Corporate Governance Basic Policy

Nippon Kayaku Co., Ltd.

Section 1: General Rules
1. Purpose (Principle 3-1 (i))
Nippon Kayaku shall establish a Basic Corporate Governance Policy (hereinafter “the Policy”) to
realize sustainable growth and increase the value of the company over the medium- to long-term basedon our corporate vision of the KAYAKU Spirit.
KAYAKU Spirit: “Continuously providing society with the best products through ceaseless progress
and the combined forces of our consciences”
2. Basic Views on Corporate Governance (Principle 3-1 (ii))
Nippon Kayaku shall recognize that fair and timely disclosure of information to all shareholders andinvestors and ensuring transparency in management by enhancing check functions are important toachieve our corporate vision of the KAYAKU Spirit. We shall also work to enhance and reinforce
corporate governance as an important task in managing operations. We shall do this this under the
judgment that corporate governance through consensus-based decision-making by a Board of
Directors and an Audit & Supervisory Board system is a system that enables our management tofunction effectively.

Section 2: Relationship with Shareholders
3. Ensuring the Rights and Equality of Shareholders (Basic Principle 1)(1) Ensuring the Rights of Shareholders (Principle 1-1)
Nippon Kayaku shall aim to ensure the substantial rights of all shareholders and the equality of allshareholders – including minority shareholders and foreign shareholders. To that end, we shall takeappropriate measures to allow shareholders to exercise their votes by striving to devise shareholder
meeting operation and voting methods and to develop an environment that includes the information
disclosure in our basic policy of capital measures.
(i) The Board of Directors shall review the most recent Annual Shareholders Meeting to analyze
the causes of proposals that received a considerable number of votes against them every year.
(Supplementary Principle 1-1 (i))(2) Exercising of Rights at Annual Shareholders Meetings (Principle 1-2 and Supplementary
Principle 1-2 (i), (ii), (iii) and (iv))
Nippon Kayaku shall hold an Annual Shareholders Meeting in June every year as one opportunity
to communicate with our shareholders. We shall set the date of this meeting to one that is not on a
day when many other companies hold their shareholders meetings. This shall be to make it easier for
shareholders to attend our Annual Shareholders Meeting. Furthermore, we shall visualize theconvocation notice, provide the convocation notice in English on TDnet and our website, and send
and electronically disclose the convocation notice at an early stage. The aim of this shall be to convey
business reports and agenda items to our shareholders in a way that is even easier to understand andeven faster. Moreover, we shall introduce a system to vote electronically using the Internet including
an electronic voting platform in addition to allowing voting in writing. With this, we shall develop
an environment in which shareholders can vote more easily.

(3) Basic Policy of Capital Measures (Principle 1-3)
Nippon Kayaku shall attach great importance to returning profits to shareholders. We shall set a
midterm target for our dividend payout ratio to about 40% of consolidated net income taking into
consideration stable and continuous profit return and the level of our internal reserves. Moreover, weshall set and disclose capital productivity indicator targets for return on equity (ROE) in our mid-term
management plan while enhancing our corporate value by allocating our internal resources to capital
investment and R&D investment in growing businesses.
(4) Policy on Cross-Shareholding (Principle 1-4)
Nippon Kayaku shall check and judge that it is effective for us in the mid-term to engage in crossshareholdings in business partners upon fully verifying their economic rationality.
(i)

Policy on Cross-shareholding (Supplementary Principle 1-4 (i))

