (excluding Executive Director)
The Company has executed a Liabilities Limitation Agreement with each of five (5) directors (excluding
Executive Directors), Shigeo Ohyagi, Yutaka Iimura, Nobuo Seki, Kenichiro Senoh and Fumio Ohtsubo
which limits the respective liabilities of each director to the higher amount of ¥20 million or the minimum
liability amount stipulated in Article 425, Paragraph 1, of the Companies Act.
2) Liabilities Limitation Agreement with Statutory Auditors
The Company has executed a Liabilities Limitation Agreement with each of five (5) statutory auditors,
Atsushi Mugitani, Noriaki Endo, Nobuo Tanaka, Gen Ikegami and Hitomi Nakayama which limits therespective liabilities of each statutory auditor to the higher amount of ¥20 million or the minimum liability
amount stipulated in Article 425, Paragraph 1, of the Companies Act.

(3) Remuneration for Directors and Statutory Auditors
1) Remuneration for Directors during the subject fiscal year
(millions of yen)
Inside Directors

Outside Directors

Total

Number ofAmount of

Number ofAmount of

Number ofAmount of

Directors

Remuneration

Directors

Remuneration

Directors

Remuneration

7

498

4

57

11

555

Notes:
1.

Inside directors means directors other than outside directors.

2.

The Company has no director who is also an employee of the Company.

3.

The amounts of above remuneration include ¥151 million, an expected amount of performance-based remuneration to be
paid to the six (6) inside directors appointed at the 151st Ordinary General Meeting of Shareholders held on June 22,2017. Performance-based remuneration was not paid to outside directors. The amounts of above remuneration include¥33 million as compensation-type stock options granted to inside directors for their duties performed during the subject
fiscal year. Stock options were not granted to outside directors.

4.

The Company abolished the retirement benefits payment system for retiring inside directors at the conclusion of the145th Ordinary General Meeting of Shareholders held on June 22, 2011. For the directors who remained in office after
the conclusion of the said Ordinary General Meeting of Shareholders, it was decided that payments of retirement
benefits corresponding to their respective periods in office up to the abolishment of the retirement benefits payment

32

system are to be made when each director retires. In accordance with this, apart from the above-mentioned amounts ofremuneration, retirement benefits of ¥12 million were paid to one (1) inside director who retired during the subject fiscal
year. Retirement benefits are not paid to outside directors.

2) The calculation standard for Directors’ Remuneration<Amount of remunerations>
The maximum annual remuneration for directors of the Company has been ¥700 million, as resolved by the 140th
Ordinary General Meeting of Shareholders, held on June 23, 2006 and the 149th Ordinary General Meeting of
Shareholders, held on June 24, 2015. The amount of the above remuneration includes (1) ¥630 million of annual salary,and (2) ¥70 million for the fair value of compensation-type stock options. The remuneration for outside directors is only
annual salary. In addition, the amount of remunerations for directors does not include the portion of employee salaries for
directors concurrently serving as employees.
The standard for calculating the annual remuneration for inside directors and outside directors is as follows.

<Inside directors>
The amount for Directors’ remuneration is determined based on information from each fiscal year such as the degree towhich the Company’s ROE (Return on Equity; ratio of consolidated net income to equity) targets are achieved, thedegree to which budget targets are achieved with regard to consolidated EBITDA and ROIC based on consolidated
operating income, and individual directors’ performance evaluations. The average remuneration level for inside directors
at other companies in the same industry in Japan is also taken into consideration.

<Outside directors>
The amount is a fixed amount that is not linked with the performance of the Company, and is determined with reference
to the average remuneration level of outside directors at other companies in the same industry in Japan.

3) Remuneration for Statutory Auditors during the subject fiscal year
(millions of yen)
Inside Statutory Auditors

Outside Statutory Auditors

Total

Number ofAmount of

Number ofAmount of

Number ofAmount of

Statutory

Remuneration

Statutory

Remuneration

Statutory

Remuneration

Auditors

Auditors
2

62

Auditors
4

32

6

94

Notes:
1.

Inside statutory auditors means statutory auditors other than outside statutory auditors.

2.

The maximum monthly remuneration for statutory auditors is ¥12 million (as resolved by the 133rd Ordinary General
Meeting of Shareholders held on June 25, 1999).

33

(4) Outside Directors and Outside Statutory Auditors
1) Significant Concurrent Positions and the relation between the Company and the entities at which Outside Directors andOutside Statutory Auditors hold such positions.
They are shown in the above-mentioned「(1) Directors and Statutory Auditors」.

2) Main Activities of Outside Directors and Outside Statutory Auditors
Category

Name

Main Activities
Attended 11 of the 12 meetings of the Board of Directors held

Yutaka Iimura

during the relevant fiscal year and offered valuable commentsfrom his expertise and knowledge cultivated over many years as a
diplomat.
Attended 12 of the 12 meetings of the Board of Directors held

Nobuo Seki

during the relevant fiscal year and offered valuable commentsfrom his extensive management experience and knowledge.

Outside Directors

Attended 12 of the 12 meetings of the Board of Directors held
Kenichiro Senoh

during the relevant fiscal year and offered valuable commentsfrom his specialist viewpoint of business model field.
Attended 12 of the 12 meetings of the Board of Directors held

Fumio Ohtsubo

during the relevant fiscal year and offered valuable commentsfrom his extensive management experience and knowledge.
Attended 12 of 12 meetings of the Board of Directors and 12 of 12
meetings of the Board of Statutory Auditors held during the

Nobuo Tanaka

relevant fiscal year and offered valuable comments from his
experience at the government agencies and internationalorganization and offered, in particular, advice and suggestions
concerning corporate governance.
Attended 12 of 12 meetings of the Board of Directors and 12 of 12

Outside Statutory
Auditors

meetings of the Board of Statutory Auditors held during the
Gen Ikegami

relevant fiscal year and offered valuable comments from his
professional knowledge as a Certified Public Accountant.
After her appointment on June 22, 2017, she attended 9 of 9
meetings of the Board of Directors and 9 of 9 meetings of the

Hitomi Nakayama

Board of Statutory Auditors held during the relevant fiscal year
and offered valuable comments from her professional knowledge
as lawyer, and offered, in particular, advice and suggestions
concerning compliance34

5. Accounting Auditor(1) Name of Accounting Auditor
KPMG AZSA LLC.
(2) Amount of Remuneration(Millions of yen)

Details

Amount1) The amount of remuneration, etc., to be paid by the Company tothe accounting auditor
2) The total amount of cash or other proprietary interest to be paidby the Company and its subsidiaries to the accounting auditor

158

329

Notes:
1.

