NOTICE: This is a translation of a document issued in Japanese and is made solely for the convenience of the foreign
readers. In case of any discrepancy between the translation and the Japanese original, the latter shall take precedence.

Corporate Governance Report
Last Update: June 27, 2024

Nippon Kayaku Co., Ltd.
President: Atsuhiro Wakumoto, President
Contact: Ichio Kohinata
General Manager of Legal Affairs Div.
Securities Code: 4272
https://www.nipponkayaku.co.jp/english/
The corporate governance situation of Nippon Kayaku Co., Ltd. (“Nippon Kayaku”) is described below.

I. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other
Basic Information
1. Basic Approach
In order to realize our KAYAKU Spirit corporate vision of “Continuously providing society with the best products
through ceaseless progress and the combined forces of our consciences,” we recognize the importance of fair andtimely disclosure of information to all shareholders and investors, and the delivery of transparent business
management through enhanced checking functions. In line with our judgement that consensus-based decisionmaking by the Board of Directors and corporate governance underpinned by an Audit & Supervisory Board system
is best-placed to effectively exercise management functions, we are actively working to enhance and reinforce
corporate governance as a key business management issue.

[Reasons for Non-compliance with the Principles of Corporate Governance Code]We implement all principles of the Corporate Governance Code.

[Disclosure Based on the Principles of Corporate Governance Code] 【Updated】
Our basic approach and policies on corporate governance have been compiled within our “Corporate
Governance Basic Policy” document available on our website:
https://www.nipponkayaku.co.jp/english/company/governance.html
Principle 1-4: Cross-Shareholdings(1) Policy on Cross-shareholdings
Nippon Kayaku maintains cross-shareholdings to preserve and strengthen our business relationships
with business partners from the perspective of increasing our company value over the medium to longterm.
Each year our Board of Directors verifies the significance of each individual cross-shareholding and,taking market impact into consideration, offloads cross-shareholdings deemed to be no longer necessary.

(2) Standards for the Exercising of Voting Rights on Cross-shareholdings
When it comes to exercising voting rights, from the viewpoint of increasing the holding company’s
medium to long-term corporate value, we vote to approve resolutions that will increase the value of
Nippon Kayaku-held shares, and to oppose resolutions that will harm our corporate value. Where
necessary, we also engage in dialog with the issuing company regarding the contents of a resolution.
Principle 1-7: Related Party Transactions
Nippon Kayaku has specified in the Rules of the Board of Directors that any Director engaging incompetitive or personal transactions must receive prior Board approval and report the results of suchtransactions to the Board. In addition to the aforementioned, we also verify at the end of the fiscal year
whether either Directors and Audit & Supervisory Board Members themselves or their close relatives (towithin two degrees) have engaged in transactions with the Nippon Kayaku Group.
The Rules of the Board of Directors specify that Board approval is required for important transactions withprincipal shareholders and affiliated companies.
Principle 2-4: Ensuring Internal Diversity Including the Promotion of Women in the Workplace
Supplementary Principle 2-4-1: Ensuring diversity in the recruitment of Core Personnel, Human Resource
Development Policy, and Internal Environment Improvement Policy
Our approach and objectives towards ensuring diversity in the recruitment of core personnel, as well as ourdiversity-driven policies for human resource development and internal environment improvement policy aredisclosed on our website and other media.
For more details on the female employees, non-Japanese employees and mid-career recruits appointed to
management positions, please refer to “III: Implementation of Measures for Stockholders and Other
Stakeholders.”
Human Resources Management(Policies for Human Resource Development and Internal Environment Improvement Policy)
https://www.nipponkayaku.co.jp/english/sustainability/management/human-management/#h-02-01

Maintaining and Expanding Employment, Developing Human Resources(Our Approach towards Diversity, Training Programs etc.)
https://www.nipponkayaku.co.jp/english/sustainability/social/human-resource/
Principle 2-6: Fulfilling the Function of a Corporate Pension Asset Owner
Nippon Kayaku’s Terms-Based Defined Benefit Corporate Pension Plan is based on Defined-Benefit
Corporate Pension Law and internally-fixed company regulations as follows:(1) To ensure proper management of both pension assets and conflicts of interest arising between the Defined
Benefit Corporate Pension Plan beneficiaries and the company, we have established an Asset Management
Committee which regularly convenes and is comprised of members selected from our Finance andAccounting, Corporate Planning and Human Resources Management divisions, and the Nippon Kayaku
Labor Union.
(2) This committee formulates our basic policy on pension asset management and pension asset portfolio
composition to secure the necessary funds to disburse pension benefits over the long term.
(3) In order to benefit from academic expertise, the Asset Management Committee retains and works with
Outside consultants to regularly revise the basic policy on pension asset management and pension asset
portfolio composition, as well as monitor and evaluate management results, policies, structures, and otherrelevant aspects.

Principle 3-1: Full Disclosure
Supplementary Principle 3-1-3: Implementing Sustainability(1) Company Objectives (Business Principles, etc.), Business Strategies, Business Plans, Sustainability, andInvestments in Human Capital and Intellectual Property.
Our KAYAKU Spirit corporate vision, Basic Policy on Sustainable Management (businessstrategies, mid-term business plan, etc.), and Implementation of Sustainability and Investments in
Human Capital and Intellectual Property can all be found on our company website.
Corporate Visionhttps://www.nipponkayaku.co.jp/english/company/vision/kayakuspirit.html
Basic Policy on Sustainable Management
After clicking the “Sustainability Management” link below, please further refer to the section on“Policy and Basic Approach.”https://www.nipponkayaku.co.jp/english/sustainability/management
Business Strategy
https://www.nipponkayaku.co.jp/english/ir/managementpolicy/strategy.html
Sustainability Information
https://www.nipponkayaku.co.jp/english/sustainability/
Human Capital
https://www.nipponkayaku.co.jp/english/sustainability/management/human-management/#h-02-01
For details on our Human Capital Management initiatives, please click on the link below and refer
to “March 2024: Securities Reports, (2) Basic Approach and Initiatives on Sustainability, ②
Human Capital Management Initiatives.”
https://www.nipponkayaku.co.jp/ir/library/securities.html (Japanese Only)Intellectual Property
https://www.nipponkayaku.co.jp/english/rd/ip.html
Data Summary
https://www.nipponkayaku.co.jp/english/sustainability/library/data/
Disclosure of Climate Change-related Risks and Opportunities
March 2022 saw Nippon Kayaku agree with the recommendations of the TCFD (Task Force on
Climate-related Financial Disclosures). We conduct an annual scenario analysis of the businessfields believed to present the greatest climate-related risks and opportunities to Nippon Kayaku
Group’s business activities, management strategy, and financial planning, and report our findings
and progress towards achieving our goals on our company website.
https://www.nipponkayaku.co.jp/english/sustainability/environment/(2) Basic Approach and Guidelines on Corporate GovernanceFor our basic approach on corporate governance, please refer to the section: “I-1. Basic Approach.”(3) Board Policies and Procedures in Determining the Remuneration of Senior Management and Directors
The Nominations & Remuneration Advisory Committee deliberates the policy and procedures fordetermining executive management remuneration in response to inquiries from the Board of Directors,
which also has the final vote on committee recommendations.
For further details on the Policy and Procedures for Determining Remuneration of Directors, please referto section: “II-1. Matters Concerning Organizational Structure, Organizational Operation, etc. [Relating
to Director Remuneration], Disclosures regarding Policy for Determining Remuneration Amounts andMethods for Calculating Remuneration.”(4) Board Policies and Procedures for the Appointment and Dismissal of Senior Management;
Nomination of Candidates for Directors and Audit & Supervisory Board Members
The Nominations & Remuneration Advisory Committee deliberates the selection of candidates for, anddismissal of members from, the Board of Directors and Audit & Supervisory Board, and the selection anddismissal of Representative Directors in response to inquiries from the Board of Directors. The Board thenvotes on the committee’s findings.