Nippon Kayaku shall hold cross-shareholdings to maintain and strengthen our business relationships
with business partners from the perspective of increasing the value of our company over the mediumto long-term.
Each year we shall verify the significance of holding cross-shareholdings in individual companies ata Board of Directors meeting. Such decisions shall be based on the significance of the shareholding
from the medium- to long-term perspective of increasing corporate value. We shall take the market
impact into consideration in selling cross-shareholdings in companies we have deemed unnecessary
to continue holding.
In the event a cross-shareholder indicates an intention to sell shares in our company, we shall notprevent such a sale.
(ii) Standards for Exercising Voting Rights on Cross-shareholdings (Supplementary Principle 1-4(ii))
When exercising voting rights, we shall vote to approve resolutions that will increase the value of theshares our company holds from the perspective of increasing the corporate value of the issuing
company over the medium- to long-term. We shall vote to oppose resolutions that will harm corporate
value. We shall also engage in dialog with the issuing company regarding the contents of a resolution
when necessary.
(5) Capital Measures with the Potential to Harm the Interests of Shareholders (Principle 1-6) When
implementing a capital measure with the potential to bring about a change or large-scale dilution in
the right of control, Nippon Kayaku shall aim to ensure that the interests of existing shareholders are
not unduly harmed. To that end, the Board of Directors shall make resolutions upon fully discussing
the necessity and rationality of that capital measure. At the same time, we shall provide a clear
explanation to shareholders about that capital measure.

Section 3: Appropriate Collaboration with Stakeholders Other Than Shareholders
4. Appropriate Collaboration with Stakeholders Other Than Shareholders (Basic Principle 2)

(1) Charter of Conduct and Code of Conduct (Principle 2-2 and Supplementary Principle 2-2 (i))
Nippon Kayaku shall establish the Nippon Kayaku Group Charter of Conduct and Code of Conduct.
We shall deploy these to our company and each company in our group. At the same time, we shallgive all employees a compliance questionnaire once a year and then report the results of that to theBoard of Directors.
Nippon Kayaku Group Charter of Conduct and Code of Conduct
https://www.nipponkayaku.co.jp/english/company/vision/conduct.html(2) Issues Relating to Sustainability (Principle 2-3 and Supplementary Principle 2-3 (i))
Nippon Kayaku shall tackle issues relating to the environment, society and governance (ESG) andsustainability to enhance our corporate value under the Mid-term CSR Action Plan. We shall do thisby setting important indicators (KPI) and quantitative targets for each item. We shall then disclose thecontent of that on our website.
Integrated Reporthttps://www.nipponkayaku.co.jp/english/ir/library/annual/index.html
CSR information
https://www.nipponkayaku.co.jp/english/csr/index.html(3) Ensuring Internal Diversity by Initiatives for Achieving SDGs Approach to Diversity & Inclusionin the Workplace(Principle 2-4 and Supplementary Principle2-4(i))
Nippon Kayaku shall strive to ensure internal diversity by Initiatives for Achieving SDGs Approach
to Diversity & Inclusion in the workplace under the Mid-term CSR Action Plan. We shall do this bysetting important indicators (KPI) and quantitative targets. We shall then disclose the content of thaton our website.
Integrated Reporthttps://www.nipponkayaku.co.jp/english/ir/library/annual/index.html(4) Internal Reporting System (Principle 2-5 and Supplementary Principle 2-5 (i))
Nippon Kayaku shall set up an external reporting counter in an attorney’s office. This counter shallbe independent from executive management (executive directors and executive officers) as amechanism to appropriately deal with inquiries and reports relating to organizational or personal
violations of laws/ordinances from employees of our company, our group companies, oursubcontractors and business partners providing temporary employee placement. Through this, we will
shall aim to detect wrongdoing at an early stage and then correct it. In addition, the Rules of Nippon
Kayaku Group Whistleblowing System shall stipulate that information providers shall remain
anonymous and that it shall be prohibited from treating them disadvantageously.
(5) Fulfilling the Function of Corporate Pension Asset Owner (Principle 2-6)
Nippon Kayaku shall establish and manage as follows a system of management for the defined benefit
corporate pensions specified by our company based on the laws/ordinances governing defined benefit
corporate pensions and the company pensions regulations established by our company.
(i)

To ensure proper management of pension assets and of conflicts of interest that arise between
the defined benefit corporate pension plan beneficiaries and our company, we shall establish an
Asset Management Committee that consists of members selected from our Finance andAccounting Division, Corporate Planning Division, Human Resources Management Division,and the Nippon Kayaku labor union. This committee shall convene regularly.
(ii) The committee shall formulate the basic policy on management of pension assets and thecomposition of the pension asset portfolio to secure the funds to pay pension benefits over the
long-term.
(iii) The Asset Management Committee shall retain and work together with external consultants toguarantee expertise and shall regularly revise the basic policy on management of pension assets
and the composition of the pension asset portfolio. The committee shall also work together onmonitoring and evaluating the management results, management policy, management structure,and other relevant aspects of the management firm.

