These documents have been translated from Japanese originals for reference purposes only.
In the event of any discrepancy between these translated documents and the Japanese originals, the originals
shall prevail. The Company assumes no responsibility for this translation or for direct, indirect or any otherforms of damages arising from the translations.
Denka Co., Ltd.
(Securities Code: 4061)

NOTICE OF CONVOCATION OF
THE 162ND ORDINARY GENERAL MEETING OF SHAREHOLDERS

Date and Time:

Tuesday, June 22, 2021 at 10:00 a.m.

Place:

Nihonbashi Mitsui Hall, COREDO Muromachi 1 (reception desk on the 4th floor)
2-1, Nihonbashi-Muromachi 2-chome, Chuo-ku, Tokyo

Proposals to be resolved:
Proposal No. 1:
Proposal No. 2:
Proposal No. 3:

Appropriation of Surplus
Election of Five (5) Directors (Excluding Directors who are Audit & Supervisory
Committee Members)
Election of Four (4) Directors who are Audit & Supervisory Committee Members

Please exercise your voting rights in writing or via the Internet by
5:00 p.m. on Monday, June 21, 2021.
This year, the Company will not distribute souvenirs or beverages at the General Meeting of Shareholders.
We appreciate your understanding.

1Message from the Management
To Our Shareholders
With the SDGs as our compass, we will continue to challenge ourselves to resolve a variety of social issues, andstrive to enhance corporate governance to accurately reflect social demands, aiming to an indispensable
corporate member of society.
Enclosed please find the Notice of Convocation of the 162nd Ordinary General Meeting of Shareholders.
We would like to take this opportunity to express our gratitude to you for your continued support of Denka
and make some observations concerning the Company’s results and current initiatives.
May 2021
Manabu Yamamoto (left)
Chairman and Representative Director
Toshio Imai (right)
Representative Director,
President and Chief Executive Officer
During the fiscal year ended March 31, 2021 (fiscal 2020), the Japanese economy faced difficult conditions
including substantial restrictions on economic activities overall, and a significant downturn, especially inpersonal consumption and exports, due to the spread of COVID-19. The global economy deteriorated, primarilyin Europe and the United States as the COVID-19 pandemic continued to spread, except in China and someother regions. In the chemical industry, demand declined during the first half of the fiscal year, due to the spreadof COVID-19, but corporate earnings remained resilient overall, with a subsequent recovery in demand,
primarily in the automobile and semiconductor sectors.
Against this economic backdrop, in order to realize “The Denka Value” corporate philosophy, the Grouppushed ahead with the refocusing of the business portfolio and the introduction of innovative processes, twostrategies set forth in our “Denka Value-Up” five-year management plan launched in 2018, and focused its
efforts on expanding businesses and enhancing profitability, under the three elements of our growth vision: to bea “Specialty-Fusion Company” with sustainable and sound growth.
As a result, during the year under review, sales volumes declined overall, as a consequence of the fall indemand due to the global economic slowdown, despite a positive contribution from growth in electronics andhighly advanced product lines and new healthcare products. In addition, net sales decreased due to revisions toselling prices for certain products in step with declines in raw material prices. Turning to earnings, operating
income increased to the highest level on record, thanks to an increase in sales of high value-added products for
growth sectors, as well as a reduction in fixed costs. Ordinary income and profit attributable to owners of theparent also increased, both exceeding the previous fiscal year’s levels.
In fiscal 2020, the middle year of “Denka Value-Up,” along with the progress in process innovation, we
began to observe tangible results from the growth strategies we progressively implemented up until now,
primarily in the healthcare field and environment and energy field, and we achieved a new record level ofoperating income. We are progressing smoothly along the path to becoming a “Specialty-Fusion Company,” theobjective of our long-term growth vision, and we were able to reaffirm that the direction of our initiatives under“Denka Value-Up” has been correct. We have positioned the final two years of the “Denka Value-Up” plan,
including fiscal 2020, as an important period of preparations to leap ahead to our vision for the next management
plan. As a first step towards being an indispensable corporate member of society, we are focusing on three“Value-Up” initiatives, concerning our business, the environment, and human resources. Please refer to pages 32
to 35 of this Notice of Convocation for details.
From April this year, we have implemented a change in top management to respond the unprecedentedchanges that have occurred in the Company’s environment since last year. At the same time, we undertook a
restructuring of business divisions to promote the further optimization and expansion of our businesses. If the
proposal submitted to this General Meeting of Shareholders is approved, we will reduce the number of Directors
from twelve to nine, a more appropriate composition to clarify the respective roles of the Board of Directors andexecutive management, with the aim of further enhancing the effectiveness of discussion by the Board of
Directors, and expediting its decision-making. In addition, we will increase the proportion of Outside Directors,
and strengthen their degree of involvement in the Board of Directors.
The social requirements placed on corporate governance are growing ever higher, including the enhanced
standards of governance required from companies in the Prime Market under the new market segments to be
introduced by the Tokyo Stock Exchange next spring. We will continue to strive for a higher level of corporate
governance, accurately reflecting these requirements.
We will continue to deepen transformation and coordination across the whole Group. With the SDGs as ourcompass, we will challenge ourselves to resolve a variety of social issues in ways that only Denka can, to be2

an indispensable corporate member of society, of which all our employees and stakeholders can feel proud.
We hope we can count on the continued understanding and support of our shareholders in this endeavor.

3

(Securities Code: 4061)
May 31, 2021
To Our Shareholders:Toshio Imai
President
Denka Co., Ltd.
1-1, Nihonbashi-Muromachi 2-chome, Chuo-ku, TokyoNOTICE OF CONVOCATION OF
THE 162ND ORDINARY GENERAL MEETING OF SHAREHOLDERS
The 162nd Ordinary General Meeting of Shareholders of Denka Co., Ltd. (the “Company”) will be held as
described below.
Recently, the national government and prefectural governors have been strongly requesting that people
refrain from leaving their homes, in order to prevent the spread of the COVID-19 coronavirus. After carefulconsideration in light of these circumstances, the Company has decided to hold the General Meeting of
Shareholders while taking appropriate measures to counter the spread of the virus (for details thereof, pleaserefer to the enclosed “Measures to Prevent the Spread of the COVID-19 Coronavirus at the 162nd Ordinary
General Meeting of Shareholders”).
From the perspective of preventing the spread of the virus, the Company strongly requests that shareholders
make the utmost effort to refrain from attending the General Meeting of Shareholders, regardless of the statusof your health as an individual.
The Company strongly recommends that shareholders exercise voting rights in advance. Please review theattached Reference Documents for the General Meeting of Shareholders and exercise your voting rights inwriting by mail (Voting Rights Exercise Form) or via the Internet, etc., as described in the “Guide for Exerciseof Voting Rights” (Page 6), by no later than 5:00 p.m. on Monday, June 21, 2021.
1. Date and Time:

Tuesday, June 22, 2021 at 10:00 a.m.

2. Place:

Nihonbashi Mitsui Hall, COREDO Muromachi 1(reception desk on the 4th floor)
2-1, Nihonbashi-Muromachi 2-chome, Chuo-ku, Tokyo

3. Meeting Agenda:
Matters to be reported: 1. The Business Report, Consolidated Financial Statements for the Company’s
162nd Term (from April 1, 2020 to March 31, 2021) and results of audits by
the Accounting Auditor and the Audit & Supervisory Committee of theConsolidated Financial Statements
2. Non-consolidated Financial Statements for the Company’s 162nd Term(from April 1, 2020 to March 31, 2021)
Proposals to be resolved:
Proposal No. 1: Appropriation of Surplus
Proposal No. 2: Election of Five (5) Directors (Excluding Directors who are Audit &Supervisory Committee Members)
Proposal No. 3: Election of Four (4) Directors who are Audit & Supervisory Committee
Members◎ The following are posted on the Company’s website at https://www.denka.co.jp/ in accordance withlaw and Article 16 of the Company’s Articles of Incorporation and thus are not included in the
documents attached to this notice of convocation.

4•Company’s Systems and Policies (Systems to Ensure the Appropriateness of Operations, Operational
Status of Systems to Ensure the Appropriateness of Operations, and Basic Policies regarding theControl of the Company) in the Business Report•Consolidated Statement of Changes in Net Assets and Notes to Consolidated Financial Statements•Non-consolidated Statement of Changes in Net Assets and Notes to Non-consolidated Financial
Statements
The Business Report, consolidated financial statements and the non-consolidated financial statements
audited by the Audit & Supervisory Committee and the Accounting Auditor include the above
documents posted on the Company’s website.
◎ If any revisions are made to the Business Report, Consolidated Financial Statements, Non-consolidated
Financial Statements, or Reference Documents for the General Meeting of Shareholders, they will be
posted on the Company’s website at https://www.denka.co.jp/.

5<Guide for Exercise of Voting Rights>
The following three methods are available for exercising voting rights pertaining to the Company’s General
Meeting of Shareholders.

Exercise of Voting Rights in Writing by Mail (Voting Rights Exercise Form)
Please indicate your vote for or against the proposals on the enclosed Voting Rights Exercise Form and send
the completed form to us so that it is received by 5:00 p.m. on Monday, June 21, 2021.
Exercise of Voting Rights via the Internet etc.
Please access the website for exercising voting rights designated by the Company (https://www.web54.net),
use the “Voting Rights Exercise Code” and the “Password” indicated on the enclosed Voting Rights Exercise
Form, and follow the on-screen guidance. Please vote for or against the proposals by 5:00 p.m. on Monday,
June 21, 2021.
(Inquiry about Exercise of Voting Rights via the Internet etc.)
Sumitomo Mitsui Trust Bank Stock Transfer Web Support Dial
Tel: 0120-652-031(office hours: 9:00 a.m. - 9:00 p.m.)●Exercise of Voting Rights by Attending the Meeting
Please bring the enclosed Voting Rights Exercise Form with you to the meeting and submit it to thereceptionist at the meeting venue.
* In the case of exercising voting rights by attending the meeting as a proxy, please submit a document
evidencing the authority of proxy to the receptionist at the meeting venue together with the Voting Rights
Exercise Form. Please note that such proxy must be one shareholder of the Company with voting rights
in accordance with Article 18 of the Company’s Articles of Incorporation.
Furthermore, the Company will not distribute souvenirs or beverages at the General Meeting of
Shareholders. We appreciate your understanding.
*Handling of duplicated exercise of voting rights
If you exercise your voting rights both by the method of exercising voting rights in writing by mail (Voting
Rights Exercise Form) and by the method of exercising voting rights via the Internet etc., the exercise of
voting rights by the method of exercising voting rights via the Internet etc. shall prevail regardless of the timeof arrival of the votes.
In addition, if you exercise your voting rights multiple times via the Internet, etc., the vote made last shallprevail.

6

Reference Documents for the General Meeting of Shareholders

Proposal No. 1: Appropriation of Surplus
It is proposed that the surplus be appropriated as follows:
Matters concerning year-end dividends
In the management plan “Denka Value-Up,” formulated in November 2017, the Company sets out its
basic concepts of safety as No. 1 priority, environmental awareness, fostering and tapping human capital andcontributing to the community, all of which are indispensable for continued growth of the Company. We aim
to realize sustainable and sound growth as a “Specialty-Fusion Company,” through new strategies to achieve
dramatic growth globally.
While the Company has formulated an investment plan as we look to achieve these goals, we have alsoestablished a “Policy on Shareholder Returns,” with a 50% target total payout ratio.
<Shareholder returns in the management plan “Denka Value-Up”>
Committed to a 50% standard for the target total payout ratio*
Regarding shareholder returns, the dividend is prioritized, with flexible purchase of treasury shares,
depending on stock price movements and other factors.
* Total payout ratio = (Dividends paid + treasury stock purchased) / consolidated net income<Investment plan in the management plan “Denka Value-Up”>
Total for five years:¥200.0 billion
Of which strategic investment:¥75.0 billion (¥15.0 billion/year)
M&A, etc.:¥60.0 billion
Process reform:¥15.0 billion
Regular investment:¥125.0 billion (¥25.0 billion/year)
With respect to the year-end dividend for the 162nd term, in view of the above, the Company proposes thefollowing.
(1) Type of dividend property
Cash(2) Allocation of dividend property and total amount thereof¥65 per share of common stock of the Company
Total amount of dividends: ¥5,608,179,785(3) Effective date of dividends from surplus
June 23, 2021

7

Proposal No. 2: Election of Five (5) Directors (Excluding Directors who are Audit & Supervisory
Committee Members)
The terms of office of seven (7) Directors (excluding Directors who are Audit & Supervisory Committee
Members; hereinafter, the same applies in this proposal) will expire at the conclusion of this Ordinary
General Meeting of Shareholders.
It is proposed to reduce the number of Directors from seven (7) to five (5), in order to achieve even more
effective discussions and even swifter decision-making by the Board of Directors, as well as ensuring anappropriate composition to realize clearer roles for the Board of Directors and the executive structure.
Accordingly, the election of five (5) Directors is proposed.
The candidates for Directors are as follows.

No.

Name

1

Reappointed

2

Reappointed

Positions and responsibilities at the Company

Manabu Yamamoto Chairman and Representative Director
Toshio Imai

3

New
appointment

Tetsuya Shinmura

4New
appointment

Kazuo Takahashi

Representative Director, President and Chief Executive
Officer
Senior Managing Executive Officer
Chief Technical Officer (CTO)
In charge of Purchasing Dept., Logistics Dept., ElectricPower Dept., Production & Process Technology Dept.,
Engineering Dept., Digital Innovation Dept.
Managing Executive Officer
Chief Compliance Officer (CCO)
In charge of Corporate Planning Dept., Corporate
Communications Dept., Automotive Materials &Solutions Dept., Denka Corporation, Denka Chemicals
GmbH, DCG Denka Value-Up Promotion

New
appointment
Outside
Yoshiyuki Fukuda
5
Independent
Director(planned)
Reappointed: Candidate for reappointment as Director
New appointment: Candidate for new appointment as Director
Outside: Candidate for Outside Director
Independent Director: Independent Director as notified to the Tokyo Stock Exchange

8

Attendance atBoard ofDirectors
meetings
13/13(100%)
13/13(100%)

—/—

—/—

—/—

Name
(Date of birth)
No. [Director since][Director’s term ofoffice]Career summary and significant concurrent positions, etc.

April 1981
June 2004

Number ofshares of theCompany held

Joined the Company
General Manager of Functional Ceramics Div. ofElectronics Materials Business Group of the Company
April 2009
Executive Officer, General Manager of Electronics
Materials Div. of Electronics Materials Business Group of(Reappointed)
the Company
April 2011
Senior Executive Officer of the Company
Manabu Yamamoto
April
2013
Managing Executive Officer, Head of Electronics &(March 31, 1956)
Innovative Products of the Company
Age: 65
June 2013
Director and Managing Executive Officer of the
9,900
Company[June 2013]
April
2015
GeneralManagerofCorporate
Planning
Dept.
of
the
[8 yearsCompany* at the conclusion of
April
2016
Director and Senior Managing Executive Officer of thethis Ordinary GeneralCompany
Meeting ofJune 2016
Outside Audit & Supervisory Board Member of Koatsu
Shareholders]
Gas Kogyo Co., Ltd. (until June 2019)
April 2017
Representative Director, President and Chief Executive
Officer of the Company
1
April 2021
Chairman and Representative Director of the Company(present)[Reasons for selection as a candidate for Director]
Through work experience at overseas subsidiaries and many years of responsibility for theelectronics materials business division, Mr. Manabu Yamamoto possesses international
viewpoints and adequate operational experience. After he supervised new businessstrategies and accounting and finance strategies across the entire Denka Group as theexecutive responsible for management strategy, accounting and finance, and investor
relations and corporate communications divisions, Mr. Yamamoto promoted “Denka
Attendance at Board Value-Up” as Representative Director, President. As Chairman and Representative Director,
he currently serves in the position of the Chairman of the Board of Directors, based on his
of Directors
deep knowledge and understanding of the Group. The Company has judged that he canmeetings
appropriately fulfill the role of supervising the business execution of Directors and13/13 (100%)
Executive Officers, and requests his election as Director.
[Message to shareholders]
In addition to striving for more sophisticated corporate governance that accurately reflects
society’s expectations, I will endeavor to enhance the effectiveness of the Company’s Audit& Supervisory Committee system, currently in its third year, and promote a stronger
management advisory and supervisory function and even swifter decision-making, in orderto achieve “Denka Value-Up”.
Notes:1. No material relationship of interest exists between the Company and the above candidate.
2. The Company has entered into a directors and officers liability insurance contract with an insurancecompany as stipulated in Article 430-3, Paragraph 1 of the Companies Act to cover legal damages,
litigation expenses and others in the event that a claim for damages is made against the insured persons,
including Directors of the Company. If the appointment of the candidate above is approved, then he will
become an insured person under the contract. The Company intends to renew this insurance contract withthe same contents at the time of the renewal.

