Notice of the 93rd Ordinary General Meeting of Shareholders

This is an unofficial translation of the Japanese language original version, and is provided for reference purposes
only, without any warranty as to its accuracy or as to the completeness of the information.
In the event of any discrepancy between this translation and the Japanese original, The Japanese language original
shall prevail. The Company assumes no responsibility for this translation or for direct, indirect or any other formsof damages arising from this translation.

1

(Translation)

Securities Code 4182

June 5, 2020
Dear Shareholders with Voting Rights

Masashi Fujii
President and Representative Director
Mitsubishi Gas Chemical Company, Inc.
Mitsubishi Building,
5-2 Marunouchi 2-chome, Chiyoda-ku,
Tokyo, Japan

Notice of the 93rdOrdinary General Meeting of Shareholders
Please refer to the below for information about the upcoming the 93rd Ordinary General Meeting of
Shareholders of Mitsubishi Gas Chemical Company, Inc. (hereinafter "MGC") to be held as described below.
You may exercise your voting rights by 5:30 p.m. of June 24, 2020, as it is possible to exercise your voting
rights by mail or via the Internet.

1. Date and Time:
2. Place:

Thursday, June 25, 2020 at 10:00 a.m.
MGC Head Office (6th Floor, Mitsubishi Building)
5-2, Marunouchi 2-chome, Chiyoda-ku, Tokyo

3. Agenda for the Meeting:
Matters to be reported: (1) Report on the Business Report, Consolidated Financial Statements, and resultsof audits of the Consolidated Financial Statements by the independent Auditor
and the Audit & Supervisory Board for the 93rd Business Term (from April 1,
2019 to March 31, 2020)(2) Report on the Non-Consolidated Financial Statements for the 93rd Business
Term (from April 1, 2019 to March 31, 2020)
Matters for Resolution:
Proposal No. 1: Election of Twelve Directors
Proposal No. 2: Election of Two Audit & Supervisory Board Members
4. Disclosure on the internet● Among the documents that should be attached to this convocation notice, in accordance with laws andregulations and the provisions of Article 15 of the Articles of Incorporation of MGC, the following
documents are posted on MGC’s website and are not included in this convocation notice.
(ⅰ) Stock Acquisition Rights(ⅱ) Consolidated Statement of Changes in Net Assets(ⅲ) Notes to Consolidated Financial Statements(ⅳ) Non-Consolidated Statement of Changes in Net Assets(ⅴ) Notes to Non-consolidated Financial Statements●Please be advised that if minor amendments are required to matters contained in the Reference Documents
for General Meeting of Shareholders, Business Report, Non-Consolidated Financial Statements, or the2(Translation)

Consolidated Financial Statements, MGC will post revisions on its website.
MGC’s website : https://www.mgc.co.jp/ir/stockinfo/meeting.html◇This year,

if the situation is not recovered normally, you are advised to refrain from visiting the Ordinary
General Meeting of Shareholders regardless of your health condition at the time of the General Meeting to beheld with the aims of preventing the spread of COVID-19 and avoiding infection risks to shareholders.
However, if you prefer to attend in person, it is requested that you bring the enclosed Voting Form to thereception desk.

Information on Exercising Voting Rights●Attending the General Meeting of Shareholders
This year, if the situation is not recovered normally, you are advised to refrain from visiting the Ordinary
General Meeting of Shareholders regardless of your health condition at the time of the General Meeting to beheld with the aim of preventing the spread of COVID-19. However, if you prefer to attend in person, it isrequested that you submit the enclosed Voting Form to the reception desk at the venue. (You do not need to put
your seal on it).
Date and Time of the General Meeting of Shareholders : June 25th 2020(Thu) 10:00a.m. (Japan Time)
Place : MGC Head Office (6th Floor, Mitsubishi Building)
5-2, Marunouchi 2-chome, Chiyoda-ku, Tokyo●Postal Mail
Please indicate your approval or disapproval of agenda items on the Voting Form and return it by mail.
Voting forms must arrive no later than 5:30 p.m. on Wednesday, June 24th 2020(Japan Time).
●Internet
Please access the voting website (https://evote.tr.mufg.jp/) and enter your approval or disapproval of the
proposals. Exercise deadline: Until 5:30 p.m. on Wednesday, June 24th 2020(Japan Time).
■Multiple Exercise of Voting Rights
In the event voting rights are exercised multiple times via the mailing of the Voting Form and via Internet, votes
submitted via Internet will be deemed valid.
In the event that voting rights are exercised multiple times via Internet, the last set of votes cast will be deemedvalid.

＜To Institutional Investors＞
The “Electronic Proxy Voting Platform” operated by ICJ, Inc. is available for exercising voting rights for
MGC’s General Meeting of Shareholders.

3(Translation)

Reference Documents for General Meeting of Shareholders
Proposal No. 1: Election of Twelve Directors
The term of office of all eleven current Directors will expire as of the close of this Ordinary General Meeting of
Shareholders. In order to further strengthen cooperate governance structure, the number of candidates for
Outside Director has been increased by 2. Therefore, it is proposed that twelve Directors, including 4 Outside
Directors, be elected. If this Proposal is approved and adopted as proposed, Outside Directors shall make up
one-third of all Directors.
The candidates are as follows:
Num
Name
Position
Responsibilities at Mitsubishi Gas
ber
ChemicalRepresentative Director
1Toshikiyo Kurai
Renomination
Chairman－
2

Masashi Fujii

Representative Director

Renomination－

President
3

Masato Inari

Director, Managing
Executive Officer

4

Nobuhisa Ariyoshi

Director, Managing
Executive Officer

5

Tomohiko Okubo

Director, Managing
Executive Officer

6

Kenji Kato

7

Yasushi Kosaka

8Naruyuki Nagaoka

9

Kazuo Tanigawa

Director, Managing
Executive Officer
Managing Executive
OfficerManaging Executive
Officer
Director

In charge of Internal Audit
Division, Environment & Total
Production Sector
In charge of internal control & risk
management, Corporate
Management Sector
Administrative Management of
LNG Project Team, and in chargeof Basic Chemicals Business
SectorIn charge of Research &Development Sector
In charge of Specialty Chemicals
Business Sector
In charge of compliance, andCorporate Planning Sector－

Renomination

Renomination

Renomination

Renomination
NewNomination
NewNomination
Renomination
Outside Director
IndependentDirector

10

Tsugio Sato

Director

Renomination－

Outside Director
IndependentDirector

11

Haruko Hirose－

NewNomination－

Outside Director
IndependentDirector

12

Toru Suzuki－

NewNomination－

Outside Director
IndependentDirector4(Translation)

No.

Name
(Date of Birth)

Profile, position and responsibility in MGC(Important positions concurrently held at other companies, etc.)
April 1975
June 2003
June 2006

June 2008
Renomination

June 2009

Toshikiyo Kurai(January 9, 1952)

June 2010

October 2011
June 20121
June 2013
April 2019

Joined MGC.
General Manager, Inorganic Chemicals Division,Specialty Chemicals Company
Executive Officer, and General Manager,
Inorganic Chemicals Division, Specialty
Chemicals Company
Executive Officer, and President of Specialty
Chemicals Company
Director, Managing Executive Officer, andPresident of Specialty Chemicals Company
Director, Managing Executive Officer, Presidentof Specialty Chemicals Company, and General
Manager, Engineering Plastics Division
Director, Managing Executive Officer, andPresident of Specialty Chemicals Company
Representative Director, Senior Managing
Executive Officer, Assistant to the President, andPresident of Specialty Chemicals Company
President and Representative Director
Chairman and Representative Director(to the present)

Attendance of Board of ■ Reason for nomination as candidate
Directors Meeting
Mr. Toshikiyo Kurai, following his service in important positions
mainly in Specialty Chemicals department and his presiding over(the fiscal year ended
the R&D, manufacture and whole business of the Inorganic
March 31, 2020)
Chemicals division and Engineering Plastics division, was
12 held, 12 attended
appointed to be a Director in June 2009, and served from June2013 to March 2019 as President and Representative Director, andhas served from April 2019 as Chairman and Representative
Director, and due to his abundant experience and knowledge of
MGC's business and management control as a whole, he has once
again been nominated as a candidate for Director.

5

Number ofshares of MGC
held

45,732

(Translation)

No.

Name
(Date of Birth)

Profile, position and responsibility in MGC(Important positions concurrently held at other companies, etc.)
April 1981
June 2010
June 2012

June 2014

April 2015
Renomination
Masashi Fujii(March 10, 1959)

2

June 2015

April 2018

October 2018
Attendance of Board of
Directors Meeting(the fiscal year ended
March 31, 2020)
April 201912 held, 12 attended

Joined MGC.
General Manager, Organic Chemicals Division,
Natural Gas Chemicals Company
Executive Officer, and General Manager, Organic
Chemicals Division, Natural Gas Chemicals
Company
Executive Officer, and General Manager,
Methanol Division, Natural Gas Chemicals
Company
Managing Executive Officer, Administrative
Management of LNG Project Team, and Presidentof Natural Gas Chemicals Company
Director, Managing Executive Officer,
Administrative Management of LNG Project
Team, and President of Natural Gas Chemicals
Company.
Outside Director, Co-op Chemical Co., Ltd(currently Katakura & Co-op Agri Corporation)
Director, Managing Executive Officer,
Administrative Management of LNG Project
Team, and President of Natural Gas Chemicals
Company and Manager of Energy & Resources
Division.
Director, Managing Executive Officer,
Administrative Management of LNG Project
Team, and President of Natural Gas Chemicals
Company.
President and Representative Director(to the present)■ Reason for nomination as candidate
Mr. Masashi Fujii, following his service in important positions in
the Administrative & Personnel, Natural Gas Chemicals
department, was appointed to be a Director in June 2015 andpresided over Natural Gas Chemicals department, and has served
from April 2019 as President and Representative Director, and due
to his abundant experience and knowledge of MGC's business andmanagement control as a whole, he has once again been nominatedas a candidate for Director.

6

Number ofshares of MGC
held

19,800(Translation)

No.

Name
(Date of Birth)

Profile, position and responsibility in MGC(Important positions concurrently held at other companies, etc.)
April 1985
June 2011
June 2014

Renomination
Masato Inari(January 23, 1961)

April 2016
June 2016
April 2017
June 2017
April 20193
June2019

Joined MGC.
Plant Manager, Niigata Plant, Natural Gas
Chemicals Company
Executive Officer, Plant Manager, Niigata Plant,
Natural Gas Chemicals Company
Executive Officer, President of Aromatic
Chemicals Company
Director, JSP Corporation
Managing Executive Officer, President of
Aromatic Chemicals Company
Director, Managing Executive Officer, Presidentof Aromatic Chemicals Company
Director, Managing Executive Officer, in chargeof Production Technology Division, Environment
Safety and Quality Assurance Division
Outside Director, Katakura & Co-op Agri
Corporation(to the present)
Director, Managing Executive Officer, in chargeof Internal Audit Division, Environment & Total
Production Sector(to the present)

April2020
Attendance of Board of
Directors Meeting(the fiscal year ended■ Reason for nomination as candidate
March 31, 2020)
Mr. Masato Inari, following his engagement mainly in the R&D of
12 held, 12 attended

Aromatic Chemicals department, served in important positions in
Natural Gas Chemicals and Aromatic Chemicals department,
presides over Aromatic Chemicals department, and was appointed
to be a Director in June 2017. With his abundant experience andknowledge of R&D and business management, etc., he has once
again been nominated as a candidate for Director.

7

Number ofshares of MGC
held

12,503

(Translation)

No.

Name
(Date of Birth)

Profile, position and responsibility in MGC(Important positions concurrently held at other companies, etc.)
April 1984
June 2012
April 2016

April 2018

June 2018
Renomination
Nobuhisa Ariyoshi(November 26,1961)

4

April 2019

June 2019

Attendance of Board of
Directors Meeting
April 2020
(the fiscal year ended
March 31, 2020)12 held, 12 attended

Joined MGC.
General Manager, Administrative & Personnel
CenterExecutive Officer, General Manager, Electronic
Materials Division, Information & Advanced
Materials Company
Managing Executive Officer, in charge of Finance& Accounting Center, Information Systems
Division, and Purchasing & Logistics Center
Director, Managing Executive Officer, in chargeof Finance & Accounting Center , Information
Systems Division, and Purchasing & Logistics
CenterDirector, Managing Executive Officer, Chairmanof Internal Control Promotion Committee, incharge of Compliance, Risk Management,Internal Audit Division, Corporate Planning
Division, Administrative & Personnel Center andCorporate Communications Division, General
Manager Tokyo Techno Park
Director, Managing Executive Officer, in chargeof Compliance, Risk Management, Finance &Accounting Center, Information Systems
Division, Administrative & Personnel Center andCorporate Communications Division, General
Manager Tokyo Techno Park
Director, Managing Executive Officer, in chargeof internal control & risk management, Corporate
Management Sector(to the present)■ Reason for nomination as candidate
Mr. Nobuhisa Ariyoshi, following his engagement mainly inInformation & Advanced Materials and Specialty Chemicals
department, served in important positions in the Administrative &Personnel and Information & Advanced Materials department, andwas appointed to be a Director in June 2018, and was in charge ofCorporate Management Sector and Compliance. With his abundant
experience and knowledge of MGC’s business and administrationof management, etc., he has once again been nominated as a
candidate for Director.