(5) Explanation of Individual Dismissals and Appointments Based on the above Provision (4)The reasons for nominations or proposed dismissals relating to Director and Audit & Supervisory Board
Member positions are disclosed in Shareholder Meeting reference documents. For the most recent details,
please refer to the Notice of the 167th Ordinary General Meeting of Shareholders published on our website.
https://www.nipponkayaku.co.jp/english/ir/stock/meeting.html
Additionally, information on the reasons for selecting Outside Audit & Supervisory Board Members can befound in section “II 1. Organizational Composition and Operation (Auditor Matters).”
Supplementary Principle 4-1-1: Scope of Delegation to Management Personnel
Matters to be referred to the Board of Directors are clearly set forth in the Rules of the Board of Directors,
based on laws, regulations, Articles of Incorporation, and other rules. We have also set forth the Rules on
Duties and Authority, which clearly specify the scope of duties and authority that can be delegated to
management personnel. In line with such Rules does the Board decide on management policy, businessstrategy, various proposals, and other matters of importance to operational execution. It also requests
reports on operational execution status to fulfil its supervisory role pertaining to whether operations
delegated to management have been properly executed.

Principle 4-9: Independence Standards and Qualifications for Independent Directors
Nippon Kayaku has set forth the following independence standards for Outside officers (Outside Directors
and Audit & Supervisory Board Members). The Outside officer concerned is judged to be independent of
the company if he or she does not constitute any of the following:(1)

A supplier who sees Nippon Kayaku and important subsidiaries of Nippon Kayaku (hereafter, “theNippon Kayaku Group”) as a principal customer, or a person who is an executive director, executive
officer, or other employee of the parent company or principal subsidiaries of that supplier (hereafter,“executive”)(2)

A principal customer of Nippon Kayaku, or someone employed by that customer in an executive capacity(3)

An executive of either a principal financial institution from which the Nippon Kayaku Groupborrows, or the parent or a subsidiary of that financial institution(4)

An attorney, certified public accountant (CPA), licensed tax accountant or other consultant who hasreceived funds or other assets exceeding a certain amount, other than officer remuneration, from the
Nippon Kayaku Group (or a person affiliated with the corporation, union, or other group benefiting fromthe assets in question)(5)

A person who has received donations or aid exceeding 10 million yen a year from Nippon Kayaku (oran executive of the corporation, union or other group benefiting from the donation or aid)

(6)

A principal shareholder of the Nippon Kayaku Group, or an executive of that shareholder(7)

A company that has accepted directors from the Nippon Kayaku Group, or an executive of the parent
company or one of its subsidiaries

(8)A person who has constituted any of (1) through (7) in the past five years(9) The spouse or close relatives (within two degrees) of a person in an important position constituting any
one of (1) through (8)(10) The spouse or close relatives (within two degrees) of the person when the person is a director,
executive officer, or manager of Nippon Kayaku or one of its subsidiaries(Notes)1. “Important subsidiaries of Nippon Kayaku” in (1) refers to subsidiaries that comprise 20% ormore of any one of Nippon Kayaku’s (non-consolidated) sales, total assets, income, orborrowings in the most recent fiscal year.
“A supplier who sees the Nippon Kayaku Group as a principal customer” refers to “a supplier
who, in the most recent fiscal year, has received payment worth 2% or more of that entity’sannual consolidated sales from the Nippon Kayaku Group.”
2. “A principal customer of Nippon Kayaku” in (2) refers to “a customer who, in the most recent
fiscal year, paid Nippon Kayaku an amount worth 2% or more of our annual consolidated sales.”
3. “A principal financial institution” in (3) refers to “an entity that, in the most recent fiscal year,
has lent an amount equal to 2% or more of Nippon Kayaku’s consolidated assets to Nippon
Kayaku.
4. “A certain amount” in (4) refers to whichever is the higher of “10 million yen a year” or “2% of theannual sales of an attorney or the corporation, union or other organization to which the attorney
belongs.”
5. “A principal shareholder” in (6) refers to a shareholder who holds 10% or more of the voting
rights (either directly or indirectly).
6. “A person in an important position” in (9) refers to employees who are directors (excluding
Outside directors), executive officers, persons responsible for operational execution, upper-level
management (of department manager level or above), as well as attorneys affiliated with a law
firm holding a position of partner or higher; CPAs affiliated with an accounting firm holding a
position of partner and employee or higher; trustees, directors, auditors, or other officers
affiliated with a foundation, incorporated organization, educational corporation or othercorporation; and other persons reasonably and objectively judged to be of similar importance.
Principle 4-10-1: Use of Optioned Organizations
Nippon Kayaku runs the Nominations & Remuneration Advisory Committee as an Optional Committee
comprised of six Directors. To enhance corporate governance through strengthening the fairness, transparency
and objectivity of Director nomination and remuneration procedure, 4 of the committee’s 6 Directors are
Outside directors.
The committee deliberates, in response to Board of Director inquiries: the selection and dismissal of Directors,
Audit & Supervisory Board Members and Representative Directors; the remuneration (e.g. the remuneration
structure) of Directors and Audit & Supervisory Board Members; and other matters deemed necessary by the
Board, and reports its findings to the Board.
We believe that the majority of independent Outside directors guarantees committee independence.
Principle 4-11: Views on Board of Directors Composition
Supplementary Principle 4-11-1: Identifying skills; Independent Outside Directors with Management Experience at
Other Companies.
So that the Board effectively executes its roles and responsibilities, and is able to rapidly decide on
management matters, Nippon Kayaku has set the maximum number of Directors at 10. In addition togathering a certain number of people well-versed in our business and connected issues, we also think itimportant to ensure diversity in Board member knowledge, experience and skills in order to preserve Board
independence and objectivity.
The Nominations and Remuneration Advisory Committee references our management strategy whenidentifying the skills required of directors, and reports its conclusions to the Board.
For information on independent Outside directors with managerial experience at other companies, pleaserefer to section “II. Business Management Organization and Other Corporate Governance Systems regarding
Decision-making, Business Execution, and Oversight in Management.”

The Skills Matrix we deploy can be found on our company website:
https://www.nipponkayaku.co.jp/english/company/skillmatrix.html
Supplementary Principle 4-11-2: Status of Concurrent Postings of Directors and Audit & Supervisory
Board Members
Nippon Kayaku discloses, on an annual basis, the status of positions that Directors and Audit &Supervisory Board Members concurrently hold as officers in other listed companies in business reports,
Shareholder Meeting reference documents, and securities reports.
Supplementary Principle 4-11-3: Analysis and Evaluation of Overall Board of Directors EffectivenessActions for FY 2023 included the speedy provision of explanatory materials concerning the utilization of IT
tools to augment Board discussions on management strategy, as well as discussions regarding an improved
workplace environment and greater diversification of core human resources and HR development policies.
January 2024 saw Nippon Kayaku conduct a survey of all our Directors and Audit & Supervisory Board
Members on Board of Directors effectiveness for FY 2023. The survey asked respondents to self-assess, andprovide unreserved opinions on, Board structure, functions and management, as well as information provision
to Outside Directors and Outside Audit & Supervisory Board Members. The Board’s analysis and evaluationof survey results revealed relative improvements in survey scores stemming from the various improvements
achieved through our action plans.
Overall, the analysis confirmed that our Board of Directors is effectively fulfilling its roles and responsibilities.
However, it also identified a need for a deepening of discussion on human capital management following on
from the March 2023 Board meeting which fixed for Human Resource Development Policy and Internal
Environment Improvement Policy. The Board has therefore redoubled its efforts to tackle issues related tothese areas through expanding discussion and oversight functions, delivering more focused measures on
business portfolio strategy and PBR improvement, and widening the debate on monitoring. The Board fixed
the relevant actions to be taken at the March 2024 meeting and worked on steadily implementing them from
April 2024 onwards.
We will make continued efforts to improve Board effectiveness going forward.
Supplementary Principle 4-14-2: Policy on the Training of Directors and Audit & Supervisory Board Members
Nippon Kayaku conducts training for Directors and Audit & Supervisory Board Members when they
assume office to educate them on the roles and responsibilities expected of the Directors and Audit &Supervisory Board Members of a listed company, the related laws and regulations, and compliancematters. Even after they assume their posts, we provide self-training and self-education opportunities forofficers to acquire knowledge outside of their specialist sectors.
To our Outside Directors and Outside Audit & Supervisory Board Members, we provide sufficient
explanation of our business, performance, organization and other company and Group aspects, including
opportunities to tour our main business locations.