9

Name
(Date of birth)
No. [Director since][Director’s term ofoffice]Career summary and significant concurrent positions, etc.

April 1982
October 2006
June 2011

Number ofshares of theCompany held

Joined the Company
General Manager, Styrene Div. of the Company(Reappointed)
General Manager, Corporate Planning Dept. of theCompany
Toshio Imai
April 2013
Executive Officer, Assistant to General Manager,(January 25 1959)
Elastomers & Performance Plastics of the Company
Age: 62
April 2015
General Manager, Elastomers & Performance Plastics of
the Company
8,300[June 2019]
April 2017Managing Executive Officer of the Company[2 years
April 2019
General Manager, Denka Value-Up Promotion Dept. of* at the conclusion of
the Company
this Ordinary General June 2019
Director and Managing Executive Officer of the Company
Meeting ofApril 2020
Director and Senior Managing Executive Officer of the
Shareholders]Company
April
2021
Representative Director, President and Chief Executive
2
Officer of the Company (present)[Reasons for selection as a candidate for Director]
Mr. Toshio Imai possesses an international perspective and adequate operational
experience, including work experience at overseas subsidiaries, and taking responsibility
for the styrene and elastomer businesses over many years. After taking charge of businessstrategy for the Denka Group as a whole, including overseas businesses, as the executive
Attendance at Board responsible for management strategy and investor relations and corporate communications
divisions, he currently serves as Representative Director, President. Based on his richof Directors
experience and impressive track record in Company administration, it is hence judged bymeetings
the Company that he can appropriately fulfil the role of determining important business
13/13 (100%)execution and supervising the business execution of Directors and Executive Officers, andrequests his election as Director.
[Message to shareholders]
I will promote the “Denka Value-Up” plan, and realize “sustainable and sound growth” as a“company that contributes to sound social development through new value creation.”
Notes:1. No material relationship of interest exists between the Company and the above candidate.
2. The Company has entered into a directors and officers liability insurance contract with an insurancecompany as stipulated in Article 430-3, Paragraph 1 of the Companies Act to cover legal damages,
litigation expenses and others in the event that a claim for damages is made against the insured persons,
including Directors of the Company. If the appointment of the candidate above is approved, then he will
become an insured person under the contract. The Company intends to renew this insurance contract withthe same contents at the time of the renewal.

10

Name
(Date of birth)
No. [Director since][Director’s term ofoffice]Career summary and significant concurrent positions, etc.

Number ofshares of theCompany held

April 1980
January 2007

Joined the Company
General Manager, Polymers Center, Chiba Plant of theCompany(New appointment)
April 2009
Deputy General Manager, Central Research Institute of theCompany
Tetsuya Shinmura
April
2011
Deputy General Manager, Omi Plant of the Company(January 28, 1958)
Age: 63
April 2013
Executive Officer, General Manager, Omi Plant of the
4,200
Company[–]
April 2015
General Manager, Technology Dept. of the Company[–]
April 2017Managing Executive Officer of the Company
April 2019
General Manager, Omi Plant of the Company
April 2021
Senior Managing Executive Officer of the Company(present)
3[Reasons for selection as a candidate for Director]
Mr. Tetsuya Shinmura has adequate operational experience, including research anddevelopment and plant manufacturing. Currently, Mr. Shinmura directs the technicaldivision overall as Chief Technical Officer, while also taking responsibility for the Digital
Innovation Dept., a department created to strategically build and operate general
Attendance at Board information systems for the Group. It is hence judged by the Company that he canof Directors
appropriately fulfil the role of determining important business execution and supervising
meetings
the business execution of Directors and Executive Officers, and requests his election as–/– (–)
Director.
[Message to shareholders]
I will endeavor to enhance corporate value by developing technologies to challenge thepossibilities of chemistry and contributing to the resolution of global issues, to make this acompany genuinely needed by society.
Notes:1. No material relationship of interest exists between the Company and the above candidate.
2. The Company has entered into a directors and officers liability insurance contract with aninsurance company as stipulated in Article 430-3, Paragraph 1 of the Companies Act to coverlegal damages, litigation expenses and others in the event that a claim for damages is madeagainst the insured persons, including Directors of the Company. If the appointment of thecandidate above is approved, then he will become an insured person under the contract. The
Company intends to renew this insurance contract with the same contents at the time of therenewal.

11Name(Date of birth)
No. [Director since][Director’s term ofoffice](New appointment)
Kazuo Takahashi(March 30, 1960)
Age: 61[–][–]

Career summary and significant concurrent positions, etc.

April 1983
October 2013
April 2015
April 2017
April 2019
April 2021

Joined the Company
Deputy General Manager, Chiba Plant of the Company
General Manager, Ofuna Plant of the Company
Executive Officer, General Manager, Omuta Plant of theCompany
President of Denka Performance Elastomer LLC
Managing Executive Officer of the Company (present)

Number ofshares of theCompany held–

[Reasons for selection as a candidate for Director]
Mr. Kazuo Takahashi possesses adequate operational experience, including work4
experience in plant manufacturing and overseas subsidiaries. Currently, Mr. Takahashi is
in charge of business strategy for the Denka Group as a whole, including overseas
businesses, as the executive responsible for management strategy and investor relations
Attendance at Board and corporate communications divisions, and he is promoting the management plan,“Denka Value-Up.” It is hence judged by the Company that he can appropriately fulfil theof Directorsrole of determining important business execution and supervising the business execution of
meetings
Directors and Executive Officers, and requests his election as Director.
–/– (–)[Message to shareholders]
The new normal and paradigm shift have arisen over an extremely short period of time.
Apprehending these dramatic changes in the world as an opportunity to soar, I will
endeavor to leverage the Company’s comprehensive capabilities to enhance corporate value
and achieve sound growth.
Notes:1. No material relationship of interest exists between the Company and the above candidate.
2. The Company has entered into a directors and officers liability insurance contract with an insurancecompany as stipulated in Article 430-3, Paragraph 1 of the Companies Act to cover legal damages,
litigation expenses and others in the event that a claim for damages is made against the insured persons,
including Directors of the Company. If the appointment of the candidate above is approved, then he will
become an insured person under the contract. The Company intends to renew this insurance contract withthe same contents at the time of the renewal.

12

Name
(Date of birth)
No. [Director since][Director’s term ofoffice]Career summary and significant concurrent positions, etc.

April 1979
April 2004

Number ofshares of theCompany held

Joined The Industrial Bank of Japan, Limited
General Manager, Business Division No.7 of Mizuho
Corporate Bank, Limited
March 2006
Executive Officer, General Manager, Corporate Banking
Division No.15 of Mizuho Corporate Bank, Limited
April 2007
Executive Officer, General Manager, Securities Divisionof Mizuho Corporate Bank, Limited(New appointment) April 2008
Managing Executive Officer in charge of Corporate(Candidate for
Banking of Mizuho Corporate Bank, Limited
Outside Director) April 2010
Managing Executive Officer, Chief Compliance Officer(Independentand Chief Credit Officer of Mizuho Corporate Bank,
Director (planned))
LimitedApril 2011
Managing Executive Officer, Head of Corporate Banking–
Yoshiyuki Fukuda
Unit of Mizuho Corporate Bank, Limited(September 8, 1956) April 2012Managing Executive Officer, Head of Corporate Banking
Age: 64
Unit (Large Corporations) and Corporate Banking Unit ofMizuho Corporate Bank, Limited (until March 2013)
April 2013
Deputy President and Deputy President-Executive Officer,[–][–]
Head of Investment Banking Division, Head of Public &Financial Institutions Group of Mizuho Securities Co.,
Ltd. (until March 2014)
April 2014
Chairman of Shinko Asset Management Co., Ltd. (until
November 2015)
5
November 2015 President & CEO of Fund Corporation for the Overseas
Development of Japan’s ICT and Postal Services Inc.
(until June 2021 (planned))[Reasons, etc. for selection as a candidate for Director, and summary of expected roles]
Having worked in corporate management at financial institutions for many years, Mr.
Yoshiyuki Fukuda has rich experience and broad insight as a manager and possesses
advanced insights regarding corporate finance, and to utilize these insights and receive
recommendations toward the Company’s overall management, his election as Outside
Director is requested. Additionally, although he used to work at a financial institution thathas transactions with the Company, the Company considers that there is no risk thatconflict of interest with other general shareholders will arise because 1) he is not a current
Attendance at Board or a recent operating officer of the said financial institution; 2) a significant number ofyears have passed since he retired from the said financial institution (8 years have passedof Directors
since his retirement as of the day of this Ordinary General Meeting of Shareholders); 3) the
meetings
composition of borrowings relative to net assets of the Company is low at approximately–/– (–)
30%, and the Company’s dependency on the said financial institution is low as it accounts
for less than 10% of overall borrowings; and 4) he satisfies the Company’s “Standards ofIndependence for Outside Directors” and thus, the Company considers that the said
financial institution has no special impact on the Company’s decision-making by the Boardof Directors, etc.
[Message to shareholders]
I will focus on creating an open and transparent organizational culture, and hope tocontribute to building an organization with a high level of risk management.
Notes:1. No material relationship of interest exists between the Company and the above candidate.
2. If the election of Mr. Fukuda is approved, the Company intends to conclude a liability limitation contract
with him, based on Article 427, Paragraph 1 of the Companies Act, that limits his liability for damages of
Article 423, Paragraph 1 of said Act to a predefined amount of ¥5 million or more or the amountstipulated by laws and regulations, whichever is higher.

13

3. The Company has entered into a directors and officers liability insurance contract with an insurancecompany as stipulated in Article 430-3, Paragraph 1 of the Companies Act to cover legal damages,
litigation expenses and others in the event that a claim for damages is made against the insured persons,
including Directors of the Company. If the appointment of the candidate above is approved, then he will
become an insured person under the contract. The Company intends to renew this insurance contract withthe same contents at the time of the renewal.

14

Proposal No. 3:

Election of Four (4) Directors who are Audit & Supervisory Committee Members

The terms of office of five (5) Directors who are Audit & Supervisory Committee Members will expire at
the conclusion of this Ordinary General Meeting of Shareholders.
The transition to a company with an Audit & Supervisory Committee was approved by the 160th
Ordinary General Meeting of Shareholders of the Company held in June 2019. Two years have subsequently
passed, the new system is operating stably, and the Company has deemed that it ensures sufficiently effective
governance. Therefore, it is proposed to reduce the number of internal Directors who are Audit &Supervisory Committee Members from two (2) to one (1), and elect four (4) Directors who are Audit &Supervisory Committee Members, as follows.
If Proposal No. 2 and this Proposal are approved as originally proposed, then the proportion of the Boardof Directors composed of Outside Directors will increase, and the involvement of Outside Directors in the
Board of Directors will be further strengthened.
The consent of the Audit & Supervisory Committee has been obtained for the submission of this
proposal.
The candidates for Directors who are Audit & Supervisory Committee Members are as follows:

No.

1

Name

New
appointment

Masaharu Suzuki

Positions and responsibilities
at the Company

Director, Advisor

Attendance at
Audit &
Supervisory
Committee
meetings

Attendance atBoard ofDirectors
meetings

–/–
(–)

13/13
(100%)

Reappointed
OutsideDirector, Audit & Supervisory
15/15
13/13
Toshio Kinoshita
2
Independent
Committee Member(100%)(100%)
DirectorNew
appointment
–/–
13/13
3
OutsideAkio Yamamoto Director(–)(100%)
Independent
DirectorNew
appointment
Outside–/––/–4
Miyuki Matoba
Independent(–)(–)
Director(planned)
Reappointed: Candidate for reappointment as Director (Audit & Supervisory Committee Member)
New appointment: Candidate for new appointment as Director (Audit & Supervisory Committee Member)
Outside: Candidate for Outside Director (Audit & Supervisory Committee Member)
Independent Director: Independent Director as notified to the Tokyo Stock Exchange

15

Name
(Date of birth)
No.
[Director since][Director’s term ofoffice]Career summary, positions, responsibilities
and significant concurrent positions, etc.
April 1981
June 2005

Number ofshares of theCompany held

Joined the Company
Deputy General Manager, Shibukawa Plant of theCompany(New appointment)
June 2007
Deputy General Manager, Omuta Plant of the Company
April 2011
Executive Officer of the Company, Director Chairman of
Masaharu Suzuki
Denka Chemicals Holdings Asia Pacific Pte., Ltd.
(December 11, 1955)
April 2015
Managing Executive Officer of the Company
Age: 65
April 2017
General Manager, Corporate Planning Dept. of the
4,000
Company[June 2019]
May
2017
GeneralManager,Business
Process
ReformPromotion[2 years
Dept. of the Company* at the conclusion ofJanuary
2018
General Manager, Denka Value-Up Promotion Dept. of
this Ordinary General
the Company
Meeting ofJune 2019
Director and Managing Executive Officer of the Company
Shareholders]April 2020
Director and Senior Managing Executive Officer of theCompany
1April 2021
Director and Advisor of the Company (present)[Reasons for selection as a candidate for Director who is an Audit & Supervisory
Committee Member]
Mr. Masaharu Suzuki possesses adequate operational experience, including work
experience in research and development and plant manufacturing, responsibility for the
Attendance at Audit
management of an overseas subsidiary, business strategy, and administrative divisions& Supervisory
such as investor relations and corporate communications, followed by experience directing
Committee meetings
the technical division overall as Chief Technical Officer, while also taking responsibility–/– (–)
for the Digital Innovation Dept., a department created to strategically build and operate
general information systems for the Group. The Company judges that this abundant andAttendance at Board
broad knowledge and insight is necessary for the supervision and audit of the Company’sof Directors
management, and requests his election as Director who is an Audit & Supervisory
meetings
Committee Member.
13/13 (100%)[Message to shareholders]
I intend to engage in audit activities focused on the implementation of growth strategy andresponse to internal and external risk, to sustainably boost the corporate value of theCompany.
Notes: 1. No material relationship of interest exists between the Company and the above candidate.
2. The Company has entered into a directors and officers liability insurance contract with aninsurance company as stipulated in Article 430-3, Paragraph 1 of the Companies Act to coverlegal damages, litigation expenses and others in the event that a claim for damages is madeagainst the insured persons, including Directors of the Company. If the appointment of thecandidate above is approved, then he will become an insured person under the contract. The
Company intends to renew this insurance contract with the same contents at the time of therenewal.