Section 4: Ensuring Appropriate Information Disclosure and Transparency
5. Ensuring Appropriate Information Disclosure and Transparency (Basic Principle 3 andSupplementary Principle 3-1 (i), (ii) and (iii))
Nippon Kayaku shall establish an Information Disclosure Committee to ensure we continue to betrusted by all of our stakeholders and to have a presence needed by society. At the same time, we shallestablish a disclosure policy. With this, we shall disclose accurate, easy-to-understand and useful
information to shareholders, investors and other stakeholders in a timely, fair and impartial manner.
Moreover, we shall disclose information in English as necessary.

(1) Full Disclosure (Principle 3-1 (i) to (v))(i)

Company Objectives (Business Principles, etc.), Business Strategies, Business Plans andSustainability

Nippon Kayaku shall disclose our corporate vision of the KAYAKU Spirit, Management Policy (e.g.,
Business Strategy and Mid-term Business Plan) and Implementing sustainability on our website.
Corporate Vision KAYAKU spirit
https://www.nipponkayaku.co.jp/english/company/vision/kayakuspirit.html
Management Policy (Business Strategy, Mid-term Business Plan, etc.)
https://www.nipponkayaku.co.jp/english/ir/managementpolicy/index.html
CSR information

https://www.nipponkayaku.co.jp/english/csr/index.html(ii) Basic Views and Guidelines on Corporate GovernanceNippon Kayaku shall establish our Basic Views on Corporate Governance in the Policy.
(iii) Board Policies and Procedures in Determining the Remuneration of Senior Management andDirectors
We shall determine the remuneration determination policy and procedures for executive
management in 6 (2) (ii) and (iii) in Section 5 of the Policy. We shall adopt performance-based
bonuses for the remuneration of executive management. Together with this, we shall set their term in
office to one year. We shall do this to appropriately reflect the management responsibility of
Directors.
(iv) Board Policies and Procedures for the Appointment and Dismissal of Senior Management andNomination of Candidates for Director and Audit & Supervisory Board MemberWe shall determine the procedures to select and dismiss executive management in 6 (3) (i) in Section
5 of the Policy.

We shall seek individuals possessing excellent character and insight both within and outside of thecompany as candidates for Director and Audit & Supervisory Board Member. We shall also consider
elements such as the size, balance of knowledge, experience, and skills of the Board of Directors asa whole, with the criteria of performance and management ability in operations overseen for
individuals from inside the company and extensive knowledge and experience in the sectors theycome from for individuals outside of the company, among other factors.
(v)

Explanation of Individual Dismissals and Nominations Based on Provision (iv), Above Nippon
Kayaku shall disclose the reasons for proposing candidates for Director and Audit &Supervisory Board Member to the Board of Directors and in the reference materials for the
Annual Shareholders Meeting in the event of dismissing a Director or Audit & Supervisory Board
Member.
Reference Materials for the Shareholders Meetinghttps://www.nipponkayaku.co.jp/english/ir/stock/meeting.html(2) External Accounting Auditor (Principle 3-2 and Supplementary Principle 3-2 (i) and (ii)) Nippon
Kayaku shall appoint an Accounting Auditor. We shall then establish an environment in which the
Accounting Auditor conducts audits from a fair and impartial standpoint under the Companies Act
and Financial Instruments and Exchange Act.
The Audit & Supervisory Board of Nippon Kayaku shall determine the appropriateness ofreappointing the Accounting Auditor every year by conducting an evaluation according to the
Policies for determination of dismissal of or refusal to reelect Financial Auditor and the Standards
for Evaluation and Selection of Financial Auditor established by the Audit & Supervisory Board.
https://www.nipponkayaku.co.jp/english/ir/esg/governance.html
Nippon Kayaku shall formulate a settlement schedule to ensure sufficient audit time for the
Accounting Auditor. We shall then ensure that there are sufficient opportunities to exchange
information with Directors, Audit & Supervisory Board Members and the internal audit divisions(Audit Division and Internal Control Management Division). In addition, we shall establish a
specific response structure in the event the Accounting Auditor discovers wrongdoing or otherwise
identifies defects and problems.