8

Number ofshares of MGC
held

11,500(Translation)

No.

Name
(Date of Birth)

Profile, position and responsibility in MGC(Important positions concurrently held at other companies, etc.)
April 1985
June 2010
October 2014

Renomination
Tomohiko Okubo(April 26,1961)

April 2015
April 2016
April 2019

June 20195

April 2020

Joined MGC.
Manager, Sales Group, Methanol Division,
Natural Gas Chemicals Company
Manager, Business Development Department,
Natural Gas Chemicals Company
General Manager, Methanol Division, Natural
Gas Chemicals Company
Executive Officer, General Manager, Methanol
Division, Natural Gas Chemicals Company
Managing Executive Officer, Administrative
Management of LNG Project Team, and Presidentof Natural Gas Chemicals Company.
Director, Managing Executive Officer,
Administrative Management of LNG Project
Team, and President of Natural Gas Chemicals
Company.
Director, Managing Executive Officer,
Administrative Management of LNG Project
Team, and in charge of Basic Chemicals Business
Sector(to the present)

Number ofshares of MGC
held

9,500

Attendance of Board of
Directors Meeting(the fiscal year ended ■ Reason for nomination as candidate
Mr. Tomohiko Okubo, following his engagement mainly inMarch 31, 2020)
Aromatic Chemicals department and Natural Gas Chemicals
9 held, 9 attended

department, served in important positions in Natural Gas
Chemicals department, was appointed to be a Director in June2019 and presided over Natural Gas Chemicals department. With
his abundant experience and knowledge of MGC’s business andadministration of management, etc., he has once again been
nominated as a candidate for Director.

Renomination
Kenji Kato
(June 2,1962)

April 1987
June 2013
April 2016
April 2018

April 2019
June 20196

April 2020

Joined MGC.
General Manager, Tokyo Research Laboratory,Specialty Chemicals Company
Executive Officer, and Plant Manager, Kashima
Plant, Specialty Chemicals Company
Executive Officer, General Manager, Electronic
Materials Division, Information & Advanced
Materials Company
Managing Executive Officer, President ofInformation & Advanced Materials Company
Director, Managing Executive Officer, Presidentof Information & Advanced Materials Company
Director, Managing Executive Officer, in chargeof Research & Development Sector(to the present)

Attendance of Board of
Directors Meeting
Reason for nomination as candidate(the fiscal year ended ■Mr. Kenji Kato, following his engagement in the R&D of Specialty
March 31, 2020)
Chemicals, served in important positions in Specialty Chemicals
9 held, 9 attended
and Information & Advanced Materials department, was appointed
to be a Director in June 2019 and presided over Information &Advanced Materials department. With his abundant experience andknowledge of MGC’s business and administration of management,
etc., he has once again been nominated as a candidate for Director.

912,800(Translation)

No.

Name
(Date of Birth)

Profile, position and responsibility in MGC(Important positions concurrently held at other companies, etc.)
April 1985
June 2012
June 2014

New Nomination
Yasushi Kosaka(February 13,1961)

April 2016
June 2016
April 2020

7

Joined MGC.
General Manager, Inorganic Chemicals Division,Specialty Chemicals Company
Executive Officer, General Manager, Inorganic
Chemicals Division, Specialty Chemicals
Company
Managing Executive Officer, Mitsubishi
Engineering-Plastics Corporation
President and CEO, Mitsubishi
Engineering-Plastics Corporation
Managing Executive Officer, in charge ofSpecialty Chemicals Business Sector(to the present)

Number ofshares of MGC
held

2,930

■ Reason for nomination as candidate
Mr. Yasushi Kosaka, following his engagement mainly inSpecialty Chemicals department, served in important positions inSpecialty Chemicals department. With his abundant experience andknowledge of MGC’s business and administration of management,
etc., he is deemed to be able to sufficiently carry out his roles as
Director in MGC’s decision making and supervision ofmanagement executives and for this reason he has been nominatedas a candidate for Director.

April 1985
June 20118

New Nomination

April 2016
June 2016

Naruyuki Nagaoka(November 20,1962)

April 2017
June 2019

April 2020

Joined MGC.
Manager, Administrative, Natural Gas Chemicals
Company
Manager, Corporate Planning Division
Audit & Supervisory Board Member of JSP
Corporation(to the present)
Executive Officer, Corporate Planning Division
Managing Executive Officer, in charge ofCorporate Planning and Purchase & Logistic
CenterManaging Executive Officer, in charge ofCompliance and Corporate planning Sector(to the present)■ Reason for nomination as candidate
Mr. Naruyuki Nagaoka, following his engagement mainly in
Natural Gas Chemicals department and Administrative &Personnel, served in important positions in Natural Gas Chemicals
department, and Corporate planning Division. With his abundant
experience and knowledge of MGC’s business and administrationof management, etc., he is deemed to be able to sufficiently carryout his roles as Director in MGC’s decision making andsupervision of management executives and for this reason he has
been nominated as a candidate for Director.

10

8,188

(Translation)

No.

Name
(Date of Birth)

Profile, position and responsibility in MGC(Important positions concurrently held at other companies, etc.)
April 1972
June 2004
June 2007

Renomination
Outside Director

June 2008
June 2011

Independent Director
Kazuo Tanigawa(September 8, 1949)

May 2012

June 2015
9

Number ofshares of MGC
held

Joined Tokyo Shibaura Electric Co., Ltd.
(currently Toshiba Corporation)
Executive Officer, and Corporate Vice President,
Toshiba Corporation
Director, Executive Officer, and Corporate SeniorVice President, Toshiba Corporation
Director, Executive Officer, and Corporate
Executive Vice President, Toshiba Corporation
Advisor, Toshiba Corporation
Outside Audit and Supervisory Board Member,
Toshiba Machine Co., Ltd.
Chairman, Board of Trustees, Business ResearchInstitute
Chairman, Japan Society for Human Resource
Management
Outside Director, MGC(to the present)■ Reason for nomination as candidate
Mr. Kazuo Tanigawa has many years of experience and insight asa manager at a company operating on a global scale, and provides
appropriate supervision and advice to MGC’s management. Since
it is deemed that he would contribute to ensuring the validity andappropriateness of MGC’s decision making in the future, he has
once again been nominated as a candidate for Outside Director.
Attendance of Board of
Additionally, although he was a business execution manager until
Directors Meeting
June 2011 at Toshiba Corporation, a business partner of MGC,
(the fiscal year ended
over eight years have passed since his retirement. While there are
March 31, 2020)
transactional relationships between MGC and said company
12 held, 12 attended
including the sale of products, the amount was less than 1% ofconsolidated net sales for FY2019. Furthermore, although heserved until May 2015 at Business Research Institute, a business
partner of MGC, over five years have passed since his retirement.
While there are transactional relationships between MGC and said
company including participation in seminars, the amount during
FY2019 was insignificant, totaling ¥3 million.

11

5,200

(Translation)

No.

Name
(Date of Birth)

Profile, position and responsibility in MGC(Important positions concurrently held at other companies, etc.)
April 1975
February 1989

Renomination
Outside Director
Independent Director
Tsugio Sato
(February 20,1951)

April 1994
April 2001
April 2010

April 2013

August 2013
April 201610
June 2017

Assistant, Applied Chemistry, Faculty ofEngineering, Tohoku University
Associate Professor, Molecular Chemistry andEngineering, Faculty of Engineering, Tohoku
University
Professor, Institute for Chemical Reaction
Science, Tohoku University
Professor, Institute of Multidisciplinary Research
for Advanced Materials, Tohoku University
Deputy Director, Institute of Multidisciplinary
Research for Advanced Materials, Tohoku
University
Director, Center for Exploration of New Inorganic
Materials, Institute of Multidisciplinary Research
for Advanced Materials, Tohoku University
Director, The Foundation for Japanese Chemical
Research
Professor Emeritus, Tohoku University(to the present)
Outside Director, MGC(to the present)■ Reason for nomination as candidate
Dr. Tsugio Sato has highly advanced expertise in wide fields ofAttendance of Board ofstudy in chemicals such as inorganic materials chemistry, andDirectors Meetingprovides appropriate supervision and advice to MGC’s(the fiscal year ended
management. Since it is deemed that he would contribute toensuring the validity and appropriateness of MGC’s decision
March 31, 2020)
making in the future, he has once again been nominated as a
12 held, 11 attended
candidate for Outside Director.
Although he has not been directly involved in corporate
management, other than as Outside Director of MGC, he hasserved in important positions at university research institutions,and it is deemed that he would continue to perform his duties as
Outside Director appropriately.
Additionally, while there are transactional relationships between
MGC and Tohoku University, where he serves as Professor
Emeritus, including payment of consideration for joint research,
the amount during FY2019 was insignificant, totaling ¥6 million.

12

Number ofshares of MGC
held0(Translation)

No.

Name
(Date of Birth)

Profile, position and responsibility in MGC(Important positions concurrently held at other companies, etc.)

New Nomination

December 1968 Appointed to the National Personnel Authority ofJapan
January 1992
Director, Bureau of Human Resources
Management of Headquarters(Paris), United
Nations Educational, Scientific and Cultural
Organization (UNESCO)
September 2002 Deputy to the Director General and Managing
Director of Field Operations Division of
Headquarters(Vienna), United Nations Industrial
Development Organization (UNIDO)
November 2006 Japanese Ambassador Extraordinary andPlenipotentiary to Kingdom of Morocco
April 2013
Specially Appointed Professor, Academy for
Global Leadership Tokyo Institute of Technology
May 2014
President, Japan Morocco Association(to the present)
June 2016
Outside Director, S&B Foods Inc.
(to the present)
April 2017
Director, Ochanomizu University
March 2018
Outside Director, Nikkiso Co., Ltd.
(to the present)

Outside Director
Independent Director
Haruko Hirose( September 23,1945)

11■ Reason for nomination as candidate
Ms. Haruko Hirose has many years of experience overseas andinsight as director at international organizations on a global scale,and it is deemed that she would provide appropriate supervision
and advice to MGC’s management.
Although she has not been directly involved in corporate
management, other than as Outside Director, she has served inimportant positions at a international organization, and since it isdeemed that she would contribute to ensuring the validity andappropriateness of MGC’s decision making in the future, she has
been nominated as a candidate for Outside Director.
Additionally, while there are transactional relationships between
MGC and S&B Foods Inc. where she serves as an outside director,
including the sale of products, the amount was less than 1% ofconsolidated net sales for FY2019. While there are transactional
relationships between MGC and Nikkiso Co., Ltd. where she
serves as an outside director, including the purchase of equipment,
the amount was less than 1% of consolidated net sales of said
company for FY2019.

13

Number ofshares of MGC
held0(Translation)

No.

Name
(Date of Birth)

Profile, position and responsibility in MGC(Important positions concurrently held at other companies, etc.)

Number ofshares of MGC
held

April 1979
April 2011
New Nomination
Outside Director
Independent Director(July 14,1955)
Toru Suzuki

12

Joined Mitsui & Co., Ltd.
Managing Officer, Performance Chemicals
Business Unit, Mitsui & Co., Ltd.
April 2014
Managing Officer, Mitsui & Co., Ltd. andPresident of Mitsui & Co. Vietnam Ltd.
April 2015
Executive Managing Officers, Mitsui & Co., Ltd.
and President of Mitsui & Co. Vietnam Ltd.
June 2015
Executive Managing Officers, Chief Regional
Representative of Southwest Asia, Mitsui & Co.,
Ltd., and President of Mitsui & Co. India Pvt
Ltd.,
June 2017
Audit & Supervisory Board Member, Mitsui
Sugar Co.,Ltd.
(to the present)
December 2018 Audit & Supervisory Board Member, Nutri Co.,Ltd.
(to the present)■ Reason for nomination as candidate
Mr. Toru Suzuki has many years of experience overseas andinsight as a manager at a company operating on a global scale, and
it is deemed that he would provide appropriate supervision andadvice to MGC’s management. and since it is deemed that hewould contribute to ensuring the validity and appropriateness of
MGC’s decision making in the future, he has been nominated as a
candidate for Outside Director.
Additionally, although he was a business execution manager until
June 2017 at Mitsui & Co., Ltd., a business partner of MGC, over
two years have passed since his retirement. While there aretransactional relationships between MGC and said company
including the sale of products and materials, the amount was lessthan 1% of consolidated net sales of MGC for FY2019. Also,
while there are transactional relationships between MGC and said
company including the purchase of materials, the amount was lessthan 1% of consolidated net sales of said company for FY2019.