16Name(Date of birth)
No.
[Director since][Director’s term ofoffice]Career summary, positions, responsibilities
and significant concurrent positions, etc.
July 1983
July 1989

Number ofshares of theCompany held

Registered as Certified Public Accountant
Partner, U.S. Coopers & Lybrand L.L.P (current
PricewaterhouseCoopers) (until June 1998)
June 1994
Representative employee of Chuo Audit Corporation(until July 2005)
July 1998
Senior Managing Partner for North America, New York
Head Office, U.S. PricewaterhouseCoopers L.L.P. (until
June 2005)
July 2005
Management Board Member for International Business of(Reappointed)
Tokyo Office of ChuoAoyama PricewaterhouseCoopers(Outside)(until June 2007)(Independent
July 2007
Chief Executive of The Japanese Institute of Certified
Director)
Public Accountants (JICPA) (until July 2013)
July 2013
Council Member of JICPA (until July 2016)
Toshio Kinoshita
June
2014
Outside Audit & Supervisory Board Member of Panasonic(April 12, 1949)
Corporation (present)
Age: 72–
July 2014
Representative Director of Global Professional Partners(present)[June 2019]
August2014
Outside Corporate Auditor of Weathernews Inc. (until[2 years
August 2018)* at the conclusion of
March
2015
Outside Director of Asatsu-DK Inc. (until December
2 this Ordinary General
2018)
Meeting ofJune 2015
Outside Audit & Supervisory Board Member of the
Shareholders]Company
June 2015
Outside Director of TACHI-S CO., LTD. (present)
July 2015
Outside Director of Mizuho Bank, Ltd. (until September
2019)
January 2018
Outside Director of ThreePro Group Inc. (current GiG
Works Inc.) (present)
June 2019
Outside Director (Audit & Supervisory Committee
Member) of the Company (present)(to date)[Reasons for selection as a candidate for Outside Director who is an Audit & Supervisory
Attendance at Audit Committee Member and summary of expected roles]& Supervisory
Mr. Toshio Kinoshita has experience and rich accounting knowledge gained as a certified
Committee meetings public accountant who practiced in Japan and the U.S. for many years and is well versed in
15/15 (100%)international accounting. The Company proposes that Mr. Kinoshita be elected as an
Outside Director who is an Audit & Supervisory Committee Member in the expectation
Attendance at Board that he will utilize his knowledge in supervision and audit of the Company’s management.
of Directors[Message to shareholders]meetings
I will contribute to enhancing corporate governance, aimed at Denka’s sustainable growth
13/13 (100%)
as a global company and the medium- and long-term enhancement of corporate value.
Notes: 1. No material relationship of interest exists between the Company and the above candidate.
2. Based on Article 427, Paragraph 1 of the Companies Act, the Company currently has a liability
limitation contract with the candidate that limits his liability for damages of Article 423,
Paragraph 1 of said Act to a predefined amount of ¥5 million or more or the amount stipulated bylaws and regulations, whichever is higher. If the election of Mr. Kinoshita is approved, theCompany plans to continue the same contract.
3. The Company has entered into a directors and officers liability insurance contract with aninsurance company as stipulated in Article 430-3, Paragraph 1 of the Companies Act to coverlegal damages, litigation expenses and others in the event that a claim for damages is madeagainst the insured persons, including Directors of the Company. If the appointment of thecandidate above is approved, then he will become an insured person under the contract. The
Company intends to renew this insurance contract with the same contents at the time of therenewal.
17Name(Date of birth)
No.
[Director since][Director’s term ofoffice](New appointment)(Candidate for
Outside Director)(Independent
Director)

Career summary, positions, responsibilities
and significant concurrent positions, etc.
April 1974
April 1999
April 2004
April 2007

Joined Mitsui & Co., Ltd.
President of Mitsui & Co., Benelux S.A./N.V.
Vice President of Synthetic Resin & Inorganic Chemical
Products Business Unit of Mitsui & Co., Ltd.
Executive Officer of Mitsui & Co., Ltd. (until March
2010), President of Mitsui & Co. (Thailand) Ltd.
Representative Director and President of Mitsui Bussan
Plastic Trade Co., Ltd. (present Mitsui & Co. PlasticsLtd.) (until June 2014)
Counselor of Mitsui & Co. Plastics Ltd. (until June 2015)
Outside Director of the Company (present)

Number ofshares of theCompany held

Akio Yamamoto
April 2009
(December 2, 1951)
Age: 69
June 2014[June 2015]
June 2015[6 years* at the conclusion ofthis Ordinary General
Meeting of
Shareholders][Reasons, etc. for selection as a candidate for Outside Director who is an Audit &Supervisory Committee Member and summary of expected roles]
Mr. Akio Yamamoto has rich experience and broad insight as a manager in Japan andoverseas through his involvement in corporate management for many years. His career
includes serving as an Executive Officer of Mitsui & Co., Ltd. and the Representative
Director and President of Mitsui & Co. Plastics Ltd. He also has rich international
3
experience, including serving as a vice president at global enterprises and has provided
suggestions about the Company’s overseas business expansion strategy and managementin general based on this knowledge. The Company proposes that Mr. Yamamoto be elected
as an Outside Director who is an Audit & Supervisory Committee Member in the
Attendance at Audit expectation that he will utilize his abundant and broad knowledge and insight in the
supervision and audit of the Company’s management& Supervisory
Committee meetings Although he used to work at a company that has transactions with the Company, theCompany considers that there is no risk that conflict of interest with other general–/– (–)
shareholders will arise because 1) he is not a current or a recent operating officer of the
Attendance at Board said company; 2) although the Company’s sales to the said company account for 4.6% of
the Company’s total sales, transactions between the Company and the said company areof Directors
substantially payments of commission by the Company to the said company for services
meetings
offered by its trading company function and the amount of commission paid is modest
13/13 (100%)(under 2% of the said company’s sales); and 3) he satisfies the Company’s “Standards ofIndependence for Outside Directors” and thus, the Company considers that the said
company has no special impact on the Company’s decision-making by the Board of
Directors, etc.
[Message to shareholders]
We are entering an era of significant change in the environment and value perceptions thatsurround companies. I intend to firmly maintain a medium- to long-term perspective and asincere, fair and upright attitude, and endeavor to further strengthening corporate
governance, to contribute to the Company’s sound growth and the enhancement of its
corporate value.
Notes: 1. No material relationship of interest exists between the Company and the above candidate.
2. Mr. Yamamoto served as the Representative Director and President of a specified related party of
the Company until June 2014.
3. Based on Article 427, Paragraph 1 of the Companies Act, the Company currently has a liability
limitation contract with the candidate that limits his liability for damages of Article 423,
Paragraph 1 of said Act to a predefined amount of ¥5 million or more or the amount stipulated bylaws and regulations, whichever is higher. If the election of Mr. Yamamoto is approved, theCompany plans to continue the same contract.
4. The Company has entered into a directors and officers liability insurance contract with aninsurance company as stipulated in Article 430-3, Paragraph 1 of the Companies Act to cover18

legal damages, litigation expenses and others in the event that a claim for damages is madeagainst the insured persons, including Directors of the Company. If the appointment of thecandidate above is approved, then he will become an insured person under the contract. The
Company intends to renew this insurance contract with the same contents at the time of therenewal.

19Name(Date of birth)
No.
[Director since][Director’s term ofoffice]Career summary, positions, responsibilities
and significant concurrent positions, etc.
April 2000
April 2013

Number ofshares of theCompany held

Registered as a lawyer (Tokyo Bar Association)
Executive Governor of the Japan Federation of Bar(New appointment)
Associations (until March 2014)(Candidate for
October 2015 Senior Leader, Management Support Division of MOS
Outside Director)
FOOD SERVICES, INC.
(Independent
April 2018
Risk Management & Compliance Group Leader of MOS
Director (planned))
FOOD SERVICES, INC. (until March 2019)
April 2019
General Manager, Risk Management & Compliance–
Miyuki Matoba
Office of MOS FOOD SERVICES, INC. (until September(August 15, 1973)
2020)
Age: 47
September 2020 Intellectual Property and Legal Div., General Affairs H.Q.
of NITTO KOHKI CO., LTD.
[–]
April 2021
General Manager, Intellectual Property and Legal Div.,[–]
General Affairs H.Q., and compliance supervisor of
NITTO KOHKI CO., LTD. (present)4(to date)[Reasons, etc. for selection as a candidate for Outside Director who is an Audit &Supervisory Committee Member and summary of expected roles]
Ms. Miyuki Matoba has abundant legal knowledge acquired over many years as a lawyer.
Attendance at Audit The Company proposes that Ms. Matoba be elected as an Outside Director who is an Audit& Supervisory& Supervisory Committee Member in the expectation that she will utilize her knowledge
Committee meetings in the supervision and audit of the Company’s management, while also providing advice–/– (–)
from a perspective based on diversity. Although she has never been directly involved incorporate management, she has extensive knowledge of corporate legal affairs as a lawyer,
Attendance at Board and sufficient insight regarding corporate governance, including through her experience asof Directors
corporate counsel. It is hence judged by the Company that she can appropriately fulfill the
meetings
duties of an Outside Director who is an Audit & Supervisory Committee Member.
–/– (–)[Message to shareholders]
I will contribute to enhancing corporate value by focusing on the further strengthening ofcorporate governance and thorough compliance.
Notes: 1. No material relationship of interest exists between the Company and the above candidate.
2. If the election of Ms. Matoba is approved, the Company intends to conclude a liability limitation
contract with her, based on Article 427, Paragraph 1 of the Companies Act, that limits her liability
for damages of Article 423, Paragraph 1 of said Act to a predefined amount of ¥5 million or moreor the amount stipulated by laws and regulations, whichever is higher.
3. The Company has entered into a directors and officers liability insurance contract with aninsurance company as stipulated in Article 430-3, Paragraph 1 of the Companies Act to coverlegal damages, litigation expenses and others in the event that a claim for damages is madeagainst the insured persons, including Directors of the Company. If the appointment of thecandidate above is approved, then he will become an insured person under the contract. The
Company intends to renew this insurance contract with the same contents at the time of therenewal.

20

(Reference)
The Company’s views regarding the election of Directors
In order to promote the management plan, “Denka Value-Up” aimed at realizing “The Denka Value,” theCompany’s corporate philosophy, the Company aims to strengthen the management structure with Directors
and Executive Officers, while enriching the governance structure and supervisory functions.
In electing Directors, internal Directors are chosen from persons who possess a wealth of experience andachievements in various divisions within the Company, while also possessing insights and adequate
specialized knowledge as Director, and Outside Directors are chosen from persons who possess
specialization required for continuous growth and improvement in corporate value of the Company and wide
insights based on a wealth of business experience. The Company believes that it is important for the Boardof Directors as a whole to elect a good balance of personnel with a variety of knowledge, experience, andabilities, and ensure that the composition of the Board of Directors is diverse in terms of gender,international background, and other factors.
Additionally, the Company believes that Independent Outside Directors should comprise at least
one-third of Directors, and implements this policy.
Standards of Independence for Denka Outside Directors
The Company selects candidates for Outside Directors based mainly on practical considerations, such aswhether we can expect the candidate to contribute to an increase in the corporate value of the Company as anindependent officer. Specifically, the Company has defined the following standards, in accordance with therequirements for independence stipulated in the Companies Act, in addition to the standards forindependence defined by the Tokyo Stock Exchange and other factors.
Standards of Independence for Outside Directors
The standard of independence for an Outside Director of the Company shall be persons that do not fallunder any of the categories defined in items (1) through (5) below.
(1) An executor of business (*4) at a main customer (*1), main supplier (*2), or main lender (*3)
that is a main trading partner of the Company;(2) A consultant, accountant, lawyer, or other such person that has received money or other property
exceeding ¥10 million in value per year from the Company, excluding officer compensation, inthe most recent fiscal year;(3) A person belonging to a group for whom the amount paid by the Company makes up 2% or moreof the group’s revenues or total income in the most recent fiscal year, in cases where the entity
receiving property under item (2) above is a group;(4) A person that has fallen under any of the above categories (1) through (3) within the past year;(5) A spouse or relation within the second degree of a person falling under any of the categories
below (excluding an insignificant person):i.
A person that falls under any of the above categories (1) through (4);ii.
A person that is or was an executor of business at the Company or a subsidiary of theCompany now or within the past year.
(*1) Main customer: A customer from whom the amount paid has made up 2% or more of theCompany’s revenues in the most recent fiscal year(*2) Main supplier: A supplier to whom the amount paid from the Company has made up 2% ormore of the supplier’s revenues in the most recent fiscal year(*3) Main lender: A lender that was essential for the Company’s funding, and that the Company
relied on to the extent the lender was irreplaceable, as of the end of the most recent fiscal
year(*4) Executor of business: An executive director, executive, executive officer, or other
employee, etc.

21

(Reference)
Denka’s Corporate Governance Initiatives
Basic Approach to Corporate GovernanceIn order to fulfill the expectations and trust of its many stakeholders, including shareholders, customers,
local society, and employees, based on “The Denka Value” (corporate philosophy), which forms the basis forthe activities of the Denka Group, the Company strives to strengthen its business foundation by improving its
earnings power and expanding the scope of operations, while also working to improve corporate value bymaking every effort to continue being a company that can win the trust and sympathy of society.
The Company considers corporate governance as the foundation for the above, and so we have striven tostrengthen governance, in order to fulfill the responsibilities we owe to all our stakeholders, and ensure thetransparency and soundness of our management.
The Denka Value (Corporate Philosophy)“The Denka Value” (corporate philosophy) consists of the “Denka Mission,” which represents ouruppermost mission statement, and the “Denka Principles,” a set of precepts guiding actions taken by every
Group employee.
“The Denka Value” lies at the pinnacle of all corporate activities, including management plans, andthrough implementing “The Denka Value,” the Company will work to respond to the expectations and trustof society.
“The Denka Value” (Corporate Philosophy)
The Denka Mission
Taking on the challenge of expanding the possibilities of chemistry to create new value and contribute tosound social development.
Note: Based on the corporate slogan “Possibility of chemistry.”
The Denka Principles
We:• Boldly confront challenges with determination and sincerity.
• Think and take action today with the future in mind.
• Deliver new values, and inspire customers through innovative monozukuri.*• Respect the environment and create a cheerful workplace that prioritizes safety.
• Contribute to a better society, whilst taking pride in being a trusted corporate citizen.
*Japanese-style craftsmanship22

Current Corporate Governance System

Board of Directors and optional committees■Board of Directors (Met 13 times in fiscal 2020)
To realize the Company’s corporate philosophy, “The Denka Value,” the Board of Directors monitors andsupervises major operational decision-making and execution of business duties by executive officers, basedon strategic and management planning. The Board of Directors as a whole appoints candidates to be
Directors in line with the standards for the appointment of both internal and Outside Directors, based on the
belief that it is important to appoint a good balance of people with a variety of expertise, experiences, andskills. For further details of our approach in appointing members of the Board of Directors, please see page
21.
Additionally, the Nomination & Remuneration Advisory Committee has been established as an advisoryorgan of the Board of Directors, to strengthen the roles of the Board of Directors and foster higher standardsof objectivity and transparency. It also organizes the D&A Round Table, aimed at enriching deliberations on
major matters of particular management concern.
In addition, in principle, the Company has discontinued the use of executive titles, (such as Senior
Managing Director, Managing Director) for Directors, such that all Directors may focus on monitoring andsupervising the execution of business duties from an equal standpoint. Also, the Company has set the lengthof Directors’ (excluding Audit & Supervisory Committee Members) terms to one year, in order to facilitate
flexible checks on them at the General Meeting of Shareholders.
■Nomination & Remuneration Advisory Committee (Met 2 times in fiscal 2020)
For major management matters such as nomination, remuneration and other elements of governance, theBoard of Directors has set up the Nomination & Remuneration Advisory Committee, comprising all Outside
Directors, the Chairman and the President, to foster transparency and objectivity in management
decision-making, informed by a wide range of opinion and advice from Outside Directors.

23

In the previous fiscal year, this Committee received inquiries from the Board of Directors regarding thepolicy for determining Directors’ remuneration, and remuneration and redeployments at the Director andExecutive Officer level, including the abolition of the office of Counselor, and made recommendations andproposals regarding the results of these inquiries.
■D&A Round Table (Met 4 times in fiscal 2020)
In order to facilitate in-depth discussions regarding management matters that are of particular importance,
the D&A Round Table is organized as a forum for free, open-minded, constructive discussions, exchange of
opinions and information, and strengthening of cooperation between internal and Outside Directors.
■Evaluation of the Effectiveness of the Board of Directors
At Denka, the effectiveness of the Board of Directors is analyzed and evaluated annually. As a result of
measures taken in the previous fiscal year, we reaffirmed that discussion was reinvigorated at the Board of
Directors, by ensuring an appropriate Board size and composition (in terms of achieving the right balance ofexpertise, experience, ability and diversity) and an appropriate meeting frequency and duration. In addition,
we affirmed that the monitoring and supervision of the management was being appropriately implemented
by the Board of Directors, 42% of the members of which are Outside Directors.
Furthermore, based on the view expressed in the previous year’s appraisal, that the transition to acompany with an Audit & Supervisory Committee should be used as an opportunity to achieve even more
appropriate operation of the Board of Directors, the Board of Directors engaged in a review of the meeting
agenda. As a result, it was possible to allot more time to the consideration of important matters through thestrict selection of agenda items necessary for the monitoring and supervision of the execution of duties, andwe affirmed that discussions had become deeper.
Meanwhile, the view was expressed that more substantial discussion was needed regarding long-term
company-wide targets and specific business strategy, based on changes in the management environment,
while strengthening our focus on ESG management. Regarding the necessity for a continuing review of thecriteria for forming a resolution and operation after the transition to a company with an Audit & Supervisory
Committee, we evaluated operation during the first year as smooth overall, and shared an awareness that
more optimal operation should be pursued during the second year.
Looking ahead, in light of these constructive opinions, we will take steps to further improve theeffectiveness of the Board of Directors, aiming to improve medium-to-long-term corporate value, andrespond to the expectations and trust placed in us by our shareholders and numerous other stakeholders.
Audit & Supervisory Committee (Met 15 times in fiscal 2020)
In accordance with their fiduciary responsibilities to shareholders, Audit & Supervisory Committee
Members and the Audit & Supervisory Committee work with the support of the full-time staff of the Audit
Committee Dept., whose independence from management is ensured, to conduct audits of the execution of
directors’ duties, internal control, business duties, and accounting, by exercising statutory rights that include
requesting reports on the businesses of the Company, investigations pertaining to business duties andaccounting, and the appointment, dismissal, non-reappointment, and remuneration of an auditing firm.
In addition, the Audit & Supervisory Committee forms views on matters related to the election, etc. andcompensation, etc. of Directors (excluding Directors who are Audit & Supervisory Committee Members),
including matters to be put forward at the General Meeting of Shareholders.
Furthermore, the Company appoints candidates for Directors who are Audit & Supervisory Committee
Members based on its judgment that, in order for the Audit & Supervisory Committee to fulfill its roles andresponsibilities, Audit & Supervisory Committee Members should possess appropriate experience and ability
as required for their duties, and that in particular, there should be at least one person with expertise in financeand accounting.
Outside Directors
Regarding Outside Directors, the Company selects candidates based mainly on practical considerations,such as whether we can expect the candidate to contribute to an increase in the corporate value of theCompany as an independent officer, and has also defined its own standards of independence (please see page21), in accordance with the requirements for independence stipulated in the Companies Act, in addition to
the standards for independence defined by the Tokyo Stock Exchange and other factors.
In addition, by enhancing their understanding of the Company, the Company strives to create anenvironment that allows those appointed as Outside Directors to perform their roles for the sake of thesustainable growth of the Company and the increase of its corporate value.
24

Specifically, in addition to tours of offices, plants, and other facilities, the Company has been
implementing the following initiatives:■Objective briefings (Met twice in fiscal 2020)
Briefings are held in order to have Outside Directors understand the Company’s medium- to long-termand short-term business and research policies.
■Outside Officer Liaison Committee (Met 4 times in fiscal 2020)
The Company holds “Outside Officer Liaison Committee” meetings to facilitate the exchange of
information and mutual awareness among outside officers concerning matters related to Denka’s corporate
governance and business.