Principle 5-1: Policy for Constructive Dialog with Shareholders
With a view to achieving sustainable growth and increase the company’s medium to long-term value,
Nippon Kayaku promotes constructive dialog with shareholders and investors while presenting them withtimely and impartial information.
We have also appointed an officer in charge of IR as the chief person responsible for all dialog withshareholders and investors. The body in overall charge of that, our Public Relations & Investor Relations
Division, communicates with the relevant internal divisions, and works to engage in dialog withshareholders and investors by, among other methods, holding regular briefings on financial results.
When dialog with shareholders and investors takes place, we work diligently to ensure that information ispresented to all parties equally, and periodically report opinions and comments gleaned to executive
management.

【Action to Implement a form of Management that is Conscious of Cost of Capital and Stock Price】
Based on the basic strategies of our mid-term business plan, KAYAKU Vision 2025, we are addressing
five key company-wide material issues (materiality), strengthening profitability, improving capitalefficiency and contributing to a sustainable society, aiming to realize a form of management that is
conscious of both cost of capital and stock price. For more details, please refer to the link below.
Presentation materials for mid-term business plan
https://ssl4.eir-parts.net/doc/4272/ir_material_for_fiscal_ym14/118572/00.pdf
Presentation materials for the consolidated financial results for the fiscal year ended March 31, 2024
https://ssl4.eir-parts.net/doc/4272/ir_material_for_fiscal_ym14/156059/00.pdf

2. Capital Structure
Foreign Shareholding Ratio

More than 30%[Status of Major Shareholders] 【Updated】
Name / Company Name

Number of Shares Owned

Percentage (%)

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

24,826,300

14.97

NORTHERN TRUST CO., (AVFC) RE SILCHESTERINTERNATIONAL INVESTORS INTERNATIONALVALUE EQUITY TRUST (Standing proxy: Tokyo Branchof Hongkong and Shanghai Banking Corporation Limited)

13,745,000

8.29

Custody Bank of Japan, Ltd. (Trust account)

12,406,700

7.48

NORTHERN TRUST CO. (AVFC) RE U.S. TAXEXEMPTED PENSION FUNDS (Standing proxy: Tokyo
Branch of Hongkong and Shanghai Banking Corporation
Limited)6,152,700

3.71

Kayavestor Club

6,139,600

3.70

MUFG Bank, Ltd.

5,090,000

3.07

The Joyo Bank, Ltd. (Standing proxy: The Master Trust
Bank of Japan, Ltd.)5,089,000

3.07

NORTHERN TRUST CO., (AVFC) RE NON TREATY(Standing proxy: Tokyo Branch of Hongkong and Shanghai
Banking Corporation Limited)

4,960,700

2.99

Meiji Yasuda Life Insurance Company (Standing proxy:
Custody Bank of Japan, Ltd.)4,843,482

2.92

National Mutual Insurance Federation of Agricultural
Cooperatives (Standing proxy: The Master Trust Bank ofJapan, Ltd.)

4,190,000

2.53

Controlling Shareholder(except for Parent Company)-

Parent Company

None

Supplementary Explanation 【Updated】- An Amendment Report for Possession of Large Volume was submitted by MUFG Bank, Ltd. and its coowners Mitsubishi UFJ Trust and Banking Corporation and Mitsubishi UFJ Asset Management Co. Ltd.,on March 18, 2024, but as we are unable to confirm the actual number of shares owned in this instance,
said Amendment Report is not included in the above Status of Major Shareholders.
- An Amendment Report of Possession of Large Volume was submitted by Sumitomo Mitsui Trust Bank
Ltd. and its co-owners Sumitomo Mitsui Trust Management Ltd. and Nikko Asset Management Ltd. on
March 22, 2024, but as we are unable to confirm the actual number of shares owned in this instance, said
Amendment Report is not included in the above Status of Major Shareholders.

3. Corporate Attributes
Listed Stock Market and Market Section

Tokyo Stock Exchange Prime Market

Fiscal Year-End

MarchType of Business

Chemicals

Number of Employees (Consolidated) as of the Endof the Previous Fiscal Year

More than 1,000

Sales (Consolidated) as of the End of thePrevious Fiscal Year

From ¥100 billion to less than ¥1 trillion

Number of Consolidated Subsidiaries as of the Endof the Previous Fiscal Year

From 10 to 50

4. Policy on Measures to Protect Minority Shareholders when Conducting Transactions with aControlling Shareholder-

5. Other Special Circumstances which may Materially Impact Corporate Governance-II. Business Management Organization and Other Corporate Governance Systems pertaining
to Decision-making, Business Execution, and Management Oversight
1. Organizational Composition and Operation
Company with an Audit & Supervisory Board

Organization Form

[Directors]
Maximum Number of Directors Stipulated in Articles of Incorporation

10

Term of Office Stipulated in Articles of Incorporation

1 yearChairperson of the Board

President

Number of Directors

10Outside Director Election Status

ElectedNumber of Outside Directors

4

Number of Independent Directors

4Outside Director Relationships with Nippon Kayaku (Part 1)

Name

Attribute

Yo OtaAttorney

Yasuyuki Fujishima

From Other company

Seiichi Fusamura

Attorney

Ikuko Akamatsu

CPA

Relationship with Nippon Kayaku*
a

b

c

d

e

f

g

h

i

j

k

△
△

△

* Categories of “Relationship with Nippon Kayaku”* “○”: Director presently falls, or has recently fallen, under the category; “△”:Director previously fell under the category* “●”: Director’s close relative presently falls, or has recently fallen, under the category;“▲”: Director’s close relative previously fell under the categorya. An executive of Nippon Kayaku or its subsidiaries
b. A non-executive director or executive of Nippon Kayaku’s parent company
c. An executive of a fellow subsidiary company of Nippon Kayaku
d. A party whose major client or supplier is Nippon Kayaku, or an executive thereof
e. A major client or supplier of the listed company, or an executive thereof
f. A consultant, accountant or legal professional receiving from Nippon Kayaku a large amount ofmonetary remuneration or other property (besides remuneration) as a Director/Audit & Supervisory
Board Member
g. A major shareholder of Nippon Kayaku (or an executive of said major shareholder if the shareholder is alegal entity)h. An executive (himself/herself only) of a Nippon Kayaku client or supplier (who does not correspond to anyof d, e, or f)i. An executive (himself/herself only) of a company with which engages in the mutual appointment of
Outside Directors/ Audit & Supervisory Board Members with Nippon Kayaku
j. An executive (himself/herself only) of a company or organization that receives a donation from
Nippon Kayaku
k. Others

Outside Director Relationships with Nippon Kayaku (Part 2)Name

Yo OtaYasuyuki Fujishima

Seiichi Fusamura

Ikuko Akamatsu

Designation as
Independent
Director○○

Supplementary
Explanation of
the Relationship

Reasons for Appointment

Mr Yo Ota previously
served concurrently as
a professor at The
University of Tokyo,
with whom Nippon
Kayaku hastransactions involving
monetary donations
and research contracts.
However, he resigned
his university positionin March 2016.