Section 5: Duties of the Board of Directors
6. Duties of the Board of Directors (Basic Principle 4)
Nippon Kayaku shall adopt a structure as a company with an Audit & Supervisory Board under theCompanies Act.
(1) Roles and Responsibilities of the Board of Directors (1) (Principle 4-1)(i)

The maximum number of members on the Board of Directors shall be 10 to ensure swift
management decision-making. Rules of the Board of Directors shall clearly stipulate importantmatters under laws/ordinances and the Articles of Incorporation relating to business execution asagenda items for the Board of Directors. Moreover, the scope in which executive management canserve shall be clearly stipulated in Rules for Managerial Authority. The status of businessexecution for matters determined by the Board of Directors in regards to important matters inmanagement policy, management strategy and business execution shall be reported to the Boardof Directors as necessary under Rules of the Board of Directors. This is so that the Board of
Directors can supervise whether or not the business operations delegated to executive
management are being performed appropriately. (Supplementary Principle 4-1 (i))(ii) The Board of Directors and executive management shall disclose to shareholders the progress① of the Mid-term Business Plan and analysis results in financial results briefings,
explanations at the Annual Shareholders Meetings and the Notices of the General
Meeting of Shareholders. (Supplementary Principle 4-1 (ii))
Mid-term Business Plan
https://www.nipponkayaku.co.jp/english/ir/managementpolicy/businessplan.html(iii) In the Nippon Kayaku Group, individuals who are deemed qualified as candidates to succeed inmanagement positions shall be provided opportunities to acquire experience in participating inmanagement through upper level management training, experience in multiple divisions, andparticipation in various management meetings, including the Board of Directors, Management
Meeting, Management Strategy Meeting, and Executive Directors Meeting. Candidates to succeed
the president and other upper level management shall be chosen from among those individuals
based on the business principles and business strategy. (Supplementary Principle 4-1(iii))(iv) Board of Directors will tackle sustainability issues through the implementation of CSR Managementthat is integrated with business strategy, and effectively supervise through the CSR Management
Committee the allocation of management resources, including investments in human capital andintellectual property, and the implementation of strategies related to the business portfolio of our businessvision of "Safeguard life and health" and "Support a comfortable life", in order to contribute to thesustainable growth of the company. (Supplementary Principle 4-2(ii))(2) Roles and Responsibilities of the Board of Directors (2) (Principle 4-2)(i)Nippon Kayaku shall introduce an executive director system to ensure our ability to quickly
address changes in the business environment and flexible execution of operations. We shallclearly separate our management decision-making and supervisory functions from ouroperational execution functions, strengthening each of them to ensure correct decision-making
and rapid operational execution.

(ii) The Nomination & Remuneration Advisory Committee with independent Outside Directors
comprising the majority of its members shall deliberate the remuneration of executive
management in response to inquiries from the Board of Directors. The committee shall make areport on this to the Board of Directors. The Board of Directors shall then determine theremuneration of executive management with a resolution. This is to ensure the validity of the
remuneration and transparency in the determination process. (Supplementary Principle 4-2 (i))
The remuneration of Audit & Supervisory Board Members shall be limited to basic remunerationin view of their responsibility to monitor the execution of the duties of Directors. The amountof remuneration for individual Audit & Supervisory Board Members shall be determinedthrough discussions with those members within the range of the total amount of remuneration
approved at the General Meeting of Shareholders.