25

Initiatives to Corporate Governance Thus Far
PurposeTo speed up decision-making
2007
Ensure that Directors monitor and supervise theexecution of business on an equal footing
Clear separation of monitoring and supervisory
functions from the execution of business
Flexibly perform checks on directors
Step up checks on management from anexternal perspective
2008
Create system enabling appropriate
advice-giving even outside of meetings of theBoard of Directors, by arranging ample
exchange of opinions
Speed up decision-making by deepening
discussions of important management matters

2015

2016

2017

Improve the governance framework and raise
standards of transparency and soundness ofmanagement
Create venues for free, vigorous andconstructive deliberations, exchange of
opinions and information andalliance-strengthening for internal and Outside
Directors and Audit & Supervisory Board
Members
Achieve optimum standards of corporate
governance to ensure sustainable growth andimprove medium to long-term corporate value
Deepen understanding of the Company’sbusiness, and stimulate debate at meetings ofthe Board of Directors
Enable exchange of information and formationof consensus among outside officers
Promote understanding of the Company’s
medium- to long-term and short-term businessand research objectives
Ensure adequate auditing and supervision ofbusiness execution by executive officers
Step up the effectiveness of the Board of
Directors

Foster greater transparency and objectivity inbusiness decision-making, with the Board of
Directors accepting diverse opinions andadvice from the outside officers with regard to
major business topics including appointments,
remuneration and other governance matters

MeasuresCut the number of directors by half andintroduce an executive officer system
Abolition of executive titles (such as Senior
Managing Director, Managing Director)
Reassigning the authority of business execution
and executive titles from directors to executive
officers
Shortening the length of directors’
appointments to one year
By appointing two Outside Directors, thenumber of appointments of outside officers
rises to four, including two Outside Audit &Supervisory Board Members (per statutory
requirements)
Implement regular opportunities for outside
officers to exchange opinions with top
management
Establishment of a Management Committee
comprising Directors, Audit & Supervisory
Board Members (internal), and some executive
officers
Increasing the number of Outside Directors(from two to three) and reducing the number ofmembers of the Board of Directors (by two)
To step up round-table meetings of Outside
Directors and Audit & Supervisory Board
Members formerly held twice per year, hold around-table conference of Directors and Audit& Supervisory Board Members
Compilation of the Denka Corporate
Governance Guidelines
Enhance the provision of advance explanationfor outside officers regarding specific agenda
items that require adequate explanation
Holding “Outside Officer Liaison Committee”
four times per year
Holding business and research objective
briefings (currently referred to as objective
briefings) for outside officers twice a year
Clarification of the details of agenda and reportmaterials at the Board of Directors meetings
Arrangement for all Directors and all Audit &Supervisory Board Members to annually
analyze and evaluate the effectiveness of theBoard of Directors, and disclose the results in
the Corporate Governance Report
Establishment of the Management Advisory
Committee comprising all Outside Directors,
all Outside Audit and Supervisory Board
Members, the Chairman and the President
Renaming the “round-table conference of
Directors and Audit & Supervisory Board
Members” the “D&A Round Table”

26

2019

2021

2021
(planned)

PurposeFurther strengthen corporate governance andimprove corporate value by further
strengthening the supervisory role of the Boardof Directors, by enabling more rapid
decision-making and vesting directors who aremembers of the Audit & Supervisory
Committee with voting rights at the Board of
Directors meeting

Review of regulations regarding theappointment of retirees from the office ofChairman and President as Counselors andAdvisors.
Clarify the roles of the Board of Directors andthe executive structure, further enhance theeffectiveness of discussions at Board of
Directors meetings, and further expedite its
decision-making process

27

Measures
Shift from the “Company with Audit &Supervisory Board” model to that of a“Company with Audit & Supervisory
Committee”

Change the name of the “Management
Advisory Committee” to the “Nomination &Remuneration Advisory Committee
Abolish the office of Counselor

Reduce the number of Directors from 12 to 9,
and raise the proportion of Outside Directors
on the Board of Directors to over 44%

[Attached Documents]

Business Report(From April 1, 2020 to March 31, 2021)

1. Overview of the Group(1)

Business Progress and Results
During the fiscal year under review, the Japanese economy faced difficult conditions including
substantial restrictions on economic activities overall, and a significant downturn, especially in personal
consumption and exports, due to the spread of COVID-19. The global economy deteriorated, primarilyin Europe and the United States as the COVID-19 pandemic continued to spread, except in China andsome other regions.
In the chemical industry, demand declined during the first half of the fiscal year, due to the spread of
COVID-19, but corporate earnings remained resilient overall, with a subsequent recovery in demand,
primarily in the automobile and semiconductor sectors.
Against this economic backdrop, in order to realize “The Denka Value” corporate philosophy, theGroup pushed ahead with “Business Portfolio Shift” and “Introduction of Innovative Processes,” twostrategies set forth in our “Denka Value-Up” five-year management plan launched in fiscal 2018, andfocused its efforts on expanding businesses and enhancing profitability, under the three elements of our
growth vision, namely, “Specialty-Fusion Company,” “Sustainable Growth,” and “Sound Growth.” As aresult, during the year under review, sales volumes declined overall, as a consequence of the fall indemand due to the global economic slowdown, despite a positive contribution from growth inelectronics and highly advanced product lines and new healthcare products. Sales decreased ¥26,412
million or 6.9% year on year to ¥354,391 million, partly due to revisions to selling prices for certain
products in step with declines in raw material prices. Turning to earnings, operating income increasedby ¥3,142 million or 9.9% year on year to ¥34,729 million, the highest on record, and the ratio of
operating income to net sales was 9.8%, an increase of 1.5 percentage points, thanks to an increase insales of high value-added products for growth sectors, as well as a reduction in fixed costs. Furthermore,ordinary income increased ¥2,108 million or 7.0% to ¥32,143 million, and profit attributable to ownersof the parent increased ¥81 million or 0.4% to ¥22,785 million, both exceeding the previous fiscal
year’s levels.
Results of operations by division are described below.
Elastomers & Performance Plastics Division (Sales: ¥124,301 million)
Principal products: Chloroprene rubber, styrene monomer, polystyrene resin, ABS resin,
CLEAREN, heat-resistant resin, transparent resin, POVAL, etc.
Sales of chloroprene rubber have begun to recover, but were down year on year due to an overall
slump in production activities, resulting from the substantial impact of the worldwide economic
slowdown due to the spread of COVID-19. In addition, sales of styrene monomer, ABS resin,polystyrene resin and MS resin at Denka Singapore Pte., Ltd. were generally robust in volume terms,
but sales revenues fell owing to revisions to selling prices in step with the decline in prices of raw
materials.
As a result, division sales decreased ¥25,023 million or 16.8% year on year to ¥124,301 million.
Infrastructure &Social Solutions Division (Sales: ¥50,547 million)
Principal products: Cement, special cement additives, fertilizers, calcium carbide, fire resistantmaterials, environmental materials, etc.
Sales of corrugated drainpipes for agriculture and civil engineering were generally robust, but salesof cement, special cement additives, fertilizers, fire resistant materials, and steel materials were down
year on year as a result of factors including the impact of unfavorable weather conditions, in addition to
COVID-19.
28

As a result, division sales decreased ¥4,254 million or 7.8% year on year to ¥50,547 million.
Electronics & Innovative Products Division (Sales: ¥71,195 million)
Principal products: Fused silica, electronic circuit substrates, fine ceramics, electronic packaging
materials and acetylene black, etc.
Sales volumes grew for spherical alumina and high-purity conductive carbon black, primarily for
xEV. Sales of functional films for electronic components and semiconductors, and spherical fused silica
fillers were robust, due to expansion in worldwide demand related to 5G and data centers, and sales of
HITTPLATE aluminum substrate for automotive applications also increased. In addition,
ALONBRIGHT SiAlON phosphors for LED performed strongly owing to PC-related demand, but salesof ALSINK highly reliable heat-dissipating plate and AN PLATE high thermal conductivity substrates
fell year on year due to a slump in electric railway-related demand.
As a result, division sales increased ¥3,166 million or 4.7% year on year to ¥71,195 million.
Life Science & Environmental Products Division (Sales: ¥33,441 million)
Principal products: Food packaging materials, housing materials, industrial tapes, synthetic fiber for
wigs, etc.
Sales of film for food packaging material and processed products were robust in general, due to anincrease in demand for take-out food. However, sales of plastic rain gutters,“TOYOKALON” synthetic
fiber for wigs, and industrial tapes were down year on year, due to the impact of the spread of
COVID-19.
As a result, division sales decreased ¥3,532 million or 9.6% year on year to ¥33,441 million.
Life Innovation Division (Sales: ¥42,947 million)
Principal products: Joint function improvers, vaccines, and diagnostic reagents, etc.
Shipments of influenza vaccines were up year on year, and revenues increased, with the rise invaccination rates resulting from increased awareness of vaccination due to the COVID-19 pandemic.
Production and sales of the COVID-19 Rapid Antigen Test Kit QuickNavi™- COVID19 Ag, launchedin August 2020, were robust, but sales of our existing testing reagents fell year on year, as the number ofpeople using our influenza testing kits and similar products declined due to the impact of the COVID-19
pandemic. In addition, we commenced shipments of diethyl malonate, a raw material used to produce
the anti-flu medicine Avigan® Tablet, which is expected to be effective against COVID-19.
As a result, division sales increased ¥7,436 million or 20.9% year on year to ¥42,947 million.
*Avigan is a registered trade name of FUJIFILM Toyama Chemical Co., Ltd.

Others Division (Sales: ¥31,958 million)
Principal business: Plant engineering etc.
Transaction volumes of Akros Trading Co. Ltd. and other trading companies decreased, and thevalue of projects completed by Denka Consultant & Engineering Co., Ltd. was also down year on year.
As a result, division sales decreased ¥4,204 million or 11.6% year on year to ¥31,958 million.

29

(2)

Capital Investment
In the “Denka Value-Up” management plan, investments totaling 200 billion over five years areplanned under the two growth strategies of “Business Portfolio Shift” and “Introduction of Innovative
Processes,” to meet numerical targets. In the fiscal year ended March 31, 2021, the Group carried out
capital investments totaling ¥42,323 million.
Capital investment in the Elastomers & Performance Plastics Division amounted to ¥9,716 million.
Principal items were construction for increased MS resin capacity at Denka Singapore Pte. Ltd. throughthe redeployment of polystyrene production facilities, in addition to investments at the Company’s Omi
Plant, Chiba Plant, etc.
In the Infrastructure & Social Solutions Division, capital investment amounted to ¥11,452 million,
which mostly concerned the Company’s Omi Plant.
In the Electronics & Innovative Products Division, capital investment amounted to ¥12,671 million.
The investments were mostly works to expand spherical alumina production capacity and works toexpand high purity conductive carbon black capacity at the Company’s Omuta Plant and our Singapore
subsidiary
Capital investment in the Life Science & Environmental Products Division amounted to ¥1,877
million mainly for the Company and DENKA Polymer Co., Ltd.
In the Life Innovation Division, capital investments of ¥6,459 million were made, in regard toconstruction of a new influenza vaccine base manufacturing facility wing at the Company’s Gosen Siteand other items.
Main capital investment projects completed during fiscal 2020 included the construction of a new
influenza vaccine base manufacturing facility wing at the Company’s Gosen Site, and a newhydroelectric power facility at the Omi Plant. In addition, capital investment projects currently underconstruction include works to increase production capacity for electronics and highly advanced productlines at the Company’s Omuta Plant and Singapore subsidiary.

(3)

Financing
In fund procurement, the Company did not obtain any financing through the issue of new shares or
corporate bonds during the fiscal year under review.

(4)

Significant Business Reorganization
Effective April 1, 2020, the Company assumed the rights and obligations of DENKA SEIKEN Co.,
Ltd. through an absorption-type merger with the Company as the surviving company.
Furthermore, effective April 1, 2020, the Company’s subsidiaries Akros Trading Co., Ltd. and YK
Inoas Co., Ltd. conducted an absorption-type merger, with Akros Trading Co., Ltd. as the surviving
company and YK Inoas Co., Ltd. as the absorbed company.

(5)

Issues to be Addressed
Since fiscal 2018, the Company has been focusing significant efforts on promoting the “Denka
Value-Up” five-year management plan, in order to realize its corporate philosophy “The Denka Value.”
Here we would like to describe some specific measures implemented in fiscal 2020, the third year of theplan.
Firstly, in the environment and energy field, we strengthened our functional ceramics businesses in
Singapore and at the Omuta Plant. In Singapore, we proceeded with works to strengthen production
capacity for spherical alumina, a heat-dissipating material for fifth-generation mobile communications
systems (5G) and next-generation automobiles (xEV). We leveraged the unique fusion technologies that
the Company has developed over many years, to raise spherical alumina to a level beyond the reach of
our competitors. We aim to complete all works in March 2022. At the Omuta Plant, we will strengthen
our production capacity for silicon nitride powder, a heat dissipating material for xEV, by approximately
30% by the second half of fiscal 2022. The Company boasts an industry leading production capacityand market share in silicon nitride powder, a leading engineering ceramic with outstanding thermal andmechanical properties. We will continue to promote the development of new materials, for 5G and xEVin particular, and endeavor to further strengthen our presence in the environment and energy field.
In the healthcare domain, we obtained approval for the sale in Japan of a rapid antigen test kit for
COVID-19, a disease threatening the entire world, and commenced sales. In January 2021, we also
developed a rapid antigen test kit capable of testing for COVID-19 and influenza simultaneously on asingle device. We have applied for regulatory approval of this kit in Japan. In December 2020, Daiichi
Sankyo Co., Ltd. submitted a new drug application for production and marketing of regenerative
medicine, etc. for G47∆ (delta), an oncolytic virus for which the Company has been developing30

commercial production technology. After production and sale of G47∆ is approved by the Ministry of
Health, Labour and Welfare, it is planned that the Company will be responsible for manufacturing it.
G47∆ is a promising, innovative cancer treatment. The Company, with its many years of experience inthe development and manufacture of vaccines and virus testing reagents, has been engaged indeveloping production technology to turn virus into drugs. In addition to the infectious disease domain,
including influenza vaccines and various virus antigen rapid test kits, the Company will now embark on
a range of new businesses in the cancer domain.
In fiscal 2020, the whole world experienced the disaster of the COVID-19 pandemic. The Company
steadily continued its businesses around the world however, still providing the value that society needs,
as a result of the steady initiatives described above, under the “Denka Value-Up” management plan. At
the same time however, the Company was unable to achieve the level of operating income planned forfiscal 2020 under “Denka Value-Up.” We have recently announced a revision of the remaining two
years of “Denka Value-Up,” establishing an operating income target for fiscal 2022 of ¥50.0 billion,
within the original range of the plan, and determined to engage in threefold “Value-Up” initiatives.
The first initiative is “enhancing the value of our business.” We will focus our efforts on achieving
numerical targets through measures such as riding megatrends including 5G and xEV to expand income
from advanced electronics materials, steady growth in the healthcare field, and faster specialization of
our key operations.
The second initiative is “enhancing the value of our environment.” With the reduction ofenvironmental impact as the foundation of our management, we will accelerate decarbonization
initiatives, to achieve a 50% reduction in greenhouse gas emissions by 2030 (compared to 2013), andcarbon-neutral status by 2050.
The third initiative is “enhancing the value of human resources.” The COVID-19 crisis highlighted
the fact that the task of enhancing operational productivity through flexible working styles is
indispensable for corporate survival. We will pursue work styles applicable to the post-COVID-19 era,
to become a company in which each employee can achieve job satisfaction and personal growth throughtheir job.
Ultimately, the COVID-19 crisis has given rise a keen awareness of the fact that “only companies
that provide genuine value will survive in the society of the future.” This is precisely what drives thepromotion of specialization, the core of the “Denka Value-Up” management plan, or “concentrating onjobs that we do best.” With the SDGs as our compass, we will continue to challenge ourselves to resolvea variety of social issues, and strongly promote our threefold “Value-Up” initiatives, to be an
indispensable corporate member of society.

