(Translation)

Corporate Governance Report
Note: This document has been translated from a part of the Japanese original for reference purposes only.
In the event of any discrepancy between this translated document and the Japanese original, the original
shall prevail. The Company assumes no responsibility for this translation or for direct, indirect or any
other forms of damages arising from the translation.
Last Update: June 28, 2024
Taiheiyo Cement Corporation
President and Representative Director
Yoshifumi Taura
Contact: General Administration Dept.
Securities code: 5233
https://www.taiheiyo-cement.co.jp/english/index.html
The corporate governance of Taiheiyo Cement Corporation (the “Company”) is described below.

I.

Basic Views on Corporate Governance, Capital Structure, Corporate Profile andOther Basic Information

1. Basic Views
The mission of the Taiheiyo Cement Group is to contribute to social infrastructure development by providing
solutions that are environmentally efficient, enhance our competitive position and bring value to ourstakeholders. Based on this mission, the Company will, in accordance with the provisions of the “Taiheiyo
Cement Corporation Basic Policy on Corporate Governance,” strive to improve corporate governance byensuring the separation of the management’s decision-making and supervisory functions from businessexecution to satisfy the expectations of stakeholders including stockholders and to realize sustainable growthand increase of its corporate value over the medium to long term.
The “Taiheiyo Cement Corporation Basic Policy on Corporate Governance” was established based on a
resolution of the Board of Directors of the Company and is published on the website of the Company in its
entirety.
Japanese URL https://www.taiheiyo-cement.co.jp/company/corpgov.html
English URL https://www.taiheiyo-cement.co.jp/english/company/corpgov.html[Reasons for Non-compliance with the Principles of the Corporate Governance Code]
The Company has implemented all the principle of the Corporate Governance Code.

[Disclosure Based on the Principles of the Corporate Governance Code][Principle 1.4 Cross-Shareholdings]-1-

(Translation)
Please refer to Article 23 (Basic Policy concerning Cross-Shareholding and the Exercise of Voting Rights
Pertaining to Shares Held as Part of Cross-Shareholdings) of the “Taiheiyo Cement Corporation Basic Policy
on Corporate Governance.” As a result of verification, the Company sold 6 issues in FY2023.
[Principle 1.7 Related Party Transactions]
Please refer to Article 24 (Transactions with Related Parties) of the “Taiheiyo Cement Corporation Basic
Policy on Corporate Governance.”[Supplementary Principle 2.4.1 Ensuring Diversity in the Appointment, etc. of Core Human Resources]
The Company regards its employees as key management resources (“human assets”) that support thesustainable development of the Group, and we are working to create an environment and systems in whichhuman resources with diverse personalities and values can exert their individual talents to the utmost
regardless of nationality or gender.
In addition, the Company considers the promotion of diversity as one of the most important issues for thecreation of an innovative labor force, and has established quantitative targets concerning the empowermentof women as part of the Sustainability Targets that were announced in May 2024, the status of which isdisclosed in integrated reports and other publications. Although the Company has not established specificquantitative targets for the recruitment of foreign nationals and mid-career employees and the appointment of
human resources to management positions, we are working to secure diverse human resources regardless ofgender, nationality, career background, etc. when recruiting employees or appointing human resources tomanagement positions.
The human resources development policy and the internal environment improvement policy are disclosed in
integrated reports and other publications.
Integrated Report (Taiheiyo Cement Report)
Japanese URL https://www.taiheiyo-cement.co.jp/csr/csr_fr.html
English URL https://www.taiheiyo-cement.co.jp/english/csr/csr_fr.html[Principle 2.6 Roles of Corporate Pension Funds as Asset Owners]
The Company has established a basic investment policy for management of the assets under its corporate
pension plan to ensure future payments of pension benefits to beneficiaries, and asset management institutions
control and manage the plan assets in accordance with the basic investment policy.
The Pension Committee regularly monitors the investment status of the plan assets and reviews the portfolio
composition of the plan assets as necessary.
The Pension Committee consists of personnel who belong to the accounting and finance, human resources,and other divisions with a thorough knowledge of asset management and pension plan, such as officers incharge of accounting, human resources, and corporate planning.
[Principle 3.1 Full Disclosure](1) Company objectives (e.g., mission), management strategies and management plans
Please find the mission, management strategies and management plans of the Company in the applicablesections of the Company’s website.
<Mission>
Mission of the Taiheiyo Cement Group
Japanese URL https://www.taiheiyo-cement.co.jp/company/pol.html
English URL https://www.taiheiyo-cement.co.jp/english/company/pol.html<Management strategies/management plans>
26 Medium-Term Management Plan
Japanese URL https://www.taiheiyo-cement.co.jp/ir/manage.html
English URL https://www.taiheiyo-cement.co.jp/english/ir/manage.html(2) Basic views and guidelines on corporate governance-2-

(Translation)

Please refer to “1.1 Basic views” of this Report.
(3) Board policies and procedures in determining the compensation of the senior management anddirectors
Please refer to Article 16 (Policy and Procedure for the Determination of Officers’ Compensation) of the“Taiheiyo Cement Corporation Basic Policy on Corporate Governance.”(4) Board policies and procedures in the appointment and dismissal of the senior management and thenomination of director and corporate auditor candidatesPlease refer to Article 6 (Nomination Policy, etc. for Candidates for a Director), Article 10 (Appointment
Policy, etc. for Executive Officers), and Article 13 (Nomination Policy, etc. for Candidates for a Corporate
Auditor) of the “Taiheiyo Cement Corporation Basic Policy on Corporate Governance.”(5) Explanation with respect to the individual appointment and dismissal of the senior management
and the individual nomination of director and corporate auditor candidatesPlease refer to the reference documents of the Notice of the Ordinary General Meeting of Stockholders
published on the website of the Company.
Japanese URL https://www.taiheiyo-cement.co.jp/ir/kabunushi.html
English URL https://www.taiheiyo-cement.co.jp/english/ir/kabunushi.html[Supplementary Principle 3.1.3 Initiatives for Sustainability](1) Initiatives for sustainability, and investment, etc. in human capital and intellectual property
The Company is promoting initiatives related to sustainability, the status of which is disclosed in integrated
reports and other publications. The Company also discloses investment in human capital and intellectual
property in its integrated reports.
Integrated Report (Taiheiyo Cement Report)
Japanese URL https://www.taiheiyo-cement.co.jp/csr/csr_fr.html
English URL https://www.taiheiyo-cement.co.jp/english/csr/csr_fr.html(2) Risks and earnings opportunities related to climate change
The Company offered its support for the TCFD recommendations in June 2019. For information disclosurein accordance with the TCFD framework, please refer to the applicable sections of the Company’s website.
Japanese URL https://www.taiheiyo-cement.co.jp/csr/global_warm_fr.html
English URL https://www.taiheiyo-cement.co.jp/english/csr/global_warm_fr.html[Supplementary Principle 4.1.1 Board of Directors’ decisions and the scope of the matters delegated tothe management]
Please refer to Article 3 (Roles and Responsibilities of the Board of Directors) of the “Taiheiyo Cement
Corporation Basic Policy on Corporate Governance.”[Principle 4.9 Independence criteria for independent outside directors]
Please refer to Article 4 (Composition of the Board of Directors) of the “Taiheiyo Cement Corporation Basic
Policy on Corporate Governance” and the “Independent Officers” section of “2.1 Matters Concerning
Organizational Structure, Organizational Operation, etc.” of this Report.
[Supplementary Principle 4.10.1 Independence and Roles, etc. of the Nomination Committee and theCompensation Committee]-3-