(iii)The remuneration of Directors shall function sufficiently as an incentive to sustainably improve
corporate value and to share value with shareholders toward the realization of the KAYAKU spiritthat serves as our corporate vision. At the same time, it shall be a remuneration structure at acompetitive level from the perspective of securing excellent personnel. Specifically, theremuneration of Directors involved in executing business activities shall consist of basic
remuneration and incentive remuneration (performance-linked bonuses and stock remuneration).
The remuneration of Outside Directors with a standpoint independent from business execution
shall be limited to basic remuneration.
The amount of the basic remuneration of Directors involved in executing business activities
shall be determined according to the total amount of the standard amount for each objective
element such as whether they have the right to representation and their duties. This shall be paid
as monetary remuneration on a monthly basis.
The performance-linked bonuses of individual Directors involved in executing businessactivities shall be based on the degree of achievement of the targets for consolidated operating
income and return on equity (ROE) set at the start of the fiscal year. These bonuses shall thenbe calculated taking into account the business results of the departments they are responsible forand the degree of achievement of mid-to long-term key issue targets. The bonuses shall be paidin cash at a certain time after the end of every fiscal year. The President may determine theamount of performance-linked bonuses for individuals within the range of the amount limit of
the resolution at the General Meeting of Shareholders upon being delegated with this task by
the Board of Directors.
Directors involved in executing business activities shall be awarded transfer restricted stock witha certain transfer restriction period at a certain time every year. This shall be done to motivate
those Directors to contribute to improving mid-to long-term corporate value and shareholder
value under the aim of sharing value with shareholders. The monetary remuneration credits
equivalent to the stock remuneration to be awarded and the number of shares to be awarded shallbe determined based on position, responsibilities, stock price and other factors.
The ratio of remuneration by type for Directors involved in executing business shall roughly be
60% for basic remuneration and 40% for incentive remuneration. This shall be determined basedon position, responsibilities and other factors.
https://www.nipponkayaku.co.jp/english/ir/esg/governance.html(3) Roles and Responsibilities of the Board of Directors (3) (Principle 1-7 and Principle 4-3)
Nippon Kayaku shall enact a basic policy to build a system to ensure proper operation in the Boardof Directors. The aim of this shall be to maintain and secure the internal control structure. We shallmaintain a structure to develop internal regulations and to establish the necessary organizations
under the policy. In addition, in the event a Director wishes to make a competitive transaction or
self-transaction, that shall require the approval of the Board of Directors in advance. The results ofthat shall be reported to the Board of Directors.
(i)

The Nomination & Remuneration Advisory Committee shall deliberate on the selection anddismissal of executive management and the selection and dismissal of representative directors in
response to inquiries from the Board of Directors. The committee shall report its findings to theBoard of Directors and then a resolution shall be made by the Board of Directors. (Supplementary
Principle 4-3 (i), (ii) and (iii))

(ii) Nippon Kayaku shall establish Internal Control Management Division and Audit Division, which are
the internal audit section under the direct control of the president and establish Ethics Committee andRisk Management Committee with Internal Control Management Division as the Secretariat as an
Enterprise Risk Management system.
Ethics Committee and Risk Management Committee shall be held regularly. Board of Directors shallreceive periodic reports from the Directors, who are the chairs of each committee, and shall conduct theestablishment of a system for internal control systems and the evaluation of internal controls. Audit

Division and Internal Control Management Division shall regularly share information with Audit &Supervisory Board Members and accurately provide necessary information. (Principle 4-3(iv) and
Supplementary Principle4-13(iii))(4) Roles and Responsibilities of the Audit & Supervisory Board and Its Members (Principle 4-4)
The Audit & Supervisory Board and its members shall make appropriate judgments from an
independent and objective standpoint based on fiduciary duty to shareholders with consent pertaining
to the audits on the performance of duties by Directors, and the selection, dismissal and remunerationof the Audit＆Supervisory Board Members and the Accounting Auditor.
(i) The Audit & Supervisory Board of Nippon Kayaku shall consist of five members (of these, twoshall be full-time auditors and three shall be Outside Audit & Supervisory Board Members). In
principle, a full-time auditor shall serve as the Chair of the Audit & Supervisory Board.
Each Audit & Supervisory Board Member shall monitor and supervise the performance of duties
by Directors from an independent standpoint. They shall do this by attending meetings of theBoard of Directors and other important meetings, by inspecting important documents, and byauditing the situation of business execution based on the audit policies, audit methods, audit
plans and the division of duties of each Audit & Supervisory Board Member established by the
Audit & Supervisory Board at the start of the term.
The full-time auditors shall attend important meetings, visit the major departments, offices andgroup companies, conduct interviews, and inspect records of proceedings and other important
documents. Through this, they shall audit the management situation and the execution ofbusiness by Directors and Operating Officers. The Outside Audit & Supervisory Board Members
shall give necessary opinions. This shall include advice by accompanying site visits andappropriately participating in meetings to exchange information with internal audit divisions(Audit Division and Internal Control Management Division) in addition to attending meetingsof the Audit & Supervisory Board to receive reports on the status of these audits. (Supplementary
Principle 4-4 (i))(5)