31

(Reference)Management Plan
Denka Value
Value-Up
Up ～Numerical
Numerical Targets for Fiscal 2022 and Initiatives for the Next Two Years
Years～The Company recently completed an interim review of the five-year
five year management plan “Denka Value
Value-Up”
that started in 2018, determining initiatives to focus on over the coming two years and establishing numericaltargets for fiscal 2022.
Until now, the results of our growth strategy under “Denka Value
Value-Up”
Up” have
have steadily materialized, primarily
in the fields of healthcare, the environment and energy, and we are smoothly progressing on the road toachieving our long
long-term
term vision to be a “Specialty“Specialty-Fusion
Fusion Company.” This demonstrates that the Company washeading in
n the right direction with “Denka Value
Value-Up.”
Now, in addition to initiatives for the next two years, based on the growth strategy set forth in “Denka
Value-Up,”
Up,” we aim to achieve our numerical targets for fiscal 2022 by clarifying our social raison d’d’être.
We have also designated these last two years of “Denka Value
Value-Up”
Up” as an important time to prepare to aim
even higher under our next management plan. We will strive forward, our vision set on new heights.
Revision of numerical targets
Numerical targets (c(consolidated
onsolidated operating income, income ratio, ratio of specialty business)<Definition of Specialty Business>• A business with a top
top-classclass share, that is consistent with ESG initiatives, that is both unique and highvaluevalue-added, and that is not easily shaken by the external environment; or a business that has thepotential to gain these qualities in the near future.
• In addition to our threefold focus on healthcare, the environment and energy, and high value
value-added
added
infrastructure, since fiscal 2018 we are striving to specialize our key operations.

32

Allocation of profits
Investment
Forecast to exceed plans, due to the active implementation of investment strategy (specialty business andprocess innovation).
2018～20

Strategic
investment
Regularinvestment
Total

2018～223-year results

5-year plan

5-year forecast

51.8 billion yen

75.0 billion yen

85.0 billion yen

75.8 billion yen

125.0 billion yen

125.0 billion yen

127.6 billion yen

200 billion yen

210.0 billion yen

Shareholder returns
Continue according to the original plan, with a benchmark total payout ratio of 50% in both FY2021 andFY2022.
* Total payout ratio = (Dividends paid + treasury stock purchased) / consolidated net income
FY2018results

FY2019results

FY2020results

Profit25.0 billion yen

22.7 billion yen

22.8 billion yen

Total dividends

10.5 billion yen

10.8 billion yen

10.8 billion yen

Share
repurchases

2.1 billion yen

0.0 billion yen

0.0 billion yen

Total payout
ratio

50%

48%

47%

33

Initiatives over the next two years to realize our vision for Denka
With the SDGs as our compass, we will challenge ourselves to resolve a range of social issues in ways that
only Denka can. As a first step towards being a company that our employees and stakeholders can take pride
in, an indispensable corporate member of society, we will focus our efforts on threefold “Value-Up”
initiatives.
Initiatives for the next two years<1> Enhancing the value of our businessTransforming our portfolio and achieving further specialization by concentrating on the jobs that we do best
1. Business Portfolio Shift◇ Accelerate growth of specialty businessesThe
environment
and energy• Expand sales in markets related to xEV, 5G, semiconductors and renewableenergy• Focus on developing a product lineup that anticipates the coming age

Healthcare• Actively contribute to responding to new and re-emerging infectious diseases• Respond to the digitalization of diagnosis and treatment through genetic testingHighvalue-added
infrastructure• Overseas expansion
New product development
Accelerate radical reform of unprofitable products• Continue to regard as a key field, and place on a new growth trajectory◇ Specialize our key operations, redefine the positioning of the commodity business• Address portfolio shift for businesses requiring restructuring within two years
2. Innovative Processes◇ Fuse processes through DX, and transform the business model and organizational structure
Reformproduction
processes• Focus on automation of visual examination, introduction of robotics, stronger
sensors, etc.

Reform R&D
processes• Full-scale utilization of R&D support systems and material infomatics

Business process
reform, work
style reform• Shift to online meetings, digitalization of documents and approvals• Elimination of difficult, dirty, and dangerous workplaces<2> Enhancing the value of our environment
Environmental management (initiatives to achieve carbon-neutral status)
Make the reduction of environmental impact the foundation of our management
50% reduction in greenhouse gas emissions by 2030 (compared to 2013)
Aim for carbon-neutral status by 2050
• Portfolio shift• Expand the use of clean energy and introduce high-efficiency gas turbine power generation• Products to contribute to the environment and technologies to reduce environmental impact• Develop and implement CCUS (carbon capture, utilization and storage technologies)• Chemical recycling technologies• Reduce overall greenhouse gas emissions throughout product recycling (LCA)34

<3> Enhancing the value of human resources
To be a company where employees can feel their own growth through meaningful jobs
• Establish securing specialty human resources, diversity promotion and work style reform as KPIs
• Reform systems for evaluation, recruitment, training, work environment, etc.
• Human resources education for early development of senior management candidates, radical renewal oforganization and human resources• Promotion of wellness management, including the creation of environments where employees can makefull use of their abilities

35

(6)

Financial Position and Results of Operations
159th term
Item

(Millions of yen, unless otherwise stated)
160th term
161st term
162nd term(from April 1, 2017 to (from April 1, 2018 to (from April 1, 2019 to (from April 1, 2020 toMarch 31, 2018)
March 31, 2019)
March 31, 2020)
March 31, 2021)

Net sales
395,629
413,128
380,803354,391
Operating income
33,652
34,22831,58734,729Ordinary income
31,49932,81130,03432,143
Profit attributable to23,03525,04622,70322,785owners of parent
Net income per share
261.80286.18262.62264.24(yen)
Total assets
473,799483,827
501,448
526,035
Total net assets
242,780
250,481
254,014270,036
Net assets per share
2,727.94
2,839.16
2,906.95
3,101.92(yen)
Total shareholders’
50.5
51.0
50.0
50.8
equity ratio (%)
Return on equity
10.0
10.3
9.1
8.8
(ROE) (%)
Total dividends paid
9,206
10,47910,785
10,785
Dividends per share
105.00120.00125.00125.00(yen)
Notes: 1. The Company conducted a consolidation of shares at a ratio of five shares to one sharewith an effective date of October 1, 2017. As a result, net income per share, net assets
per share and dividends per share in the above chart are provided assuming that theshare consolidation had been conducted at the beginning of the 159th term.
2. Net income per share is calculated using the average number of shares issued andoutstanding excluding treasury stock. Net assets per share are calculated using thenumber of shares issued and outstanding at the end of the fiscal year excluding
treasury stock.
3. For total dividends paid and dividends per share for the 162nd term, the sum of theinterim dividend paid in December 2020 and the dividend proposed for resolution at
this Ordinary General Meeting of Shareholders is indicated.
4. The Company applied Partial Amendments to Accounting Standards for Tax EffectAccounting (Accounting Standards Board of Japan (“ASBJ”) No. 28, February 16,2018) from the beginning of the 160th term, and these standards have been
retrospectively applied to the details of assets and profit/loss in the 159th term.

36

(7) Significant Subsidiaries (as of March 31, 2021)
1) Significant subsidiaries
The
Company’s
percentage ofequityparticipation

Company name

CapitalDenka Singapore Pte., Ltd.

SGD 69,410 thousand

Denka Chemicals Holdings
Asia Pacific Pte., Ltd.
Denka Performance
Elastomer LLC

USD 68,700 thousand
USD 62,000 thousand

Hinode Kagaku Kogyo

JPY 300 million

Nishi-nihon Koatsu Gas Co.,Ltd.

JPY 80 million

Denka RENOTEC Co., Ltd.

JPY 50 million

Denka Azumin Co., Ltd.

JPY 300 million

Denka Inorganic Materials
Tianjin Co., Ltd.
Denka Infrastructure
Technologies Shanghai Co.,Ltd.
Denka Infrastructure
Malaysia Sdn Bhd.
Denka Construction Solutions
Malaysia Sdn Bhd.

JPY 250 million
JPY 210 million
MYR 7,151 thousand
MYR 1,500 thousand

PT. Hissan Trading Indonesia

USD 300 thousand

Denka Advantech Pte., Ltd.

SGD 17,000 thousand

Denal Silane Co., Ltd.

JPY 500 million

Denka Advanced Materials(Suzhou) Co., Ltd.

CNY 55,440 thousand

Denka Electronic Materials
Dalian Co., Ltd.

JPY 1,000 million

Denka Advanced Materials
Vietnam Co., Ltd.

USD 12,000 thousand

DENKA Polymer Co., Ltd.

JPY 2,080 million

Nakagawa Techno IndustrialCo., Ltd.

JPY 50 million

Denka Chemicals GmbHEUR 256 thousand

37

Principal business

Manufacturing and sales of
100.0
acetylene black and functional(100.0)polystyrene resin products
Regional headquarters for
100.0
Southeast and South Asia
70.0 Manufacturing and sales of(70.0) synthetic rubbers
Manufacturing and sales of
100.0 fertilizers and chemical
products
Manufacturing and sales of
93.3
high-pressure gas
Repair, design, engineering
100.0 and management work forconcrete structures
Manufacturing and sales of
100.0 fertilizers and agricultural
materials
Manufacturing and sales of
100.0
special cement additives
Business headquarters for100.0 special cement additives in
China
100.0 Manufacturing and sales of(100.0) construction chemicals
100.0 Manufacturing and sales of(100.0) construction chemicals
100.0 Sales of special cement(100.0) additives, etc.in Indonesia
Manufacturing and sales of
100.0
fused silica and synthetic fiber(100.0)for wigs and hairpieces
Manufacturing and sales of
51.0
monosilane gas, etc.
Manufacturing, processing,
100.0 and sales of electronic
packaging materials
Processing and sales of
100.0
electronic materials
Manufacturing and sales of
100.0
electronic packaging materials(100.0)and vinyl tapes
Manufacturing and sales of
100.0 various packaging materials
and plastic containers
Manufacturing, processing,
100.0
and sales of metal rain gutters
Import, export and sales of
100.0 chemical and electronics
products

Company name

The
Company’s
percentage ofequityparticipation

CapitalPrincipal business

Design and engineering of
100.0 various industrial facilities,
transportation facilities, etc.
Sales of inorganic industrial
products, organic industrial
Akros Trading Co. Ltd.
JPY 1,200 million
76.8 products, civil engineeringand construction materials,
interior materials, etc.
Akros Trading China Co.,
100.0 Sales of electronic packaging
USD 300 thousandLtd.
(100.0) materials, etc.
Sales of resins andAkros Trading Taiwan Co.,
100.0
TWD 29,000 thousandsemiconductor-related
Ltd.
(100.0)materials, etc.
Notes: 1. The Company’s percentage of equity participation is calculated by dividing thenumber of shares held by the Company by the number of shares issued and outstanding.
The figure within parentheses indicates the percentage of indirect ownership by
subsidiaries.
2. Effective April 1, 2021, the Company executed a corporate demerger, divesting itself
of its housing equipment-related business, which was absorbed by Nakagawa Techno
Industrial Co., Ltd. Nakagawa Techno Industrial Co., Ltd. was renamed Denka Astec Co.,
Ltd. (Minato-ku, Tokyo) effective the same day.
.
Denka Consultant &Engineering Co., Ltd.

JPY 50 million

2) Significant affiliates
Company nameToyo Styrene Co., Ltd.
Denak Co., Ltd.
Kurobegawa Power Plant

The
Company’s
percentage ofequityparticipation

CapitalJPY 5,000 million
JPY 600 million
JPY 3,000 million

38

Principal business

Manufacturing processing
50.0 sales of polystyrene resin andstyrene-based special resin.
Manufacturing and sales of
50.0
monochloroacetic acid
Operation of electric power
50.0 business and other incidental
business

(8) Principal Business Details (as of March 31, 2021)
The Company manufactures and sells the following products.

(9)

Business division

Main products

Elastomers & Performance
Plastics Division
Infrastructure & Social
Solutions Division
Electronics & Innovative
Products Division
Life Science &Environmental Products
DivisionLife Innovation Division
Others Division

Chloroprene rubber, styrene monomer, polystyrene resin, ABS resin,
CLEAREN, heat-resistant resin, transparent resin, POVAL, etc.
Cement, special cement additives, fertilizers, calcium carbide, fire
resistant materials, environmental materials, etc.
Fused silica, electronic circuit substrates, fine ceramics, electronic
packaging materials, acetylene black, etc.
Food packaging materials, housing materials, industrial tapes, synthetic
fiber for wigs, etc.
Joint function improvers, Vaccines, diagnostic reagents, etc.
Plant engineering etc.

Principal Offices and Factories (as of March 31, 2021)
Company namePrincipal offices
Head Office:1-1, Nihonbashi-Muromachi 2-chome, Chuo-ku,
TokyoBranches:
Tokyo, Osaka, Nagoya, Fukuoka, Niigata, Kanetsu(Saitama), Hokuriku (Toyama), Sapporo, Tohoku(Sendai)
Plants:Omi (Itoigawa, Niigata Prefecture), Omuta, Chiba(Ichihara, Chiba Prefecture), Shibukawa, Ofuna
Denka Co., Ltd.
(Kamakura, Kanagawa Prefecture), Isesaki, Gosen
Research Institutes: Denka Innovation Center (Advanced Technologies
Research Institute, Life Innovation ResearchInstitute, Infrastructure & Solutions Development
Research Institute) (Machida, Tokyo)
Polymer & Processing Technology Institute(Ichihara, Chiba Prefecture)
Denka Singapore Pte., Ltd. Head Office and Plants: Singapore
Denka Chemical Holdings
Head Office: Singapore
Asia Pacific Pte., Ltd.
Denka Performance
Head Office and Plant: Louisiana, United States
Elastomer LLC
Hinode Kagaku Kogyo
Head Office and Plant: Maizuru, Kyoto Prefecture
Nishi-nihon Koatsu Gas
Head Office: Fukuoka, Fukuoka PrefectureCo., Ltd.
Denka RENOTEC Co.,
Head Office: Chuo-ku, TokyoLtd.
Denka Azumin Co., Ltd.
Head Office and Plant: Hanamaki, Iwate Prefecture
Denka Inorganic Materials
Head Office and Plant: Tianjin, China
Tianjin Co., Ltd.
Denka Infrastructure
Technologies Shanghai
Head Office: Shanghai, China
Co., Ltd.
Denka Infrastructure
Head Office and Plant: Selangor, Malaysia
Malaysia Sdn Bhd.
Denka Construction
Solutions Malaysia Sdn
Head Office and Plant: Selangor, Malaysia
Bhd.
PT. Hissan Trading
Head Office: Jakarta, Indonesia
Indonesia
Denka Advantech Pte., Ltd. Head Office and Plant: Singapore
Denal Silane Co., Ltd.
Head Office: Chuo-ku, Tokyo
39

Company name
Denka Advanced Materials(Suzhou) Co., Ltd.
Denka Electronic Materials
Dalian Co., Ltd.
Denka Advanced Materials
Vietnam Co., Ltd.
DENKA Polymer Co., Ltd.