(Translation)
The Company has established a Nomination and Compensation Advisory Committee as an advisory body to
the Board of Directors in order to secure fairness, transparency and objectivity of procedures pertaining todecisions on the nomination and compensation of directors and managing executive officers. For details,
please refer to Article 5 (Establishment of a Nomination and Compensation Advisory Committee) of the“Taiheiyo Cement Corporation Basic Policy on Corporate Governance” and “II-1 [Directors] Supplementary
Explanation of the Voluntary Establishment of Committee(s) Corresponding to Nomination Committee or
Compensation Committee” of this Report.
[Supplementary Principle 4.11.1 Views on the appropriate balance between knowledge, experience andskills of the Board as a whole, as well as on diversity and appropriate board size]
Please refer to Article 4 (Composition of the Board of Directors) of the “Taiheiyo Cement Corporation Basic
Policy on Corporate Governance.”
Please find the skill matrix for Directors in the reference documents of the Notice of the Ordinary General
Meeting of Stockholders published on the website of the Company.
Japanese URL https://www.taiheiyo-cement.co.jp/ir/kabunushi.html
English URL https://www.taiheiyo-cement.co.jp/english/ir/kabunushi.html[Supplementary Principle 4.11.2 Status of concurrent positions at other listed companies held bydirectors /corporate auditors of the Company]
Please refer to Article 8 (Concurrent Positions of Directors) and Article 15 (Concurrent Positions of Corporate
Auditors) of the “Taiheiyo Cement Corporation Basic Policy on Corporate Governance.”[Supplementary Principle 4.11.3 Analysis and evaluation of the overall effectiveness of the Board of
Directors and the summary of the results]
As stipulated in Article 20 (Evaluation of the Overall Effectiveness of the Board of Directors) of the “Taiheiyo
Cement Corporation Basic Policy on Corporate Governance,” the Company is supposed to conduct theanalysis and evaluation of the overall effectiveness of the Board of Directors each year.
Assessment for FY2023 was implemented through a questionnaire format for self-evaluation of all Directors
and Corporate Auditors, and analysis and assessment were executed by the Chairperson of the Board andOutside Directors based on the results. In addition, upon reporting the contents of analysis and assessment to
the Board of Directors, the improvements as compared to the previous year and future issues were deliberated
and confirmed.
As a result, the overall assessment for FY2023 resulted in better outcome and therefore it was evaluated thatthe Board of Directors of the Company was generally appropriately managed and that the overall effectivenessof the Board of Directors was secured. As for the enhancement of discussion with regard to the Medium-Term
Management Plan, which was raised as an issue in the previous evaluation, the Company made time available
for and enhanced the contents of the discussion, and has confirmed that improvements have been made.
Regarding the further enhancement of disclosure in English, the Company made efforts to promote same-day
disclosure of information in Japanese and English. It was also confirmed that efforts were needed to review
the criteria for submitting proposals in response to changes in economic conditions and social environment,
among other matters, and to further enhance IR activities, including those aimed at overseas investors.
In the future, based on the results of assessment of effectiveness and wide diversity opinions come up with byeach Director and Corporate Auditor, the Company will work to make required improvements with the intent
of further improvement of the functions of the Board of Directors.
[Supplementary Principle 4.14.2 Training policy for directors and corporate auditors]
Please refer to Article 19 (Training Policy for Directors, Corporate Auditors, etc.) of the “Taiheiyo Cement
Corporation Basic Policy on Corporate Governance.”[Principle 5.1 Policy for constructive dialogue with stockholders]
Please refer to Article 25 (Policy for Constructive Dialogue with Stockholders) of the “Taiheiyo Cement
Corporation Basic Policy on Corporate Governance.”-4-

(Translation)[Action to implement management that is conscious of cost of capital and stock price]
The Company set a management target of achieving an ROE of 10% or more in the 26 Medium-Term
Management Plan, which was announced in May 2024. The Company positions revitalizing domestic
business, further promoting global strategy, and promoting sustainability management and contributing tocarbon neutrality as its main initiatives in the 26 Medium-Term Management Plan. The Company aims tomaximize corporate value by steadily implementing these initiatives. For details, please refer to the Outlineof the 26 Medium-Term Management Plan published on the website of the Company.
Japanese URL https://www.taiheiyo-cement.co.jp/news/news/pdf/240514_2.pdf
English URL https://www.taiheiyo-cement.co.jp/english/summary/pdf/240514_2.pdf[Status of dialogue with shareholders]
Please find the status of dialogue with shareholders in the applicable section of the Company’s website.
Japanese URL https://www.taiheiyo-cement.co.jp/csr/disclosure_fr.html
English URL https://www.taiheiyo-cement.co.jp/english/csr/disclosure_fr.html

2. Capital Structure
Foreign Shareholding Ratio

More than 30%[Status of Major Stockholders]Name / Company Name
THE MASTER TRUST BANK OF JAPAN, LTD. (TRUST ACCOUNT)CUSTODY BANK OF JAPAN, LTD. (TRUST ACCOUNT)STATE STREET BANK AND TRUST COMPANY 505001
JP MORGAN CHASE BANK 385632
JP MORGAN CHASE BANK 380072
SSBTC CLIENT OMNIBUS ACCOUNTMSIP CLIENT SECURITIESSTATE STREET BANK AND TRUST COMPANY 505223
JP MORGAN CHASE BANK 385781
STATE STREET BANK AND TRUST COMPANY 505103
Controlling Stockholder (except for Parent
Company)
Parent Company

Number of Shares
Owned
20,438,100
7,705,720
4,577,397
4,505,400
2,848,800
1,918,894
1,800,956
1,774,810
1,590,074
1,589,922

Percentage (%)
17.64
6.65
3.95
3.88
2.45
1.65
1.55
1.53
1.37
1.37

------None

Supplementary Explanation(1) In the Change Report made available for public inspection as of September 7, 2023, T. Rowe Price Japan,
Inc. and one other company were reported to hold the following shares as of August 31, 2023. However,as the Company is unable to confirm the number of shares effectively held by these two companies as ofMarch 31, 2024, these shareholdings are not included in the table above.
The shareholding reported in the Change Report are as follows:
T. Rowe Price Japan, Inc.

Number ofshares held

-5-4,428 thousand

Shareholding 3.63%
ratio(Translation)
T. Rowe Price International Ltd.
Total

Number ofshares held
Number ofshares held

4,141 thousand
8,569 thousand

Shareholding 3.39%
ratio
Shareholding 7.02%
ratio(2) In the Change Report made available for public inspection as of January 18, 2023, Marathon AssetManagement Limited was reported to hold the following shares as of January 13, 2023. However, as theCompany is unable to confirm the number of shares effectively held by this company as of March 31,
2024, this shareholding is not included in the table above.
The shareholding reported in the Change Report is as follows:
Marathon Asset Management Limited

Number ofshares held

10,365 thousand

Shareholding 8.50%
ratio(3) In the Change Report made available for public inspection as of September 22, 2022, Sumitomo Mitsui
Trust Bank, Limited and two other companies were reported to hold the following shares as of September
15, 2022. However, as the Company is unable to confirm the number of shares effectively held by thesethree companies as of March 31, 2024, these shareholdings are not included in the table above.
The shareholdings reported in the Change Report are as follows:
Sumitomo Mitsui Trust Bank, Limited
Sumitomo Mitsui Trust AssetManagement Co., Ltd.
Nikko Asset Management Co., Ltd.
Total

Number ofshares held
Number ofshares held
Number ofshares held
Number ofshares held

359 thousand
4,096 thousand
2,379 thousand
6,834 thousand

Shareholding
ratio
Shareholding
ratio
Shareholding
ratio
Shareholding
ratio

0.29%
3.36%
1.95%
5.60%

(4) The Company holds 6,129,529 shares of treasury stock as of March 31, 2024, but is not included in the
major stockholders shown above.