0(Notes) 1. No conflict of interest exists between MGC and any of these candidates.
2. Mr. Masato Inari is scheduled to resign from his position of Outside Director of Katakura & Co-op
Agri Corporation on June, 26, 2020.
3. Mr.Naruyuki Nagaoka is scheduled to resign from his position of Audit & Supervisory Board
Member of JSP Corporation on June, 26, 2020.
4. Ms.Haruko Hirose is listed as above in her preferred name. Her name in the family register is Haruko
Makinouchi.
5. Of the candidates, Mr. Kazuo Tanigawa, Dr.Tsugio Sato, Ms.Haruko Hirose and Mr.Toru Suzuki arenominated as Outside Directors.
6. Mr. Kazuo Tanigawa will have been in office as Outside Director for five years as of the close of thisOrdinary General Meeting of Shareholders. Dr. Tsugio Sato will have been in office as Outside
Director for three years as of the close of this Ordinary General Meeting of Shareholders.
7. MGC has executed Limitation of Liability Agreements with Mr. Kazuo Tanigawa and Dr.Tsugio
Sato, currently MGC’s Outside Directors, limiting their liabilities pursuant to Article 423 Paragraph
1 of the Companies Act to the maximum amount stipulated by the Companies Act. Aforementioned
Limitation of Liability Agreements will be extended in the event their re-elections are approved.
Furthermore, in the event the election of Ms. Haruko Hirose and Mr. Toru Suzuki is approved, MGC
is scheduled to conclude an identical Limitation of Liability Agreement with them.
8. MGC has registered Mr. Kazuo Tanigawa and Dr.Tsugio Sato as independent director/auditor at14

(Translation)

Tokyo Stock Exchange, Inc. and will continue to register them as such in the event their re-elections
are approved. Furthermore, in the event the election of Ms. Haruko Hirose and Mr. Toru Suzuki isapproved, MGC will also register them as an independent director/auditor.

15

(Translation)(Reference) MGC Standards on Independence for Outside Corporate Officers
A candidate is deemed to qualify as an independent officer as long as none of the following matters apply.
1. If any of the following applies to the candidate.
1) Has been a business execution manager (*1) of the MGC Group (*2).
2) Is a major shareholder of MGC (*3) or is or has been a business execution manager for a major shareholder
company within the previous five years.
3) Is or has been a business execution manager within the previous five years of an important business partner(*4).
4) Has been dispatched from a company or organization that has established a relationship with the MGC Groupthrough the reciprocal appointment of outside officers.
5) Works for or has worked for an accounting firm within the previous five years that has conducted a statutory
audit of MGC.
6) Provides or has provided consulting services other than statutory auditing to the MGC Group within theprevious three years, for which he or she has received high compensation (*5).
2. If any of the following applies to a close relation (*6) of the candidate.
1) Is or has been an important business execution manager (*7) of the MGC Group within the previous five years.
2) Is a major shareholder of MGC or a business execution manager for a major shareholder company.
3) Is or has been a business execution manager within the previous five years of an important business partner.
4) Works for or has worked for an accounting firm within the previous five years that has conducted a statutory
audit of MGC.
5) Provides or has provided consulting services other than statutory auditing to the MGC Group within theprevious three years, for which he or she has received high compensation.
3. The candidate has another important vested interest in the MGC Group and has been reasonably deemed to be unable
to fulfill his or her duties as an independent officer.
(*1)

Business execution manager: Either a Director overseeing business execution, an Executive Officer, other officer
involved in business execution, or an employee.

(*2)

MGC Group: MGC or one of its subsidiaries.

(*3)

Major shareholder of MGC: A shareholder currently holding, either directly or indirectly, 10% or more of total
shares issued and outstanding.

(*4)

Important business partner: A business partner that has made transactions, including buying and selling,amounting to 2% or more of consolidated net sales over the previous three consecutive years. Consolidated net
sales pertains to the MGC Group in the event the MGC Group is the seller, or to the partner in the event the
MGC Group is the buyer.

(*5) High compensation: In the case of an individual, an annual amount of 10 million yen or more, or in the case of amember of company or organization, compensation exceeding 2% of its consolidated net sales or total revenue.
(*6) Close relation: Either a spouse, first- or second-degree relative, or financial dependent.
(*7) Important business execution manager: Either a Director overseeing business execution, an Executive Officer, orother officer involved in business execution.
16

(Translation)

Proposal No. 2: Election of Two Audit & Supervisory Board Members
The term of office of Audit & Supervisory Board Member Mr. Katsuhiko Sugita will expire as of the close ofthis Ordinary General Meeting of Shareholders, and Audit & Supervisory Board Member Mr. Kunio Kawa will
resign from his position as of the close of this Ordinary General Meeting of Shareholders. Therefore, it is
proposed that two Audit & Supervisory Board Member be elected. Mr. Masamichi Mizukami is intended tosucceed to the position of Mr. Kunio Kawa, and the term of his office also dates from the date of his succession
to his predecessor according to the Articles of Incorporation of MGC.
The Audit & Supervisory Board has already given consent to this proposal.
The candidates are as follows:
No.

Name
(Date of Birth)

Profile and position in MGC(Important positions concurrently held at other companies, etc.)
April 1977
June 2006
June 2007

Renomination
Katsuhiko Sugita(June 25, 1954)

June 2012

June 2014

April 2015

June 2015

1

Attendance of Board of
Directors Meeting(the fiscal year ended April 2016
June 2016
March 31, 2020)12 held, 12 attended
Attendance of Audit &Supervisory Board
Meeting(the fiscal year ended
March 31, 2020)14 held, 14 attended

Joined MGC.
General Manager, Corporate Planning Department,
Corporate Planning Division
Executive Officer, General Manager, Finance &Accounting Center
Director, Managing Executive Officer, in charge of Risk
Management, Administrative & Personnel Center andPurchasing & Logistics Center
Director, Managing Executive Officer, in charge of Risk
Management, Finance & Accounting Center,
Administrative & Personnel Center and Purchasing &Logistics Center
Director, Senior Managing Executive Officer, in charge ofCompliance, Chairperson of Internal Control Promotion
Committee, in charge of Internal Audit Division and
Finance & Accounting Center
Representative Director, Senior Managing Executive
Officer, in charge of Compliance, Chairperson of Internal
Control Promotion Committee, in charge of Internal Audit
Division and Finance & Accounting Center
Director
Audit & Supervisory Board Member（Fulltime）(to the present)■ Reason for nomination as candidate
Mr. Katsuhiko Sugita was appointed to be a Director in June 2012, servedin important positions in the Finance & Accounting, Administrative &Personnel and other departments and was also Administrative Managementof Internal Audit department, giving him abundant experience regarding
MGC's business as well as corporate management and auditing along with aconsiderable degree of knowledge regarding finance and accounting. It isdeemed that, derived from those experiences, he would possess sufficientinsight and knowledge essential for Audit & Supervisory Board Member tobe responsible for ensuring the lawfulness and appropriateness of theexecution of Directors' duties, therefore, he has once again been nominatedas a candidate for Audit & Supervisory Board Member.

17

Number ofshares of
MGC held

16,800(Translation)

No.

Name
(Date of Birth)

Profile and position in MGC(Important positions concurrently held at other companies, etc.)

Joined MGC.
Plant Manager, Yamakita Plant, Specialty Chemicals
Company
June 2013
Executive Officer, and Plant Manager, Yamakita Plant,
Specialty Chemicals Company
December 2013 Executive Officer, and Plant Manager, Kashima Plant,
Specialty Chemicals Company
April 2016
Managing Executive Officer, Chairman of The
Committee on Future R&D, in charge of Research &Development Division and Advanced Business
Development Division, and General Manager, Advanced
New Nomination
Business Development Division
Masamichi Mizukami
June
2016
Director, Managing Executive Officer, Chairman of The(September 11, 1958)
Committee on Future R&D, in charge of Research &Development Division and Advanced Business
Development Division, and General Manager, Advanced
Business Development Division
January 2017
Director, Managing Executive Officer, in charge of
Research & Development Division and Advanced
Business Development Division
April 2019
Representative Director, Senior Managing Executive
2
Officer, in charge of Research & Development Division,
Advanced Business Development Division, Business
Strategy Division, General Manager QOL Innovation
Center Shirakawa
Attendance of Board of June 2019
Representative Director, Senior Managing Executive
Directors Meeting
Officer, Chairperson of Internal Control Promotion(the fiscal year ended
Committee, in charge of Internal Audit Division,
March 31, 2020)
Research & Development Division, Advanced Business
12 held, 12 attended(※)
Development Division, Business Strategy Division,
General Manager QOL Innovation Center Shirakawa(※)attended as director
April 2020
Director(to the present)

Number ofshares of
MGC held

April 1983
June 2012■ Reason for nomination as candidate
Mr. Masamichi Mizukami, was appointed to be a Director in June 2016,served in important positions in Specialty Chemicals, Research &Development and Internal Control, etc., It is deemed that, derived fromthose experiences, he would possess sufficient insight and knowledge
essential for Audit & Supervisory Board Member to be responsible for
ensuring the lawfulness and appropriateness of the execution of Directors'
duties, therefore, he has been nominated as a candidate for Audit &Supervisory Board Member.

(Notes) No conflict of interests exists between MGC and any of these candidates.

18

19,800BUSINESS REPORT(From April 1, 2019 to March 31, 2020)
1. Review of Results(1) Overview of results
During the fiscal year ended March 2020 (April 1 2019 – March 31, 2020), the world economy wasaffected by heightening tension between the United States and China over trade issues. Moreover,
COVID-19 emerged from January 2020, creating a global pandemic that caused significant
deceleration in economic activities and heightened the sense of uncertainty over the future.
Against this background, the MGC Group nevertheless saw consistently strong demand for its
semiconductor-related products. The Group also benefitted from growing demand for offerings for
optical use, such as products used in smartphone cameras thanks to the widespread use of multiple
camera lenses in smartphones, in addition to those used in vehicle-mount cameras. However, theGroup’s overall business environment remained challenging, as market prices of such key products
as methanol, polycarbonates, purified isophthalic acid and other general-purpose products remainedsluggish.
Despite the harsh business environment, the Group strove to live up to its vision of “Creating value
to share with society” and, to this end, has been implementing the MGC Advance2020 Medium-termManagement Plan since April 2018. Specifically, in line with the plan’s basic policies, the Group
carried out such strategies as “Strengthening the earnings power of existing businesses with a focus
on core businesses,” “Creating and developing new businesses” and “Implementing investment
strategies to form an optimal business portfolio.” Thus, the Group’s accomplishments in the fiscal
year ended March 31, 2020 included the launch of a new production facility for super-pure hydrogen
peroxide in North America and the strengthening of production capacity for optical polymers. The
MGC Group also made progress in initiatives to upgrade its consolidated business structure via, forexample, the inclusion of Japan U-pica. Co. Ltd. and Toho Earthtech,Inc. into the scope of
consolidation while pushing ahead with procedures to complete the merger of three of its Group
companies and consolidate their trading functions.
However, the MGC Group’s net sales decreased year on year, reflecting the decline in market prices
for methanol, polycarbonates and other products.
Group operating income also fell year on year, despite an increase in the sales volume of opticalpolymer and that of BT materials for semiconductor packaging, due to drops in market prices forsuch products as polycarbonates, purified isophthalic acid and methanol.
Ordinary income also decreased, due to the fall in operating income as well as a significant
deterioration in equity in earnings (losses) of affiliated companies related to overseas methanol
producing companies. This reflected falling methanol market prices as well as one-off costs recorded
at a joint venture, described below, in Saudi Arabia.
In fiscal 2019, the MGC Group achieved ¥613.3 billion in consolidated net sales, a decrease of ¥35.6
billion (5.5%) from the previous year. Consolidated operating income was ¥34.2 billion, a decreaseof ¥7.1 billion (17.2%). As a result of recording equity in loss of affiliates of ¥1.2 billion, a decreaseof ¥29.6 billion, consolidated ordinary income was ¥31.1 billion, a decrease of ¥38.0 billion (55.0%).
The Group achieved a profit attributable to owners of parent of ¥21.1 billion, a decrease of ¥33.8
billion (61.5%).
As previously announced, from the fiscal year ended March 31, 2020, MGC’s Consolidated
Financial Statements reflect the impact of the decreased ratio of equity held by Japan Saudi Arabia
Methanol Co., Inc. (JSMC), an equity method affiliate, in the Saudi Methanol Company (AR-RAZI)
19

(Translation)
and amortization costs associated with cash to be paid as consideration for the continuation of thejoint venture status of AR-RAZI. MGC also recorded one-off costs totaling ¥7.8 billion, including
loss related to the sale of shares of AR-RAZI as well as additional tax-related expenses. The
aforementioned factors are included in equity in losses of affiliates.
(2) Results by business segment
Natural Gas Chemicals Segment
Main businesses
Methanol
Methanol/Ammonia Based Chemicals
formalin, ammonia, methylamine and its derivatives,
methyl methacrylate, methacrylic acid ester,dimethyl ether, polyols, etc.
Energycrude oil, geothermal power generation, etc.
Life Science Related Products
functional food materials, etc.
The methanol business saw decreases in both net sales and earnings due to a decrease in market
prices compared with the previous year.
Methanol/ammonia-based chemicals posted a decrease in earnings compared with the previous fiscal
year due to lower market prices of MMA and neopentyl glycol.
Despite higher crude oil sales volume, results for crude oil and other energy sources remained
virtually unchanged from the previous fiscal year, reflecting such factors as plunges in crude oil
prices.
In fiscal 2019, the Natural Gas Chemicals Segment achieved consolidated net sales of ¥157.1 billion,a decrease of ¥23.3 billion (13.0%) from the previous year and an operating income of ¥0.1 billion, adecrease of ¥3.2 billion (96.4%). Additionally, due to ¥4.9 billion equity in loss of affiliates, coming
primarily from overseas methanol producing companies, the segment achieved ordinary loss of ¥5.7
billion, a decrease of ¥28.3 billion.
Aromatic Chemicals Segment
Main Businesses
Commodity Aromatic Chemicals
m-xylene, p-xylene, o-xylene, purified isophthalic acid,
phthalic anhydride, plasticizers, etc.
Specialty Aromatic Chemicals
m-xylenediamine (MXDA), MX-Nylon, aromatic aldehydes, etc.
Foamed Plastics
foamed polystyrene, foamed polyolefin, etc.
Specialty aromatic chemical products posted a decrease in earnings from the previous fiscal year as
demand for meta-xylenediamine became weaker in the fourth quarter, despite growing sales volumeof aromatic aldehydes.
Commodity aromatic chemical products suffered decreases in net sales and earnings compared withthe previous fiscal year. Negative factors included lower sales prices of purified isophthalic acid andmeta-xylene.
Foamed plastics suffered a year-on-year decline in earnings, primarily due to weak demand and arise in fixed costs associated with the construction of production systems to meet new demand.
20