Principal offices
Head Office and Plant: Suzhou, Jiangsu, China
Head Office and Plant: Dalian, Liaoning, China
Head Office and Plant: Hung Yen, Vietnam
Head Office: Koto-ku, Tokyo
Plants: Sakura, Katori (Tako-machi, Chiba Prefecture), Goi (Ichihara,
Chiba Prefecture)

Nakagawa Techno
Head Office and Plant: Kasai, Hyogo Prefecture
Industrial Co., Ltd.
Denka Chemicals GmbH
Head Office: Düsseldorf, Germany
Denka Consultant &Head Office: Ichihara, Chiba Prefecture
Engineering Co., Ltd.
Akros Trading Co., Ltd.
Head Office: Minato-ku, Tokyo
Akros Trading China Co.,
Head Office: Shanghai, China
Ltd.
Akros Trading Taiwan Co.,
Head Office: Hsin-Chu, Taiwan
Ltd.
Note: Effective April 1, 2021, the Company executed a corporate demerger, divesting itself of
its housing materials business, which was absorbed by Nakagawa Techno Industrial Co.,
Ltd. Nakagawa Techno Industrial Co., Ltd. was renamed Denka Astec Co., Ltd. (Minato-ku,
Tokyo) effective the same day.
(9) Employees (as of March 31, 2021)
1) The Group
Business segment
Number of employees
1,050
[99]
Elastomers & Performance Plastics Division
Infrastructure & Social Solutions Division
1,042
[129]
Electronics & Innovative Products Division
1,228
[118]
Life Science & Environmental Products Division
1,026
[186]
Life Innovation Division
925
[279]
Others Division
711
[195]
Corporate (common)
369
[56]
Total
6,351 [1,062]
Notes: 1. The number of employees indicated is the number of full-time employees and theannual average number of temporary employees is indicated in brackets.
2. The number of employees indicated for “Corporate (common)” is the number of
employees who belong to administrative divisions that cannot be classified into a
specific business.
2) The Company
Increase (Decrease)from the previous
Average age
Average service years
fiscal year-end
4,166 [697]+817 [+179]
40.5
16.5
Notes: 1. The number of employees indicated is the number of full-time employees and theannual average number of temporary employees is indicated in brackets.
2. The increase of 817 in the number of employees compared to the previous year-end isdue to factors including the absorption-type merger of its consolidated subsidiary
DENKA SEIKEN Co., Ltd.
Number of employees

40(10) Principal Lenders (as of March 31, 2021)
LenderOutstanding borrowings (Millions of yen)
Syndicated loan
35,000Mizuho Bank, Ltd.
17,416
M&A loans
12,442The Norinchukin Bank
5,735
Sumitomo Mitsui Banking Corporation
5,118
Notes: 1. The syndicated loan is managed by Mizuho Bank, Ltd. and Sumitomo Mitsui Banking
Corporation and is co-financed.
2. M&A loans refers to an overseas M&A support loan system maintained by the Japan
Bank for International Cooperation in cooperation with private banks.
(11) Other Significant Matters concerning the Group’s Current Situation
Not applicable41

2. Status of Shares (as of March 31, 2021)(1) Total Number of Authorized Shares

290,000,000 shares(2) Shares of Common Stock Issued

88,555,840 shares(including 2,276,151 shares of treasury stock)(3) Number of Shareholders

35,737(4) Major Shareholders
Number of shares
held(hundred shares)
114,701
73,101

Shareholder name

Percentage ofshares held
(%)
13.29
8.47

The Master Trust Bank of Japan, Ltd. (Trust Account)
Custody Bank of Japan, Ltd. (Trust Account)
Mizuho Trust & Banking Co., Ltd. Retirement Benefit
Trust Mizuho Bank Account32,1583.73(Account re-entrusted by Custody Bank of Japan, Ltd.)
National Mutual Insurance Federation of Agricultural
29,007
3.36
Cooperatives
TAIJU LIFE INSURANCE COMPANY LIMITED
23,816
2.76
SSBTC CLIENT OMNIBUS ACCOUNT
14,1971.65
Mitsui Sumitomo Insurance Company, Limited
13,832
1.60
Japan Post Insurance Co., Ltd.
13,8001.60
THE BANK OF NEW YORK MELLON 140044
13,473
1.56
STATE STREET BANK AND TRUST COMPANY
1.51
12,990505001
Notes: 1. 2,276,151 shares of treasure stock have been excluded from the above list of major
shareholders.
2. Treasury stock is excluded for calculation of the percentage of shares held.
(5) Other Significant Matters concerning Shares
Not applicable.

3. Matters concerning the Company’s Stock Acquisition Rights (as of March 31, 2021)
Not applicable424. Company Officers(1)

Directors (as of March 31, 2021)
Name

Position

Manabu Yamamoto

Chairman, Board of
Directors
President

Norihiro Shimizu

Director

Masaharu Suzuki

Director

Toshio Imai

Director

Shinsuke Yoshitaka

Akio Yamamoto
Tatsutsugu Fujihara
Mitsukuni Ayabe

Junichi Kimura

Yasuo Sato

Toshio Kinoshita

Director (Outside)
Director (Outside)
Director (Full-time
Audit & Supervisory
Committee Member)
Director (Full-time
Audit & Supervisory
Committee Member)
Director (Outside)(Audit & Supervisory
Committee Member)
Director (Outside)(Audit & Supervisory
Committee Member)

Responsibilities and significant concurrent positions
Outside Director of Koatsu Gas Kogyo Co., Ltd.
President and Chief Executive Officer
Senior Managing Executive Officer
Chief Scientific Officer (CSO)
Chief R&D Officer
In charge of New Business Planning & Development
Dept., R&D Promoting Dept., Intellectual Property
Dept.
Senior Managing Executive Officer
Chief Technical Officer (CTO)
In charge of Purchasing Dept., Logistics Dept., ElectricPower Dept., Production & Process Technology Dept.,
Engineering Dept., Digital Innovation Dept.
Senior Managing Executive Officer
Chief Compliance Officer (CCO)
In charge of Corporate Planning Dept., Corporate
Communications Dept., Automotive Materials &Solutions Dept., Denka Corporation, Denka Chemicals
GmbH
In charge of Denka Value-Up Promotion

Chairman and Director of Wisemech Corporation

Representative Director of Global Professional Partners
Outside Audit & Supervisory Board Member ofPanasonic Corporation
Outside Director of TACHI-S CO., LTD.
Outside Director of GiG Works Inc.
Lawyer, Sasanami Law OfficeDirector (Outside)(Audit & Supervisory
Committee Member)
Notes: 1. Directors Mr. Akio Yamamoto, Mr. Tatsutsugu Fujihara, Mr. Yasuo Sato, Mr. Toshio
Kinoshita, and Ms. Hiroko Yamamoto are outside directors as stipulated in Article 2,
Item 15 of the Companies Act.
2. Director who is an Audit & Supervisory Committee Member, Mr. Toshio Kinoshita is acertified public accountant, and has an adequate level of knowledge regarding financeand accounting.
3. The Company has appointed Directors Mr. Mitsukuni Ayabe and Mr. Junichi Kimura
as Full-time Audit & Supervisory Committee Members, in order to enhance theeffectiveness of audits through better information gathering and sufficient coordination
with the Internal Control Dept., etc., and thereby strengthen audit and supervisory
functions.
Hiroko Yamamoto

434. The Company designated Directors Mr. Akio Yamamoto, Mr. Tatsutsugu Fujihara, Mr.
Yasuo Sato, Mr. Toshio Kinoshita, and Ms. Hiroko Yamamoto as independent officers
as defined by Tokyo Stock Exchange, Inc. and notified it of the designation.
(Reference)
Executive Officers (as of April 1, 2021)
Position
President and Chief
Executive Officer
Senior Managing
Executive Officer

Managing Executive
OfficerName
Toshio Imai

Tetsuya Shinmura
Hideki Watanabe
Koki Tabuchi

Shojiro Watanabe

Nobuyuki Yoshino
Kazuya Tokumoto
Hideki Takahashi

Kazuo Takahashi

Executive Officer

Responsibilities

Rimiru Hayashida
Yoshimi Ishizuka
Kiyoshi Asami
Ikuo Ishida
Yasuo Nakatomi
Yukio Sasagawa
Mikio Shimizu
Hideki Toya
Masanobu Kosaka
Kenjiro Ishizuka

Chief Technical Officer (CTO)
In charge of Purchasing Dept., Logistics Dept., ElectricPower Dept., Production & Process Technology Dept.,
Engineering Dept., Digital Innovation Dept.
General Manager, Chiba Plant
General Manager, Elastomers & Infrastructure
SolutionsSupervisor of Environmental Measures Promotion
In charge of Internal Control Dept., Environment and
Safety Dept., Sustainability Promotion Dept., Quality
Assurance Dept.
Chief R&D Officer
In charge of New Business Planning & Development
Dept., R&D Promoting Dept., Intellectual Property
Dept.
Managing Director, DCHA, DSPL, DAPL
General Manager, Life Innovation
Chief Compliance Officer (CCO)
In charge of Corporate Planning Dept., Corporate
Communications Dept., Automotive Materials &Solutions Dept., Denka Corporation, Denka Chemicals
GmbH
In charge of Denka Value-Up Promotion
In charge of Accounting & Finance Dept.
General Manager, Omuta Plant
In charge of Secretary Dept., Administrative Dept.,
Legal Dept., HR Dept.
General Manager, Electronics & Innovative Products
General Manager, Gosen Site
General Manager, Shibukawa Plant
President, Denka Performance Elastomer LLC
Assistant to Chief R&D Officer
In charge of Innovation Center
General Manager, Infrastructure & Solutions
Development Research Institute
General Manager, Omi Plant
General Manager, Polymer Solutions

Notes: DCHA: Denka Chemicals Holdings Asia Pacific Pte., Ltd.
DSPL: Denka Singapore Pte., Ltd.
DAPL: Denka Advantech Pte., Ltd.

44

(2) Summary of Liability Limitation Agreements
Based on Article 427, Paragraph 1 of the Companies Act, the Company currently has liability
limitation contracts with Directors Mr. Akio Yamamoto, Mr. Tatsutsugu Fujihara, Mr. Yasuo Sato, Mr.
Toshio Kinoshita, and Ms. Hiroko Yamamoto that limit their liability for damages provided for in Article
423, Paragraph 1 of said Act. The limit of liability under the contract is set to a predefined amount of ¥5
million or more or the amount stipulated by laws and regulations, whichever is higher.
(3) Summary of Directors and Officers Liability Insurance
The Company has entered into a directors and officers liability insurance contract with an insurancecompany as stipulated in Article 430-3, Paragraph 1 of the Companies Act. The Company’s Directors(including Directors who are Audit & Supervisory Committee Members), Executive Officers, andDirectors, Corporate Auditors and Executive Officers of some of the Company’s Group companies are
insured parties under the contract. As a rule, the insured parties are not responsible for paying insurance
premiums.
The Directors and officers liability insurance covers legal damages and litigation expenses in theevent that a claim for damages is made against the insured persons due to an act committed by aninsured person in his/her capacity as such. However, measures have been implemented to ensure thatproper execution of duties by officers, etc. is not impaired. These include an exclusion where theCompany makes a claim for damages against the insured parties, as well as the establishment of adeductible amount.
(4) Remuneration and Other Payments to Directors
1) Policy on the determination of remuneration and other payments to individual Directors
The Board of Directors of the Company has decided on the following policy for determining
remuneration and other payments to individual Directors (hereinafter referred to as the “Decision
Policy”), after receiving recommendations and proposals from the Nomination & Remuneration
Advisory Committee.
[Basic Policy]
Remuneration for individual Directors (excluding Directors who are Audit & Supervisory Committee
Members; the same applies hereinafter) shall be in accordance with each Director’s roles andresponsibilities, and shall be determined by the Board of Directors after receiving recommendations andproposals from the Nomination & Remuneration Advisory Committee, and set forth in internal
regulations, in order to enhance objectivity and transparency.
The structure of Directors’ remuneration shall, in addition to a fixed monthly amount of basic
remuneration, consist of performance-linked cash remuneration, designed to increase motivation to
improve the financial results for each fiscal year, and stock remuneration, designed to increase
motivation to contribute to improving medium- and long-term performance and enhancing corporate
value. These function as sound incentives to maintain growth. However, in view of the duties performedby Outside Directors and non-executive Directors, remuneration for these Directors shall consist solelyof basic remuneration.
[Policy on the determination of remuneration and other payments to individual Directors]i) Policy on the determination of the amount and calculation method of basic cash remuneration.
Basic remuneration shall be determined in accordance with each Director’s roles and responsibilities,
taking into consideration factors such as the level of employee pay. It shall be paid in a fixed amountevery month.
ii) Policy on the determination of the performance indicators, amount and calculation method of
performance-linked cash remuneration
The total amount of performance-linked remuneration shall be determined with reference toconsolidated operating income, a key indicator under the Company’s management plan. It shall thenbe allotted in accordance with each Director’s roles and responsibilities, and paid promptly after thefinancial results are finalized. However, if consolidated operating income is below a certain level, ora massive extraordinary loss is recorded, or if a serious compliance breach has occurred, then no
payment shall be made, or the payment amount shall be reduced.
iii) Policy on the determination of the details, amount and calculation method of stock remuneration

45

The stock remuneration scheme shall utilize a trust structure. Points shall be granted to Directors
each month in accordance with rank, based on stock delivery regulation established by the Company,
and shares of the Company’s stock shall be delivered to Directors through the trust on retirement,
based on the number of points they have accumulated. The maximum amount of money to becontributed by the Company to the trust for the purpose of delivering the Company’s shares to
Directors shall be ¥40 million per year.
iv) Policy on the determination of the proportions of the total amount of remuneration paid as basic
remuneration, performance-linked remuneration, and stock remuneration
No policy is established specifically to determine the proportion of Directors’ remuneration to be
paid as basic remuneration, performance-linked remuneration, and stock remuneration. However, if
the operating income target under the management plan is achieved, then the proportions will beapproximately 70%, 20% and 10% respectively.
v) Method used to determine remuneration and other payments to individual Directors
The details of remuneration and other payments to individual Directors shall be determined by the
Board of Directors, after receiving recommendations and proposals from the Nomination &Remuneration Advisory Committee, and set forth in internal regulations.
2) Reason why the details of remuneration and other payments to individual Directors are judged by
the Board of Directors to be in accordance with the Decision Policy
The Board of Directors establishes the details of remuneration in internal regulation, in accordancewith the Decision Policy, after receiving recommendations and proposals from the Nomination &Remuneration Advisory Committee. Remuneration for individual Directors is determined based on theseregulations. Therefore, the Board of Directors deems it to be in accordance with the Decision Policy.
3) Remuneration and other payments to Directors

Category

Numberofpersons

Amount of
remuneration,
etc.
(Millions ofyen)

Breakdown
Cash remuneration
Performance-linked
Basic remuneration
remuneration
Number
Total
Number
Totalof(Millionsof(Millionspersonsof yen)personsof yen)Stockremuneration
Numberofpersons