3. Corporate Attributes
Listed Stock Market and Market Section

Tokyo Stock Exchange Prime Market, Fukuoka Stock
Exchange Main Board

Fiscal Year-End

MarchType of Business

Glass & Ceramics Products

Number of Employees (consolidated) as of
the End of the Previous Fiscal YearSales (consolidated) as of the End of thePrevious Fiscal Year
Number of Consolidated Subsidiaries as of
the End of the Previous Fiscal Year

More than 1000
From ¥100 billion to less than ¥1 trillion
From 100 to less than 300

4. Policy on Measures to Protect Minority Stockholders in Conducting Transactions with Controlling
Stockholder-------6-

(Translation)

5. Other Special Circumstances which may have Material Impact on Corporate Governance
The Company owns Pacific Systems Corporation, a listed subsidiary. Its main businesses include equipment
sales, software development, systems sales, and systems operation and management. The Company considers
that it is essential to ensure the independence of Pacific Systems Corporation by maintaining its listing on thestock exchange so as to maintain and improve the subsidiary’s credibility and name value, secure superior
person, and maintain business partners’ trust in the subsidiary. Moreover, given that Pacific Systems
Corporation functions as the Group’s sole systems-related company, the Company considers that Pacific
Systems Corporation maximizes corporate value of the entire Group by making it possible to adequately
leverage synergies drawing on the utilization of IT by the Company and group companies.
The Company, based on the “Group Companies Management Rules,” properly manages and supports its
subsidiaries under the basic principle that the Company will assist them in establishing an autonomous andstable management that is based on their own responsibilities, with adequately functioning management
bodies (general meeting of stockholders, board of directors, corporate auditors, board of auditors).

II. Business Management Organization and Other Corporate Governance Systems
regarding Decision-making, Execution of Business, and Oversight in Management
1. Organizational Composition and Operation
Company with Board of Auditors

Organization Form
[Directors]
Maximum Number of Directors Stipulated in
Articles of Incorporation
Term of Office Stipulated in Articles ofIncorporation

10
1 yearNumber of Directors

Chairperson (excluding those concurrently serving as
President)
9

Appointment of Outside Directors

Appointed

Number of Outside Directors

3

Number of Independent Directors

3

Chairperson of the Board

Outside Directors’ Relationship with the Company (1)NameAttribute

Yoshiko Koizumi

LawyerHideyuki Furikado

Other

Shingo Tsutsumi

From another company*

Relationship with the Company*
A

Categories for “Relationship with the Company”
-7-

b

c

d

e

f

g

h

i

△

△

j

k

(Translation)**“○” when the director presently falls or has recently fallen under the category;“△” when the director fell under the category in the past“●” when a close relative of the director presently falls or has recently fallen under the category;“▲” when a close relative of the director fell under the category in the pasta. Executive of the Company or its subsidiaries
b. Non-executive director or executive of a parent company of the Company
c. Executive of a fellow subsidiary company of the Company
d. A party whose major client or supplier is the Company or an executive thereof
e. Major client or supplier of the listed company or an executive thereof
f. Consultant, accountant or legal professional who receives a large amount of monetary consideration or otherproperty from the Company besides compensation as a director/corporate auditor
g. Major stockholder of the Company (or an executive of the said major stockholder if the stockholder is alegal entity)
h. Executive of a client or supplier company of the Company (which does not correspond to any of d, e, or f)(the director himself/herself only)
i. Executive of a company, between which and the Company outside directors/corporate auditors aremutually appointed (the director himself/herself only)
j. Executive of a company or organization that receives a donation from the Company (the director
himself/herself only)
k. Others

Outside Directors’ Relationship with the Company (2)Name
Yoshiko Koizumi

Hideyuki Furikado

Designation as
Independent
Director
Yes

Supplementary
Explanation of
the Relationship-

Reasons of Appointment<Reason for the appointment as an
outside director>
Yoshiko Koizumi has a wealth ofexperience as a lawyer and the broad
insight of corporate legal affairs. As
such, she is considered to be suitable toserve as an outside director from anequitable and impartial standpoint.
<Reason for designation as anindependent director >Yoshiko Koizumi has been designatedas an independent director as she
satisfies the “Independence Criteria for
Outside Officers” established by theCompany and it is therefore determinedthat there is no risk of any conflict ofinterest with general stockholders.
<Reason for the appointment as an
outside director>
Hideyuki Furikado has a wealth ofexperience as a government official
and the broad insight of public
administration. As such, he isconsidered to be suitable to serve as
an outside director from an equitable
and impartial standpoint.

Yes

-8-

(Translation)

Shingo Tsutsumi

Yes

Shingo Tsutsumi had
held a position of an
executive (Director andExecutive Vice
President) at TOSOHCORPORATION, which
is a business partner of
the Company, until June
2020. In addition,
Yukimasa Nakano, who
had worked for theCompany in the past,
has assumed the officeof outside director at
TOSOH
CORPORATION.

Voluntary Establishment of Committee(s)Corresponding to Nomination Committee or
Compensation Committee<Reason for designation as anindependent director>
Hideyuki Furikado has been
designated as an independent director
as he satisfies the “Independence
Criteria for Outside Officers”
established by the Company and it istherefore determined that there is norisk of any conflict of interest withgeneral stockholders.
<Reason for the appointment as an
outside director>
Shingo Tsutsumi has a wealth ofexperience as a senior management
executive of a company and the broad
insight of corporate management ingeneral. As such, he is considered to besuitable to serve as an outside director
from an equitable and impartial
standpoint.
<Reason for designation as anindependent director>
Shingo Tsutsumi has been designated as
an independent director as he satisfies
the “Independence Criteria for Outside
Officers” established by the Company
and it is therefore determined that there
is no risk of any conflict of interest withgeneral stockholders.

Established

Committee’s Name, Composition, and Attributes of Chairperson

All Committee Members

Committee Corresponding toNomination Committee
Nomination and Compensation
Advisory Committee
4

Committee Corresponding to
Remuneration Committee
Nomination and Compensation
Advisory Committee
4

Full-time Members

00Inside Directors

11Outside Directors

33Outside Experts

0

0

Other

0

0

Chairperson

Outside Director

Outside Director

Committee’s Name

Supplementary Explanation-9-

(Translation)
The Company has established a Nomination and Compensation Advisory Committee as an advisory body to
the Board of Directors in order to secure fairness, transparency and objectivity pertaining to decisions on thenomination and compensation of directors and other officers. The members of the Nomination andCompensation Advisory Committee consist of directors appointed by the Board of Directors and include threeor more members, the majority of whom shall be outside directors. The chairperson of the committee isappointed from among outside directors. The members of the committee are Outside Director Yoshiko
Koizumi (Chairperson), Outside Director Hideyuki Furikado, Outside Director Shingo Tsutsumi andChairman and Director Masafumi Fushihara. In addition, the Committee deliberates policies for thenomination of Directors, the appointment and dismissal of Directors, etc., the policy for determining
compensation, etc. for individual Directors, and details of compensation for Directors, etc., and reports to theBoard of Directors.
[Corporate Auditors]
Establishment of Board of Auditors

Established

Maximum Number of Corporate Auditors
Stipulated in Articles of Incorporation

5

Number of Corporate Auditors

4

Cooperation among Corporate Auditors, Accounting Auditors and Internal Audit Departments[Status of coordination between corporate auditors and accounting auditors]
Corporate auditors receive reports and explanations from accounting auditors regarding their audit plans,methods and results and exchange opinions with them regularly.
[Status of coordination between corporate auditors and the Internal Auditing Department]
Corporate auditors hold meetings with the Internal Auditing Department regularly and as necessary to
exchange opinions. They also receive reports from the Department on internal audit plans and theirimplementation status in all particulars and request the Department to conduct an investigation as necessary.
Appointed
Appointment of Outside Corporate Auditors
Number of Outside Corporate Auditors