(Translation)
In fiscal 2019, the Aromatic Chemicals Segment achieved consolidated net sales of ¥200.1 billion, adecrease of ¥10.9 billion (5.2%), an operating income of ¥11.1 billion, a decrease of ¥3.5 billion(23.9%), and an ordinary income of ¥10.4 billion, a decrease of ¥3.4 billion (25.0%).
Specialty Chemicals Segment
Main Businesses
Inorganic Chemicals
hydrogen peroxide, super-pure hydrogen peroxide, persulfates,
hybrid chemicals, chemical polishing agent, etc.
Plastic Lens Monomer
Engineering Plastics
polycarbonate resin, polyacetal resin, polyphenylene ether resin,
polycarbonate sheets and films, etc.
Inorganic chemicals posted lower earnings compared with the previous year, despite growth in thesales volume of chemicals for use in semiconductor manufacturing. This was primarily due to higher
fixed costs in connection with the launch of a new production facility for super-pure hydrogen
peroxide in North America, deterioration in the profitability of hydrogen peroxide and a decline in
the sales volume of chemicals for use in liquid crystal display production.
Earnings from the engineering plastics business stayed virtually unchanged from the previous fiscal
year. While market prices for polycarbonates declined significantly from the previous year, opticalpolymer sales volumes increased due to the growing use of multiple camera lenses in smartphones
and the execution of measures to enhance production capacity.
In fiscal 2019, the Specialty Chemicals Segment posted consolidated net sales of ¥200.3 billion, adecrease of ¥4.2 billion (2.1%) from the previous year and an operating income of ¥19.9 billion, adecrease of ¥1.3 billion (6.5%). Due to ¥3.3 billion equity in earnings of affiliates, ordinary income
was ¥22.3 billion, a decrease of ¥5.8 billion (20.8%).

Information & Advanced Materials Segment
Main Businesses
Electronics Materials
printed circuit board materials (epoxy resin-based copper-cladlaminates, BT resin-based copper-clad laminates),
LE sheet for drilling holes in printed circuit boards, etc.
Oxygen Absorbers
AgelessTM, PharmaKeepTM, etc.
Electronic materials saw increases in net sales and earnings. This was mainly attributable to overall
recovery of demand in contrast with stagnation in the latter half of the previous fiscal year, theperformance of products used in smartphones and memory devices that have been supported by
growth in demand from the third quarter onward, and higher sales volumes of BT materials forsemiconductor packaging, the core product category for electronic materials.
Oxygen absorbers such as AGELESSTM posted a decrease in earnings compared with the previous
year. This was due mainly to a downturn in showings of those sold in Japan for use in confectionary
packages, reflecting the impact of natural disasters and COVID-19 pandemic.
In fiscal 2019, the Information & Advanced Materials Segment achieved consolidated net sales of¥54.7 billion, an increase of ¥2.7 billion (5.3%) and an operating income of ¥5.6 billion, an increase21

(Translation)of ¥1.7 billion (44.5%). Due to ¥0.3 billion in equity in earnings of affiliates, ordinary income was¥5.8 billion, an increase of ¥1.3 billion (30.5%)
Other Business Segments
The other business segment achieved consolidated net sales of ¥0.8 billion, an increase of ¥0.2
billion (30.8%). Operating loss was ¥0.0 billion, a decrease of ¥0.1 billion(81.3%), and ordinary
income was ¥0.0 billion, a decrease of ¥0.4 billion(98.1%).
Note:

While MGC made Japan U-Pica Co., Ltd. a consolidated subsidiary on March 31, 2020, its sales have notbeen included in the consolidated statement of income for the fiscal year under review for accounting
purposes. The principal business of U-Pica Co., Ltd. is “manufacture and sale of unsaturated polyester
resins, coating resins, and methacrylic acid esters.”

Sales by Business Segment

Segment

FY2018FY2019(April 2018 - March 2019)(April 2019 - March 2020)

Sales
AmountSales
Amount(millions of yen)

Percentage
Total (%)

(millions of yen)

Percentage
Total (%)

Year-on-Year
Increase/
Decrease (%)

Natural Gas Chemicals
Segment

180,55427.8

157,158

25.6

△13.0

Aromatic Chemicals Segment

211,12332.6

200,174

32.6

△5.2

Specialty Chemicals Segment

204,63431.5

200,396

32.7

△2.1

Information & Advanced
Materials Segment

51,986

8.0

54,716

8.9

5.3

Other Business Segments

686

0.1

898

0.1

30.8

648,986

100.0

613,344

100.0

△5.5

Total

Note: The figures shown in parentheses represent loss or minus.

(3) Capital Expenditures
Capital expenditures for the current fiscal year were made largely in relation to reinforcing the
production capabilities for existing products and maintaining/renovating equipment and facilities.
Major expenditures incurred are as follows:
1) Major facilities completed during the current fiscal year
MGC PURE CHEMICALS AMERICA, Inc.
・Factory for Super-pure hydrogen peroxide, Oregon, U.S.A.
（Specialty Chemicals Segment）
・Factory for Super-pure hydrogen peroxide, Texas, U.S.A.
（Specialty Chemicals Segment）
2) Construction initiated or continuing through the current fiscal year
No applicable items.
(4) Funding
The funds for equipment and facilities as well as for working capital for the current fiscal year were
provided by MGC’s own resources and borrowings from financial institutions.
(5) Operations Results and Financial Position
22

(Translation)
1) MGC Group (consolidated basis)
FY2016FY2017FY2018(Millions of yen)
FY2019April 2016 –March 2017

April 2017 –March 2018

April 2018 –March 2019

April 2019 –March 2020

Sales

556,480

635,909648,986

613,344

Ordinary income

62,43080,711

69,19931,116Classification

Profit attributable to owners ofparent(Mitsubishi GasChemical)
Net income per Share (yen)48,01360,53155,00021,158221.83281.39257.46100.50Total assets

738,188785,687

804,038

771,733

Net assets

473,370

519,144553,282

548,141

Note 1: From FY 2017 in applying the equity method to some of the overseas associated companies, financial
statements created in compliance with IFRS are used as a basis. Figures for FY2016 above contain values
that reflect a retroactive application of this change.
Note 2: From the beginning of FY2018, MGC has applied the “Partial Amendments to Accounting Standard forTax Effect Accounting” (Accounting Standards Board of Japan (“ASBJ”) Statement No. 28; February 16,2018), etc., and figures for FY2017 in the table above have been retroactively restated after application ofsaid accounting standard, etc.
Note 3: With an effective date of October 1, 2016, MGC conducted a reverse stock split for MGC’s ordinary
shares on a 2:1 basis. As a result, net income per share in the above table is calculated assuming that thereverse stock split had been conducted at the beginning of FY2016.

2) MGC (Non-consolidated basis)
FY2016FY2017(Millions of yen)
FY2018FY2019April 2016 –March 2017

April 2017 –March 2018

April 2018 –March 2019

April 2019 –March 2020

Sales

299,234

364,433

375,129

351,348

Ordinary income

31,40954,14941,32930,066

Net income

27,996

41,386

34,69029,332

Net income per Share (yen)129.35

192.39162.39139.33

Total assets

426,324455,869

457,427

425,713

Net assets

251,521275,255

291,198

290,955Classification

Note 1: From the beginning of FY2018, MGC has applied the “Partial Amendments to Accounting Standard forTax Effect Accounting” (Accounting Standards Board of Japan (“ASBJ”) Statement No. 28; February 16,2018), etc., and figures for FY2017 in the table above have been retroactively restated after application ofsaid accounting standard, etc.
Note 2: With an effective date of October 1, 2016, MGC conducted a reverse stock split for MGC’s ordinary
shares on a 2:1 basis. As a result, net income per share in the above table is calculated assuming that thereverse stock split had been conducted at the beginning of FY2016.

23

(Translation)(6) Key Challenges for the Mitsubishi Gas Chemical Group1) State of progress in important measures as of the end of FY2019
The new medium-term management plan “MGC Advance2020: A Brighter Future from Bigger
Dreams!” started in fiscal 2018. Under the MGC Group Vison of “Creating values to share withsociety,” the Group has launched the new basic strategies of “Enhancing the corporate value of the
MGC Group” and “Deepening the trust of MGC Group stakeholders.” In order to realize thesestrategies, the Group will promote the following five measures.
◆MGC Group Vision“Creating values to share with society”◆New medium-term management plan
“MGC Advance2020: A brighter Future from Bigger Dreams!”●Fundamental Objectives
Enhancing the corporate value of the MGC Group
Deepening the trust of MGC Group stakeholders■Strategies
・Strengthening the earning power of existing businesses with a focus on core businesses
・Creating and developing new businesses
・Implementing investment strategies to form an optimal business portfolio
・Promoting unified MGC Group management
・Improving total enterprise quality to support sustainable growth
The Group’s core businesses range from resource energy, chemical products and materials such as
methanol, hydrogen peroxide, polycarbonate and m-xylenediamine, MX-Nylon to specialty products
such as sheets & films, foamed plastics, electronics chemicals, BT materials and oxygen absorber“AgelessTM”, providing value to society. By continuing to concentrate management resources onthese core businesses into the future, the Group will strengthen further its profitability.
In fiscal 2019, the Group built new factories for super-pure hydrogen peroxide in North America andstrengthened capabilities of optical polymers. Furthermore, the Group started commercial operationof Wasabizawa Geothermal Power Plant of Yuzawa Geothermal Power Generation Corporation andconstruction of Appi Geothermal Power Plant of Appi Geothermal Energy Corporation, and decided
to build a production facility for industrial hydrogen peroxide at MGC Pure Chemicals Taiwan, Inc.
In “Creating and developing new businesses,” under a plan to invest proactively in the areas of“medical and food,” “information and communications,” and “mobility” while keeping in mind themegatrends in society, MGC Farmix Co., Ltd. which produces and distributes factory farmed
vegetables completed a fully artificial light-type plant factory.
In “Implementing investment strategies to form an optimal business portfolio,” the Group will planand implement active investment strategies including M&A in order to establish a profit structure
which is able to withstand changes in the external environment.
In “Promoting unified MGC Group management,” the Group decided to absorb and merge the three
MGC Group trading companies with MGC Trading Co., Ltd. as a surviving company, moving
forward with improving efficiency and strengthening trading company functions within the Group,and made Japan U-Pica Co., Ltd. and Toho Earthtech,Inc. a consolidated subsidiary. Evaluation andintroduction operations also continued for the unification and integration of accounting systems
24

(Translation)across the Group.
Regarding “Improving total enterprise quality to support sustainable growth,” in addition to further
improving group-wide safety awareness and culture, and further strengthening internal control andcompliance structures, by improving the “quality” of management resources such as humanresources, technologies, information, funds, brands, and patents held by the Group, the Group willcontinue to realize sustainable growth.
● Financial targets (to be achieved in the final fiscal year of MGC Advance 2020)(JPY in billions)
Consolidated parameter

Target Fiscal2020

Sales
750
Operating Income
65
Ordinary Income80
ROE (Return On Equity)
12％ or higher＜Assumptions＞ Exchange rate：110JPY／US$
Crude oil (Dubai)： 60US$/BBL
2) Future initiatives
MGC reorganized its internal structure as of April 1, 2020 in order to fully utilize management
resources from a viewpoint of total optimization and establish a system that can respond to customer
and market needs properly and promptly.
For fiscal 2020, the last year of the medium-term management plan, the Group expects to face asevere profit environment as the product demand and prices will significantly decline due to stagnant
economic activities caused by the worldwide spread of COVID-19 infection. The impact onelectronics materials and optical polymers is expected to be limited, as the demand was solid forfiscal 2019. On the other hand, weakening demand in various areas including auto-related business,housing and infrastructure, and electric and electronic devices is likely to negatively affect raw
materials of those products such as foamed plastics, engineering plastics, and specialty aromatic
chemicals. Moving forward, however, MGC will make efforts in the five measures and strive as a
unified MGC Group under the new structure toward achieving the financial targets. In particular, ourtop priorities are creating a business portfolio that is less affected by changes in the external
environment and accelerating creation and development of new business. Toward achieving thesepriorities, the Group will maintain plans for a total investment amount of ¥200 billion and acumulative R&D amount of ¥66 billion during the medium-term management plan. Additionally,
with initiatives including increasing production capacity of meta-xylenediamine at the forefront, theGroup will actively implement strategic investment that contributes to strengthening foundations forexisting businesses, and accelerate the creation and development of new businesses by maximizing
the use of technologies and personnel both within and outside of the Group, under the new R&D
structure which was organized by separating the research institutes from each operating division for
integration into one unified R&D division.
Furthermore, with the CSR Department, a section established in the fiscal 2019, taking a leading role,
MGC identified top priorities (materiality) which management should tackle for realizing the MGC
Group Vision, “Creating values to share with society.” For the future, MGC will be further
committed to CSR management by developing the business plan and managing progress inconsideration of materiality.
* Plans and descriptions concerning the future such as target values provided in “Key Challenges for
the Mitsubishi Gas Chemical Group” are based on information available to the Group as of the dateof preparation of this document and certain assumptions which the Group deems reasonable, and25

(Translation)
therefore include uncertainties. Actual results may differ significantly from these projections due tovarious factors.