Mr Yo Ota possesses extensive experience as
an attorney, and is very knowledgeable incorporate legal affairs. He has served as an
Outside Audit & Supervisory Board Member
and is well-versed in the internal business of
Nippon Kayaku. He has been elected as an
Outside Director on the expectation that hewill enhance the supervisory function of theBoard of Directors, and have deemed hiselection as an Outside Director to beappropriate. Furthermore, we have judged
him to have no potential conflict with generalshareholder interests, and have designatedhim as an Independent Officer.

Mr Yasuyuki Fujishima
was affiliated with
Sojitz Corporation,with whom Nippon
Kayaku has business
transactions.
However, he resigned
from his post there in
March 2010.

Mr Yasuyuki Fujishima possesses extensive
experience as a manager at a general trading
company. We expect him to provide advice
on all aspects of Nippon Kayaku
management, and have therefore deemed hiselection as an Outside Director to beappropriate. Furthermore, we have judged
him to have no potential conflict with generalshareholder interests, and have designatedhim as an Independent Officer.

○

Mr Seiichi Fusamura can provide generalmanagement advice to Nippon Kayaku basedon his wealth of experience in judicial organs
and the high level of insight he cultivated as alegal expert. We have therefore deemed hiselection as an Outside Director to beappropriate. Furthermore, he is deemed tohave no potential for conflict with generalshareholder interests, and has been
designated as an Independent Officer.

〇

Ms Ikuko Akamatsu possesses extensive
experience and expertise as a Certified Public
Accountant and Certified Fraud Examiner,
and is expected to provide advice on all
aspects of Nippon Kayaku management. She
has been elected as an Outside Director basedon these competencies. Furthermore, we have
deemed her to have no potential conflict withgeneral shareholder interests, and havedesignated her as an Independent Officer.

Ms. Ikuko Akamatsu
once belonged to
Nippon Kayaku’s
accounting auditor,
Ernst & Young
ShinNihon LLC, butleft her position there in
October 2010.

Voluntary Establishment of Committee(s)Corresponding to Nomination Committee orRemuneration Committee

Established

Status of the Establishment of Optional Committees, Membership Composition and Attributes of the Chair

Committee’s NameAll Committee Members
Full-time Members
Inside Directors
Outside Directors
Outside Experts
Other
Chairperson

Committee Corresponding toNomination Committee
Nomination & Remuneration
Advisory Committee
6
0
2
4
0
0
Inside Director

Committee Corresponding to
Remuneration Committee
Nomination & Remuneration
Advisory Committee
6
0
2
4
0
0
Inside Director

Supplementary Explanation
The Nomination & Remuneration Advisory Committee is comprised of a minimum of three Directors (themajority being independent and from outside the company) selected by the Board of Directors. The aim is tofurther enhance corporate governance by strengthening the fairness, transparency and objectivity of theprocedures relating to Director appointments and remuneration. This committee deliberates the selection,
dismissal and remuneration (e.g remuneration structure) of Directors and Audit & Supervisory Board Members,
the selection and dismissal of Representative Directors, and other matters deemed necessary in response toinquiries from the Board. Committee findings are reported to the Board.

This committee was established on June 25, 2020. It is comprised of six members: the President, the Director
in charge of the Human Resources Division and Legal Affairs Division, and four Independent and Outside
Directors.
[Audit & Supervisory Board Members]
Establishment of Audit & Supervisory Board

Established

Maximum Number of Audit & Supervisory
Board Members Stipulated in Articles ofIncorporation

5

Number of Audit & Supervisory Board Members 5
Cooperation among Audit & Supervisory Board Members, the financial auditor, and the Internal Audit
Division 【Updated】
Audit & Supervisory Board Members have been working to facilitate better communications, gather
information and improve audit effectiveness and efficiency through various practices such as exchanging
information with the Audit Division every three months.
They also hold twice-yearly meetings on J-SOX audit evaluations with the J-SOX department of the Audit
Division (one of which in the presence of accounting auditors). They also cooperate with those in charge ofcompliance and risk management at the Internal Control Management Division, holding regular informationexchange meetings every three months.
Audit & Supervisory Board Members receive audit plans formulated by the financial auditors at the beginningof the period; work to ensure communication of intent with financial auditors through opinion exchange
during the period; and make themselves present for inventory at the end of the period, among other things.
They also receive reports on, and explanations of, quarterly reviews and financial statement audit results fromthe financial auditors at the end of the fiscal year.

Accounting auditors and the J-SOX Department of the Audit Division work closely together and regularly
exchange information.
As described above, the Audit & Supervisory Board Members, Accounting Auditors and Internal Auditing
Division cooperate to improve auditing effectiveness and efficiency.

Appointment of Outside Audit & Supervisory
Board Members

Appointed

Number of Outside Audit & Supervisory Board
Members3

Number of Independent Audit & Supervisory
Board Members

3

Outside Audit & Supervisory Board Member Relationships with Nippon Kayaku (Part 1) 【Updated】
Relationship with Nippon Kayaku*
Name

Attribute
A

Ichiro Wakasa

From other company

Atsushi Iwasaki

CPA

Kyoichi Toriyama

Academic

b

c

d

e

F

g

h

i

j

k

l

m

△
△

* Categories of “Relationship with Nippon Kayaku”* “○”: Director presently falls, or has recently fallen, under the category;“△”: Director previously fell under the category* “●”: Director’s close relative presently falls, or has recently fallen, under the category;“▲”: Director’s close relative previously fell under the categorya. An executive of Nippon Kayaku or its subsidiaries
b. A non-executive director or accounting advisor of Nippon Kayaku or its subsidiaries
c. A non-executive director or executive of the parent company of Nippon Kayaku
d. An Audit & Supervisory Board Member of the parent company of Nippon Kayaku
e. An executive of a fellow subsidiary company of Nippon Kayaku
f. A party whose major client or supplier is Nippon Kayaku, or an executive thereof
g. A major client or supplier of Nippon Kayaku, or an executive thereof
h. A consultant, accountant or legal professional who receives a large amount of monetary remuneration orother property from Nippon Kayaku (besides remuneration) as an Audit & Supervisory Board Member
i. A major shareholder of Nippon Kayaku (or executive thereof if the shareholder is a legal entity)
j. An executive of a client or supplier of Nippon Kayaku (not corresponding to any of f, g, or h) (the Audit& Supervisory Board Member himself/herself only)
k. An executive of a company which engages in the mutual appointment of Outside Directors/Audit &Supervisory Board Members with Nippon Kayaku (the Audit & Supervisory Board Member
himself/herself only)l. An executive of a company or organization that receives a donation from Nippon Kayaku (the Audit &Supervisory Board Member himself/herself only)
m. Others

Outside Audit & Supervisory Board Members’ Relationship with Nippon Kayaku (Part 2) 【Updated】

Name

Ichiro Wakasa

Atsushi Iwasaki

KyoichiToriyama

Designation as
Supplementary
Independent Audit &Explanation of theSupervisory Board
Relationship
MemberMr Ichiro Wakasa
served as a director of
Meiji Yasuda Life
Insurance Company,
which is in business(e.g. money lending)with Nippon Kayaku.
〇
However, he resigned
this position in July
2014. Meiji Yasuda
loans accounted foraround 6% of Nippon
Kayaku’s total
outstanding loans as ofMarch 31, 2024.

◯

Mr Atsushi Iwasaki
once belonged to
Nippon Kayaku’s
accounting auditor,
Ernst & Young
ShinNihon LLC, butleft his position there inAugust 2005.