2

Number of Independent Corporate Auditors

2

Outside Corporate Auditors’ Relationship with the Company (1)NameAttribute

Wakako Mitani

LawyerRelationship with the Company*
a

b

c

d

e

f

g

h

i

j

k

CPA
Toshihito Aoki
* Categories for “Relationship with the Company”* “○” when the director presently falls or has recently fallen under the category;“△” when the director fell under the category in the past
* “●” when a close relative of the director presently falls or has recently fallen under the category;“▲” when a close relative of the director fell under the category in the pasta. Executive of the Company or its subsidiaryb. Non-executive director or accounting advisor of the Company or its subsidiaries
c. Non-executive director or executive of a parent company of the Company
d. Corporate auditor of a parent company of the Company
e. Executive of a fellow subsidiary company of the Company- 10 -lm

(Translation)
f. A party whose major client or supplier is the Company or an executive thereof
g. Major client or supplier of the Company or an executive thereofh. Consultant, accountant or legal professional who receives a large amount of monetary consideration orother property from the Company besides compensation as a corporate auditor
i. Major stockholder of the Company (or an executive of the said major stockholder if the stockholder is alegal entity)
j. Executive of a client or supplier company of the Company (which does not correspond to any of f, g, or h)(the corporate auditor himself/herself only)
k. Executive of a company, between which and the Company outside directors/ corporate auditors aremutually appointed (the corporate auditor himself/herself only)
l. Executive of a company or organization that receives a donation from the Company (the corporate auditor
himself/herself only)
m. Others
Outside Corporate Auditors’ Relationship with the Company (2)Name

Designation as
Independent
Corporate
AuditorYes

Supplementary
Explanation of
the Relationship-

Reasons of Appointment<Reason for the appointment as an
outside corporate auditor>
Wakako Mitani has a wealth ofexperience, achievements and insight on
corporate legal affairs as a lawyer. As
such, she is considered to be suitable toserve as an outside corporate auditor
from an equitable and impartial
standpoint.

Wakako Mitani

Yes<Reason for designation as anindependent corporate auditor >Wakako Mitani has been designated as
an independent corporate auditor as she
satisfies the “Independence Criteria for
Outside Officers” established by theCompany and it is therefore determinedthat there is no risk of any conflict ofinterest with general stockholders.
<Reason for the appointment as an
outside corporate auditor>
Toshihito Aoki has a wealth ofexperience, achievements and insight on
corporate accounting as a certified
public accountant. As such, he isconsidered to be suitable to serve as an
outside corporate auditor from anequitable and impartial standpoint. He
also has considerable knowledge offinance and accounting based on hislong experience as a certified public
accountant.

-Toshihito Aoki

<Reason for designation as anindependent corporate auditor >- 11 -

(Translation)
Toshihito Aoki has been designated as
an independent corporate auditor as hesatisfies the “Independence Criteria for
Outside Officers” established by theCompany and it is therefore determinedthat there is no risk of any conflict ofinterest with general stockholders.

[Independent Directors/ Corporate Auditors]
Number of Independent Directors/ Corporate
Auditors

5

Matters relating to Independent Directors/ Corporate Auditors[Independence Criteria for Outside Officers]
Outside officers are considered to be sufficiently independent from the Company if they do not fall under anyof the following items:
1. A person who is or was an executive (Note 1) of the Company or any of its subsidiaries;
2. A person who is or has recently been a person falling under any of the (1) through (7) below:(1) A major stockholder (Note 2) of the Company or an executive of a major stockholder of the Company;(2) A party whose major business partner is the Company (Note 3) or an executive thereof;(3) A major business partner of the Company (Note 4) or an executive thereof;(4) A person belonging to an audit corporation that is the accounting auditor of the Company;(5) A party who receives a significant amount of donation or aid (Note 5) from the Company or an executive
thereof;(6) An individual who receives a significant amount of money (Note 6) or other property from the Company
as a lawyer, certified public accountant, tax accountant, consultant, etc., in addition to the compensationthat he/she receives from the Company as an outside officer; or(7) An executive of a legal entity, etc. that is a law firm, auditing firm, tax accounting firm, consulting firm,etc., whose major business partner is the Company (Note 7).
3. A person who is a close relative (Note 8) of any of the persons listed in 1. and 2. above.
Notes:
1. An executive is an executive director, corporate officer, executive officer, or an employee who holds asenior management position.
2. A major stockholder is a stockholder who holds 10% or more of the voting rights of the Company.
3. A party whose major business partner is the Company is a party who has carried out transactions with theCompany for an amount exceeding 2% of the annual consolidated total net sales for the latest fiscal year ofthat party.
4. A major business partner of the Company is a party who has carried out transactions with the Company for
an amount exceeding 2% of the annual consolidated total net sales for the latest fiscal year of the Company
or a financial institution that has an outstanding balance of loans to the Company that exceeds 2% of theconsolidated total assets of the Company as of the end of the latest fiscal year of the Company.
5. If the recipient is an individual, a significant amount of donation or aid means a donation or aid exceeding
an average of 10 million yen per year over the last three fiscal years. If the recipient is a legal entity, asignificant amount of donation or aid means a donation or aid of an average of 10 million yen per year overthe last three fiscal years or 30% of the total annual expenses of said legal entity, whichever the greater.
6. A significant amount of money means an amount of money exceeding an average of 10 million yen peryear over the last three fiscal years.

- 12 -

(Translation)
7. A legal entity, etc. whose major business partner is the Company is a legal entity, etc. that has carried outtransactions with the Company for an average amount per year over the last three years exceeding 2% of
the annual consolidated total net sales of said legal entity, etc.
8. A close relative means a spouse or a relative within the second degree of kinship.

[Incentives]
Incentive Policies for Directors

Performance-linked Compensation

Supplementary Explanation
Directors’ (excluding Outside Directors’) compensation consists in part of stock compensation andperformance-linked compensation. For details, please see “II. 1. [Director Compensation] Disclosure of
Policy on Determining Compensation Amounts and Calculation Methods” of this Report.

Recipients of Stock Options
Supplementary Explanation-------[Director Compensation]
Disclosure of Individual Directors’Compensation

No Individual Disclosure

Supplementary Explanation
Compensation paid to directors and corporate auditors
Directors: 393 million yen (in total for 10 directors)
Corporate auditors: 72 million yen (in total for 5 corporate auditors)

Policy on Determining Compensation Amounts
and Calculation Methods

Established

Disclosure of Policy on Determining Compensation Amounts and Calculation Methods(i) Matters concerning the policy for determining compensation, etc. for individual Directors
The Company has determined policy for determining compensation, etc. for individual Directors at themeeting of Board of Directors. When determining compensation for Directors, the Company will clarify
management responsibilities, raise awareness of improving business performance, and strengthen the link
between the compensation and stockholders’ benefit, while offering the Directors incentives to achieve
improvement of the long-term business performance and corporate value of the Group and sharing more ofthat value with the stockholders. The outline of Directors’ compensation determination process is as follows:
The Company establishes the Nomination and Compensation Advisory Committee, the majority of whose
members are Outside Directors and is chaired by an Outside Director, as an advisory body to the Board of
Directors. From the view of enhancing the fairness, transparency, and objectivity, the compensation shall be
discussed by said Committee, which reports to the Board of Directors, and shall be determined at the discretionof Representative Directors at the Board of Directors meeting, within the range of suitable amount based on- 13 -