Total(Millionsof yen)Directors(excluding
Directors
who areAudit &
7
349
7
285
5
42
5
21
Supervisory
(2)
(24)
(2)
(24)
(-)
(-)
(-)
(-)
Committee
Members)(of whichOutsideDirectors)
Directors(Audit &Supervisory
Committee
591
591Members)
(3)
(36)
(3)
(36)
(-)
(-)
(-)
(-)
(of whichOutsideDirectors)
Total(of which
12
441
12
376
5
42
5
21
Outside
(5)
(60)
(5)
(60)
(-)
(-)
(-)
(-)
Directors)
Notes: 1. The maximum amount of cash compensation remuneration for Directors (excluding
Directors who are Audit & Supervisory Committee Members) is ¥490 million per year(of which the maximum amount of remuneration for Outside Directors is ¥40 million,46

excluding the portions of their salaries as employees) as resolved at the 160th Ordinary
General Meeting of Shareholders held on June 20, 2019. There were 7 Directors(excluding Directors who are Audit & Supervisory Committee Members), including 2
Outside Directors, as of the conclusion of the 160th Ordinary General Meeting of
Shareholders.
2. The maximum amount of remuneration for Directors who are Audit & Supervisory
Board Members is ¥166 million per year as resolved at the 160th Ordinary General
Meeting of Shareholders held on June 20, 2019. There were 5 Directors who are Audit& Supervisory Board Members as of the conclusion of the 160th Ordinary General
Meeting of Shareholders.
3. Regarding the amount of stock remuneration for Directors (excluding Directors who
are Audit & Supervisory Committee Members or Outside Directors), the maximum
amount of cash to be contributed by the Company is ¥40 million per year, and the
maximum number of points to be awarded to Directors is 110,000 points per year, as
resolved at the 160th Ordinary General Meeting of Shareholders held on June 20, 2019.
There were 5 Directors (excluding Directors who are Audit & Supervisory Committee
Members or Outside Directors) as of the conclusion of the 160th Ordinary General
Meeting of Shareholders.
4. The total amount of stock remuneration is the amount of expenses recorded for the
fiscal year under review for the stock remuneration plan that allots shares of theCompany (a stock remuneration plan wherein a trust established by the Company
makes acquisitions using funds contributed by the Company, and shares of theCompany and cash equivalent to the disposal conversion amount of the Company’s
shares are allotted to Directors (excluding Directors who are Audit & Supervisory
Committee Members and Outside Directors) through said trust).
5. The amount of performance-linked remuneration paid is determined with reference tothe consolidated operating income for each fiscal year. If consolidated operating
income is below a certain level, or if a serious compliance breach has occurred, thenno payment is made, or the payment amount is reduced. The reason why consolidated
operating income has been selected as an index is because it is a key indicator in the
Company’s management plan. The trend in operating income for fiscal 2020 and otheryears is presented in 1. (6) Financial Position and Results of Operations.
(5) Outside Officers
1) Significant concurrent positions as business executors at other companies, etc. and therelationship between the Company and such companies, etc.
Director who is an Audit & Supervisory Committee Member Mr. Yasuo Sato is Chairman and
Director of Wisemech Corporation. There are no significant transactions between the Company
and Wisemech Corporation.
Director who is an Audit & Supervisory Committee Member Mr. Toshio Kinoshita is
Representative Director of Global Professional Partners. There are no significant transactions
between the Company and Global Professional Partners.
Director who is an Audit & Supervisory Committee Member Ms. Hiroko Yamamoto is alawyer with Sasanami Law Office. There are no significant transactions between the Company and
Sasanami Law Office.
2) Significant concurrent positions as outside officers etc. at other companies, etc. and therelationship between the Company and such companies, etc.
Director who is an Audit & Supervisory Committee Member Mr. Toshio Kinoshita is Outside
Audit & Supervisory Board Member of Panasonic Corporation and Outside Director of TACHI-S
CO., LTD., and Outside Director of GiG Works Inc.
There are no significant transactions between the Company and TACHI-S CO., LTD., or GiG
Works Inc.
The Company has transactions with Panasonic Corporation, but there are no special interest
relationships.
3) Relationship with specified related parties such as major customers
Not applicable474) Principal activities in the fiscal year ended March 31, 2021
i. Outside Directors[Board of Directors meetings]
The Board of Directors met 13 times in the fiscal year ended March 31, 2021. Mr. Akio Yamamoto,
Mr. Tatsutsugu Fujihara, Mr. Yasuo Sato, Mr. Toshio Kinoshita and Ms. Hiroko Yamamoto attended all
13 meetings of the Board of Directors (attendance rate: 100%). Mr. Akio Yamamoto, based on his richexperience and wide views as a corporate executive and rich international experience serving as abusiness manager at global companies, and Mr. Tatsutsugu Fujihara, based on his rich experience andwide views as a manager, and expert knowledge of corporate finance, actively made necessaryinquiries and recommendations.
In addition, as Directors who are Audit & Supervisory Committee Members, Mr. Yasuo Sato,based on his rich experience and wide views as a corporate executive and rich international experience
serving as a business manager at global companies, Mr. Toshio Kinoshita, based on his experience andrich accounting knowledge as a certified public accountant in Japan and the US, and Ms. Hiroko
Yamamoto, based on her rich experience and expert knowledge as a lawyer, actively made necessaryinquiries and recommendations.
[Audit & Supervisory Committee]
The Audit & Supervisory Committee met 15 times in the fiscal year ended March 31, 2021. Mr.
Yasuo Sato, Mr. Toshio Kinoshita and Ms. Hiroko Yamamoto attended all 15 meetings of the Audit &Supervisory Committee (attendance rate: 100%). Each member of the Audit & Supervisory
Committee worked closely with the Internal Control Dept., etc. to perform efficient and effective
audits of the Company’s divisions and departments, business sites and subsidiaries and receive
briefings on the status of business execution at periodic divisional report meetings. They reported theresults of these activities to the Audit & Supervisory Committee and had necessary discussions withother Directors who are Audit & Supervisory Committee Members.
Board of Directors
Audit & Supervisory
meetings
Committee
Attendance
Attendance
Attendance
Attendance
rate
rate
Director
13/13
100%
Akio Yamamoto
Director
13/13
100%
Tatsutsugu Fujihara
Director (Audit &Supervisory
13/13
100%
15/15
100%
Committee Member)
Yasuo Sato
Director (Audit &Supervisory
13/13
100%
15/15
100%
Committee Member)
Toshio Kinoshita
Director (Audit &Supervisory
13/13
100%
15/15
100%
Committee Member)
Hiroko Yamamoto

485) Summary of Duties Fulfilled by Outside Directors Related to Their Expected Roles
Expected roles

Director
Akio Yamamoto

Director
Tatsutsugu Fujihara

Director (Audit &Supervisory
Committee Member)
Yasuo Sato

Director (Audit &Supervisory
Committee Member)
Toshio Kinoshita
Director (Audit &Supervisory
Committee Member)
Hiroko Yamamoto

Recommendations and supervision
regarding the Company’s managementin general, based on his rich experiencein Japan and overseas and wide views
as a corporate executive, and richinternational experience serving as abusiness manager at global companies
Recommendations and supervision
regarding the Company’s managementin general, based on his rich experienceand wide views as a manager, andexpert knowledge of corporate financeSupervision and audit of theCompany’s management, based on his
rich experience and wide views as acorporate executive and richinternational experience serving as abusiness manager at global companies,
as well as his experience as outside
auditor of a listed company
Supervision and audit of theCompany’s management, based on his
experience and rich accounting
knowledge as a certified public
accountant in Japan and the US
Supervision and audit of theCompany’s management, based on her
rich experience and expert knowledge
as a lawyer

49

Summary of duties performed related
to expected roles
Inquiries and recommendations
regarding business strategy and risk
management at subsidiaries in Japanand overseas, and medium- tolong-term environmental management

Inquiries and recommendations
regarding funding strategy for theGroup as a whole and the completenessof governance systems at overseas
subsidiaries
Inquiries and recommendations
regarding overseas development plansfor new businesses and thecompleteness of regulation across theGroup

Inquiries and recommendations
regarding the strengthening of risk
management in overseas businesses
and the United States tax system
Advice on the completeness of theCompany’s internal regulation, andinquiries and recommendations
regarding Group businesses andintellectual property strategy

5. Accounting Auditor(1)

Accounting Auditor’s Name
Ernst & Young ShinNihon LLC(2)Accounting Auditor’s Remuneration, etc. for the Fiscal Year Ended March 31, 2021
Amount paid (thousands of yen)
Remuneration, etc. for the Accounting Auditor for the fiscal
94,000year ended March 31, 2021
Monetary or property benefits to be paid by the Company
124,770
and its subsidiaries to the Accounting Auditor
Notes: 1. Under the audit agreement between the Company and its Accounting Auditor,
remuneration for audits based on the Companies Act and that for audits based on the
Financial Instruments and Exchange Act are not strictly distinguished and they cannot
be substantially distinguished. Consequently, the sum of the amounts of these
remunerations is stated as the amount of remuneration, etc. for the Accounting Auditor
for the fiscal year ended March 31, 2021.
2. The Audit & Supervisory Committee of the Company, in observance of the “Practical
Guidelines for Cooperation with Accounting Auditors” published by the Japan Audit &Supervisory Board Members Association, has confirmed the time taken to audit each
audit item compared to audit plans for previous fiscal years and comparisons withamounts for other companies as disclosed for the fiscal year ended March 31, 2020,
and agrees to the fees, etc., of the Accounting Auditor under Article 399, Item 1 of theCompanies Act.
3. Financial statements (including corresponding statements) of some of the Company’s
significant subsidiaries are audited (subject to regulations of the Companies Act andthe Financial Instruments and Exchange Act; including corresponding laws andregulations overseas) by Certified Public Accountants or Audit Corporations(including persons with qualifications that correspond to these qualifications overseas)other than the Company’s Accounting Auditor.

(3)

Non-audit Services
The Company pays fees to Ernst & Young ShinNihon LLC mainly for advice and guidance
provided in relation to the introduction of accounting standards for revenue recognition.

(4)

Policy for Determination of Dismissal or Non-reappointment of the Accounting Auditor
If the Audit & Supervisory Committee considers that it has become difficult for the Accounting
Auditor to perform its duties appropriately or otherwise considers it necessary, the Audit & Supervisory
Committee will make a resolution for dismissal or non-reappointment of the Accounting Auditor, andwill submit a proposal to the General Meeting of Shareholders.
If it is deemed appropriate to dismiss the Accounting Auditor is deemed, because it falls under any
item of Article 340, Paragraph 1 of the Companies Act, the Audit & Supervisory Committee will
dismiss the Accounting Auditor upon consent of all the Audit & Supervisory Committee Members.

(5)

Disposition of Suspension of Business of the Accounting Auditor during the Past Two Years
Not applicable(6)

Outline of the Limited Liability Contracts
Not applicable

50

Consolidated Financial Statements
Consolidated Balance Sheet(As of March 31, 2021)(Millions of yen)Account item
(Assets)
Current assets
Cash and deposits
Notes and accounts
receivable-trade
Merchandise andfinished goods
Work in process
Raw materials andsupplies
Other
Allowance for doubtful
accounts

Noncurrent assets
Property, plant andequipment
Buildings
Structures
Machinery andequipment
VehiclesTools, furniture andfixturesLand
Lease assets
Construction in progress
Intangible assets
Software
Goodwill
Right of using patent
Investments and otherassets(Reference)161st term
501,448

162nd term

Account item

526,035(Liabilities)

198,452

200,726

29,172

25,910Current liabilities
Notes and accounts
payable-trade

85,637

92,81652,159(Reference)161st term
247,434

162nd term
255,998

160,807

155,062

43,00540,188

Short-term loans payable

51,92941,867

46,718Commercial paper

9,000

8,000

4,037

4,617

Current portion of
long-term loans payable

10,01010,003

19,582

20,379Accounts payable-other

18,07923,313

8,156

10,479

Income taxes payable

3,550

5,431

(293)

(195)

Accrued consumption taxes

1,431

453

Accrued expenses
Provision for bonuses
Other11,194
2,992
9,613

10,871
2,718
12,213302,995

325,309

Noncurrent liabilities

86,626

100,935

231,815

247,834

Bonds payable

37,00037,00040,733
21,77045,71029,086

26,4003,245

41,3195,161

69,09871,914

8,403

8,397

691

909

Long-term loans payable
Deferred tax liabilities
Deferred tax liabilities forland revaluation
Net defined benefit liability

7,874

5,892

4,146

4,510

Provision for stock benefits

58

80

63,37063,562

Other

3,644

3,084

2,260

1,929

(Net assets)

254,014270,036

29,745
11,808
1,002
7,544
3,261

30,211
11,392
1,166
7,203
3,022

235,628
36,99849,365
156,857(7,593)

247,596
36,99849,397
168,878(7,677)59,371

66,081

Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Accumulated othercomprehensive income

15,092

19,85251

Investment securities

51,20059,569

178

158

2,423

1,904

Deferred tax assets

3,160

2,146

Other

2,526

2,420

Long-term loans
receivable
Long-term prepaid
expenses

Valuation difference on
available-for-salesecurities
Deferred gains or losses onhedges
Revaluation reserve for land
Foreign currency translation
adjustment
Remeasurements of defined
benefit plans

Allowance for doubtful
(118)
(117)
Non-controlling interests
accounts
Total
501,448
526,035
Total(Note) Amounts are rounded down to the nearest million yen.

52

10,691

16,143

(551)

(442)

10,25910,245(876)(3,004)(4,429)(3,090)

3,294

2,588

501,448

526,035

Consolidated Statement of Income(From April 1, 2020 to March 31, 2021)(Millions of yen)
(Reference)161st term
380,803

Account item
Net sales
Cost of sales
Gross profit
Selling, general, and administrative expenses
Operating income

162nd term
354,391

281,465

254,196

99,338100,194

67,75065,464

31,58734,729Non-operating income
Interest and dividend income

1,552

1,405

Equity in earnings of affiliates

1,170

933

Other

822

3,545

1,314

3,653

Non-operating expenses
Interest expenses

866

Other

4,231

Ordinary income

821
5,098

5,418

30,034

6,239
32,143Extraordinary income
Loss on sales of investment securities

280

280

158

158

Extraordinary loss
Loss on liquidation of business

940-

Loss on disaster249-

Merger-related expenses

113

252

Loss on litigation-

Income before income taxes

1,303

2,997

29,011

Income taxes-current

6,344

Income taxes-deferred

131

3,250
29,052

7,122
6,475

(129)

6,993

Profit22,53522,059Profit (loss) attributable to non-controlling interests

(167)

(725)

Profit attributable to owners of parent

22,70322,785(Note) Amounts are rounded down to the nearest million yen.

53

Non-consolidated Financial Statements
Non-consolidated Balance Sheet(As of March 31, 2021)

Account item
(Assets)
Current assets
Cash and deposits
Notes
receivable-trade
Accounts
receivable-trade
Merchandise andfinished goods(Reference)161st term
391,666
133,727
17,556

162nd term

Account item

451,002
158,682
14,651(Liabilities)
Current liabilities
Notes payable-trade
Accounts
payable-trade
Short-term loans
payable

3,637

4,482

57,26273,37836,51536,447-

3,941

11,962

16,758

1,420

1,632

756

209

4,616

7,184

(1)

(5)

Deposits received

257,939

292,319

Provision forbonuses
Other
Noncurrent liabilities

173,160

210,767

Bonds payable

Buildings

28,58638,526Structures

19,293

26,791

Machinery andequipment

46,61955,314559

805

Tools, furniture andfixtures

2,793

3,714

Land

60,37561,781-

199

14,932
1,216
618

Work in progress
Raw materials andsupplies
Prepaid expenses
Short-term loans
receivable
Other
Allowance for
doubtful accounts

Noncurrent assets
Property, plant andequipment

VehiclesLeased assets
Construction inprogress
Intangible assets
Software(Millions of yen)
(Reference)
162nd term
161st term
216,290
228,391
141,764
137,598
4,138
24,05725,292

38,67527,675

9,000

8,000

10,00010,00016,26921,260

1,201

4,726

844

-

6,983

8,497

32,52624,988

1,807

2,173

398
74,526847
90,79237,00037,00024,44239,442

3,889

5,048

8,403

8,397

58

80

129

129

603

695

(Net assets)

175,376

222,610

23,633

Shareholders’ equity

155,726

197,880

1,417
826

Capital stock

36,99836,99854

Commercial paper
Current portion of
long-term loans
payableAccounts
payable-other
Income taxes payable
Accruedconsumption taxes
Accrued expenses

Long-term loans
payableDeferred tax
liabilities
Deferred tax
liabilities for land
revaluation
Provision for stock
benefits
Asset retirement
obligations
Other

Right of using patent
Investments andother assets
Investment securities
Stocks of
subsidiaries andaffiliates
Long-term loans
receivable

597

590

83,56280,135

26,58633,362

48,28038,254

Capital surplus

49,28449,284

Legal capital surplus

49,28449,284

Other capital surplus

0077,036

119,274

77,036

119,274

3,786

3,767

73,250115,506(7,593)(7,677)

19,64924,7309,389

14,485

10,25910,245

391,666

451,002

Retained earnings

Other retained
earnings
Reserve forLong-term prepaid
advanced
1,930
1,546
expensesdepreciation of
noncurrent assets
Retained earnings
Prepaid pension cost
614
685
brought forward
Other investments
1,496
1,616
Treasury stock
Valuation andAllowance for(1)(47)
translation
doubtful accounts
adjustments
Valuationdifference on
available-for-salesecurities
Revaluation
reserve for land
Total
391,666
451,002 Total(Note) Amounts are rounded down to the nearest million yen.
4,654

4,717

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Non-consolidated Statement of Income(From April 1, 2020 to March 31, 2021)(Millions of yen)
(Reference)161st term
228,249

Account item
Net sales
Cost of sales
Gross profit
Selling, general, and administrative expenses
Operating income

162nd term
252,492

165,432

171,437

62,817

81,054

46,79652,80016,02028,254Non-operating income
Interest and dividend income

6,571

Other

1,060

2,097
7,631

1,404

3,501

Non-operating expenses
Interest expenses

660

Other

3,237

Ordinary income

486
3,897

4,346

19,753

4,832
26,923Extraordinary income
Gain on sales of investment securities

280

Gain on extinguishment of tie-in shares

-

158
280

32,37332,532Extraordinary loss
Loss on liquidation of business

730

Loss on disaster249

Income before income taxes

980-

19,053

Income taxes-current

2,991

Income taxes-deferred

241

Profit56

59,455
6,291

3,232
15,821(Note) Amounts are rounded down to the nearest million yen.