26

(Translation)(7) Major Places of Business of Mitsubishi Gas Chemical (As of March 31, 2020)
1) MGC
Name
Location
5-2, Marunouchi 2-chome, Chiyoda-ku, Tokyo, Japan
Osaka Branch
Osaka Prefecture
Tokyo Techno ParkTokyo Prefecture
Research Institutes:
Niigata Research Laboratory
Niigata Prefecture
Hiratsuka Research Laboratory
Kanagawa Prefecture
Niigata Plant
Niigata Prefecture
Mizushima Plant
Okayama Prefecture
Plants:Yokkaichi Plant
Mie Prefecture
Yamakita Plant
Kanagawa Prefecture
Kashima Plant
Ibaraki Prefecture
QOL Innovation Center Shirakawa
Fukushima Prefecture
Notes: 1. The following organization changes have been made on 1st April 2020
・Abolishing Osaka Branch・Tokyo Techno Park has been renamed as Tokyo Research Laboratory.
Head Office:Branch Office:2) Subsidiaries
Company Name
Eiwa Chemical Industry Co., Ltd.
Tokyo Shokai, Ltd.
Toho Earthtech,Inc.
Japan Finechem Co., Inc.
Japan U-pica.Co.Ltd.
Yonezawa Dia Electronics Co., Inc.
Ryoko Chemical Co., Ltd.
Ryoyo Trading Co., Ltd.
JSP Corporation
MGC Electrotechno Co., Ltd.
MGC Terminal Co., Inc.
MGC Filsheet Co., Ltd.
MGC Advanced Polymers Inc.
MGC Pure Chemicals America, Inc.
Mitsubishi Gas Chemical America, Inc.
MGC Pure Chemicals Singapore Pte. Ltd.
Mitsubishi Gas Chemical Singapore Pte. Ltd.
Ageless（Thailand）Co., Ltd.
Thai Polyacetal Co., Ltd.
Mitsubishi Gas Chemical EngineeringPlastics (Shanghai) Co., Ltd.
MGC Pure Chemicals Taiwan, Inc.
Samyoung Pure Chemicals Co., Ltd.

27

Head Office
Kyoto
Tokyo
NiigataTokyo
Tokyo
Yamagata
Tokyo
Tokyo
Tokyo
Tokyo
Tokyo
Saitama
U.S.A.
U.S.A.
U.S.A.
Singapore
Singapore
ThailandThailandChina

Business and Production Site
Aichi Prefecture, etc.
Osaka Prefecture, etc.
Tokyo Prefecture, etc.
Kagawa Prefecture, etc.
Yamaguchi Prefecture, etc.
--Osaka Prefecture, etc.
Osaka Prefecture, etc.
Tochigi Prefecture, etc.
Fukushima Prefecture
Hiroshima Prefecture, etc.
Osaka Prefecture,etc.
------------Thailand---

Taiwan
Korea--Korea(Translation)(8) Number of Employees (As of March 31, 2020)
1) MGC Group (Consolidated)
Numberof Employees
1,107
3,875
2,307
1,203
137
325
8,954

Segment
Natural Gas Chemicals Segment
Aromatic Chemicals Segment
Specialty Chemicals Segment
Information & Advanced Materials Segment
Other Segments
Corporate (Shared)
Total

Change fromEnd of FY2018
122
△96
75
414
116
47
678

Notes: 1. Only employees working within the Group are included in the headcount (excludes individuals on
assignment from the Group to companies outside of the Group and includes individuals on assignment
from outside of the Group to companies within the Group).
2. The employees in the Corporate (Shared) segment are individuals who belong to administrative
departments that cannot be classified into specific business segments.
3. Toho Earthtech, Inc. became a consolidated subsidiary in April 2019 and its employees have been
included in the number of employees of the Natural Gas Chemicals Segment.
4. Ageless (Thailand) Co., Ltd. became a consolidated subsidiary in April 2019 and its employees havebeen included in the number of employees of the Information & Advanced Materials Segment.
5. Japan U-Pica Co., Ltd. became a consolidated subsidiary in March 2020 and therefore, its employees
have been included in the number of employees of the Other Segments.

2) MGC (Non-Consolidated)
NumberChange fromof Employees
End of FY2018
2,391

Average Age
40 years old and6 month36

Average Duration in
Employment
17 years and6 month

Note: Only employees working within MGC are included in the headcount (excludes individuals on assignment
from MGC to other companies and includes individuals on assignment from other companies to MGC).

(9)

Major Subsidiaries and Affiliates (As of March 31, 2020)
Company

Issued Share Capital(millions of yen)

Eiwa Chemical Industry
Co., Ltd.

420

Tokyo Shokai, Ltd.

200

Toho Earthtech, Inc.

240

Japan Finechem Co., Inc.

274

Japan U-Pica Co., Ltd.

1,100

Yonezawa Dia
Electronics Co., Inc.
Ryoko Chemical Co.,Ltd.

Ratio of
VotingRights (%)

Principal Business

Manufacture and sale of blowing agents,
blowing agent activators, and resin
processing products
100.0 Sale of compound resins and electronic(100.0) materials
Production and sale of natural gas and50.1
iodine, and Seismic reinforcement works
Manufacture and sale of organic synthetic
95.1 chemicals, including polymeric initiators(10.3) and raw materials for agrichemicals, andelectronics parts
Manufacture and sale of unsaturated
66.4 polyester resins, coating resins, andmethacrylic acid esters
100.0 Manufacturing of Mass lamination board(100.0) and LE sheet, entry sheet for PWB drilling

90.9

90

100.0
Sale of industrial chemicals(100.0)100

28(Translation)

Company
Ryoyo Trading Co., Ltd.
JSP Corporation

Issued Share Capital(millions of yen)

Ratio of
VotingRights (%)

100.0(100.0)
54.0
(0.2)

90
10,128MGC Electrotechno Co.,
Ltd.

500

MGC Terminal Co., Inc.

493

MGC Filsheet Co., Ltd.

50

MGC Advanced
Polymers Inc.
MGC Pure Chemicals
America, Inc.
Mitsubishi Gas Chemical
America, Inc.
MGC Pure Chemicals
Singapore Pte. Ltd.
Mitsubishi Gas Chemical
Singapore Pte. Ltd.

(thousands of USD)

Ageless（ Thailand ） Co.,Ltd.

(millions of THB)

100.0
100.0
(14.2)
100.0(45.4)
100.0(21.4)
100.0(20.0)

6,000(thousands of USD)

5,000

Principal Business
Sale of chemicals and insurance agency
business
Manufacture and sale of foamed polystyrene
and foamed polyolefin
Manufacture and sale of printed circuitboard materials
Storage services for methanol
Manufacture and sale of polycarbonate
sheets/films
Manufacture and sale of MX-Nylon
Manufacture and sale of super purehydrogen peroxide and other products(thousands of USD)

100.0

1,084
(thousands of USD)

Sale of chemicals and other products

100.0 Manufacture and sale of super pure(10.0) hydrogen peroxide and other products

7,106(thousands of USD)

1,161
250

100.0

Sale of chemicals and other products

100.0

Manufacture and sale of OxygenAbsorbers

70.0

Manufacture and sale of polyacetal resins

91.0

Manufacture and sale of polycarbonate
resins(millions of THB)

Thai Polyacetal Co., Ltd.
Mitsubishi Gas Chemical
Engineering-Plastics(Shanghai) Co., Ltd.
MGC Pure Chemicals
Taiwan, Inc.
Samyoung Pure
Chemicals Co., Ltd.

840
(millions of RMB)

1,504
(millions of NTD)

100.0

80
(millions of KRW)

51.0

3,500

Manufacture and sale of super purehydrogen peroxide and other products
Manufacture and sale of super purehydrogen peroxide and other products
Manufacture and sale of magneto-optics
crystalGranopt Co., Ltd.

150

49.0

Kokuka Sangyo Co.,Ltd

100

50.0

Shipping of chemical products

2,310

47.4

Import and sale of methanol, and investment
in and finance for foreign companies

3,000

50.0

Sale and manufacture of engineering plastics

300

45.0

Manufacture and sale of electric/electronic
related materials and their applied products.

50.0

Manufacture and sale of methanol

Japan Saudi Arabia
Methanol Co., Inc.
Mitsubishi
Engineering-Plastics
Corporation
Ryoden Kasei Co.,Ltd
Brunei Methanol
Company Sdn.Bhd.

(thousands of USD)Tai Hong Circuit
Industrial Co., Ltd.

(millions of NTD)

Korea Engineering
Plastics Co., Ltd.

(millions of KRW)

189,400

50.0

1,104

40.0

12,600

Manufacture and sale of printed circuitboards (single-sided boards, double-sided
boards, and double layer boards)
Manufacture and sale of engineering
plastics, mainly polyacetal resins

Note: The figures in parentheses represent the percentage of voting rights indirectly held by MGC's subsidiaries,
included in totals.

29

(Translation)(10) Major Lenders (As of March 31, 2020)(Millions of yen)

LenderBalance of Borrowings

MUFG Bank, Ltd.

15,644The Norinchukin Bank

7,888

Nippon Life Insurance Company

5,795

Development Bank of Japan Inc.

5,605

Sumitomo Mitsui Banking Corporation

5,248

The Bank of Yokohama, Ltd.

4,571

Mizuho Bank, Ltd.

3,638

30

(Translation)

2. Information Concerning Stock (As of March 31, 2020)(1) Authorized Shares

492,428,000 (No change from end of FY2018)(2) Issued and Outstanding Shares 225,739,199 (Decrease by 6,000,000 from end of FY2018)*MGC conducted a cancellation of treasury shares on May 27, 2019 and January 31, 2020.
The number of issued and outstanding shares decreased by 6,000,000 shares.
(3) Number of Shareholders

24,777 (Increase by 1,542 from end of FY2018)(4) Principal Shareholders (ten largest shareholders)
Investment to MGC
Number of
Shares Held(thousands Shares)

Percentage to
Total Shares
Outstanding (%)

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

15,260

7.3

Japan Trustee Services Bank, Ltd. (Trust account)

9,346

4.5

Meiji Yasuda Life Insurance Company

8,797

4.2

Nippon Life Insurance Company

8,795

4.2

The Norinchukin Bank

5,026

2.4

AGC Inc.

4,835

2.3

Japan Trustee Services Bank, Ltd. (Trust account 5)

3,711

1.8

JP Morgan Chase Bank 385151

3,183

1.5

The Bank of Yokohama,Ltd.

3,085

1.5

J.P Morgan Bank Luxembourg S.A.1300000

2,794

1.3

Name of shareholder

Notes: 1. MGC holds 17,758 thousands shares of treasury shares, which is not included in the above list ofprincipal shareholders.
2. Percentage to Total Shares Outstanding is calculated excluding treasury shares.

31

(Translation)

3. Information Concerning Corporate Officers(1) Directors and Audit & Supervisory Board Members (As of March 31, 2020)
Position
Representative
Director
Chairman
Representative
Director
President
Representative
Director
Senior Managing
Executive Officer
Director
Managing Executive
Officer
Director
Managing Executive
Officer
Director
Managing Executive
Officer
Director
Managing Executive
Officer
Director
Managing Executive
Officer
Director
Managing Executive
Officer
Director
Director
Audit & Supervisory
Board Member(Fulltime)
Audit & Supervisory
Board Member(Fulltime)
Audit & Supervisory
Board Member(Fulltime)

Responsibilities at MGC and Important current positionsat other companies, etc.

Name

Toshikiyo Kurai

Masashi Fujii

Masamichi
Mizukami

Chairman of Internal Control Promotion Committee,
In charge of Internal Audit Division,Research & Development
Division, Advanced Business Development Division, Business
Strategy Division, General Manager QOL Innovation Center
Shirakawa

Masahiro Johno

President of Specialty Chemicals Company

Masato Inari

Nobuhisa
Ariyoshi

Production Technology Division, Environment Safety and Quality
Assurance Division,
Outside Director, Katakura & Co-op Agri Corporation
In charge of Compliance, Risk Management, Finance &Accounting Center, Information Systems Division, Administrative& Personnel Center and Corporate Communications Division,
General Manager Tokyo Techno Park

Tomohiko Okubo

Administrative Management of LNG Project Team,
President of Natural Gas Chemicals Company

Hiroyuki Otsuka

President of Aromatic Chemicals Company
Director, JSP Corporation

Kenji Kato

President of Information & Advanced Materials Company

Kazuo Tanigawa
Tsugio Sato
Takashi Kimura

Katsuhiko Sugita

Kunio Kawa

32

(Translation)

Position

Audit & Supervisory
Board Member

Responsibilities at MGC and Important current positionsat other companies, etc.