The amount described in Item 1) of the above table is the total sum of the remunerations for audits under theCompanies Act and the remuneration for the audits under Financial Products & Exchange Act in Japanbecause these are not clearly distinguished from each other in the contract between the Company and theaccounting auditor.

2.

Of the major subsidiaries of the Company, 9 companies, including Teijin Aramid B.V. , undergo auditing byaccounting firm other than the accounting auditor.

3.

Based on the Company’s scale and characteristics, the Board of Statutory Auditors has given consent to the
remuneration, etc., to be paid the Accounting Auditor as stipulated in Article 399, Paragraph 1 of the Companies Act,
as a result of the confirmation of the audit contents, total audit work done, audit plans of Accounting Auditor and its
rewards estimation.

(3) Policy for Dismissal or Non-Reappointment of Accounting Auditor
The Company has a policy that the Board of Statutory Auditors may dismiss the accounting auditor based on theunanimous approval by the statutory auditors in cases where Article 340, Paragraph 1 of the Companies Act is judged
to apply. Furthermore, the Company has a policy of submitting a proposal regarding dismissal of the accounting
auditor to a shareholder’s meeting in the event that it is deemed that a grave obstacle to the Company’s audit operation
involving the accounting auditor has occurred, and similarly submitting a proposal regarding the non-reappointment of
the accounting auditor in the event that it is deemed necessary to change the accounting auditor in light of theaccounting auditors’ independence and reliability, or the status of its performance of duties.
In both cases, the submission of the proposals is based on a decision of the Board of Statutory Auditors.

35

6. Corporate Governance System(1) Reasons for Choosing the Current Corporate Governance System
The Company’s Group has adopted and will adopt from time to time mechanisms for corporate governance which isappropriate for achieving the purposes of the Company. Accordingly, the Company will timely review the mechanisms
and such changes may be made in accordance with changes in the social and legal environments.
The current Companies Act requires the Board of Directors to appropriately carry out two functions: important businessdecision and management oversight and supervision. The governance system deemed appropriate is therefore based onthese two core functions, with execution of business led by the Company’s inside directors (limited to Executive
Directors) on the one hand, and management oversight and supervision focused on by outside directors and carried out by
statutory auditors and the Board of Statutory Auditors on the other hand.
Therefore the Company intends to continue to be a company with Board of Statutory Auditors for the time being. At theCompany, the strengthening of the management oversight and supervisory functions and similar corporate governancethat are the aim of a “company with nominating committees” are effectively achieved via an “Advisory Board”, a “Boardof Directors and executive officer system that includes independent outside directors,” and a “Board of Statutory Auditors
system that includes independent outside statutory auditors.”(2)Outline of Current System
1) Decision-Making Bodies
Within the Teijin Group, matters for which the Board of Directors retains authority in accordance with the provisions of
the law are decided by the “Board of Directors,” which meets once a month in principle. Important matters related to
execution of business of the Company or the Teijin Group for which authority has been delegated from the Board of
Directors (individual medium- or short-term plans relating to each business group or function operations, and individual
important matters) are decided by the President and CEO through deliberation in the “Group Strategy Committee,” whichmeets once a week in principle, and the “Group Management Committee,” which meets once a month in principle.
The “Group Strategy Committee” and “Group Management Committee” members consist of the CEO, Responsible for
Business officers, chief officers, and people designated by the CEO. The CEO convenes and chairs both committees. In
addition to the members, the committees are also attended by the full-time statutory auditors.
2) Board of Directors and Corporate Officer System
To expedite decision making and clarify accountability of execution of business, the Company’s Articles of Incorporation
set the maximum members of the Board of Directors to 10 directors, and the Company has introduced a corporate officer
system that delegates broad authority to corporate officers. Four members of the Board of Directors are outside directors
who are independent from the company. In addition, the Articles of Incorporation sets the term of office for directors at
one year. The Board of Directors is chaired by the chairman of the Company (in the case of vacant of the chairman of theBoard, the director of senior advisor or the outside director will take the chairmanship of the Board), as a means ofseparating oversight and supervision from execution of business.
3) Selection of Director Candidates
Director candidates are decided by the Board of Directors as personnel that are suitable to be top management of theCompany, with outstanding personality and insight, in consideration of their personal capabilities, past performancerecord, and so forth. The candidates are recommended at the General Meeting of Shareholders.
4) Advisory Board (Management Consultative Committee)
The Advisory Board, comprising both Japanese and non-Japanese experts, has been established to provide advice tomanagement in general and to evaluate the top managements, and operates as a consultative body to the Board of
Directors. The Advisory Board is made up of five to seven outside advisors consisting of two or three non-Japaneseadvisors as well as the Chairman of the Board (in the case of vacant of the chairman of the Board, the senior advisor), and
the President & CEO, and the Chairman of the Board chairs the Advisory Board. The Advisory Board also functions as anominations and remuneration committee, making recommendations regarding the alternation of the CEO andnomination of a successor, deliberating the selection of Chairman, deliberating the system and levels of compensation for
Teijin Group directors, and evaluating the performance of the CEO and representative directors.
5) Nomination Consultative Committee and Compensation Consultative Committee as consultative bodies
In addition to the above Advisory Board, the Company shall establish and manage the Nomination Consultative
Committee and the Compensation Consultative Committee, as consultative bodies of the Board of Directors to further
enhance the transparency concerning the appointment of directors and officers. Both committees are made up of two
outside directors, the Chairman of the Board and the President & CEO. Outside Director chairs both committees. Bothcommittees shall have a function to make proposals and recommendations to the Board of Directors with respect to thenomination, evaluation and amount of compensation of Directors and the Senior Management other than the Chairman
36and CEO and the nomination of Statutory Auditors.