Fiduciary Duty of Directors and Audit & Supervisory Board Members (Principle 4-5)

The Audit & Supervisory Board shall exchange opinions with the Representative Directors on aperiodic basis in regards to the issues that should be addressed by the company, the situation
concerning the development of the environment for audits by Audit & Supervisory Board Members,
and important issues in the audits. The board shall then make requests that they deem necessary.
With this, it shall strive to deepen mutual understanding. In addition, the Audit & Supervisory Board

shall explain the audit policies, audit plans and audit situation results to the Representative Directors
and Board of Directors as appropriate.

(6)Supervision and Execution of Management (Principle 4-6)

Nippon Kayaku shall select multiple Directors (including Outside Directors) who do not concurrently
serve as Operating Officers to independently and objectively supervise the management. The aim of
this shall be to improve management transparency and strengthen the corporate governance structure.
(7)

Roles and Responsibilities of Independent Directors (Principle 4-7)

Independent Directors shall supervise the management of Nippon Kayaku. They shall do this byattending important meetings (e.g., meetings of the Board of Directors) and giving their opinions as
appropriate. They shall also achieve this by attending Mid-term Corporate Strategy Meetings, Nippon
Kayaku Group Corporate Strategy Meetings and Executive Directors Meetings.
(8)

Selection and Cooperation of Independent Directors (Principle 4-8 and Supplementary Principle
4-8 (i) and (ii))

Nippon Kayaku shall select a sufficient number of Independent Directors taking into account business
operation in accordance with the Independence Standards of Outside Directors described in theattachment.
Independent Directors shall attend meetings to exchange information with the Representative
Directors and Audit & Supervisory Board Members. At these meetings, they shall exchange
information and share awareness from an independent and objective standpoint. In this way, they shallcooperate with executive management and Audit & Supervisory Board Members.
(9)

Independence Standards and Qualification for Independent Directors (Principle 4-9) Nippon
Kayaku shall stipulate the Independence Standards of Outside Officers described in theattachment to ensure the independence of Independent Directors.

(10) Use of Optional Approach (Principle 4-10 and Supplementary Principle 4-10 (i))
Nippon Kayaku shall establish a Nomination & Remuneration Advisory Committee as an advisory
body to the Board of Directors. The aim of this shall be to enhance corporate governance byensuring the fairness, transparency and objectivity of procedures relating to the nomination andremuneration of Directors and Audit & Supervisory Board Members. The Nomination &Remuneration Advisory Committee shall deliberate the following matters in response to inquiries
from the Board of Directors based on the Rules of Nomination & Remuneration Advisory
Committee. The committee shall report its findings to the Board of Directors(i) Matters relating to the selection and dismissal of Directors and Audit & Supervisory Board Members(ii) Matters relating to the selection and dismissal of Representative Directors(iii) Matters relating to the remuneration (e.g., remuneration structure) of Directors and Audit &Supervisory Board Members(iv) Other matters deemed necessary by the Board of Directors