(Translation)a resolution of the General Meeting of Stockholders and the regulations of the Company, while also respecting
the contents of report of the Nomination and Compensation Advisory Committee to the maximum extent
possible.
The compensation plan for Directors (excluding Outside Directors) consists of fixed compensation, stockcompensation and performance-linked compensation whereas the compensation plan for Outside Directors
consists only of fixed compensation.
・The amounts of fixed compensation and stock compensation are determined according to the rank ofposition.
・ The amount of the performance-linked compensation of Directors (excluding Outside Directors) is
calculated by multiplying the amount calculated as profit attributable to owners of parent for the current fiscal
year times 1% (an upper limit of ¥400 million) by the multiplier assigned to each position. It is paid startingfrom July in the fiscal year following the end of the current fiscal year. However, this amount can be reducedin consideration of the financial performance of the Company or other circumstances. In principle,
performance-linked compensation is not paid if the amount of annual dividend for the current fiscal year isless than ¥30 per share.
・Stock compensation is paid every year by granting restricted stock according to the rank of position. The
transfer restrictions will be canceled when a Director retires.
・The composition ratio of fixed compensation, stock compensation and performance-linked compensationin the amount of compensation is approximately 90% to approximately 45% for fixed compensation,
approximately 10% to approximately 15% for stock compensation, and 0% to approximately 40% for
performance-linked compensation, depending on profit.
・Profit attributable to owners of parent was chosen as an indicator with an aim to strengthen the link between
the compensation and stockholders’ benefit. Performance-linked compensation makes up 11% of the totalcompensation for FY2023. The actual result of loss attributable to owners of parent for FY2022, which serves
as a basis for calculating the performance-linked compensation for FY2023, was ¥33.2 billion.
(ii) Matters concerning the policy for determining compensation, etc. for individual Corporate Auditor
The compensation plans for Corporate Auditors of the Company consist only of fixed compensation. The
amounts of compensation of individual Corporate Auditors are determined by consultation among Corporate
Auditors.
(iii) Matters concerning resolutions of the General Meetings of Stockholders regarding compensation, etc. for
Directors and Corporate Auditors
The upper limits of compensation for Directors and Corporate Auditors are separately set by a resolution of
the General Meeting of Stockholders. The date of resolution of the General Meeting of Stockholders on thecompensation for Directors was June 29, 2021, and the number of Directors after said General Meeting ofStockholders was nine (including three outside directors). The date of resolution on the compensation for
Corporate Auditors was June 29, 2000, and the number of Corporate Auditors after said General Meeting ofStockholders was four. The content of the resolution of the General Meetings of Stockholders regarding
compensation for Directors is such that the amount shall be not more than ¥1.2 billion yen per year (of which,¥100 million yen for Outside Directors) and not more than ¥200 million yen per year (200 thousand shares
per year) shall be provided to Directors other than Outside Directors as restricted stock compensation within
the scope of the said compensation amount. The content of the resolution on the compensation for Corporate
Auditors is such that the amount shall be not more than ¥13 million per month.

[Supporting System for Outside Directors and/or Corporate Auditors]
The Corporate Planning Department provides outside directors with such support for their execution of duties
as agenda briefing for coming board meetings and regular business reporting (weekly as a rule).
For outside corporate auditors, liaison meetings are held regularly (weekly as a rule), at which full-time
corporate auditors or the departments in charge report the results of important internal meetings such as
Executive Committee meetings.
The Company also has established a Corporate Auditor’s Office consisting of three persons responsible forassisting corporate auditors.

[Status of Persons Retired as President and Representative Director, etc.]- 14 -

(Translation)
Names, etc. of advisors (“sodanyaku,” “komon,” etc.) who have formerly served as President andRepresentative Director, etc.

Name

Title/
position

Activity Description

Working Arrangement /Conditions(Full-time/Part-time,
Compensation)----------------------------

Total number of advisors (“sodanyaku,”“komon,” etc.) who have formerly served as
President and Representative Director, etc.

Date ofretirement
from
President,etc.
-------

Term--------------

Other information
・The Company has a system in which persons who have been President of the Company are commissioned
to act as Executive Advisor; however, no one is commissioned at the moment. The role of an Executive
Advisor is to perform activities in the business community, public activities, etc., and has no authoritythat could affect managerial decisions of the Company. The term of office is one year (two years at
maximum) and compensation commensurate with his/her duty is paid.
・Persons who have retired as Executive Advisor may be appointed as a Special Advisor for the purpose ofengaging in external activities that are significant to the Company. The term of office of a Special Advisor
is one year (two years at maximum) and compensation commensurate with his/her duty is paid.

2.Matters on Functions of Business Execution, Auditing, Oversight, Nomination and Compensation
Decisions (Overview of Current Corporate Governance System)(1) Management decisions based on the Companies Act are made by the Board of Directors and otherimportant decisions are made by the Executive Committee.
(2) The Company has introduced an executive officer system and part of the business execution authority has
been delegated to the executive officers in charge of individual businesses and departments.
(3) The Company has established a Sustainability Management Committee to review the ideal direction for
the Company’s business activities from the perspective of sustainability, and promotes the strengtheningof corporate governance.
[Status of the Board of Directors]
The Board of Directors meets once a month in principle and when it is deemed necessary. The meeting makes
decisions on the items stipulated by laws and regulations as well as important matters concerning
management. The Board of Directors is composed of 9 persons, including three outside directors. The
meetings were held 15 times during FY2023, and the attendance rate of directors was 100%, while that ofcorporate auditors was 100%.
[Nomination and Compensation Advisory Committee]
The Company has established a Nomination and Compensation Advisory Committee, which is composed ofthree outside Directors and one internal Director, and whose chairperson is appointed among outside
Directors. On receiving a request from the Board of Directors, the Nomination and Compensation Advisory
Committee will deliberate nominations and matters relating to compensation, and report back to the Board of
Directors. Through the Nomination and Compensation Advisory Committee, the Company is working tostrength fairness, transparency, objectivity of the decision-making process concerning about nomination andcompensation.
[Status of internal audits]- 15 -

(Translation)
The Internal Auditing Department, which is responsible for conducting internal audits, consists of 19 persons,
including qualified internal auditors. The Internal Auditing Department conducts internal audits to identify
matters requiring improvements and then reports the audit results to the President and other Directors andCorporate Auditors, to ensure the effectiveness of internal audits.
[Status of audits by corporate auditors]
The Board of Auditors consists of two internal corporate auditors and two outside corporate auditors andperforms the oversight and audit functions targeting the management by such means of attending board
meetings and other important meetings, interviewing directors and other executives to ask questions about thestatus of their execution of duties, and inspecting important approval documents. As part of its efforts toenhance the effectiveness of audit, the corporate auditors also visit branches, plants, subsidiaries, etc., toinvestigate the business execution status of the Company and the Group. They also hold regular corporate
auditor liaison meetings to exchange opinions and share information among themselves (and persons in chargeof relevant departments if necessary) to establish a system that enables them to conduct audits in a fair andappropriate manner.
[Status of accounting audits]
The Company has appointed KPMG AZSA LLC as the accounting auditor for accounting audits required by
the Companies Act and for those required by the Financial Instruments and Exchange Act. The names ofcertified public accountants who executed the audit and the composition of the assistants involved inaccounting audits are as follows: There is no special interest between the Company and the audit corporationor any of the engagement partners of the audit corporation engaging in the audit of the Company.
・Name of certified public accountants who executed the services
Designated limited liability and engagement partners: Reiji Kobayashi, Yoshihiro Uehara, Hiroko Sakurada

・Composition of the assistants involved in accounting audits
11 certified public accountants and 23 other assistants
Note: The other assistants consist of persons who have passed the CPA exam, persons in charge of system
audit, etc.
[Overview of limited liability agreement]
The Company has concluded an agreement with each director (excluding executive directors, etc.) andcorporate auditor, which limits his/her liability for damages in respect of his/her responsibilities set out under
Article 423, Paragraph 1 of the Companies Act, to the minimum limit of liability set out under Article 425,
Paragraph 1 of the same provided that he/she executes his/her duties in good faith and without grossnegligence.