-

161

6,453
53,002

Transcript of Accounting Auditor’s Audit Report on Consolidated Financial Statements

Independent Auditors’ Report(English Translation)
May 10, 2021
To the Board of Directors
Denka Co., Ltd.
Ernst & Young ShinNihon LLC
Tokyo office
Mineo Kambayashi
Certified Public Accountant
Designated and Engagement Partner
Shigeyuki Honda
Certified Public Accountant
Designated and Engagement Partner
Yasuyuki Kitamura
Certified Public Accountant
Designated and Engagement Partner

OpinionPursuant to Article 444, Paragraph 4 of the Companies Act, we have audited the accompanying
consolidated financial statements, which comprise the consolidated balance sheet, the consolidated statementof income, the consolidated statement of changes in net assets and the notes to the consolidated financial
statements of Denka Co., Ltd. (the “Company”) for the fiscal year from April 1, 2020 through March 31,
2021.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the financial position and results of operations of the Denka Group, which consists of the Company and its
consolidated subsidiaries, for the period covered by the consolidated financial statements in conformity withaccounting principles generally accepted in Japan.
Basis for the Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibility under the auditing standards is stated in “Auditor’s Responsibility for the Audit of theConsolidated Financial Statements.” We are independent of the Company and its consolidated subsidiaries inaccordance with the provisions related to professional ethics in Japan, and are fulfilling other ethicalresponsibilities as an auditor. We believe that we have obtained sufficient and appropriate audit evidence toprovide a basis for our audit opinion.
Responsibilities of Management and the Audit & Supervisory Committee for the Consolidated Financial
Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statementsin accordance with accounting principles generally accepted in Japan, and for designing and operating suchinternal control as management determines is necessary to enable the presentation and fair presentation of theconsolidated financial statements that are free from material misstatement, whether due to fraud or error.
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In preparing the consolidated financial statements, management is responsible for assessing whether it isappropriate to prepare the consolidated financial statements in accordance with the premise of a going concern,and for disclosing matters relating to going concern when it is required to do so in accordance with accounting
principles generally accepted in Japan.
The Audit & Supervisory Committee are responsible for monitoring the execution of Directors’ duties
related to designing and operating the financial reporting process.
Auditor’s Responsibility for the Audit of the Consolidated Financial Statements
Our responsibility is to obtain reasonable assurance about whether the consolidated financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to express an opinion on the
consolidated financial statements from an independent standpoint in an audit report, based on our audit.
Misstatements can occur as a result of fraud or error, and are deemed material if they can be reasonably
expected to, either individually or collectively, influence the decisions of users taken on the basis of theconsolidated financial statements.
We make professional judgment in the audit process in accordance with auditing standards generally
accepted in Japan, and perform the following while maintaining professional skepticism.
・ Identify and assess the risks of material misstatement, whether due to fraud or error. Design and implement
audit procedures to address the risks of material misstatement. The audit procedures shall be selected andapplied as determined by the auditor. In addition, sufficient and appropriate audit evidence shall beobtained to provide a basis for the audit opinion.
・ In making those risk assessments, the auditor considers internal control relevant to the entity’s audit inorder to design audit procedures that are appropriate in the circumstances, although the purpose of theaudit of the consolidated financial statements is not to express an opinion on the effectiveness of theentity’s internal control.
・ Assess the appropriateness of accounting policies adopted by management and the method of theirapplication, as well as the reasonableness of accounting estimates made by management and the adequacyof related notes.
・ Determine whether it is appropriate for management to prepare the consolidated financial statements on thepremise of a going concern and, based on the audit evidence obtained, determine whether there is asignificant uncertainty in regard to events or conditions that may cast significant doubt on the entity’s
ability to continue as a going concern. If there is a significant uncertainty concerning the premise of agoing concern, the auditor is required to call attention to the notes to the consolidated financial statementsin the audit report, or if the notes to the consolidated financial statements pertaining to the significant
uncertainty are inappropriate, issue a modified opinion on the consolidated financial statements. While theconclusions of the auditor are based on the audit evidence obtained up to the date of the audit report,
depending on future events or conditions, an entity may be unable to continue as a going concern.
・ Besides assessing whether the presentation of and notes to the consolidated financial statements are inaccordance with accounting principles generally accepted in Japan, assess the presentation, structure, andcontent of the consolidated financial statements including related notes, and whether the consolidated
financial statements fairly present the transactions and accounting events on which they are based.
・ Obtain sufficient and appropriate audit evidence regarding the financial information of the Company and its
consolidated subsidiaries in order to express an opinion on the consolidated financial statements. The
auditor is responsible for instructing, supervising, and implementing the audit of the consolidated financial
statements, and is solely responsible for the audit opinion.
The auditor reports to the Audit & Supervisory Committee regarding the scope and timing of
implementation of the planned audit, material audit findings including material weaknesses in internal
control identified in the course of the audit, and other matters required under the auditing standards.
The auditor reports to the Audit & Supervisory Committee regarding the observance of provisions related
to professional ethics in Japan as well as matters that are reasonably considered to have an impact on theauditor’s independence and any safeguards that are in place to reduce or eliminate obstacles.

58Interest
Our firm and engagement partners have no interests in the Company or its consolidated subsidiaries
requiring disclosure under the provisions of the Certified Public Accountants Act of Japan.

The above represents a translation, for convenience only, of the original report issued in the Japanese language.

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Transcript of Accounting Auditor’s Audit Report on Non-consolidated Financial Statements

Independent Auditors’ Report(English Translation)
May 10, 2021
To the Board of Directors
Denka Co., Ltd.
Ernst & Young ShinNihon LLC
Tokyo office
Mineo Kambayashi
Certified Public Accountant
Designated and Engagement Partner
Shigeyuki Honda
Certified Public Accountant
Designated and Engagement Partner
Yasuyuki Kitamura
Certified Public Accountant
Designated and Engagement Partner

OpinionPursuant to Article 436, Paragraph 2, Item 1 of the Companies Act, we have audited the accompanying
financial statements, which comprise the balance sheet, the statement of income, the statement of changes in
net assets and the related notes, and the accompanying supplementary schedules of Denka Co., Ltd. (the“Company”) for the 162nd fiscal year from April 1, 2020 through March 31, 2021.
In our opinion, the financial statements and the accompanying supplementary schedules referred to above
present fairly, in all material respects, the financial position of the Company as of March 31, 2020, and theresults of its operations for the year then ended in conformity with accounting principles generally accepted inJapan.

Basis for the Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibility under the auditing standards is stated in “Auditor’s Responsibility for the Audit of the Financial
Statements and the Accompanying Supplementary Schedules.” We are independent of the Company inaccordance with the provisions related to professional ethics in Japan, and are fulfilling other ethicalresponsibilities as an auditor. We believe that we have obtained sufficient and appropriate audit evidence toprovide a basis for our audit opinion.
Responsibilities of Management and the Audit & Supervisory Committee for the Financial Statements and the
Accompanying Supplementary Schedules
Management is responsible for the preparation and fair presentation of the financial statements and theaccompanying supplementary schedules in accordance with accounting principles generally accepted in Japan,
and for designing and operating such internal control as management determines is necessary to enable thepreparation and fair presentation of the financial statements and the accompanying supplementary schedules
that are free from material misstatement, whether due to fraud or error.

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In preparing the financial statements and the accompanying supplementary schedules, management is
responsible for assessing whether it is appropriate to prepare the financial statements and the accompanying
supplementary schedules in accordance with the premise of a going concern, and for disclosing mattersrelating to going concern when it is required to do so in accordance with accounting principles generally
accepted in Japan.
The Audit & Supervisory Committee are responsible for monitoring the execution of Directors’ duties
related to designing and operating the financial reporting process.
Auditor’s Responsibility for the Audit of the Financial Statements and the Accompanying Supplementary
Schedules
Our responsibility is to obtain reasonable assurance about whether the financial statements and theaccompanying supplementary schedules as a whole are free from material misstatement, whether due to fraud
or error, and to express an opinion on the financial statements and the accompanying supplementary schedules
from an independent standpoint in an audit report, based on our audit. Misstatements can occur as a result offraud or error, and are deemed material if they can be reasonably expected to, either individually orcollectively, influence the decisions of users taken on the basis of the financial statements and theaccompanying supplementary schedules.
We make professional judgment in the audit process in accordance with auditing standards generally
accepted in Japan, and perform the following while maintaining professional skepticism.
・ Identify and assess the risks of material misstatement, whether due to fraud or error. Design and implement
audit procedures to address the risks of material misstatement. The audit procedures shall be selected andapplied as determined by the auditor. In addition, sufficient and appropriate audit evidence shall beobtained to provide a basis for the audit opinion.
・ In making those risk assessments, the auditor considers internal control relevant to the entity’s audit in orderto design audit procedures that are appropriate in the circumstances, although the purpose of the audit of
the financial statements and the accompanying supplementary schedules is not to express an opinion on theeffectiveness of the entity’s internal control.
・ Assess the appropriateness of accounting policies adopted by management and the method of theirapplication, as well as the reasonableness of accounting estimates made by management and the adequacyof related notes.
・ Determine whether it is appropriate for management to prepare the financial statements and theaccompanying supplementary schedules on the premise of a going concern and, based on the audit
evidence obtained, determine whether there is a significant uncertainty in regard to events or conditions
that may cast significant doubt on the entity’s ability to continue as a going concern. If there is a significant
uncertainty concerning the premise of a going concern, the auditor is required to call attention to the notes
to the financial statements and the accompanying supplementary schedules in the audit report, or if thenotes to the financial statements and the accompanying supplementary schedules pertaining to thesignificant uncertainty are inappropriate, issue a modified opinion on the financial statements and theaccompanying supplementary schedules. While the conclusions of the auditor are based on the audit
evidence obtained up to the date of the audit report, depending on future events or conditions, an entity
may be unable to continue as a going concern.
・ Besides assessing whether the presentation of and notes to the financial statements and the accompanying
supplementary schedules are in accordance with accounting principles generally accepted in Japan, assess
the presentation, structure, and content of the financial statements and the accompanying supplementaryschedules including related notes, and whether the financial statements and the accompanying
supplementary schedules fairly present the transactions and accounting events on which they are based.
The auditor reports to the Audit & Supervisory Committee regarding the scope and timing of
implementation of the planned audit, material audit findings including material weaknesses in internal
control identified in the course of the audit, and other matters required under the auditing standards.
The auditor reports to the Audit & Supervisory Committee regarding the observance of provisions related
to professional ethics in Japan as well as matters that are reasonably considered to have an impact on theauditor’s independence and any safeguards that are in place to reduce or eliminate obstacles.

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Conflicts of Interest
Our firm and engagement partners have no interests in the Company requiring disclosure under theprovisions of the Certified Public Accountants Act of Japan.

The above represents a translation, for convenience only, of the original report issued in the Japanese language.

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Transcript of the Audit Report by the Audit & Supervisory Committee

Audit Report(English Translation)
The Audit & Supervisory Committee has audited the Directors’ performance of their duties during the162nd term from April 1, 2020 to March 31, 2021, and hereby reports the method and results thereof as
follows:
1. Auditing Method and Details Thereof
The Audit & Supervisory Committee received regular reports from Directors, employees, etc. on thedetails of resolutions of the Board of Directors related to matters listed in Article 399-13, Paragraph 1, item (i),(b) and (c) of the Companies Act and the creation and operational status of systems developed pursuant tosuch resolutions (internal control systems), requested explanations as necessary, and expressed its views, inaddition to conducting audits via the methods below. Some auditing activities were carried out through theonline meetings system, etc. as a COVID-19 countermeasure, and activities were largely implemented inaccordance with the original audit plan.
1) Audit & Supervisory Committee Members conformed with the Audit & Supervisory Committee Audit
Standards set forth by the Audit & Supervisory Committee and, in accordance with audit policies, theassignment of duties, etc., worked with the Internal Auditing Department and other internal control
departments to attend meetings of important committees, receive reports on matters related to the
execution of duties from Directors, employees, etc., requested explanations as necessary, reviewed
important approval documents, etc., and investigated the status of operations and assets at head office
and important business sites. In addition, with regard to subsidiaries, Audit & Supervisory Committee
Members took steps to communicate and exchange information with the Directors, Audit &Supervisory Board Members, etc. of subsidiaries, and received business reports from subsidiaries asnecessary.
2) With respect to the basic policy set forth in Article 118, Item 3 (i) of the Ordinance for Enforcement of
the Companies Act and the measures set forth in Item 3 (ii) of the said article, which are described in
the Business Report, the Audit & Supervisory Committee examined the content based on the status of
deliberations at meetings of the Board of Directors and other meetings.
3) The Audit & Supervisory Committee monitored and verified whether the Accounting Auditor
maintained its independence and implemented appropriate audits, received reports from the Accounting
Auditor regarding the status of the performance of its duties, and requested explanations as necessary.
In addition, the Audit & Supervisory Committee received notice from the Accounting Auditor that the“system for ensuring that duties are performed properly” (matters set forth in each item of Article 131of the Ordinance for Corporate Accounting) had been prepared in accordance with the “Quality Control
Standards Relating to Auditing” (issued by the Business Accounting Council on October 28, 2005) andother relevant standards, and requested explanations as necessary.
Based on the above method, the Audit & Supervisory Committee reviewed the non-consolidated financial
statements (non-consolidated balance sheet, non-consolidated statement of income, non-consolidated
statement of changes in net assets, and notes to non-consolidated financial statements) and the accompanying
supplementary schedules, as well as the consolidated financial statements (consolidated balance sheet,consolidated statement of income, consolidated statement of changes in net assets, and notes to consolidated
financial statements), and the business report and its accompanying supplementary schedules for the fiscal
year in question.
2. Results of Audit(1) Results of Audit of Business Report, etc., and Other Relevant Documents
1) In our opinion, the Business Report and the accompanying supplementary schedules present fairly
the conditions of the Company in conformity with the applicable laws and regulations and the
Articles of Incorporation of the Company.
2) We have found no instances of misconduct or material violation of the applicable laws andregulations or the Articles of Incorporation with respect to performance of duties by the Directors.
633) In our opinion, the contents of the resolutions of the Board of Directors related to the internal
control systems are fair and reasonable. In addition, we have found no matters requiring special
mention regarding the description in the Business Report and the performance of duties by the
Directors related to such internal control systems.
4) We have found no matters requiring special mention with respect to the basic policies andinitiatives regarding the determination of policies on control of the finances and business of theCompany described in the Business Report.
(2) Results of Audit of Non-consolidated Financial Statements and the Accompanying Supplementary
Schedules
In our opinion, the method and the results of the audit performed by Ernst & Young ShinNihon
LLC are fair and reasonable.
(3) Results of Audit of Consolidated Financial Statements
In our opinion, the method and the results of the audit performed by Ernst & Young ShinNihon
LLC are fair and reasonable.

May 10, 2021
Audit & Supervisory Committee, Denka Co., Ltd.
Full-time Audit & Supervisory Committee
MemberFull-time Audit & Supervisory Committee
MemberAudit & Supervisory Committee Member
Audit & Supervisory Committee Member
Audit & Supervisory Committee Member(Note)

Mitsukuni Ayabe
Junichi Kimura
Yasuo Sato
Toshio Kinoshita
Hiroko Yamamoto

Audit & Supervisory Committee Members Yasuo Sato, Toshio Kinoshita and Hiroko
Yamamoto are Outside Directors as stipulated in Article 2, Item 15 and Article 331, Section 6of the Companies Act.

64