The Nomination & Remuneration Advisory Committee shall consist of at least three Directors
selected by the Board of Directors. More than half of its members shall be Independent Directors.
(11) Prerequisites for Ensuring the Effectiveness of Board of Directors and Audit & Supervisory
Board Meetings (Principle 4-11 and Supplementary Principle4-11(i))
Nippon Kayaku shall recognize that ensuring diversity of Board of Directors and obtaining a broad
range of opinions on management will result in stronger supervisory and decision-making functions
for Board of Directors. In our process for selecting Directors, we shall elect based on the company’s
policy of selecting candidates without regard to gender, nationality, career and age.
However, Independent Outside Directors shall be elected with management experience at othercompanies, and Audit & Supervisory Board members shall be elected with sufficient expertise offinance and accounting.
The Board of Directors shall conduct investigations to analyze and evaluate the effectiveness of this.
(i) Nippon Kayaku shall set the maximum number of Directors at 10 to achieve effective executionof roles and responsibilities and to facilitate rapid decision-making in management by the
Board of Directors. In addition to requiring a certain number of people who are wellversed in
the business of our company and its issues, we shall also ensure diversity in the knowledge,
experience, and skills of Board of Directors members to ensure the independence andobjectivity of the Board of Directors and make the Skills Matrix and disclosed it.
(Supplementary Principle 4-11 (i))(ii) Nippon Kayaku shall disclose the status of concurrent positions that Directors and Audit &Supervisory Board Members hold as officers in other listed companies in business reports,
reference documents for the Annual Shareholders Meeting and securities reports on an annual
basis. (Supplementary Principle 4-11 (ii))(iii) Nippon Kayaku shall distribute an evaluation questionnaire on the effectiveness of the Board of
Directors to all Directors and Audit & Supervisory Board Members every fiscal year. These
questionnaires shall include a self-assessment from the perspectives of the Board of Director’s
structure, functions, management, and information provision to Outside Directors and Outside
Audit & Supervisory Board Members, as well as open responses regarding the Board of
Directors. We shall then analyze and evaluate the content of that. However, in the event it isrecognized that there are further challenges for the Board of Directors, we shall formulate an
action plan to be addressed by the Board of Directors in the next fiscal year. (Supplementary
Principle 4-11 (iii))(12) Stimulation of Deliberations by the Board of Directors (Supplementary Principle 4-12 (i) to (v))
The Board of Directors shall ensure the handling of the following with respect to operation of
meetings to stimulate deliberations.
(i)

In principle, materials for a meeting of the Board of Directors shall be distributed five days inadvance of the date of that meeting to allow Directors to consider the agenda in advance.

(ii) In addition to handouts, visual materials shall be projected in the venue of the meeting to giveeasy-to-understand explanations.
(iii) The annual schedule for meetings of the Board of Directors shall be formulated in the previous
fiscal year.
(iv) In principle, ordinary meetings of the Board of Directors shall be held once a month.

Extraordinary meetings of the Board of Directors shall be held as necessary. (v)There shall be no limit on the deliberation time.
(13) Information Acquisition and Support Structure (Principle 4-13)(i)

In the event Directors and Audit & Supervisory Board Members deem it necessary in relation
to the performance of their own duties, they shall request the provision of additional
information such as by asking questions as appropriate at meetings of the Board of Directors
and the Audit & Supervisory Board. Moreover, they shall appropriately acquire information byobtaining the advice of experts from outside the company at the expense of the company.
Furthermore, Audit & Supervisory Board Members shall exercise their authority appropriately
based on laws/ordinances to acquire information. (Supplementary Principle 4-13 (i) and (ii))(14) Training of Directors and Audit & Supervisory Board Members (Supplementary Principle 4-14(i) and (ii)) and other aspects to Outside Directors and Outside Audit & Supervisory Board
Members,
and provide opportunities for them to tour main business locations.

Section 6: Dialog with Shareholders
7. Dialog with Shareholders(1) Policy for Constructive Dialog with Shareholders (Principle 5-1 and Supplementary Principle51(i))
Nippon Kayaku shall disclose information to shareholders and investors in a timely and fairmanner to promote constructive dialog with shareholders. At the same time, we shall promote
constructive dialog with shareholders and investors. We shall aim to achieve sustainable growth
and to increase the value of the company over the medium- to long-term by doing so.
(i)Nippon Kayaku shall appoint an officer in charge of IR as the chief person responsible for all
dialog with shareholders and investors. The Public Relations & Investor Relations Division,
which is the division in charge, shall communicate with the relevant internal divisions, and work
to engage in dialog with shareholders and investors by holding regular briefings on financial
results and other means. In addition, Executive Management and Board of Directors or Audit &Supervisory Board Members, including Outside Directors, will consider a system for interviews
with shareholders and investors as necessary.