6) Status of Initiatives to Enhance the Function of Statutory Auditors (Corporate Audits)
The Company’s Board of Statutory Auditors consists of five members, of who, three—a majority—are independent
outside directors who are independent from the company, and one of those three is female. In addition, Gen Ikegami
possesses certified public accountant’s qualification and possesses considerable knowledge of finance and accounting.
Moreover, as a system provided for group consolidated management, the Committee of Teijin Group Statutory Auditors,
comprising statutory auditors of Group companies, serves to enhance the effectiveness of group-wide oversight and audit
and ensure impartial auditing.
7) Internal Audit System
The Corporate Audit Department, reporting directly to CEO, has been established as an internal audit organization, andcarries out Group-wide and global audits to evaluate efficiency and validity of internal control functions. Furthermore, atcertain listed subsidiaries and so forth, individual internal audit organizations have been established. As of March 31,
2017, the number of internal auditors in the Teijin Group is 19 (excluding internal auditors at listed subsidiaries and soforth).
8) Status of Accounting Audits
The status of certified public accountants who executed business is as follows (items in brackets are the affiliated auditing
firm and number of consecutive years performing audits).
Iwao Hirano (KPMG AZSA LLC, 5 years), Kiyoshi Hirai (KPMG AZSA LLC, 4 year), Takeharu Kirikae (KPMG AZSA
LLC, 3 years).
The status of assistants who executed auditing is as follows.
Certified public accountants 15, others 28, total 43.
9) Total Risk Management
In April 2003, the Company established the “Total Risk Management (TRM) Committee” beneath the Board of Directors,
as a preventive measure to handle any risks the Company may face. The TRM Committee categorizes the risks into
management strategy or business operating risks and conducts comprehensive management against the risks. The Boardof Directors deliberates and determines basic policies and annual plans related to TRM that are proposed by the TRM
Committee. The CEO is in charge of management strategy risk assessment, and provides important judgment materials
for the Board of Directors and so forth. The statutory auditors conduct audits to check whether the Board of Directors is
conducting appropriate policy determination, oversight and supervision regarding TRM.
* The details of Teijin Group “Corporate Governance Guide” (the Company’s Corporate Governance System) can be viewed at
the Company’s Web site: (https://www.teijin.com/ir/governance/guide/).

7. Systems to Ensure Appropriate Business Operations and the Status of its Implementation(1) Resolutions on Basic Policies for Establishment of Internal Control Systems
The Company passed a resolution regarding the “Basic Policy for Establishment of Internal Control Systems” at a Boardof Directors meeting held on March 30, 2018.
Below is a summary of this resolution, the details of which can be viewed at the Company’s Web site:(https://www.teijin.com/ir/governance/resolution/).
1) System for Ensuring Compliance with Laws, Regulations and the Articles of Incorporation in the
Performance of Duties by Directors and Employees of the Company and Its Subsidiaries
The Company has declared the basic principles of compliance in its Teijin Group “Corporate Governance Guide” .
To practice these basic principles, the Company shall establish systems and organizational structures that ensure practicaloperation and thorough observation of the Company’s Corporate Philosophy, Corporate Code of Conduct, Corporate
Standards of Conduct, Group Ethics Regulations and other related internal regulations.
The Company’s representative directors and other executives shall take the initiative and set good examples in observing
laws, regulations and the Articles of Incorporation, social rules and ethics, and shall promote compliance education andawareness among directors, officers and employees of the Company and its subsidiaries. In order to establish acompliance system across the entire Teijin Group, the Company appoints Chief Social Responsibility Officer as theofficer in charge of compliance.
All directors, officers and employees of the Company and its subsidiaries are required to report to the Teijin entity towhich they belong or to Teijin Limited which is the holding company of the Teijin Group, whether they detect any
violations of laws and regulations or other serious information concerning compliance, in accordance with Group Ethics
Regulations and other internal regulations. Chief Social Responsibility Officer shall direct and supervise investigations to37

confirm such reported facts and, upon consultation with CEO (President), determine appropriate measures.
The Company shall provide necessary means for directors, officers, employees and business partners to directly reportany violation or doubtful activities of non-compliance in the Company or its subsidiaries. Such measures shall ensure thatanonymity of the caller is protected and that the caller does not get any disadvantageous treatment. Important reports aswell as measures taken by the relevant Teijin entity and their results shall be announced as appropriate to, and shall berecognized by, all directors, officers and employees of the Company and its subsidiaries.
The directors of the Company and its subsidiaries shall have their performance of duties audited by the statutory auditors,
and will respect any advice or recommendations received from the statutory auditors.
The Company places Corporate Audit Department directly supervised by CEO, which performs internal auditing of the
Teijin Group’s execution of business and conducts the evaluation of the internal control system and proposes its
improvement.
The Company shall maintain a resolute attitude toward pressure from antisocial forces, including demands for payoffs
from specific shareholders or interference by crime syndicates, and shall not allow such interference. Chief Social
Responsibility Officer shall be appointed as the person in charge of actions against antisocial forces. Chief Social
Responsibility Officer shall establish action policies and other rules in consort with general manager, Human Resources
Division and shall ensure observance of such policies and rules by directors, officers and employees within the Company
and its subsidiaries.
To intensify the validity of the decision to be made by the Board of Directors, more than one of the directors shall beoutside directors satisfying the requirements for independence stipulated by the company.