3. Reasons for Adoption of Current Corporate Governance System
As stated below, with the appointment of outside directors and outside corporate auditors to perform checks
from the external perspective, the Company believes that the current corporate governance system issufficiently capable of ensuring the neutrality and objectivity of the management supervisory function.
(1) Outside directors and outside corporate auditors
Three outside directors have been appointed to oversee and supervise the overall management and two outside
corporate auditors have been appointed to conduct audits of the execution of duties by directors. There is no
special interest such as personal, capital or trade relationships between the Company and any of the threeoutside directors and two outside corporate auditors.
(2) Management oversight function
Corporate auditors oversee the execution of duties by directors by such means of attending board meetingsand other important meetings, inspecting approval documents, and audits of individual departments.
Moreover, by introducing the executive officer system, the Company strives to separate and distinguish thedecision making and supervisory functions of the management from the business execution and will continue
to improve corporate governance under the current system.
- 16 -

(Translation)

III. Implementation of Measures for Stockholders and Other Stakeholders
1. Measures to Vitalize the General Stockholder Meetings and Smooth Exercise of Voting Rights
Early Notification of General
Stockholder Meeting
Allowing Electronic Exerciseof Voting Rights
Participation in Electronic
Voting Platform
Providing Convocation Noticein English
Other

Supplementary Explanations
The Company sends the Convocation Notice of the General Meeting ofStockholders more than three weeks before the meeting date.
The Company has adopted the system for exercising voting rights via theInternet from 2007.
The Company has participated in the electronic voting platform for
institutional investors operated by ICJ, Inc. since 2007.
It is published on the website of the Company.
The content of the Convocation Notice of the General Meeting ofStockholders is published on the website of the Company about four weeks
before the meeting date, before it is sent to stockholders. The notice ofresolutions is also published on the website of the Company after the closeof the General Meeting of Stockholders.

2. IR Activities
Preparation and Publication ofDisclosure Policy

Regular Investor Briefings forAnalysts and Institutional
Investors

Posting of IR Materials on
WebsiteEstablishment of Department
and/or Manager in Charge ofIR

Supplementary Explanations
The Company has established the “Information Disclosure Policy” on May
1, 2007.
The Company believes that winning the understanding and trust of the
stakeholders of the Company through information disclosure is essential forthe realization of the “Group Mission.” The Company also recognizes active
information disclosure as one of the corporate social responsibilities.
The “Information Disclosure Policy” is available for inspection on thewebsite of the Company (URL https://www.taiheiyocement.co.jp/english/csr/disclosure_fr.html).
The Company holds financial results briefings for securities analysts,
institutional investors, etc., in May and November. Most recently, theCompany held a briefing on financial results for FY2023 and the 26
Medium-Term Management Plan on May 15, 2024, with President andRepresentative Director Yoshifumi Taura, Vice President and Representative
Director Hideaki Asakura, and Managing Executive Officer Masahiro Ban
giving explanations.
In the “Investor Relations” page (URL https://www.taiheiyocement.co.jp/english/ir/index.html) on its website, the Company publishes
such information as summaries of financial results, results briefing
materials, integrated reports, and annual securities reports.
Timely disclosure materials are published in the “News Releases” page
(URL https://www.taiheiyo-cement.co.jp/english/news/index.html) on thewebsite of the Company.
Department in charge of investor relations: General Affairs Department
Officer in charge of investor relations: Masahiro Ban, Managing Executive
Officer- 17 -

(Translation)
Head of secretariat for investor relations: Ken-ichi Takano, General
Manager of General Affairs Department

3. Measures to Ensure Due Respect for Stakeholders
Stipulation of Internal Rules
for Respecting the Position of
Stakeholders

Implementation ofEnvironmental Activities, CSR
Activities etc.

Development of Policies on
Information Provision to
Stakeholders

Supplementary Explanations
In our Business Principles we pledge to “communicate broadly withsociety.” The “Sustainability Guidelines,” which specify actions that are
essential for implementation of the Company’s Business Principles,prescribe that “we will practice appropriate information disclosure andcommunication with stakeholders, based on the status of our sustainability
management promotion, and build relationships of trust” as one of the basic
policies for the promotion of sustainability management. Furthermore, theCompany has stipulated the Basic Policy and Rules for Stakeholder
Communication and is trying to engage with our stakeholders.
By recycling wastes and by-products for use as raw materials for cement
production, the Company is reducing environmental load to the society
through the reduction of the consumption of natural mineral resources, theprevention of global warming, and the extension of the lifetime of landfills.
The Company is earnestly developing technologies to increase the volume of
the use of recycle wastes. The Company is also conducting a wide variety ofsustainability promotion activities including efforts to ensure full complianceand to strengthen communication with local communities.
In June 2019, the Company announced its support for the recommendations
by the Task Force on Climate-related Financial Disclosures (TCFD). The
Company conducted an evaluation and analysis of the business risks andopportunities posed by climate change, which it regards as one of its toppriorities, and announced its findings in 2020, while subsequent revisions
were made and disclosed in 2023. In addition, amid drastically shifting
societal awareness of climate change, the Company recognizes that it mustclearly state the direction that the Group should be heading in terms of
reducing its carbon dioxide emissions from a long-term perspective. Basedon that recognition, the Company formulated its long-term vision ofgreenhouse gas emissions reduction toward 2050 in March 2020. As a
specific measure, the Group has released its “Carbon Neutral Strategy 2050”(March 24, 2022), which includes a roadmap for technology development and2030 interim targets to achieve carbon neutrality (URL
https://www.taiheiyo-cement.co.jp/english/news/index.html).
Under this vision, the Company aims to contribute to building a resource
recycling-based society by balancing the aim of maintaining cement
production volumes with the aim of expanding its utilization of waste and byproducts, while reducing CO2 emissions. Such efforts will constitute part ofour growth strategy in alignment with the Mission of the Taiheiyo Cement
Group.
(Please refer to the “Taiheiyo Cement Report 2023,” which are published on
the website of the Company URL at https://www.taiheiyocement.co.jp/english/csr/csr_fr.html).
The Company has established the “Information Disclosure Policy” on May 1,
2007.
The Company believes that winning the understanding and trust of the
stakeholders of the Company through information disclosure is essential forthe realization of the “Group Mission.” The Company also recognizes active
information disclosure as one of the corporate social responsibilities.

- 18 -

(Translation)

Other

The “Information Disclosure Policy” is available for inspection on thewebsite of the Company (URL https://www.taiheiyocement.co.jp/english/csr/disclosure_fr.html).
<Collaboration with external organizations>
The Company is working on the resolution of various problems including
issues associated with respect for human rights and anti-corruption, as wellas environmental issues, including climate change and biodiversity, as wellas occupational health through the participation in international activities
such as the United Nations Global Compact and the GCCA (Global Cement
and Concrete Association).
(Please refer to the “Taiheiyo Cement Report 2023,” which is published on
the website of the Company URL at https://www.taiheiyocement.co.jp/english/csr/csr_fr.html).
<Promotion of diversity & inclusion>
The Company regards the promotion of diversity and inclusion as one of themost important issues for creating an innovative labor force and is actively
working toward its goal of becoming a company where women and otherhuman resources with diverse values can play an active role. The Company
has added “diversity and inclusion education” to its training curriculum inaccordance with job level, and is striving to further instill its basic views. In
addition, as part of efforts to ensure diversity in the appointment andpromotion of core human resources, we conduct training for female
employees with the aim of developing the next generation of leaders, in the
expectation that it will facilitate the appointment of women to management
positions.
Please refer to the website of the Company for the “General Business Action
Plan” based on the Act on Promotion of Women’s Participation andAdvancement in the Workplace, as well as for the promotion of diversity
and inclusion (URL https://www.taiheiyocement.co.jp/english/csr/human_rights_fr.html#section19).
<Promotion of women’s activities>
In November 2013, the Company established, and began to implement goals
and a basic policy regarding the promotion of women’s activities. The current
quantitative targets are set forth in the Sustainability Targets formulated in
May 2024 and shared both inside and outside of the Company. The ratio of
female employees was approximately 9.8% and the ratio of female managers
was approximately 2.5% as of March 31, 2024. The Company will continue
its efforts.
[Fundamental policies]
We aim to further improve corporate value by promoting innovation based on
the ideas and values of diverse human resources.
・ Promote active recruitment of women to build an appropriate humanresources portfolio.
・ Provide equal growth opportunities and support skill development for
female employees so that they can independently develop their careers.
・Aim to retain female employees by fostering an organizational culture thatallows female employees to maximize their individuality and abilities andpromoting work-life management.
April 2024
TAIHEIYO CEMENT CORPORATION
Yoshifumi Taura, President and Representative Director[Sustainability Targets]- 19 -