Name

YasuomiMatsuyama

President in Nissay Culture Foundation
President in Tokyo Opera City Cultural Foundation
External Audit & Supervisory Board Member of Keisei Electric
Railway Co., Ltd.

Notes: 1. MGC has adopted the executive officer system.
2. Of the Directors, Messrs. Tomohiko Okubo, Hiroyuki Otsuka, Kenji Kato newly assumed their office asof June 25, 2019.
3. Of the Directors, Mr. Kazuo Tanigawa and Dr.Tsugio Sato are Outside Directors as stipulated in Article
2, Item 15 of the Companies Act.
4. Of the Audit & Supervisory Board Members, Messrs. Takashi Kimura and Yasuomi Matsuyama are
Outside Audit & Supervisory Board Members as stipulated in Article 2, Item 16 of the Companies Act.
5. Audit & Supervisory Board Member, Mr. Takashi Kimura, has been involved with financial institutions
for a number of years, and has experience in corporate management as a manager, and possesses a
considerable degree of knowledge regarding finance and accounting.
6. Audit & Supervisory Board Member, Mr. Katsuhiko Sugita, has been involved in the Finance
Department of MGC for a number of years, and has experience in management through his role incharge of the Finance & Accounting Division, and possesses a considerable degree of knowledge
regarding finance and accounting.
7. Audit & Supervisory Board Member, Mr Kunio Kawa, has been involved in the Finance Department of
MGC for a number of years, and has experience in management through his role in charge of the
Finance & Accounting Division, and possesses a considerable degree of knowledge regarding financeand accounting.
8. Audit & Supervisory Board Member, Mr. Yasuomi Matsuyama, has been involved with financial
institutions for a number of years, and has experience in corporate management through his role incharge of the Accounting Division, and possesses a considerable degree of knowledge regarding financeand accounting.
9. MGC has registered Directors, Mr. Kazuo Tanigawa and Dr.Tsugio Sato, and Audit & Supervisory Board
Members, Messrs. Takashi Kimura and Yasuomi Matsuyama, as independent directors/auditors at Tokyo
Stock Exchange, Inc.
10. There is no material business relation between MGC and the other companies, etc. in which Audit &Supervisory Board Member, Mr. Yasuomi Matsuyama, serves concurrently.
11. Corporate Officers who have retired during the current fiscal year are as follows:
Representative Director
Mr. Kazuo Sakai
Representative Director
Mr. Kenji Inamasa
Representative Director
Mr. Yasuhiro Sato
Representative Director
Mr. Susumu Yoshida(Retired upon expiry of the term of office on June 25 2019)12. Effective from April 1, 2020 Responsibility at MGC and important current positions at other companies,
etc. changed as follows.
Responsibility at MGC and Important current positions at
PositionNameother companies, etc.
Director

Masamichi Mizukami―

Director

Masahiro Johno―

Masato Inari

In charge of Internal Audit Division, Environment &Total Production Sector
Outside Director, Katakura & Co-op Agri Corporation

Nobuhisa Ariyoshi

In charge of internal control & risk management,
Corporate Management Sector

Tomohiko Okubo

Administrative Management of LNG Project Team,in charge of Basic Chemicals Business Sector

Director
Managing
Executive Officer
Director
Managing
Executive Officer
Director
Managing
Executive Officer33

(Translation)

Director

Hiroyuki Otsuka

Director, JSP Corporation

Director
Managing
Executive Officer

Kenji Kato

In charge of Research & Development Sector34

(Translation)(2) Directors’ and Audit &Supervisory Board members’ Remuneration
Amount ofClassification

Total Amount of Remuneration by Type(millions of yen)

Remuneration(millions of yen)

Directors
Audit & Supervisory
Board Member
Total

Basic

Reserved Retirement

remuneration

Benefits

NumberRestricted Stock

509

393

80

35

15

87

87

－

－

4

597

481

80

35

19

55

55

－

－

4

Outside Directors/Audit &Supervisory Board Members(Figures on the right are parts ofthe total amounts above.)

Note: 1. The amount of reserved retirement benefits to Directors above is that of the provision for reserved
retirement benefits (for thirteen Directors excluding Outside Directors) for the fiscal year underreview.
2. The amount of restricted stock remuneration to Directors is that of the provision for restricted stock
remuneration (for thirteen Directors excluding Outside Directors) for the fiscal year under review.

(3) Policies and Methods for Deciding Remuneration and Other Benefits of Corporate Officers
1) Directors’ Remuneration
Remuneration to Directors (excluding Outside Directors) consists of monthly remuneration whichis the total of a basic remuneration decided in accordance with each Director's position and duties
and performance-based remuneration reconsidered every fiscal year, reserved retirement benefit
and restricted stock remuneration. Reserved retirement benefit consists of a reserved sum thatreflects each Director's performance to be paid in full upon retirement.
Restricted stock remuneration is the system with the purpose of sharing value with shareholders,which grants of restricted stock to Applicable Directors and will in turn provide incentives forApplicable Directors to create sustainable growth in MGC’s corporate value.
In addition to these forms of remuneration, a bonus amount that is considered appropriate may be
paid upon resolution of a General Meeting of Shareholders.
Additionally, to incentivize Directors to share shareholder values and further motivate them toincrease medium- to long-term corporate value, guidelines have been created that establish aminimum number of MGC shares to be held and a set amount of Director remuneration to be
used to contribute to Director share ownership through the acquisition of MGC's shares.
Furthermore remuneration proposal is supposed to be discussed in the Remuneration and
Nominating Committee consisting of the Chairman, the President, and Outside Directors prior to
proposal at the Board of Directors.
2) Audit & Supervisory Board Members’ Remuneration
Audit & Supervisory Board Members’ remuneration consists only of a basic remuneration and isdecided among the Audit & Supervisory Board Members within the amount stipulated by theGeneral Meeting of Shareholders.

35

(Translation)(4) Information Concerning Outside Corporate Officers
1) Relations between MGC and Other Companies in which Officers Concurrently Hold Important
Positions
The relations between MGC and other companies in which the outside corporate officers
concurrently hold important positions are as described in (1).

2) Major Activities of Outside Corporate Officers
Attendance at
OutsideBoard of Directors
Director
Meeting

Kazuo
Tanigawa

Tsugio Sato

Major Activities

12 of 12 meetings

Drawing on his many years of experience and insight as amanager at a company operating on a global scale, Mr.
Tanigawa adequately demonstrated management
supervision functions by making comments as necessary
at Board of Directors meetings and other important
meetings from an external perspective to ensure
appropriate and proper decision-making of MGC.

11 of 12 meetings

Drawing on his highly advanced expertise in a wide fieldof study in chemicals such as inorganic materials
chemistry and on his extensive experience holding
prominent positions in various organizations, including
universities and academic societies, Dr. Sato adequately
demonstrated management supervision functions bymaking comments as necessary at Board of Directors
meetings and other important meetings subsequent toassuming office as Director from an external perspective
to ensure appropriate and proper decision-making of
MGC.

36

(Translation)

Outside Audit& Supervisory
Board Member

Takashi
KimuraYasuomiMatsuyama

Attendanceat Board of
Directors
Meeting

12 of 12
meetings

11 of 12
meetings

Attendance at
Audit andSupervisory
Board Meeting

Major Activities

14 of 14
meetings

Drawing on his experience with financial
institutions and as a business manager, Mr. Kimura
asked questions and offered advice at Board of
Directors meetings and other important meetings
to ensure the appropriate execution of business.
Further, in compliance with audit policies
stipulated by the Audit & Supervisory Board, Mr.
Kimura audited each division and office andcarried out inspection of subsidiaries, etc., while
adequately demonstrating audit functions as a
Full-time Audit & Supervisory Board Member

13 of 14
meetings

Drawing on his experience with financial
institutions and as a business manager, Mr.
Matsuyama made comments from an external
perspective to ensure appropriate decision making
by the Board of Directors.
Further, in compliance with audit policies
stipulated by the Audit & Supervisory Board, Mr.
Matsuyama discussed and exchanged views on
important matters related to auditing, adequately
demonstrating audit functions.

3) General Intent of Limitation of Liability Agreement
MGC has entered into a Limitation of Liability Agreement with each Outside Corporate Officers
to limit their liabilities with respect to Article 423 Paragraph 1 of the Companies Act up to theamount stipulated by the law, based on Article 427 Paragraph 1 of said Act.

37

(Translation)

4. Information Concerning Independent Auditor(1) Name of Independent Auditor
Crowe Toyo & Co.
(2) Independent Auditors’ Fees in FY2019
1) Fee for the audit performed as stipulated in Article 2 Paragraph 1 of
the Certified Public Accountants Law
2) Aggregate amount of cash and other monetary payments made by
MGC and MGC’s subsidiaries¥69 million¥74 million

Notes: 1.

The fee for audit pursuant to the Companies Act and that for audit pursuant to the Financial
Instruments and Exchange Act are not differentiated in the Audit Agreement between MGC andIndependent Auditor. As such, the amount in 1) includes the amount of the fee and other payments
for the audit due pursuant to the Financial Instruments and Exchange Act.

2.

Of MGC’s main subsidiaries, the financial statements of JSP Corporation and foreign subsidiaries
are audited (as stipulated in the Companies Act or Financial Instruments and Exchange Act,
including equivalent foreign laws and ordinances) by certified public accountants or accounting
firms (including those with equivalent foreign certifications) other than MGC’s Independent
Auditor.

3.

MGC and MGC’s subsidiary entrusts agreed-upon procedural operations as duties other than duties
prescribed in Article 2, Paragraph 1 of the Certified Public Accountants Act, and pay consideration
to Independent Auditors.

4.

The Audit & Supervisory Board agreed to the amount listed above in 1) after confirming the content
of the Independent Auditor's audit plan, quality management systems, the state of execution of audit,
estimates of audit remuneration, etc.

(3) Policy for Dismissal and Non-reappointment of independent Auditors
In the case that any of the items in Article 340, Paragraph 1 of the Companies Act apply to an
Independent Auditor, that Independent Auditor's dismissal will be considered, and in the case that
their dismissal is judged to be appropriate, the Audit & Supervisory Board will dismiss the
Independent Auditor upon the consent of all Audit & Supervisory Board Members.
Also, in the case that the Audit & Supervisory Board recognizes that it has become difficult for
the Independent Auditor to appropriately execute duties, or if otherwise judged necessary, theAudit & Supervisory Board will submit an agenda item regarding the dismissal or nonrenewal of
the Independent Auditor to the General Meeting of Shareholders.

38(Translation)
5. Resolution on Establishing Systems to Ensure Appropriate Business Operations
In following with the regulations of Article 362, Paragraph 4, Item 6 of the Companies Act,
Paragraph 5 of the same Article, and Article 100, Paragraphs 1 and 3 of the Ordinance for
Enforcement of the Companies Act, MGC resolved in the Board of Directors meeting with respect tosystems to ensure appropriate business operations (Internal Control System). Additionally, the statusof the maintenance and operation of internal controls is being reported to the Board of Directors on a
yearly basis, and in addition to verifying and resolving upon the appropriateness of this resolution,
the Board of Directors also deliberates and resolves upon a basic policy and plans regarding thefollowing year's maintenance and operation of internal controls. The content of internal control
resolutions and operational status during FY2019 are as follows.
In order to maintain and strengthen internal control, MGC reorganized the internal control relatedorganization on April 1, 2020 and integrate Internal Control Promotion Committee and Risk
Management Committee into Internal Control & Risk Management Committee. At the same time,
we reviewed the functions of Compliance Committee. The following internal control resolutions
have been made for the new organization and summary of operational Status is for the end of March,
2020.
(1) Content of Resolution on Systems to Ensure Appropriate Business Operations① Systems for Ensuring Duties of Directors and Employees Are Executed in Compliance with
Laws, Regulations, and Articles of Incorporation
1) MGC shall view compliance as broadly encompassing conformity with laws, regulations, Articles
of Incorporation, and internal rules, as well as the conduct of fair, transparent, and free businessbased on an awareness of corporate responsibility to society, and shall establish MGC Corporate
Behavior Guidelines, Compliance Rules, and MGC Group Code of Conduct.
2) Officer in charge of Compliance shall be appointed and a Compliance Committee chaired by said
Officer shall be established as an organization directly under the President. Compliance
Committee shall investigate compliance violations, and also discuss, formulate and makerecommendation for corrective and preventive measures.
3）In order to ensure that MGC and its Group companies construct, maintain and operate internal
controls appropriately MGC shall establish Basic Internal Control & Risk Management Rules.
Internal & Risk Management Committee shall be chaired by the officer in charge of Internal &Risk Management and shall be established as an organization directly under the President. In
order to ensure its effectiveness Internal & Risk Management Committee shall cooperate with
Compliance Committee and Internal Audit Division.
4) In order to detect internal compliance violations and take corrective measures promptly,
Compliance Consultation Desk shall be established as a means of receiving internal reports fromofficers, employees, their families, contractors, business partners, and the like.
5) In order to eliminate anti-social forces, in addition to clarifying its firm stance against such forces
in MGC Corporate Behavior Guidelines and MGC Group Code of Conduct, MGC shall promote
its policies in each relevant department.
6) An Internal Audit Division shall be established to conduct internal audits pursuant to the Internal
Audit Rules in addition to auditing by Audit & Supervisory Board Members and by Independent
Auditors.

39

(Translation)7) MGC shall issue MGC Compliance Handbook and distribute to officers and employees to ensure
their understanding of the compliance system, as well as cultivate awareness of compliancethrough education and training.