2) Rules and Other Systems for Management of Risk of Loss in the Company and its Subsidiaries
The Board of Directors of the Company shall operate a total risk management system to deal with any kind of risks thatmight threaten sustainable business development.
Total Risk Management (TRM) Committee, shall mainly deal with the business operational risks and strategic risks to
Teijin Group, and shall propose basic policies and annual plans related to TRM to the Board of Directors of the Company.
Chief Social Responsibility Officer is in charge of establishing a system across the Teijin Group to manage business
operation risk, and shall identify problems and deal with such risks upon occurrence thereof. CEO shall assess strategicrisks and present his/her assessment to the Board of Directors of the Company as an important element upon which
managerial decisions are made.
The Company shall establish a system for the Teijin Group to ensure the continuation of businesses when faced with risk
events including disasters, the inappropriate performance of duties by directors, officers or employees, and damage tocritical IT systems.
3) Systems for Ensuring that Duties by Directors and Employees of the Company and Its Subsidiaries Are
Performed Efficiently
The Company shall establish Group regulations to provide the necessary rules and guidelines for the Group to ensure
efficient business operations throughout the Teijin Group.
The Board of Directors of the Company shall have the representative directors and other executives conduct the operationof the Company and decisions for the items on which the representative directors and other executives have beendelegated decision-making powers shall be made by the organization and procedures in accordance with the internal
regulations. These regulations shall be revised as may be necessary to reflect any revision and/or abolition of laws andregulations and/or to increase the efficiency of the representative directors and other executives in executing their duties.
The Board of Directors of the Company shall organize the basic structure of Teijin Group, and shall establish efficientmanagement, oversight and supervision system.
The Company shall formulate the Group medium-term management plan, and each fiscal year it shall formulate
short-term plans, key management targets, and budgets, as well as carrying out progress checks, in order to realize themedium-term management plan.
4) Systems for Ensuring that Proper Business Operations Are Conducted within Teijin GroupThe Company shall establish Group Regulations to provide the necessary rules and guidelines for the Group to ensure
appropriate business operations throughout the Teijin Group. Based on the Group regulations, each company shallestablish its own regulations, and use appropriate processes for deciding on important matters.
The Company shall discuss important matters concerning Teijin Group companies at its Group meetings and so forth, andto require Teijin Group companies to make reports.
The representative directors and other executives shall provide necessary instructions to ensure that the Teijin Group
entities have appropriate internal control systems.
Corporate Audit Department of the Company shall operate or supervise internal audits of the Teijin Group’ s business
operations and ensure the efficiency and validity of internal control functions over the entire business of the Teijin Group.
Statutory Auditors of the Company shall establish appropriate systems, such as those for close coordination with the38accounting auditors and Corporate Audit Department, to ensure effective and appropriate supervision and auditing of theGroup’s entire business operations.
To ensure the reliability of its financial reporting, the Company shall establish a group-wide internal control system forthe financial reporting and the operation of the Teijin Group individual operational processes, and shall properly andefficiently operate and assesse such systems.

5) Systems for the Preservation and Management of Information in Relation with the Directors’
Performance of Their Duties
Directors shall appropriately preserve and manage minutes of shareholders’ general meetings, minutes of Board of
Directors’ meetings, and other documents and important information concerning the performance of their duties inaccordance with relevant company regulations. Chairman of the Board*, who chairs the Board of Directors, is
responsible for the supervision and oversight of the preservation and management of such documents and important
information. Documents concerning directors’ performance of their duties shall be preserved for at least ten (10) years
and shall be accessible when necessary.
*The case of vacant of the Chairman of the Board, CEO will perform the office of the Chairman.
6) Provisions Concerning Employees Assigned to Assist the Statutory Auditors in Performing Their Duties,
the Independence from Directors of Such Employees, and the Validity of Instructions Given to Such
Employees
The Company shall establish Teijin Group Auditors Office under the direct control of full-time statutory auditors andappoint two or more employees, in principle, to assist Statutory Auditors in performing their duties. The members of
Teijin Group Auditors Office may concurrently become statutory auditors of Teijin Group companies; however it shallnot concurrently become corporate officers connected with performance of duties at Teijin Group companies.
To secure the independence of members of Teijin Group Auditors Office above, all decisions concerning personnel
measures regarding the members of Teijin Group Auditors require the prior consent of the full-time Statutory Auditors.
The full-time Statutory Auditors shall assess the performance of the members of Teijin Group Auditors Office.
7) System for Reporting to Statutory Auditors by Directors, Corporate Officers and Employees of theCompany and its Subsidiaries, and System for Other Reports to Statutory Auditors
The full-time statutory auditors shall attend the meetings of the Board of Directors and other important meeting bodies of
the Company, as well as those of the important meeting bodies of the main subsidiaries.
Representative directors and other executives shall report at the meetings of the Board of Directors and other important
meetings on their performance of duties with regard to the business operations, functions and subsidiaries under theircharge.
The directors, officers and employees of the Company and its subsidiaries shall immediately report to the statutory
auditors when they discover incidents that causes or may cause significant erosion of public trust of the Company,
adverse effects on the performance of the Company, significant damage to the internal or external environment, safety
and health (ESH); or related to product liability, significant violations of internal regulations, or other similar incidents.
The directors, officers and employees of the Company and its subsidiaries shall report on the business operations,functions, and subsidiaries under their charge, when they deem it necessary to do so, or at the request of the statutory
auditors of the Company, and shall cooperate with the investigations of the statutory auditors of the Company.
8) System for Ensuring that Persons Reporting to the Statutory Auditors Are Not Subject to Unfair
Treatment Because of Such Reporting
The Teijin Group’s Corporate Code of Conduct and other regulations stipulate that no person shall be treated unfairly
because of reporting or giving notice of illegal conduct and so forth.
9) Policy Concerning Processing of Expenses and Obligations Arising with Respect to the Statutory
Auditors’ Performance of Duties, Prepayment of Expenses, and Reimbursement Procedures
The Company shall bear the expenses and obligations required for the statutory auditors’ performance of duties, and shallpromptly respond to requests for pre-payment of expenses in accordance with laws and regulations after checking therequests.
10) Other System for Ensuring that the Audits of Statutory Auditors Are Conducted Effectively
To ensure transparency, the majority of statutory auditors consists of independent outside statutory auditors that satisfy
the requirements for independence that the Company specifies.
The statutory auditors shall enter into advisory agreements with outside law firms in order for themselves and statutory
auditors of the Company and its subsidiaries to form independent opinions. When they consider it necessary in the courseof conducting audits, the statutory auditors can, at their own discretion, retain outside advisers, including Certified Public
Accountants and other consultants.
39