Reasons for Appointment

Mr Ichiro Wakasa’s experience as amanager at a life insurance company has
equipped him with a thorough knowledgeof business management practices. He hashence been deemed appropriately
experienced for election as an Outside
Audit & Supervisory Board Member. We
have also determined he has no potential
for conflict with the interests ofshareholders and have therefore designatedhim as an Independent Officer.

Mr Atsushi Iwasaki’s experience as a CPA
has equipped him with considerable
experience, academic knowledge and deep
insights into the world of accounting, uponwhich Nippon Kayaku would like to draw
and has thus elected him as an Outside
Audit & Supervisory Board Member.
He has also been deemed to have nopotential conflict with the interests ofgeneral shareholders and has therefore been
designated as an Independent Officer.
Mr Kyoichi Toriyama has amassed
immense knowledge, experience and sharp
insights into both company and commercial
law as a graduate school professor. He also
has a thorough knowledge of corporate
legal affairs which we believe will prove
useful in our audit and supervisory system.
He has therefore been deemed an
appropriate choice for an Outside Audit &Supervisory Board Member and has been
elected to this position. We have also
determined that he has no potential conflictwith the interests of shareholders and havedesignated him as an Independent Officer.

◯[Independent Directors/Audit & Supervisory Board Members]
Number of Independent Directors/Audit &Supervisory Board Members

7

Matters relating to Independent Directors/Audit & Supervisory Board Members
None[Incentives]
Incentive Policies for Directors

Performance-linked Remuneration and Others

Supplementary Explanation
August 2005 saw Nippon Kayaku replace the officer retirement bonus system, which was strongly linked toyears of service, with a new system linking bonuses to consolidated business performance. The aims were toclarify director responsibilities vis-à-vis results, and to improve transparency and fairness. Meanwhile, June
2021 saw the introduction of our transfer-restricted stock remuneration system, which allocates our commonshares subject to a certain transfer restriction period and other provisions, such as free buyback options for
Nippon Kayaku. The system of Director remuneration (excluding Outside Directors) consists of a monthly
wage, a bonus linked to consolidated business performance, and the restricted stock compensation plan.

Recipients of Stock Options

None

Supplementary Explanation
None[Director Remuneration]
Disclosure of Individual Director
Remuneration

Selected Directors

Supplementary Explanation 【Updated】
The total remuneration for our 12 Directors stands at 389 million yen for the fiscal year ended March
2024. This includes a provision for director retirement benefits during that period. Additionally, the total
amount of performance-linked bonuses calculated this fiscal year for the previous one comes to 2 million
yen. Director remuneration amounts are disclosed in our Business Report and Annual Securities Report,
both of which are posted on our website: https://www.nipponkayaku.co.jp/english/. Directors receiving
remuneration and bonuses totaling 100 million yen or more are listed separately in the Annual Securities
Report.

Policy on Determining Remuneration Amounts
and Calculation Methods

EstablishedDisclosure of Policy on Determining Remuneration Amounts and Calculation Methods 【Updated】
To ensure the appropriateness of matters discussed and transparency in the decision-making process, theNomination & Remuneration Advisory Committee - the majority of whose members is comprised ofindependent Outside Directors - deliberates matters relating to the Director remuneration in response toinquiries from the Board of Directors, and reports back to the Board. Such a process enabled the Board
Meeting of June 25, 2021 to finalize Nippon Kayaku’s policy regarding the individual Director
remuneration.
With a view to achieving our KAYAKU Spirit corporate vision, in addition to sufficiently functioning as
an incentive to sustainably improve corporate value and share that value with shareholders, Director
remuneration shall also be structured at a competitive level to help us secure excellent personnel.
Specifically, Direction remuneration pertaining to the execution of business activities shall consist of basic
remuneration and incentive remuneration (performance-linked bonuses and stock remuneration). The
remuneration of Outside Directors, with their standpoints independent from business execution, shall belimited to basic remuneration in view of their responsibility.
The amount of basic remuneration for Directors involved in executing business activities shall be
determined according to the total standard amount for each objective element, such as their duties andrights to act. This amount shall be paid in the form of monetary remuneration on a monthly basis.
The performance-linked bonuses of individual Directors involved in executing business activities shall bebased on the degree of achievement with regards to current financial year targets, the average rate ofchange of consolidated operating profit over the past three fiscal years, the degree of achievement ofMedium-term Business Plan ROE targets, business results of the departments for which they are
responsible, and the degree of achievement of mid-to long-term key-issue targets. These bonuses shall be
paid in cash at a fixed time following the end of every fiscal year.
The reasons for selecting these business results indicators are: to heighten awareness of both the need forshort-term result improvements with respect to consolidated operating profit, and the need for Mediumterm Business Plan targets and sustainable business results to be achieved through our focus on an ROE of
8% of above. Directors involved in executing business activities shall be awarded transfer-restricted stock,with a fixed transfer-restriction period attached, at a certain time every year. The aim is to motivate
Directors to contribute to improving mid-to long-term corporate and shareholder value under the wider
aim of sharing value with shareholders. Monetary remuneration credits equivalent to the stock
remuneration and the number of shares to be awarded shall be determined based on the Director’s position
and responsibilities, as well as our stock price and other factors. The ratio of remuneration by type for
Directors involved in executing business shall be roughly 60% for basic remuneration and 40% forincentive remuneration, and shall be determined based on the Director’s position, responsibilities and otherfactors. Regarding decisions on the content of individual remuneration for Directors, the Nominations &Remuneration Advisory Committee will consider a draft from various perspectives, such as consistency
with overall policy direction, and report back to the Board. The Board then deliberates the Committee’sreport and decides the content of individual Director remuneration. Audit & Supervisory Board Member
remuneration shall be limited to fixed remuneration in view of their responsibility to monitor the execution
Director duties, with the amount to be determined through discussions with those Members within the
yearly remuneration limit range.

[Support System for Outside Directors and/or Audit & Supervisory Board Members]
Outside Directors attend important meetings, including those of the Board, state their opinions whenappropriate, and assume responsibility for Nippon Kayaku oversight and management throughattendance of management strategy meetings and discussions held with Audit & Supervisory Board
Members and Representative Directors.
Outside Audit & Supervisory Board Members attend important meetings, including those of the Board,state their opinions when appropriate, and attend management strategy meetings and discussions with the
Representative Directors, thereby enabling them to grasp and understand Nippon Kayaku management
policies and all aspects of company management. Where necessary, the full-time auditor also provides
summary explanations of Sustainable Management Meeting content, the results from audits conducted,
and other matters to Outside Audit & Supervisory Board Members.

[Statuses of Persons Who Have Resigned a Position as President and Representative Director, etc.]

Names of Consultants and Advisors Who Have Previously Served as President andRepresentative Director, etc.

Name

Position & Title

Nature of
Responsibilities

Form andConditions of
Employment(Full-time, Parttime,
Compensation,
etc.)

Consultant

Providing advice
born from his
extensive
experience andknowledge at therequest of thecompany

Part-time,compensatedMasanobu
Suzuki

Total number of consultants and advisors who
have previously served as president andrepresentative director, etc.

Resignation
Date

June 25, 2019Term

One year1

Other Matters
・Consultants are appointed by Board of Directors resolution.
・Renewal of a consultant’s term is decided by Board of Directors resolution.
・Consultants provide advice at the request of the company, and are not responsible for corporate management, duty
execution, or supervision.