② Systems for Ensuring Efficient Execution of Duties by Directors
1) MGC shall separate the decision-making, supervision, and business execution functions of the
management and implement the Executive Officer system for expeditious decision-making andbusiness execution. At the same time, in the operating divisions to achieve efficient business
management accountability for performance shall be clarified.
2) In order to make decisions on matters that have material effect on MGC based on multifaceted
considerations, a Management Council shall be established to deliberate on management policies
and an Operations Council shall be established to deliberate on specific execution plans.
3) Organization Regulations, Segregation of Duties Rules, and Rules Defining Extent of Authority
shall be established to clarify the duties and authorities of Directors to ensure efficient andappropriate execution of duties.
4) Performance shall be monitored based on numerical targets clarified through the Group’s
medium-term management plan, annual budget, and the like.
③ System for Archiving and Managing Information on Execution of Duties by Directors
Information pertaining to the execution of duties by Directors shall be archived and managed inaccordance with the Document Control Procedures and other internal rules.

④ Rules and Other Systems for Managing Risk of Loss
1) MGC shall establish Internal Control & Risk Management Rules in order to understand andappropriately manage business risks.
2) Internal Control & Risk Management Committee shall identify the status of risk management andprovide supervision and instructions on prioritizing risks and devising reduction measures.
3) Being a chemical manufacturer, MGC shall engage in responsible care (RC) activities as avoluntary undertaking to ensure environmental protection and safety through the life cycle ofchemicals from production to disposal.
⑤ System for Ensuring Appropriate Execution of Business by MGC Group
While valuing the autonomous management of all Group companies and clarifying themanagerial accountability of its Board of Directors, MGC has established the following systems
that include the maintenance of various regulations to ensure the appropriate execution ofbusiness within the MGC Group.
Also regarding the appropriate execution of business within the MGC Group, companies within
the Group are controlled through methods including the assignment of officers and the exercise
of voting rights as required of the nature of the business, degree of importance, etc.
・ In addition to establishing departments responsible for items relating to Group management40

(Translation)

as well as divisions that supervise individual Group companies, regulations such as Rules on
Subsidiaries and Affiliates are maintained and a reporting system is created in order toreceive regular and emergency reports from each of the Group companies.
・ Regarding Internal Audit Rules, Group companies are also subject to internal audits. Also,
regarding Basic Internal Control & Risk Management Rules, risk management conducted byGroup companies are also subject to these rules, and instruction and education is carried out
so that Group companies will maintain and improve appropriate risk management systems.
・ MGC establishes MGC Corporate Behavior Guidelines and MGC Group Code of Conduct asbasic policies for the entire Group and seeks from each Group company the maintenance ofcompliance structures that meet them. Also, MGC's Compliance Consultation Desk is alsoavailable to the officers and employees of each Group companies, as well as their families,
contractors, business partners, etc.
・ Through medium-term management plan, annual budget, etc. of Group companies, MGC
clarifies each company's performance goals and conducts performance management based onthese goals. Regarding important business activities performed by Group companies, MGC's
supervisory division ensures appropriate decision-making through management discussions,etc.
⑥ Systems for Ensuring Effective Auditing of Audit & Supervisory Board Members
1) Matters Related to Employees Assisting with Audit & Supervisory Board Members’ Duties
Employees shall be assigned to assist Audit & Supervisory Board Members with their duties
pursuant to consultations with Audit & Supervisory Board Members.
2) Matters Related to Independence from Directors of Employees Assisting with Audit &Supervisory Board Members’ Duties
Employees assigned to assist with the duties of Audit & Supervisory Board Members shallengage full time in said assignment and shall not be subject to orders and instructions from
Directors. The prior consent of the Audit & Supervisory Board is required for their transfer,appraisal, and disciplinary punishment.
3) Matters related to the ensuring of the effectiveness of orders given to employees who assist Audit& Supervisory Board Members in their duties
It is made clear that employees who assist Audit & Supervisory Board Members in their duties
are to obey instructions given to them by Audit & Supervisory Board Members, and employees
who possess the aptitude for such duties are nominated.
4) Matters Related to Reports from Directors and Employees to Audit & Supervisory Board
Membersi) In the event Directors or employees find violations of laws and regulations or facts and thelike that may cause significant damage to MGC, they must report said violations, facts, andthe like to the Audit & Supervisory Board Members in accordance with laws, regulations,
Compliance Rules, and other internal rules.
ii) Directors and employees must report regularly, and promptly in the case of important matters,on the execution status of business operations including internal control of MGC andsupervised Group companies, risk management and implementation of compliance to the
Audit & Supervisory Board Members, as well as promptly conduct investigations and provide
reports in the event Audit & Supervisory Board Members request investigations and reports41

(Translation)

concerning these status.
iii) Directors, Audit & Supervisory Board Members, and employees of Group companies will,based on laws and regulations, quickly conduct surveys and deliver reports in the case that areport is demanded from Audit & Supervisory Board Members.
iv) The Compliance Committee must promptly report to Audit & Supervisory Board Members thecontent of consultations and reports involving MGC or Group companies received throughCompliance Consultation Desk.
5) Matters related to the treatment of individuals who make reports, etc. to Audit & Supervisory
Board Members
Individuals responsible for aforementioned reports and surveys as well as those who work
together with them, etc. shall not be subject to work reassignment, discrimination, or otherunfavorable treatment as a result of that action, and knowledge of this prohibition will be madewell-known.
6) Matters related costs, etc., resulting from the execution of Audit & Supervisory Board Members'
dutiesi) In order to defray costs that occur as the result of the execution of Audit & Supervisory Board
Members' duties, an appropriate budget shall be established each fiscal year based on
projected activities.
ii) If a request for prepayment or settling of accounts regarding costs necessary for the executionof Audit & Supervisory Board Members' duties is received, MGC shall promptly comply.
iii) Even in cases where costs incurred as the result of the execution of Audit & Supervisory
Board Members' duties exceed the amount budgeted for each fiscal year, Audit & Supervisory
Board Members and the related Directors shall meet and as a rule make considerations to
respond to the necessity of those costs.
7) Other Systems for Ensuring Effective Auditing of Audit & Supervisory Board Membersi) Representative Directors shall arrange for regular exchange of views with Audit &Supervisory Board Members. Further, the Internal Audit Division and the Independent
Auditor shall communicate and deliberate with Audit & Supervisory Board Members toensure the effectiveness of Audit & Supervisory Board Members’ operations.
ii) Audit & Supervisory Board Members may attend Board of Directors Meetings and otherimportant meetings in order to understand the decision making status regarding importantmatters and the execution status of business operations, in addition to reviewing important
documents and requesting explanations of Directors and employees on the execution ofbusiness operations.
iii) In the case that the Audit & Supervisory Board requests the use of independent external
specialists, MGC shall bear those costs, excepting cases where their use is deemed notnecessary to the execution of Audit & Supervisory Board Members' duties.

(2) Summary of Operational Status of Systems to Ensure Appropriate Business Operations① Systems for Ensuring Duties of Directors and Employees Are Executed in Compliance with
Laws, Regulations, and Articles of Incorporation
1) MGC seeks to conduct CSR activities and achieve thorough compliance, by emphasizing
publication of the MGC Corporate Behavior Guidelines Directives for Corporate Actions etc. bydelivering it through the President’s message. Furthermore, the Compliance Committee met two
times during the fiscal year under review, deliberated specific items, and undertook measures to42

(Translation)enhance the compliance system. The Compliance Consultation Desk, in addition to the internal
desk, has had an external desk established as well, in order to lower the hurdle in making reports.
2) MGC revised the MGC Corporate Behavior Guidelines in February 2020 and the MGC Group
Code of Conduct in March 2020 and the MGC Compliance Handbook on April 1, 2020 based onchanges in social demand since the last revision.
3) The Internal Control Promotion Committee met three times during the fiscal year under review,and deliberated the readiness and operational status of internal controls. Furthermore, after being
approved by the Board of Directors, information concerning basic policies and plans relating tointernal controls deliberated by the Committee is spread to MGC officers, employees, and allGroup Companies.
4) Internal audits are performed based on audit plan, and measures are undertaken to maintain theproper performance of duties. Items designated by internal audits are responded to within
timeframes established by the audited division.
5）To eliminate anti-social forces, in addition to the creation of a response manual and spreading
information internally, when entering into contracts with outside parties, MGC seeks a pledge
that the party is not an anti-social force, and contracts can be nullified, etc. if it is later
determined that the party is an anti-social force.
② Systems for Ensuring Efficient Execution of Duties by Directors.
1) MGC is working to reinforce the management execution system and strengthen its governanceThrough clearly defining the functions and responsibilities of management, by placing an
Executive Officer system that makes prompt decision-making possible, and allows the Board of
Directors to concentrate on making decisions on the most important business matters andconduct supervision over business execution.
Regarding matters that have material effect on MGC, decisions are made via considerations
through multifaceted deliberations at a Management Council that deliberates on management
policies and at an Operations Council that deliberates on specific execution plans, and the adviceof attorneys and other professionals is received as needed.
2) Based on the medium-term management plan and annual budget, performance is regularly
monitored.
3) Duties and authorities of Directors, officers and employees are reviewed on a yearly basis towork toward ensuring efficient and appropriate execution of duties.
③ System for Archiving and Managing Information on Execution of Duties by Directors
Information pertaining to the execution of duties by Directors is archived and managed inaccordance with the Document Control Procedures and other internal rules through the creation ofmanagement registers and their archival for an established length of time.
④ Rules and Other Systems for Managing Risk of Loss
1) Standards, By-Laws, and an Operational Manual, etc. have been established under the Risk
Management Rules as systems to manage risk during ordinary periods and emergencies.
Additionally, the Risk Management Committee met three times during the fiscal year underreview, providing supervision and instructions on the status of risk management.
In addition, to prepare for the spread of COVID-19, the Crisis Countermeasures Headquarters
was established early based on the risk management regulations, and we are taking measures toprevent infection, such as executing work from home.
2) In addition to voluntary responsible care (RC) activities, in accordance with policies establishedat environmental safety meetings attended by all Directors, MGC strives to protect theenvironment and maintain safety, and continuously repeats the PDCA cycle for the protection of
the environment and maintenance of safety, including confirming the progress of activities with43

(Translation)internal audits.
⑤ System for Ensuring Appropriate Execution of Business by MGC Group
1) Based on regulations such as Rules on Subsidiaries and Affiliates, Group companies aremanaged through supervisory divisions, and regular reports on management status, etc. arereceived from Group companies. Additionally, a reporting system has been created for times of
emergency. While a medium-term management plan and annual budget that include Group
companies are formulated and performance management is being conducted, MGC aims toensure appropriate decision-making through the assignment of officers, etc.
2) To ensure the appropriate execution of business within MGC Group companies and enhance risk
management, the Internal Audit Division systematically conducts internal audits at major Group
companies, and through a supervisory division the Risk Management Committee strives tomaintain and enhance each Group company’s risk management system. Additionally, MGC
states that the Compliance Consultation Desk is available for use by all individuals involved in
the Company Group's business activities.
⑥ Systems for Ensuring Effective Auditing of Audit & Supervisory Board Members
1) Aside from attending meetings of the Board of Directors, Executive Officers, and other important
committees, Audit & Supervisory Board Members exchange opinions with Representative
Directors and the Board of Directors, receives reports from each department, and periodicallyconducts onsite audits of key subsidiaries. Furthermore, Audit & Supervisory Board Members
strive to enhance the effectiveness of audits, including by exchanging opinions with the head of
the Internal Control Promotion Division and Independent Auditor.
2) Through various committees related to internal control, risk management and compliance, reports
are provided to Audit & Supervisory Board Members, on the status of business execution, etc.
Also, consultations and reports discussed with Compliance Consultation Desk are quickly
reported, and it has come to be well understood that unfavorable treatment of individuals whomake reports is prohibited.
3) Staff dedicated to audit functions based on instructions from Audit & Supervisory Board
Members are placed, and all costs required for business activity audits are defrayed.

6. Policy on Appropriation of Retained Earnings, etc.
The MGC Group places the improvement of corporate value as a challenge on the management of
the greatest importance. Based on the view that the improvement of corporate value will lead to thebenefits of all stakeholders including shareholders, the MGC Group takes into consideration
investment and lending plans, financial health, and future business trends in order to realize futurebusiness growth, and works to achieve a balanced allotment of retained earnings and returns toshareholders. Retained earnings are allotted to be used as investment and lending funds for businessexpansion and growth and to strengthen the corporate structure. Regarding dividends, the decision tocontinue steady dividends is made taking into account trends in business results, while working to
improve capital efficiency and enhance returns to shareholders through implementing flexible
purchase of treasury shares in consideration of the levels of retained earnings and shareholder return.
The year-end dividend payout for FY2019 was ¥35. Since the interim dividend payout was ¥35, theannual dividend for FY2019 is ¥70 per share, same amount as FY2018, which resulted in 69.7% ofdividend payout ratio on a consolidated basis.
Regarding dividends for the next fiscal year, the interim dividend is planned to be ¥35 per share,
while the year-end dividend is planned to be ¥35 per share.