(2) Summary of the “Internal Control System Operating Status”
In accordance with the “Basic Policy for the Establishment of Internal Control Systems,” the operating status of theCompany’s internal control system for the relevant year is as follows.
1) Operating Status Regarding Compliance with Laws and Regulations
The Company has published the Teijin Group “Corporate Governance Guide” and the related regulations necessary to
carry out its basic policy on the Company intranet, and has designated each October as Corporate Ethics Month in whichinternal training is held, promoting compliance education and awareness. Furthermore, for important decision making,the related divisions and departments perform verifications, working to prevent any violations of laws and regulations.
The Company has established a framework to promote compliance under the direction of the Chief Social Responsibility
Officer, which works to identify and respond to problems across the Teijin Group. The Chief Social Responsibility
Officer also responds appropriately to important compliance issues reported by the directors, officers and employees of
the Company and its subsidiaries based on the Group Ethics Regulations, which establish rules for reporting illegal
conduct and other responses, and make regular reports to the TRM Committee.
The Company has established an internal reporting system including an anonymous compliance hotline, responding
appropriately to hotline inquiries from group companies in Japan and overseas, protecting the reporter, and publishing thestatus of the response biannually on the intranet, promoting education and awareness.
The Company respects and responds appropriately to points made by Statutory Auditors in audits and in evaluations of
the condition and operational status of internal control systems.
The Company’s Corporate Audit Department performs internal auditing across the Teijin Group based on the annual plan,and reports the audit results to the Directors and Statutory Auditors as necessary.
The Company maintains an action policy against anti-social forces in its Corporate Code of Conduct, and promotes
education and awareness at its Corporate Ethics Month.
2) Operating Status Regarding Management of Risk of Loss
The Board of Directors of the Company receives reports from the TRM Committee on proposals for basic policies andannual plans related to TRM, as well as the status of the occurrence and response to risks, putting in place a system tomanage important risks and ensure the continuation of the business.
The Chief Social Responsibility Officer implements regular evaluation and monitoring of operational risks, continually
identifying risks and evaluating the validity of countermeasures.
At meetings of the Board of Directors and other important meetings of the company, deliberation items are evaluatedbased on the results of strategic risk assessment implemented based on the Regulations for Group Profit Management.
To ensure the continuation of business, the Company will prepare the required manuals and hold regular drills to beprepared in the event of an emergency.
While preparing individual policies on personal information protection and information security, the Company has
implemented various internal education programs and security enhancement policies, as well as enhancing
countermeasures against the risk of information leaks.
3) Operating Status Regarding Securing Efficiency
The Company publishes the Group regulations on the Company intranet, promoting education and awareness.
The Company assigns management systems and job duties as well as clarifying responsibilities and authorities based onGroup organizational regulations and Group responsibility and authority regulations, working to ensure efficientmanagement execution and effective management.
4) Operating Status Regarding the Internal Control System within the Corporate GroupThe Company performs regular self-evaluations of the creation and operating status of its internal control system,
continually guiding the creation of the internal control system including both the regulations and meetings of the various
Teijin Group companies and a reporting system.
The Company’s Statutory Auditors, to promote fair and efficient auditing activities within the Teijin Group, by holding
regular meetings of the Group Board of Statutory Auditors and attending meetings in which accounting audit reports are
given, maintains close cooperation among the Accounting Auditors and Internal Audit Departments.
5) Operating Status Regarding the Preservation and Management of Information
The Company’s Board of Directors appropriately preserves documents and important information concerning theperformance of their duties in accordance with regulations regarding information related to the duties of the Group’s
directors.
6) Operating Status Regarding Ensuring the Effectiveness of the Auditing of the Statutory Auditors
40

The Company has established the Teijin Group Auditor Office, with the Teijin Group Auditor Office members under the
direct control of the Statutory Auditors to assist the Statutory Auditors in performing their duties.
The Company’s full-time Statutory Auditors attend important meeting bodies of the Company and of the main
subsidiaries, receiving reports at the meeting bodies from the representative directors, other directors, and corporate
officers on the status of the performance of duties.
The Chief Social Responsibility Officer reports on important stipulated items, including internal reporting by the hotline,
promptly following their discovery, both individually and in detail, to the members of the meeting bodies including the
Statutory Auditors, through the important meeting bodies.
Officers and employees of the Company properly respond to items requested by the Statutory Auditors, working to ensure
the effectiveness of the auditing of the Statutory Auditors.

41

8. Basic Policy Regarding the Control of the Company (Excluding Takeover Defense Measures)(1) Basic Policy Regarding the Company’s Shareholders(Basic policy regarding those who control the decision of the company’s financial and business policy)
The Company believes the existence of its shareholders is based on free transactions in the market and therefore theCompany’s shareholders should make the final decisions as to whether to accept a proposal of a large-scale acquisition
that would result in a transfer of the Company’s control.
However, it is envisioned that some large-scale acquisition of the Company’s shares or such proposals might entail,among others, the followings:① The likelihood of causing obvious harm to the corporate value of the Company and the common interests of theshareholders.
② The threat of compelling the shareholders to sell their shares.
③ In case the compensation of the Acquisition is insufficient in view of the corporate value of the Company.
The Company believes such a large-scale acquirer of the Company’s shares or a person or company who proposes suchan action is exceptionally inappropriate to control the decision of the Company’s financial and business policies.