2. Matters on Business Execution Functions, Auditing, Oversight, Nomination and Remuneration
Decisions (Overview of Current Corporate Governance System) 【Updated】
1） Business Management Systems for Decision-making, Execution, and Business Supervision
Nippon Kayaku has introduced an executive director system to ensure our ability to quickly addresschanges in the business environment and flexible execution of operations. We have clearly separated
our management decision-making and supervisory functions from our operational execution functions,strengthening each to ensure appropriate decision-making and rapid operational execution.
 Board of Directors Meeting (convening monthly)
To ensure rapid implementation of management decision-making, we have set the maximum
number of Directors at 10, and are working to further strengthen our supervisory functions so thatall decisions regarding important operational issues are made based on the rules and policies of theBoard of Directors, in accordance with the law and the Articles of Incorporation. In the 167th
fiscal year, discussions have focused mainly on management strategies, business plans, financial
strategies, financial closing-related and personnel-related matters, as well as strategies for business
units and initiatives, and progress on company-wide material issues.
As of the date of submission, the Board of Directors is comprised of 10 Directors, of which four
are from outside of the company. Atsuhiro Wakumoto, President and Representative Director,
serves as the chair of the Board. The other members are: Yoshitsugu Ishida, Shigeyuki Kawamura,
Hiroshi Shimada, Shinji Inoue, Makoto Takeda, Yo Ota (Outside Director), Yasuyuki Fujishima(Outside Director), Seiichi Fusamura (Outside Director) and Ikuko Akamatsu (Outside Director).
Board meetings are additionally attended by five (5) Audit & Supervisory Board Members andone (1) Executive Director with an official post who does not concurrently serve as a Director andwho attends these meetings in an observer capacity.
The attendance record for the 167th Business Year was as follows:
100% (14 out of 14 meetings) for Directors Atsuhiro Wakumoto, Tomoo Shibuya, Yoshitsugu
Ishida, Masatomi Akezuma and Yasuyuki Fujishima.
100% (11 out of 11 meetings) for Yoshimi Inoue, Shigeyuki Kawamura and Ikuko Akamatsu
100% (3 out of 3 meetings) for Hiroshi Mikami and Kazuto Koizumi
92% (13 out of 14 meetings) for Yo Ota
85% (12 out of 14 meetings) for Seiichi Fusamura
In addition, the attendance record of Audit & Supervisory Board Members was as follows:
100% (14 out of 14 meetings) for Megumi Machida, Katsuji Higashi, Yasuhiro Osaki and Ichiro
Wakasa
100% (11 out of 11 meetings) for Yoichiro Wada
100% (3 out of 3 meetings) for Akihiro Kojima
Nominations & Remuneration Advisory Committee

The Nominations & Remuneration Advisory Committee is comprised of at least three Directors(the majority being those who are independent and from outside of the company) selected by the
Board. The aim is to further enhance corporate governance by enhancing the fairness,transparency and objectivity of the procedures relating to the nomination and remuneration of
Directors. This committee deliberates the selection, dismissal and remuneration (e.g. remuneration
structure) of Directors and Audit & Supervisory Board Members, the selection and dismissal ofRepresentative Directors, and other matters deemed necessary by the Board in response to Board
inquiries. Committee findings are reported to the Board.

 Sustainable Management Meeting (convening weekly)This meeting group discusses and receives reports concerning important items related to
management and operations, with final decisions taken by the Executive President. As of the dateof submission, the Sustainable Management Meeting is comprised of seven (7) executive officers.
Executive President Atsuhiro Wakumoto serves as meeting chair. The other members are:
Yoshitsugu Ishida, Shigeyuki Kawamura, Hiroshi Shimada, Shinji Inoue, Makoto Takeda andYasuhito Kato. These meetings are additionally attended, in an observer capacity, by Standing
Audit & Supervisory Board Member Megumi Machida.
 Executive Directors Meeting (convening quarterly)This meeting is chaired by the company president, and is composed of the (up to 30) Executive
Directors in charge of operational execution who are appointed by the Board. The meeting sees
Executive Directors report on the status of operational execution entrusted to them by the Boardand company president, as well as on other necessary items. As of the date of submission, theExecutive Directors Meeting is comprised of 26 Executive Directors. Executive President
Atsuhiro Wakumoto serves as chair. The other members are: Yoshitsugu Ishida, Shigeyuki
Kawamura, Hiroshi Shimada, Shinji Inoue, Makoto Takeda, Yasuhito Kato, Tsutomu Kawamura,
Kenichiro Yoshioka, Takumi Fujita, Hideyuki Yuya, Yoshinori Kato, Tadayuki Kiyoyanagi,
Seiichiro Kodama, Yoshiki Akatani, Yuko Nagai, Atsurou Inubushi, Shigeru Maeda, Shigehide
Kagaya, Masako Aono, Tsuyoshi Kuboyama, Atsuya Saimoto, Kazuhiko Ishii, Hajime Suetsugu,
Shuichi Kobayashi and Shinya Ikeda. These meetings are additionally attended, in an observer
capacity, by four (4) Outside Directors and five (5) Audit & Supervisory Board Members.
 Management Strategy Meeting (convening biannually)
This meeting sees Nippon Kayaku Group’s basic policies and business strategies as decided by
the Board, as well as other important matters related to general management, communicated to
executive management to ensure that everyone in the company is kept well-informed.
 Audit & Supervisory Board Meeting (convening monthly)
The Audit & Supervisory Board monitors and supervises the execution of Director duties from an
independent perspective based on the Rules of the Audit & Supervisory Board. As of the date ofsubmission, the Audit & Supervisory Board is comprised of five (5) Audit & Supervisory Board
Members, of which three come from outside of the company. Standing Audit & Supervisory
Board Member Megumi Machida serves as the chair. The other members are: Yoichiro Wada,
Ichiro Wakasa (Outside Audit & Supervisory Board Member), Atsushi Iwasaki (Outside Audit &Supervisory Board Member) and Kyoichi Toriyama (Outside Audit & Supervisory Board
Member).


The following committees (which maintain internal controls) have been established as one partof the corporate governance system. Committee meetings are held regularly, and also ad hoc
when necessary.

(1) Ethics Committee (convening biannually)
This committee consists of a chair, nominated by the president, who is an executive director in
charge of specific operations; the various head office business units, and representatives fromeach division. It determines the compliance policies and concrete measures to be taken vis-à-vis
the Nippon Kayaku Group Charter of Conduct and Code of Conduct, and also investigates anddetermines how matters for discussion and incidents should be handled, and how recurrences
should be prevented.
(2) Risk Management Committee (convening biannually)
This committee consists of chair, appointed by the president, who is an executive director in
charge of specific operations, the various head office business units, and representatives fromeach division. It oversees the configuration of a risk management system for preventing risks
that could cause substantial damage to Nippon Kayaku Group corporate management andbusiness activities, responds to emergencies, and carries out crisis management and damage
recovery initiatives after a situation has been resolved.