(Translation)
・Ratio of female employees of at least 10% (to be achieved by FY2026)
・Ratio of female managers of at least 3% (to be achieved by FY2026) and at
least 5% (to be achieved by FY2030)<Promotion of employee health>
From FY2018, the Company has been promoting employee health, and in
September 2022 revised the content of its commitment to health with the aimof further promoting the health of employees. Currently, under thecommitment to health, the President and Representative Director is assigned
the ultimate responsibility for the health of employees, and the Human Rights& Labor Practices Committee, a subcommittee of the Sustainability
Management Committee under the direct control of the Board of Directors,
plays a central role in maintaining and improving the health of employees andtheir families in consideration that employees are the most important“capital” of the Company, and our aim to create a rewarding workplace.
Specifically, the Company promotes employee health within the PDCA cycle,
which includes establishing an activity plan for employee health for eachfiscal year, implementing measures, verifying effectiveness, and reflecting
the results in measures for the following fiscal year. Under the commitment
to health, the Company will continue to work to maintain and improve thehealth of its employees and their families, promote a rewarding workplace,and aim to revitalize the organization and increase its productivity, whilestrengthening cooperation with the Taiheiyo Cement Health Insurance
Association and the Taiheiyo Cement Labor Union, centered on the Human
Rights & Labor Practices Committee.
[Taiheiyo Cement Group Health-Conscious Management Declaration]
The physical and mental health of our employees and their families is aprerequisite for us to realize our mission of contributing to social
infrastructure development by providing solutions that are environmentally
efficient, enhancing our competitive position and bring value to ourstakeholders. We hereby declare that we regard our employees as “humancapital” and that we will work to maintain and improve their health and thatof their families, and aim to create a rewarding workplace where employees
can fully demonstrate their abilities.
April 2024
TAIHEIYO CEMENT CORPORATION
Yoshifumi Taura, President and Representative Director[Fundamental Policies]
1) Under the Health-Conscious Management Declaration, the Taiheiyo
Cement Group, led by the Human Rights & Labor Practices Committee,
will work with each business site to promote efforts to maintain andimprove the health of employees and their families and to create arewarding workplace.
2) Employees will enhance their physical and mental wellbeing andimprove their quality of life by actively working to maintain and improvetheir health and that of their families.
For information on our promotion of employee health, please refer to thewebsite of the Company (URL https://www.taiheiyocement.co.jp/english/csr/human_rights_fr.html#section24).
In addition, the Company has been recognized as a “2024 Certified Healthand Productivity Management Outstanding Organization” by the Nippon
Kenko Kaigi. For information, please refer to the “News Releases” page on- 20 -

(Translation)
the website of the Company (URL https://www.taiheiyocement.co.jp/english/summary/pdf/240311.pdf).

IV. Matters Related to the Internal Control System
1. Basic Views on Internal Control System and the Progress of System Development
The Company has established the basic policy as follows for building a system that enables the Company andits group companies to operate businesses appropriately and efficiently in accordance with the Companies Act
and the Ordinance for Enforcement of the Companies Act. The system is founded on the basic principles offurther enhancing and strengthening various systems in operation to date, as well as reviewing and revisingnecessary matters.
1)

System to ensure that Directors, Executive Officers and employees comply with laws andordinances and the Articles of Incorporation in executing their duties(i) The Company shall strengthen its system for ensuring that the actions of Directors, Executive
Officers and employees comply with laws and ordinances, the Articles of Incorporation and otherinternal company rules, and conventional wisdom in accordance with the Mission of the Taiheiyo
Cement Group, Business Principles, Basic Compliance Policy and Compliance Rules.
(ii) The Sustainability Management Committee, an interdepartmental committee under the direct
authority of the Board of Directors, pursues policies to promote compliance awareness among
Directors, Executive Officers and employees in accordance with the Sustainability Guidelines.
(iii) The Internal Auditing Department conducts audits of the business activities of each place ofbusiness within the Company to determine whether Executive Officers and employees comply
with laws and ordinances, the Articles of Incorporation, etc. in executing their duties, provides
advice and recommendations after identifying items in need of improvement, and reports to the
President about audit results and then notifies Directors and Corporate Auditors.
(iv) The Company employs an internal reporting system that uses a compliance hotline to reach
representatives both inside and outside the Company (law firm) to enable an accurate response
while protecting the informer and ensuring transparency.

2)

System to store and manage information related to the execution of duties by Directors
The Company documents, stores, and manages information related to the execution of duties byDirectors in accordance with the Board of Directors Rules, Decision Making Rules and Document
Management Rules. Directors and Corporate Auditors can review these documents at any time.

3)

Rules and other systems related to managing the risk of loss(i) The Company, under the Basic Risk Management Policy and Risk Management Rules, hasprescribed basic matters and specific responses to prevent and minimize the impact of risk items
that could significantly affect the business of the Taiheiyo Cement Group. The Risk Management& Compliance Committee is in charge of pursuing specific measures, and reports to the
Sustainability Management Committee about the status of these activities.
(ii) In the event of an emergency, the Company establishes an Emergency Headquarters led by the
President to pool information and exercise top-down leadership in tackling the emergency inaccordance with the provisions of the Risk Management Rules.

4)

System to ensure that Directors execute their duties efficiently(i) The Company delegates to Executive Officers the authority for certain business matters as
stipulated in the Decision Making Rules and elsewhere. Executive Officers, based on a
Management by Objectives, set clear targets for each responsible organization under their control
and execute their duties efficiently.
(ii) The Board of Directors efficiently allocates business resources from the perspective of optimizing
companywide resources and in accordance with the medium-term management plan and annual- 21 -

(Translation)
management policy (President’s policy), and reviews the targets of Executive Officers and theprogress of policies reported from time to time.
5)

System for ensuring proper execution of operations within the company group, comprising theCompany and its subsidiaries
The Company, in accordance with its Group Companies Management Rules, takes the following steps
to provide appropriate management and support to its subsidiaries to enable the adequate functioningof their management organizations (general meeting of stockholders, board of directors, corporate
auditors, and board of auditors) and the establishment of independent management based on selfresponsibility.
(i) The Company assigns, in principle, Directors, Executive Officers and employees to serve as
directors or corporate auditors at its subsidiaries. These corporate auditors conduct audits ofinternal control systems.
(ii) The Internal Auditing Department conducts audits of the business activities according to the size,
nature of business, etc. of subsidiaries to determine whether the directors and employees of thesubsidiaries comply with laws and ordinances, the Articles of Incorporation, etc. in executing theirduties, provides advice and recommendations after identifying items in need of improvement, andreports to the President about audit results and then notifies Directors and Corporate Auditors.
(iii) The Company seeks to understand the business conditions of each subsidiary through performance
reports and other means and endeavors to share information through exchanges of opinions
between the Company and directors at subsidiaries (including directors serving concurrently as
Directors, Executive Officers or employees at the Company) by periodically holding Group
Executive Committee meetings.
(iv) The Company makes its subsidiaries appoint officers responsible for risk management andcompliance as well as risk management and compliance promoters according to their size, natureof business, etc. and strives to prevent and reduce risks in the Taiheiyo Cement Group bycollaborating with each company, and adopts a system for reporting to Directors and Corporate
Auditors of the Company if a crisis occurs or if an event with the risk of developing into a crisis
arises at a company.