(2) Measures to Realize the Basic Policy
The Company has already launched the following measures to improve the corporate value of the Company and thecommon interests of the shareholders to ensure that investors can continue to invest in the Company over the long term.
The Company believes such measures will contribute to the realization of the basic policy described in (1) above.
1) Medium-Term Efforts
In February 2017, the Teijin Group formulated and announced its new medium-term management plan for 2017-2019,“ALWAYS EVOLVING,” as a three-year action plan to realize its long-term vision. Guided by the medium-term
management plan, the Teijin Group will improve core earnings through growth strategies, establish new core businesses
through transformation strategies and strengthen its basic management systems to support those strategies. Refer to the
19-20 pages for the contents of Tasks Ahead and Medium & Long-Term strategies.
2) Measures to Improve Corporate Value through Strengthening Corporate Governance
As an essential system to achieve steady growth of the corporate value of the Company and the common interests of theshareholders, the Company has strived to strengthen corporate governance. Refer to pages for the contents of the
Corporate Governance System.

3) Introduction of the Countermeasures to Large-Scale Acquisitions of the Company’s Shares (Takeover
Defense Measures)
Overview
The Company established the Countermeasures to Large-Scale Acquisitions of the Company’s Shares (Takeover Defense
Measures) (hereinafter, “the Plan”), which were approved by shareholders at the 149th Annual General Meeting of
Shareholders held on June 24, 2015.
*The Plan refers to that in effect at the end of fiscal 2017. The effective period of the Plan is until the conclusion of this152nd Ordinary General Meeting of Shareholders. The Company resolved not to continue the Plan at a meeting of theBoard of Directors held on May 9, 2018.

The summary of the Plan is as follows:
1. Applicable Acquisitions
Applicable acquisitions are those that lead to holdings of 20% or more of the Company’s shares
2. Procedures for Negotiations with Acquirer42Acquirers are required to submit in advance an acquisition statement and provide a period that allows the Company tocollect information and examine the acquisition proposal, present the Company management’s plans and alternative
proposals to shareholders and negotiate with the acquirer.
3. Allotment of Stock Option with call in the Event That an Acquirer Does Not Comply with Procedures
If an acquirer does not comply with the aforementioned procedures, in accordance with the recommendation of the
Independent Committee, the Board of Directors will decide to allot all shareholders registered at that time Stock Option
with call, without contribution, at the rate of one Stock Option per one share of stock held.
4. Calling the Stock Option with a Call and Distribution of the Company’s Stock
According to the Call Option attached to the stock option, the Company will call the stock option in exchange for theCompany’s shares from all shareholders other than the acquirer and other non-qualified parties at a rate of one (1) share of
the Company’s stock per one (1) stock option.
5. Impact on Shareholders Other than the Acquirer and Other Non-qualified Parties
As the Company’s shares are evenly delivered to all the shareholders other than the acquirer and other non-qualified parties,
the shares held by the shareholders would not be diluted. As the Company’s shares are not granted to the acquirer and othernon-qualified parties, this would result in dilution of the acquirer’s voting rights to a maximum of 50%.
6. Requirements for the Allotment of the Stock Option Without Contribution
The allotment of the stock option without contribution will be implemented in case any acquisition falls under the following
cases and it is deemed reasonable to implement an allotment of the stock option without contribution:(1)In case the acquisition does not comply with the procedure set forth in the Plan;(2)In case the Acquisition may cause obvious harm to the corporate value of the Company and, in turn, the common
interests of the shareholders, in view of the purpose of the Acquisition and the post-acquisition management policy, etc. andthat falls under any of the below-mentioned actions:(a) Buy out of the Company’s shares to demand that the Company purchase said shares at an inflated price;(b) Management that achieves an interest for the Acquirer to the detriment of the Company, such as temporary control of
the Company’s management for the low-cost acquisition of the Company’s material assets, etc.;(c) Diversion of the Company’s assets to secure or use as a source of funds to repay debts of the Acquirer or its groupcompany; and(d) Temporary control of the Company’s management to bring about a disposal of high-value assets, etc. that have nocurrent relevance to the Company’s business and declaring temporarily high dividends from the profits of the disposal, or
selling the shares at a high price taking advantage of the opportunity afforded by the sudden rise in share prices created by
the temporarily high dividends.
(3) In case the acquisition threatens to have the effect of compelling the shareholders to sell their shares;(4) In case the compensation of the Acquisition is insufficient in view of the corporate value of the Company.

43

7. Overview of Process Prior to Triggering The Plan
When the acquirer submits the Acquisition Statement, the Independent Committee consisting of five members appointed
from among the outside directors and outside corporate auditors may require the Company’s Board of Directors to present
its opinion regarding the details of the acquisition by the acquirer within a specified period of time ( a maximum 30 days ).
Following this, the Independent Committee will collect and examine information for a maximum period of 60 days. The
Independent Committee may extend this assessment period for up to 30 days.
Based on its collection and examination of this information, the Independent Committee will make a recommendation to theBoard of Directors for either the implementation or non-implementation of an allotment of the stock option without
contribution. The Company’s Board of Directors shall respect and adhere to the aforementioned recommendation from the
Independent Committee and finally resolve whether implement or non-implement an allotment of the stock option without
contribution. However, the Board of Directors shall convene a shareholders’ meeting as soon as practicable and raise a
proposal on the implementation of the allotment of stock option without contribution as a matter to be resolved thereat, incase the Independent Committee has placed a reserve that prior approval of a shareholders’ meeting should be obtained forthe recommendation that an allotment of the stock option without contribution should be implemented.
Explanation as to How the Above Measures Comply with the Basic Policy, Do Not Harm the Common Interests of the
Shareholders of the Company and Do Not Pursue the Personal Interests of the Company’s Directors and Statutory Auditors
The Plan was designed to incorporate the following perspectives and therefore the Company believes that it should comply
with the Basic Policy, be consistent with the corporate value of the Company and the common interests of the shareholders
and not pursue the personal interests of the Company’s Directors and Corporate Auditors.
1. Respect of Shareholders’ Intent
The Plan became effective upon its approval at the 146th Ordinary General Meeting of Shareholders, held on June 22, 2012,
and will remain in effect for three years, until the conclusion of the Ordinary General Meeting of Shareholders pertaining to
the business year ending March 2015. Moreover, as the term of office of the Company’s directors is one (1) year, theshareholders’ intent may be well reflected by way of the election of directors. Furthermore, even before the expiry of theeffective period after The Plan is introduced, The Plan shall be abolished immediately in case a proposal that The Plan beabolished is approved at a shareholders’ meeting of the Company.
2. Emphasis on the Judgment by Highly Independent Outside Directors and Independent Outside Statutory Auditors
Upon the introduction of the Plan, the Company established the Independent Committee, an organ with the role ofsubstantial and objective decision making for the benefit of shareholders while eliminating the possibility of arbitrary
decisions by the Company’s Board of Directors with regard to the actual operation of the Plan. The Independent Committee
consists of members elected and appointed by the Company’s Board of Directors from among those persons of outside
director or outside corporate auditor.
3. Reinforcement and Continuity of Corporate Governance
The Company intends to separate and reinforce three managerial functions (decision making, execution of business andmonitoring/auditing) by electing four independent outside directors on its Board of Directors, which comprises a maximumof 10 directors, and having three independent outside statutory auditors comprising a majority of the number ofstatutory auditors. The Company has also established an Advisory Board- comprising five to seven outside advisers, theChairman of the Company*, and the President & CEO – as a consultative body to the Board of Directors that is charged
with deliberating the alternation of President & CEO and nomination of successors, as well as compensation systems for44