・In addition to the above, we have set forth Rules on Work Duties and Authority, clearlyspecifying the operational organization, division of duties, and authority and responsibilities ofmanagement and supervisory positions. We have also firmly established a system ofaccountability while working to achieve systematic and efficient operational management.
2） Status of Internal Audits, Audits by the Audit & Supervisory Board Members, and Audits by the
Financial Auditor
As part of strengthening corporate governance through, for example, preventing improper acts anderrors, improve business efficiency and protect our assets, Nippon Kayaku has, in accordance withour core policy of building an internal organizational control system, established an Audit Divisionthat reports directly to the president. This Division has conducted business audits of all departments
and organizations, including Japanese and overseas group companies, in accordance with annual
auditing plans.
In addition to reporting each audit outcome to Representative Directors and Audit & Supervisory
Board Members, the Audit Division makes periodical reports to the Board of Directors using theinternal database. In some cases, it is necessary for Audit & Supervisory Board Members or the
Audit & Supervisory Board as a whole to directly report the results of such Audit Division briefings
to the Board of Directors. Seven (7) Audit Division staff are currently responsible for internal audits.
Audit & Supervisory Board Members attend important meetings, including those of the Board,
scrutinize important documents, and conduct audits of operational execution status. They also takeother steps to monitor and supervise Director duty performance from an independent standpoint
based on the audit policy, audit plans, and the distribution of audit operations fixed by the Audit &Supervisory Board.
Nippon Kayaku has selected Ernst & Young ShinNihon LLC as our Financial Auditor, and has
established an environment for financial audits to be conducted in a fair and unbiased manner, based on
both the Companies Act and the Financial Instruments & Exchange Act.
The names of the CPAs who have performed financial audit duties, and the overall compositionof supporting personnel assisting in audit operations, are as follows:1)

Names of CPAs who have performed financial audit duties, along with the audit firm which
employs them:• CPAs performing audits (Number of continuous audit years)
Atsushi Kasuga (2 year)
Mikio Shimizu (2 year)• Audit firm employing the above CPAs:
Ernst & Young ShinNihon LLC

2)Composition of support personnel assisting with financial audit duties: 11 CPAs, 10 people
who have passed the accountant examination, and 22 others

3)

Nature of the Limited Liability Agreement concluded with Nippon Kayaku by non-executive
Directors and Audit & Supervisory Board Members (set forth in Article 427, Paragraph 1 of
the Companies Act)
(Summary)
The liability of non-executive Directors and Audit & Supervisory Board Members for damages
incurred by Nippon Kayaku as a result of negligence in their duties is limited to the amountspecified in Article 425, Paragraph 1 of the Companies Act, provided that those duties were
performed in good faith and did not involve gross negligence.

3. Reasons for Adoption of Current Corporate Governance System
Nippon Kayaku has adopted the system described in Provision 2, above, in the belief that a corporate
governance set-up modeled on consensus-based decision-making by a Board of Directors under an audit
and supervisory system enables our management structures to function more effectively.

III. Implementation of Measures for Shareholders and Other Stakeholders
1. Measures to Revitalize General Shareholder Meetings and the Smooth Exercise of Voting Rights【Updated】
Supplementary Explanations
Early Notification ofGeneral Shareholder
Meeting

Sent on June 4, 2024 (The Shareholders Meeting was held on June 26, 2024).
The Convocation Notice was posted on the websites of the Tokyo Stock
Exchange and Nippon Kayaku seven days prior (dated May 28, 2024).

Scheduling AGMs to
Avoid Peak Days

Held on June 26, 2024.

Allowing Voting
Rights to be exercised
electronically

We have adopted an electromagnetic means for the exercise of voting rights since theAnnual Shareholders Meeting in 2007.

Participation in an
Electronic Voting
Platform as part ofour effort toimprove the voting
environment for
institutional
investors
Provision of a
Convocation Notice inEnglishWe have also been part of Investor Communications Japan (ICJ)’s platform forthe electronic exercise of institutional investor voting rights since our Annual
Shareholders Meeting in 2007.

Other

Both the Convocation Notice and Notice of Resolution are posted on our website.

The Convocation Notice (in the narrow sense) and supporting documentation are
posted on our website.

2. IR Activities 【Updated】
Supplementary Explanations
Formulation &Publication of our
Disclosure Policy

For further information on our disclosure policy, please refer
to our website:
https://www.nipponkayaku.co.jp/english/ir/disclosure.html

Explanation byRepresentativeRegular Investor
Briefings for Analysts
and Institutional
Investors

Briefings are held on a quarterly basis, with those for the167th fiscal year held after financial results wereannounced. Conference call briefings for the first and third
quarters were held on July 31, 2023, and January 31, 2024.
For the second and fourth quarters, briefings were held in a
combined meeting-conference call format on November 8,2023 and May 14, 2024.
Briefings for the second and fourth quarters were led by ourpresident and Finance and Accounting Director, while thosefor the first and third quarters were conducted by our
Corporate Strategy Director. The briefings in question
explained the content of financial statements and businessconditions for the current period, as well as business
forecasts for coming period.

Posting of IR
Materials on
WebsiteNippon Kayaku discloses IR information on its website:(https://www.nipponkayaku.co.jp/english/).
Information requiring timely disclosure, anddocumentation used in briefings on the annual
securities report, quarterly reports, and businessconditions may also be found here.

Establishment of
Department and/orManager in Chargeof IRWe have established the Corporate Communications
Division as our division in charge of investor relations, under
the leadership of Vice President Yoshitsugu Ishida.
Our contact for IR matters is Masaki Igawa (Tel.: 03-67315237).

Yes

3. Measures to Ensure Due Respect for Stakeholders 【Updated】
Supplementary Explanations
Implementation ofEnvironmental
Activities, CSR
Activities etc.

Our CSR activities towards fulfilling our environmental, social and economic
responsibilities are compiled in the Nippon Kayaku Group CSR Report.
Since 2011, we have produced a digest of this report in pamphlet form; posted
environmental data and examples of Group activities undertaken in our website’s“Sustainability Information” section, and have produced the report in both Japaneseand English. (https://www.nipponkayaku.co.jp/english/).
We also merged our CSR Management Committee into our Sustainable Management
Meeting in June 2022.

Other

The 164th Ordinary General Meeting of Shareholders of June 2021 saw Nippon
Kayaku elect a female Audit & Supervisory Board Member, while the 166th Meetingof June 2023 saw the election of a female Independent Outside Director (as aMember of the Board of Directors).
The company also elected another female Director on April 1st 2023 and a female
executive manager on April 1st 2024. Meanwhile, a female Standing Auditor was
selected at the Audit & Supervisory Board Meeting of June 2023.
We have established a mechanism in our company for employees meeting certain
conditions to accept the challenge of promotion to management positions upon therecommendation of a superior, regardless of gender, nationality or career. The
number of women accepting this challenge is increasing year on year, and we expect
the number of women in managerial positions to rise.
Of the total number of management positions as of March 31st 2023, female
employees accounted for 8.7%, other-country employees made up 0. 2%, and midcareer employees comprised 35.6% (all on a non-consolidated basis).
By the end of FY 2024, we are aiming for a female manager ratio of 10%, a nonJapanese manager ratio of 0.6%, and a mid-career manager ratio of 38%.
Furthermore, we aim for our FY 2024 Audit Plan to reflect the results of our FY 2023
effectiveness evaluation survey given to all Outside Audit & Supervisory Board
members.

IV.
IV. Matters Related to our Internal Control System
1. Basic View on an Internal Control System and Progress of System Development
1) System to ensure that directors and employees execute their duties properly in accordance withlaws, regulations and Articles of Incorporation(1) We have established the Nippon Kayaku Group Charter of Conduct and Code of Conduct,with which Directors and employees shall conduct themselves in strict compliance.
(2) We have set up an Ethics Committee which determines both policy on observance of laws,
regulations, and internal rules; how violations of laws, regulations, and internal rules should
be handled; and how to prevent violations from recurring.
(3) We have established the Rules of the Ethics Committee, and continue to revise these as
appropriate.
(4) We have designated the Compliance Department of the Internal Control Management
Division as our department in charge of compliance, formulating and implementing
compliance action plans, and handling administrative tasks and coordination related to
Ethics Committee management.
(5) The department in charge of compliance shall conduct regular compliance training for
directors and employees, and heighten awareness of, and respect for, compliance.
(6) The Audit Division has been established as our internal audit division, working together
with the department in charge of compliance to audit the status of compliance with laws,
regulations, and other rules.
(7) A compliance hotline has been established and shall be operated as a means for employees
to directly report information on possible violations of laws, regulations, and internal
company rules.
(8) Actions that violate laws, regulations, and internal company rules shall be handledaccording to the Rules of Employment and Disciplinary Rules.
(9) The Sustainable Management Meeting shall configure the system for disclosure.
(10) To ensure the reliability of Nippon Kayaku’s financial reporting, we have established the JSox Department in the Internal Control Management Division and regularly evaluate themanagement and operation of our system. The results of these evaluations are reported to thecompany’s Representative Directors.
2) System for retention and management of information relating to execution of Director duties(1) Retention and management of information relating to the execution of Director duties shalladhere to the Rules on Corporate Information Management and other internal rules.
(2) Directors and Audit & Supervisory Board Members may, as necessary, view
documents and other information relating to the execution of Director duties.
3) Rules and other systems pertaining to loss risk management(1) A Risk Management Committee has been established to configure a risk management systemand formulate plans for responses to emergencies and prevention of recurrences.
(2) The Rules of the Risk Management Committee and Risk Management rules etc. have been
established, and shall henceforth be revised on a regular basis.