(ii) The Public Relations & Investor Relations Division shall work diligently to manage information
so that it is not provided only to some people when engaging in dialog with shareholders andinvestors, and shall report the opinions and comments gleaned from such dialog to executive
management on a regular basis.
(iii) Nippon Kayaku shall investigate the shareholder structure with an external organization at any
time as necessary to understand the current state of shareholders.
(2) Formulation and Announcement of Business Strategies and Business Plans (Principle 5-2 andSupplementary Principle5-2(i))
Nippon Kayaku shall manage performance using capital costs. We shall then provide a disclosure andexplanations to those outside the company for both the planning and results in regards to capitalinvestment R&D expenses and Human Capital. Moreover, we shall clarify the course of direction foreach of our businesses and the challenges we need to tackle at financial results briefings for investors
in regards to business portfolio reviews.

Section 7: Other
8. Enactment, Amendment and Abolition
The Policy shall be enacted, amended and abolished with a resolution by the Board of Directors.
History
Enacted on March 31, 2020
Implemented on April 1, 2020
Amended on June 25, 2020
Amended on July 30, 2021
Amended on November 24, 2021

Attachment
Overview of the Independence Standards of Outside Officers (Outside Directors and Outside Audit& Supervisory Board Members)
Nippon Kayaku has set for the following independence standards of outside officers (Outside
Directors and Outside Audit & Supervisory Board Members). The outside officer concerned isjudged 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,“the Nippon Kayaku Group”) as a main customer, or a person who is an executive director,
executive officer, or other employee of the parent company or main subsidiaries of that supplier(hereafter, “executive”)(2) A main customer of Nippon Kayaku or an executive at that customer(3) An executive at a main financial institution from which the company borrows or the parent ora subsidiary of that financial institution(4) An attorney, certified public accountant (CPA), licensed tax accountant or other consultant who
has received funds or other assets exceeding a certain amount, other than officer remuneration,from the Nippon Kayaku Group (the person affiliated with the group when the entity receiving
the assets is a corporation, association, or other group)(5) A person who has received donations or aid exceeding 10 million yen a year from Nippon
Kayaku (an executive of the group when the entity receiving the donation or aid is a corporation,
association, or other group)(6) A main 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 theparent company or a subsidiary of that company(8) A person who constituted (1) through (7), above, in the past five years(9) The spouse or close relatives within two degrees of relationship of that person when the person
who constitutes (1) through (8), above, is a person in an important position(10) The spouse or close relatives within two degrees of relationship of the person when the person
is a director, executive officer, or manager of Nippon Kayaku or a subsidiary of Nippon Kayaku(Notes)1. “Important subsidiaries of Nippon Kayaku” in (1) refer to subsidiaries that comprise 20%
or more 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 main customer” refers to a “supplier
who received payment of 2% or more of that entity’s annual consolidated sales for themost recent fiscal year from the Nippon Kayaku Group.”
2. “A main customer of Nippon Kayaku” in (2) refers to “a customer who paid Nippon
Kayaku 2% or more of Nippon Kayaku’s annual consolidated sales for the most recent
fiscal year.”
3. “A main financial institution” in (3) refers to “an entity that lends an amount equaling 2%
or more of Nippon Kayaku’s consolidated assets for the most recent fiscal year to Nippon
Kayaku.”4．“A certain amount” in (4) refers to whichever is higher of “10 million yen a year” or“2% of the annual sales of an attorney or a corporation, association or other organization
to which the attorney belongs.”
5. “A main shareholder” in (6) refers to a shareholder who holds 10% or more of the voting
rights (including both direct and indirect ownership).
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, or
upper level management of department manager or above, as well as attorneys with the law
firm who have a position of partner or greater; CPAs affiliated with the accounting firm
who have a position of partner and employee or higher; trustees, directors, auditors, or otherofficers affiliated with a foundation, incorporated organization, educational corporation orother corporation; and other persons reasonably and objectively judged to be of similar
importance.