directors and statutory auditors of the Teijin Group. Guidelines on corporate governance of the Company including thesemeasures above are disclosed in the form of the Corporate Governance Guide.
The above measures are viewed as groundbreaking initiatives for corporate governance among Japanese listed companies.
This mechanism should have the effect of strongly breaking the self-protective conduct of the Company’s directors andcorporate auditors and are expected to prevent the arbitrary application of The Plan. The Company intends to maintain its
corporate governance above during the effective period of This Plan.
*The case of absence of the Chairman of the Company, Senior Advisor will perform the office of the Chairman.
4. Setting of Rational and Objective Requirements for Triggering The Plan
The Plan is structured not to be easily triggered unless rational, detailed and objective requirements are satisfied, andmoreover, these objective requirements are consistent with the cases set out for determining a person who is deemed
inappropriate to control the decisions of the Company’s financial and business policies. This idea serves to prevent theBoard of Directors from arbitrarily triggering the Plan.
*A Summary of the Company’s Takeover Defense Measures can be viewed at the Company’s Web site:(https://www.teijin.com/ir/governance/defense/)

9. Policy Regarding the Determination of Dividends from Retained Earnings
Our basic policy for profit sharing is to ensure dividends are in line with consolidated operating results, targeting a
consolidated payout ratio of 30% for the medium term. We will also determine dividends by giving consideration to theneed to ensure financial soundness, to our ability to maintain stable dividend payments over the medium to long term,
and to securing sufficient internal reserves to fund strategic investments aimed at ensuring future growth.

Note: Italicized product names and service names in this report are trademarks or registered trademarks of the Teijin Group in Japan
and/or other countries, or, where noted, are protected as the trademarks and/or trade names of other companies.

45

10. Financial Statement(1) Consolidated Balance Sheets
FY2016(As of Mar. 31, 2017)(Millions of yen)
FY2017(As of Mar. 31, 2018)

Total

97,750166,803
20,00084,272
8,980
29,05913,677
15,06332,058(909)
466,754

96,417
177,776
14,00091,257
10,827
34,17813,126
11,87440,852(578)
489,733

Total

61,17898,32244,493
15,471
21,823
241,289

60,106
94,86942,091
20,60822,612
240,289

Total

32,73736,302
69,04027,19133,14960,340115,104
1,846
37,988
10,965
23,155(2,092)
186,967
497,298

127,721
2,985
39,576
3,017
24,621(2,101)
195,821496,451

964,053

986,184< Assets >Current assets
Cash and deposits
Notes and accounts receivable-trade
Securities
Merchandise and finished goods
Work in process
Raw materials and supplies
Short-term loans receivable
Deferred tax assets
Other current assets
Allowance for doubtful accounts

Noncurrent assets
Tangible assets
Buildings and structures, net
Machinery and equipment, net
LandConstruction in progress
Other, net

Intangible assets
Goodwill
Other

Investments and other assets
Investment securities
Long-term loans receivable
Net defined benefit asset
Deferred tax assets
Other
Allowance for doubtful accounts
Total
Total noncurrent assets
Total assets

46

(1) Consolidated Balance Sheets< Liabilities >Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Current portion of long-term loans payable
Current portion of bonds
Income taxes payable
Provision for business structure improvement
Deferred tax liabilities
Accrued expenses
Other
Total
Noncurrent liabilities
Bonds payable
Long-term loans payable
Provision for business structure improvement
Net defined benefit liability
Asset retirement obligations
Deferred tax liabilities
Other
Total
Total liabilities<Net assets>
Shareholders' equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total
Subscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets

47

FY2016(As of Mar. 31, 2017)(Millions of yen)
FY2017(As of Mar. 31, 2018)

79,11757,58551,326－
5,021
15,112
54
26,26145,094
279,572

92,382
66,291
16,174
17,985
5,110
9,572
52
24,61644,051
276,238

55,109210,431
10,94435,4271,322
8,370
11,044
332,650
612,223

35,052
207,162－
35,6491,426
9,223
13,194
301,708
577,947

70,816103,664
168,661(274)
342,867

71,832
104,685
202,413(166)
378,764

21,842(276)(24,889)(1,159)(4,483)28,377903(14,815)(305)
14,159861
12,583351,829
964,053860
14,452408,237
986,184