(3) A Risk Management Department of the Internal Control Management Division has
been established as the division in charge of risk management, handling administrative
tasks and coordination of matters relating to the management of the Risk Management
Committee.
(4) The Risk Management Department shall ascertain company-wide risks, establish a division
responsible for each risk, and formulate concrete responses. This department shall also
promptly designate the division responsible whenever a new risk emerges.
(5) The Risk Management Department shall conduct regular education and training on risk
management.
(6) An Audit Division has been established to conduct audits relating to risk management.
4) System to ensure Directors execute duties efficiently(1) In addition to formulating business plans and clarifying goals to be achieved, we shall convene
the Board of Directors each month (and on an ad hoc basis when required) to decide on
important management and operational execution matters specified in the Rules of the Boardof Directors.
(2) We have separated management decision-making and supervisory functions from operational
execution functions, and shall adopt an executive director system to strengthen the functionsof each.
(3) The Sustainable Management Meeting shall regularly discuss important matters concerning
management and operational execution specified in the Rules of the Sustainable
Management Meeting.
(4) The operational organization and division of duties have been fixed based on the Rules on
Work Duties and Authority which specify not only the person responsible but the scope of that
person’s duties, responsibilities and authority.
5) System to ensure proper operation of the Nippon Kayaku Group (which consists of
Nippon Kayaku, its parent company and subsidiaries)(1) Each subsidiary shall formulate a Charter of Conduct and a Code of Conduct, andsubsequently comply with these. Nippon Kayaku shall receive reports from each subsidiary on
the status regarding formulation of, and compliance with, these Codes.
(2) We have set forth Rules on Group Management, and subsidiaries shall discuss importantbusiness matters with Nippon Kayaku.
(3) Divisions responsible for supervising subsidiaries shall be specified based on the Rules onGroup Management, and shall both offer advice and cooperate on the management of therelevant subsidiary business.
(4) Each subsidiary shall regularly report to Nippon Kayaku on the status of its operational
execution, financial situation, and other matters.
(5) A risk management system shall be set up and maintained in each subsidiary.
(6) A compliance hotline shall be established and operated as a means for subsidiary employees todirectly report information on acts or other matters pertaining to the suspected violation of laws
and regulations.
6) Matters concerning situations in which an Audit & Supervisory Board Member has requested theassignment of an employee to assist with duties, the independence of that employee from directors,
and guaranteeing the effectiveness of instructions given to the employee by the Audit andSupervisory Board Member(1) Audit & Supervisory Board Members may request resources necessary to the performanceof their duties from the Audit Division.

(2) Employees receiving the above-noted requests from an Audit & Supervisory Board Member
via the Audit Division shall not accept orders from directors and superiors in regard to such
requests.
(3) The company shall discuss the transfer of employees who either assist, or should assist, withthe duties of Audit & Supervisory Board Members with the board member concerned.
7) System for directors and employees to report to Audit & Supervisory Board Members, and otherreports made to Audit & Supervisory Board Members(1) Audit & Supervisory Board Members may attend Sustainable Management Meetings,
Management Strategy Meetings, and others of importance, at which they may state
their opinions.
(2) Directors and employees shall report to Audit & Supervisory Board Members via the hotline orother means in circumstances where the company stands to incur a substantial loss or has thepotential to do so, when directors and employees have discovered an illegal or fraudulent act,or regarding the occurrence of some other event specified as reportable by Audit &Supervisory Board Members.
(3) Individuals making a report to an Audit & Supervisory Board Member as detailed above
shall not be subjected to discriminatory treatment as a consequence.
(4) The Audit Division shall report the results of internal audits to Audit & Supervisory Board
Members.
8. System for ensuring that other audits conducted by Audit & Supervisory Board Members are
conducted effectively(1) The company shall strive to establish an environment for Audit and Supervisory Board
Member audits that enables directors and employees to promptly provide said Memberswith corporate information.
(2) Audit & Supervisory Board Members shall meet regularly with Representative Directors
to exchange opinions and strive to work together with the Audit Division.
(3) The company shall ensure that Audit & Supervisory Board Members have the opportunity toconsult with experts on matters requiring a high degree of legal and accounting expertise.
(4) The company shall assume the expenses related to the duties of Audit & Supervisory Board
Members, based on invoices submitted by said Members.

2. Basic View on Eliminating Anti-Social Forces
The company has declared that: “Nippon Kayaku has a strict attitude towards antisocial forces andorganizations, and shall not consider any unreasonable or illegal demands” in the Nippon Kayaku Group
Charter of Conduct posted on our company website. We have also designated the Legal Affairs Division as
the division in charge of the relevant responses. This division shall strive to routinely gather informationfrom the local community, law enforcement, and other relevant organizations, and shall configure astructure enabling of a swift response in concert with law enforcement, legal counsel, and other external
specialist organizations whenever an incident occurs.

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

Not Adopted

Supplementary Explanation
None

2. Other Matters Concerning our Corporate Governance System
None

General Meeting of Shareholders

Audit＆Supervisory【Select
・Removal・Supervisory】

Financial Auditor【Report】【Advisory】【Report】【Report】【Report】

【
C
o
o
p
e
r
a
t
i
o
n
】

Board of Directors【Audit】

Board ＆ Members

【
R
e
p
o
r
t
】

【Election・Dismissal】【Election・Dismissal】【Election・Dismissal】

Nomination & Remuneration
Advisory Committee【Report】【Cooperation】【Election・
Dismissal】【Cooperation】【Instruction】
PresidentInternal Control

Committees【Report】

Management Division【Report】

Ethics Committee【Report】【【Deliberate・Report】
R
e
p
o
r
Sustainable Management Meetingt【Instruction】 (Executive Directors with Official Posts)】【Instruction・
Executive Directors Meeting
Support】 【Report】(Executive Directors)

Risk Management
Committee
Environment, Safety,
Quality, AssuranceManagement
Committee
Research ＆ Development
Management Committee

Audit Division【Cooperation】【Audit】【Instruction】【Audit】

Internal Divisions
Managing Group Companies by the Divisions
Group Companies

Suggested amendments: “[Instruction]” can be changed to the verb form, “[Instruct]”“[Cooperation]” can be changed to the verb form, “[Cooperate]”“Managing Group Companies” can be changed to “Management of Group Companies”“[Advisory]” can be changed to the verb form “[Advise]”“[Audit]” can be changed to the singular verb form “[Audits]”“[Report]” can be changed to the singular verb form of [Reports to]”“[Deliberate]” can be changed to the singular verb form of “[Deliberates]”

Flow of Information requiring Timely Disclosure

Financial Date

Regarding Decisions

Sustainable Management Meeting

Occurring incident
Person responsible for
information handling

Examination
Board of Directors

Decision

Decision
Corporate Communications Division

Disclosure

Suggested amendments“Financial date” can be changed to “Closing of Accounts”“Occurring incident” can be changed to “Incident occurs”