6)

System to ensure reliability of financial reporting
The Company develops a system required to properly conduct financial reporting such as consolidated
financial statements.

7)

Matters related to personnel to assist Corporate Auditors and independence of such personnel
from Directors
The Company has established a Corporate Auditor’s Office which assists Corporate Auditors in
performing their duties, and assigns full-time personnel. The Company shall request and respect theopinion of the Board of Auditors in matters related to the transfer and evaluation of such full-time
personnel.

8)

System for Directors, Executive Officers and employees as well as directors, corporate auditorsand employees of subsidiaries or persons who received a report from them to report to Corporate
Auditors and other systems for reporting to Corporate Auditors(i) The Company employs a system in which Corporate Auditors can attend important meetings
related to business matters to receive reports from Directors and other employees about the statusof the execution of their duties.
(ii) The Company adopts a system in which any facts that may inflict serious damage to the Company
are reported to Corporate Auditors by Directors, Executive Officers and employees and directors,
executive officers and employees of subsidiaries or persons who received a report from them.
(iii) The Company prohibits the unfavorable treatment of anyone who has made a report under thepreceding item.

9)

Other systems to ensure effective auditing by Corporate Auditors(i) The Company employs a system in which Corporate Auditors are shown documents related toimportant decisions and can gain access to a variety of information, including management
information, at any time.
- 22 -

(Translation)(ii) The Company provides a venue for Corporate Auditors to exchange opinions and information with
the Accounting Auditor.
(iii) When a Corporate Auditor requests the prepayment or payment of expenses required for
performing his/her duties, the Company promptly pays such expenses.

2. Basic Views on Eliminating Anti-Social Forces(1) Basic views on eliminating antisocial forces
The Company states in the Basic Compliance Policy formulated in March 2005 that it will not have any
relationship with antisocial forces or organizations and resolutely reject any unfair or unreasonable demands.
In light of the enforcement of the Ordinance for Eliminating Antisocial Forces throughout Japan in 2011, inregard to unfair or unreasonable demands from antisocial forces, the Company maintains its stance of “neverbeing afraid of them,” “never giving money to them,” “never using them,” and “never having any relationshipwith them” and strives to eliminate any relationship with them. The Company strives to ensure that all officers
and employees of the Company are fully aware of the aforementioned policy and stance.
(2) Status of development of the system for eliminating antisocial forces
The Company has designated the General Affairs Department as the department in charge of handlingdemands from antisocial forces. The Department has developed a system that enables quick response throughtheir efforts to collect information at all times in cooperation with external related organizations.

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

Not Adopted

Supplementary Explanation-------

2. Other Matters Concerning to Corporate Governance System
Schematic depiction
Please see Reference: “Schematic depiction” in the Appendix at the end of this report.
Timely disclosure system(1) Basic approach concerning the timely disclosure system
The Company intends to “build the relationship of trust with stakeholders through appropriate information
disclosure to and communication with them” as stated in the Sustainability Guidelines which specify actions
that are essential for realizing the Mission of the Taiheiyo Cement Group and implementation of theCompany’s Business Principles. The Company also states in the Basic Compliance Policy that it “will strive
to promote the communication with stakeholders of the Company through the timely, appropriate, just andfair disclosure of necessary corporate information.”(2) Outline of the timely disclosure system
The Company has established the “Information Disclosure Regulations,” which prescribe basic mattersconcerning information disclosure by the Company such as the information disclosure system and roles for- 23 -

(Translation)
the purpose of ensuring the legal compliance and appropriateness of information disclosure. In theseRegulations, the Company defines the corporate information for which disclosure is required under the“Securities Listing Regulations” as material information. The outline of the timely disclosure system formaterial information is as follows:i) Timely disclosure system and roles
A. Site managers, upon exposure to potentially material information concerning the business site for which
they are responsible, prepare a written information disclosure application and submit it to the officer in charge
immediately after obtaining confirmation from the General Manager of the General Affairs Department.
B. Upon receipt of the written information disclosure application, the officer in charge determines whether
the information in question is material information in accordance with the Financial Instruments andExchange Act and the Securities Listing Regulations. If the information is determined to be material, theprocedures for deliberation and decision on disclosure items outlined in C. below are followed.
C. The deliberation and decision of the disclosure items are carried out by the Executive Committee, the Boardof Directors, or the officer in charge of the General Affairs Department, as appropriate, in accordance withthe category of decision-making bodies responsible for the matter in question as prescribed in the “Approval
Request/Reporting Standards,” from the perspectives of legal compliance, accuracy, and appropriateness.
However, in the case of an emergency, the President or the officer in charge of the General Affairs Department
may make decisions on them. In this case, the General Manager of the General Affairs Department promptly
notifies the Executive Committee members of the decision.
D. The General Affairs Department is responsible for information disclosure. After the disclosure details ofmaterial information are determined based on C. above, the General Affairs Department disclose theinformation to the Tokyo Stock Exchange and the Fukuoka Stock Exchange without delay and disclose it also
to the appropriate mass media without delay after considering presentation of the disclosure details. The
Department also publishes the information on the website of the Company and holds a press conference ifnecessary.
ii) Prevention of insider trading
The Company has established the “Insider Trading Prevention Regulations” for the purpose of preventing
insider trading by the officers and employees of the Company and maintaining the credibility of the Company
in the securities markets by properly managing material information.
Please see Reference: “Schematic depiction of the timely disclosure system” in the Appendix at the end of
this report.

- 24 -

[Reference: Schematic depiction]
Schematic diagram of the corporate governance system of the Company

General Meeting of Stockholders
Appointment/dismissal

Appointment/dismissal

Audit

Accounting
AuditorAssistance
Corporate
Auditors’ Office

Board of Directors(Management decision-making
and supervision)
Deliberate

Nomination andCompensation
Advisory Committee

ReportSelection/removal/
supervision

Cooperation

Board of Auditors

Appointment/dismissal

ReportAppointment/dismissal

Sustainability
Management
Committee

Representative
Directors
Managing
Executive Officers

Audit

Executive Committee(Review important matters)
Final decision/instruction/
supervision

Executive Officers

ReportHead Office, branches, plants,
research laboratory (Executive administration)
Group companies

Audit

Internal
Auditing
Department

[Reference: Schematic depiction of the timely disclosure system][Persons responsible for information management](= Site managers)*Including material information of

Is the information material?

Yessubsidiaries and affiliatesNo

Non-disclosure[Person responsible for information disclosure](= GM of the General Affairs Dept.)
Is the information material?

[Officer in charge]
Is the information material?

Yes

No

Non-disclosure[Executive Committee][Board of Directors][Chief Officer for Information
Disclosure](= Officer in charge of the

Deliberation/decision-m

Deliberation/decision-m

aking on disclosure

aking on disclosure

Review/decision-making

items

items

on disclosure items

General Affairs Dept.)[GM of the General Affairs Dept.]

Disclosures (Tokyo Stock Exchange, Fukuoka Stock Exchange, mass media,
press conference, publication on the website of the Company)