(2) Consolidated Statements of Income

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating revenues
Interest income
Dividends income
Equity in earnings of affiliates
Foreign exchange gains
Gain on investments in partnership
Miscellaneous income
Total
Non-operating expenses
Interest expenses
Foreign exchange losses
Contribution
Loss on valuation of derivatives
Miscellaneous loss
Total
Ordinary income
Extraordinary income
Gain on sales of noncurrent assets
Gain on sales of investment securities
Reversal of provision for business structure improvement
Gain on revision of retirement benefit plan
Reversal of impairment losses
Insurance income
Other
Total
Extraordinary loss
Loss on sales and retirement of noncurrent assets
Loss on valuation of investment securities
Impairment loss
Business structure improvement expenses
Other
Total
Income before income taxes
Income taxes - current
Income taxes - deferred
Total
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

48

FY2016(Apr. 2016-Mar. 2017)
741,291
492,862
248,429
191,91756,512(Millions of yen)
FY2017(Apr. 2017-Mar. 2018)834,985565,689
269,296
199,474
69,822

648
1,862
2,078
－
1,099
769
6,458

967
2,034
1,214
601
43
1,133
5,996

2,223
1,726
704
541
1,840
7,036
55,933

2,646
－
587
3,108
1,655
7,998
67,820

318
119
788
193
52
392
358
2,223

5,595
585
377
－
－
－
193
6,751

4,772
27
1,378
16,314
1,736
24,22933,92812,026(29,487)(17,460)
51,3881,255
50,133

4,146
88
1,076
828
537
6,677
67,894
11,2689,524
20,792
47,101
1,545
45,556

(3) Consolidated Statement of Changes in Net Assets

FY2017 (Apr. 2017 - Mar. 2018)(Millions of yen : amounts less than one million yen are omitted)
Shareholders' equity
Capital stock Capital surplus

Balance as of March 31, 2017
Changes of items during the period
Conversion of convertible bonds
Dividends from surplus
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Net changes of items other than shareholders' equity
Total
Balance at March 31, 2018

70,816103,664

1,016

1,016

Retainedearnings
168,661

Total
Treasury stock shareholders'equity(274)

342,867

(21)
130

2,032
(11,804)
45,556
(21)
134

108
(166)

35,897
378,764(11,804)
45,556
4
1,016
71,832

1,020
104,685

33,752
202,413

Accumulated other comprehensive income
Valuation
Deferred gains
difference onor losses onavailable-forhedges
sale securities
Balance as of March 31, 2017
Changes of items during the period
Conversion of convertible bonds
Dividends from surplus
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Net changes of items other than shareholders' equity
Total
Balance at March 31, 2018

21,8426,534
6,534
28,377

(276)

1,179
1,179
903

49

Foreigncurrencytranslation
adjustment(24,889)

10,074
10,074(14,815)

Remeasurements ofdefined benefit
plans(1,159)

854
854
(305)

Total

(4,483)18,64318,643
14,159Subscription
Non-controllingrights tointerests
shares

861

(1)
(1)
860

Total net
assets12,583351,829

1,868
1,868
14,452

2,032(11,804)
45,556(21)
134
20,51056,407408,237

Consolidated Statements of Comprehensive Income (Reference)(Millions of yen)
FY2016FY2017(Apr. 2016-Mar. 2017) (Apr. 2017-Mar. 2018)
51,38847,101

ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Deferred gains (losses) on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of associates accounted for using
equity method
Total
Comprehensive income
Comprehensive income attributable to :Owners of the parent
Non-controlling interests

50

4,180
1,026
(7,701)
(305)

6,854
1,179
8,678
862

(2,305)

1,467(5,105)46,282

19,042
66,14444,8501,432

64,1991,944

Consolidated Statements of Cash Flows (Reference)

Cash flows from operating activities
Income (loss) before income taxes
Depreciation and amortization
Impairment loss
Reversal of impairment losses
Increase (decrease) in net defined benefit liability
Decrease (increase) in net defined benefit asset
Increase (decrease) in allowance for doubtful receivables
Increase (decrease) in provision for business structure improvement
Interest and dividend income
Interest expenses
Equity in losses (earnings) of affiliates
Loss (gain) on valuation of derivatives
Loss (gain) on sales and retirement of noncurrent assets
Loss (gain) on sales of investment securities
Loss (gain) on valuation of investment securities
Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable-trade
Other, net
SubtotalInterest and dividends income received
Interest expenses paid
Income taxes paid
Net cash and cash equivalents provided by operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Purchase of shares of subsidiaries resulting in change in scope of consolidation
Payments for sales of shares of subsidiaries resulting in change in scope of consolidation
Decrease (increase) in short-term loans receivable
Payments of long-term loans receivableCollections of long-term loans receivable
Other, net
Net cash and cash equivalents used in investing activities
Cash flows from financing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayment of long-term loans payable
Cash dividends paid
Cash dividends paid to non-controlling interests
Proceeds from share issuance to non-controlling shareholders
Payments from changes in ownership interests in subsidiaries that do not result in change
in scope of consolidation
Other, net
Net cash and cash equivalents provided by financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase in cash and cash equivalents resulting from change of scope of consolidation
Cash and cash equivalents at end of period

51

FY2016(Apr. 2016-Mar. 2017)(Millions of yen)
FY2017(Apr. 2017-Mar. 2018)33,92839,331
1,378
(52)
3,236
(5,586)(224)
10,462(2,510)2,223(2,078)
541
4,454
(119)
27
5,253
989
2,191
(4,009)89,437
6,021(2,166)(14,251)
79,04067,89445,655
1,076
－
2,178
(2,781)(101)(16,484)(3,002)
2,646(1,214)
3,108(1,448)(585)
88(10,813)(11,295)
12,307
5,030
92,2585,968(2,564)(15,570)
80,091(37,662)2,414(2,940)(2,641)
2,026(82,890)－(2,379)(21)
90(3,644)(127,650)(42,604)
10,143(3,431)(5,160)689(1,942)(3,685)
(529)
(868)
300
(4,218)(51,307)

1,604
98,761(27,309)(8,849)
(372)
1,817

10,61816,051(45,831)(11,804)(286)－(1,584)－(301)
63,765822
15,978100,955
615
117,549(233)(31,485)
1,309(1,391)
117,549－
116,157