44

(Translation)
Consolidated Balance Sheet(As of March 31, 2020)
Account item
(Assets)
Total current assets
Cash and deposits
Notes and accounts receivable-trade
Securities
Merchandise and finished goods
Work in process
Raw materials and supplies
Other

Amount358,669
78,227141,279
3,514
62,35913,15439,282
21,957

Account item
(Liabilities)
Total current liabilities
Notes and accounts payable-trade
Short-term borrowings
Current portion of bonds payable
Accrued expenses
Lease obligations
Income taxes payable
Provision for bonuses(Millions of yen)Amount163,574
70,77633,98010,00018,008
429
5,539
5,616

△1,124

Provision for bonuses for directors(and other officers)

44

413,063

Provision for environmental measures

76

Property, plant and equipment

239,838

Provision for loss on business of
subsidiaries and associates

200

Buildings and structures, net

84,339Machinery, equipment and vehicles, net

81,079Allowance for doubtful accounts
Total non-current assets

Land
Lease assets, net
Construction in progress
Other
Total Intangible assets
Goodwill
Lease assets
SoftwareOther

41,1091,825
23,113
8,371
10,597
5,293

Provision for loss compensation
Provision for loss on businesswithdrawal
Asset retirement obligations
Other
Total non-current liabilities
Long-term borrowings
Lease obligations
Deferred tax liabilities
Provision for retirement benefits
directors (and other officers)

0
2,251
3,052

Total investments and other assets

162,628

Investments securities
Long-term loans receivable
Deferred tax assets
Retirement benefit asset
Other
Allowance for doubtful accounts

149,158
3,153
3,482
974
6,500
△640

Provision for environment measures

237
1,329

Provision for business restructuring
Provision for loss on liquidation ofsubsidiaries and associates
Other provision
Retirement benefit liability
Asset retirement obligations
Other
Total liabilities(Net assets)
Total shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total accumulated othercomprehensive income
Valuation difference on
available-for-sale securities
Deferred gains or losses on hedges

Non-controlling interests
Total net assets
Total liabilities and net assets

45

018,83760,016
29,043
1,260
9,200
433

Remeasurements of defined benefit plans

771,733

6forForeign currency translation adjustments

Total assets

60

1,170
356
9,333
3,560
4,091
223,591
494,306
41,97034,234
439,701△21,600△1,7857,789
4△6,701△2,87755,619548,141
771,733

(Translation)

Consolidated Statement of Income(From April 1, 2019 to March 31, 2020)
Account item

(Millions of yen)Amount613,344481,950

Net sales
Cost of sales

131,394
97,133Gross profit
Selling, general and administrative expenses
Operating income

34,260Non-operating income
Interest and dividend income
Other

2,791
2,941

5,733

968
1,282
6,626

8,877

Non-operating expenses
Interest expenses
Share of loss of entities accounted for using equity method
Other
Ordinary income

31,116Extraordinary income

6,794
2,676
1,024
1,016
859
564
492

Subsidy income
Gain on sales of investment securities
Reversal of provision for loss on guarantees
Gain on step acquisitions
Gain on sales of non-current assets
Insurance claim income
Gain on bargain purchase

13,428Extraordinary loss
Loss on tax purpose reduction entry of non-current assets
Provision for loss on liquidation of subsidiaries and associates

5,652
1,098
939
565

Loss on valuation of investment securities
Loss on disposal of non-current assets
Impairment loss
Provision for business restructuring
Loss on valuation of interest rate swaps
Loss compensation
Provision for loss on business of subsidiaries and associates
Loss on step acquisitions

381
350
228
217
200
197
193
177

Accident loss
Provision for environmental measures
Profit before income taxes

10,202
34,343

8,373
1,482

Income taxes-current
Income taxes-deferred

9,855

Net income

24,487

Profit attributable to non-controlling interests

3,329

Profit attributable to owners of parent

21,15846

(Translation)
Non-consolidated Balance Sheet(As of March 31, 2020)
Account item
(Assets)
Total current assets
Cash and deposits
Notes receivable-trade
Accounts receivable-trade
Securities
Merchandise and finished goods
Work in process
Raw materials and supplies
Prepaid expenses
Short-term loans receivable
Accounts receivable-other
Other
Allowance for doubtful accounts

AmountTotal noncurrent assets

214,960

Total property, plant and equipment

Buildings, net
Structures, net
Machinery and equipment, net
Vehicles, net
Tools and appliances, net

99,74422,88012,68635,362
70
4,486

Land

18,357

Provision for retirement benefits for
directors (and other officers)

Lease assets, net
Construction in progress
Total intangible assets
Goodwill
Patent right
Software
Other
Total investments and other assets
Investments securities
Stocks and investments in capitalof subsidiaries and affiliates
Long-term loans receivable
Long-term prepaid expenses
Other
Allowance for doubtful accounts

281
5,618
1,147
17
2
1,102
24
114,068
31,171

Provision for environment measures
Provision for business restructuring
Asset retirement obligations
Deferred tax liabilities
Other
Total liabilities(Net assets)
Total shareholders’ equity
Share capital

210,752
30,814226
87,3953,000
32,197
9,272
21,246
1,266
13,002
9,632
3,271
△573

Account item
(Liabilities)
Total current liabilities(Millions of yen)AmountElectronically recorded obligations-operating

Accounts payable-trade
Short-term borrowings
Current portion of bonds payable
Lease obligations
Accrued payable-other
Income taxes payable
Accrued expenses
Deposits received
Provision for bonuses
Provision for environmental measures
Provision for loss on business withdrawal

Provision for loss on business of
subsidiaries and associates
Provision for loss compensation
Other
Total non-current liabilities
Long-term borrowings
Lease obligations
Provision for retirement benefits

120
60
2,668
22,54010,009
199
3,093
108
237
1,329
2,071
4,024
1,465
134,757
284,513
41,97076,145

Total capital surpluses

35,668

5,977
1,314
1,443
△1,982

Capital surplus
Total earned surpluses
Legal retained earnings
Other retained earnings
Reserve for mine prospecting

35,668228,474
6,999
221,475
1,734

Reserve for tax purpose reduction entry
of non-current assets

General reserve
Retained earnings brought forward
Treasury shares
Total valuation and translation adjustments

Total assets

112,217273
43,412
25,561
10,000
84
9,152
2,394
15,063
322
3,020
76
6

425,713

Valuation difference on
available-for-sale securities
Total net assets
Total liabilities and net assets

47

2,937
76,500140,303△21,600
6,442
6,442
290,955
425,713(Translation)

Non-consolidated Statement of Income(From April 1, 2019 to March 31, 2020)(Millions of yen)AmountAccount item
Net sales

351,348

Cost of Sales

290,817Gross profit

60,531

Selling, general and administrative expenses

43,262

Operating profit

17,268Non-operating income
Interest and dividend income

15,987

Other

2,817

18,805Non-operating expenses
Interest expenses

314

Other

5,693

Ordinary income

6,008
30,068Extraordinary income
Subsidy income

5,725

Gain on sales of investment securities

2,676

Reversal of provision for loss on guarantees

1,024

Gain on sales of non-current assets

859

Insurance claim income

564

Reversal of allowance for doubtful accounts

302

11,153Extraordinary loss
Loss on tax purpose reduction entry of non-current assets

4,735

Loss on valuation of investment securities

664

Loss on disposal of non-current assets

565

Provision for business restructuring

350

Loss on valuation of shares of subsidiaries and associates

274

Loss compensation

217

Accident loss

193

Provision for environmental measures

177

Provision for loss on business of subsidiaries and associates

120

Income before income taxes

7,298
33,920

Income taxes-current

4,309

Income taxes-deferred278

Net income

4,587
29,33248

Independent Auditors’ Audit Report on Consolidated Financial Statements (Certified Copy)
INDEPENDENT AUDITORS’ REPORTMay 22, 2020
To: The Board of Directors
Mitsubishi Gas Chemical Company, Inc.
Crowe Toyo & Co.
Tokyo Office
Wataru Kobayashi, CPA
Designated Partner,
Engagement Partner
Hiroaki Izawa, CPA
Designated Partner,
Engagement Partner
Takayuki Kawakubo, CPA
Designated Partner,
Engagement Partner
OpinionWe have audited the consolidated financial statements of namely, the consolidated balance sheet, theconsolidated statement of income, the consolidated statement of changes in net assets and the notes to consolidated
financial statements of Mitsubishi Gas Chemical Co., Inc. (the Company) from April 1, 2019 to March 31, 2020, in
accordance with paragraph 4, Article 444 of the Companies Act.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, thefinancial position of the Company and consolidated subsidiaries and the results of its operations for the period
covered thereby in conformity with accounting principles generally accepted in Japan.
Basis for the Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibility
under the auditing standards is stated in “Auditor’s Responsibility for the Audit of the Consolidated Financial
Statements.” We are independent of the Company and its consolidated subsidiaries in accordance with the provisions
related to professional ethics in Japan, and are fulfilling other ethical responsibilities as an auditor. We believe that theaudit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management, Audit & Supervisory Board Members and the Audit & Supervisory Board for theConsolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements inaccordance with accounting principles generally accepted in Japan, and for designing and operating such internal
control as management determines is necessary to enable the preparation and fair presentation of the consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing whether it isappropriate to prepare the consolidated financial statements in accordance with the premise of a going concern, andfor disclosing matters relating to going concern when it is required to do so in accordance with accounting principles
generally accepted in Japan.
Audit & Supervisory Board Members and the Audit & Supervisory Board are responsible for monitoring theexecution of Directors’ duties related to designing and operating the financial reporting process.
Auditor’s Responsibility for the Audit of the Consolidated Financial Statements
Our responsibility is to obtain reasonable assurance about whether the consolidated financial statements as awhole are free from material misstatement, whether due to fraud or error, and to express an opinion on the
consolidated financial statements from an independent standpoint in an audit report, based on our audit.
Misstatements can occur as a result of fraud or error, and are deemed material if they can be reasonably expected to,either individually or collectively, influence the decisions of users taken on the basis of the consolidated financial
statements.
We make professional judgment in the audit process in accordance with auditing standards generally acceptedin Japan, and perform the following while maintaining professional skepticism.
・ Identify and assess the risks of material misstatement, whether due to fraud or error. Design andimplement audit procedures to address the risks of material misstatement. The audit procedures shall be selected andapplied as determined by the auditor. In addition, sufficient and appropriate audit evidence shall be obtained toprovide a basis for the audit opinion.
・ In making those risk assessments, the auditor considers internal control relevant to the entity’s audit inorder to design audit procedures that are appropriate in the circumstances, although the purpose of the audit of theconsolidated financial statements is not to express an opinion on the effectiveness of the entity’s internal control.
・ Assess the appropriateness of accounting policies adopted by management and the method of theirapplication, as well as the reasonableness of accounting estimates made by management and the adequacy of related
notes.
・ Determine whether it is appropriate for management to prepare the consolidated financial statements on

49

(Translation)
the premise of a going concern and, based on the audit evidence obtained, determine whether there is a significant
uncertainty in regard to events or conditions that may cast significant doubt on the entity’s ability to continue as agoing concern. If there is a significant uncertainty concerning the premise of a going concern, the auditor is required
to call attention to the notes to the consolidated financial statements in the audit report, or if the notes to theconsolidated financial statements pertaining to the significant uncertainty are inappropriate, issue a modified opinion
on the consolidated financial statements. While the conclusions of the auditor are based on the audit evidence
obtained up to the date of the audit report, depending on future events or conditions, an entity may be unable tocontinue as a going concern.
・ Besides assessing whether the presentation of and notes to the consolidated financial statements are inaccordance with accounting principles generally accepted in Japan, assess the presentation, structure, and content of
the consolidated financial statements including related notes, and whether the consolidated financial statements fairly
present the transactions and accounting events on which they are based.
・ Obtain sufficient and appropriate audit evidence regarding the financial information of the Company andits consolidated subsidiaries in order to express an opinion on the consolidated financial statements. The auditor is
responsible for instructing, supervising, and implementing the audit of the consolidated financial statements, and issolely responsible for the audit opinion.
The auditor reports to Audit & Supervisory Board Members and the Audit & Supervisory Board regarding thescope and timing of implementation of the planned audit, material audit findings including material weaknesses ininternal control identified in the course of the audit, and other matters required under the auditing standards.
The auditor reports to Audit & Supervisory Board Members and the Audit & Supervisory Board regarding theobservance of provisions related to professional ethics in Japan as well as matters that are reasonably considered tohave an impact on the auditor’s independence and any safeguards that are in place to reduce or eliminate obstacles.
Conflicts of Interest
We have no interest in the Company which should be disclosed in compliance with the Certified Public
Accountants Act.

50

(Translation)
Independent Auditors’ Audit Report (Certified Copy)
INDEPENDENT AUDITORS’ REPORTMay 22, 2020
To: The Board of Directors
Mitsubishi Gas Chemical Company, Inc.
Crowe Toyo & Co.
Tokyo Office
Wataru Kobayashi, CPA
Designated Partner,
Engagement Partner
Hiroaki Izawa, CPA
Designated Partner,
Engagement Partner
Takayuki Kawakubo, CPA
Designated Partner,
Engagement Partner
OpinionWe have audited the financial statements of namely, the balance sheet, the statement of income, the statement ofchanges in net assets, the notes to financial statements and the supporting schedules of Mitsubishi Gas Chemical Co., Inc.
(the Company) for the 93rd business year from April 1, 2019 to March 31, 2020, in accordance with item 1, paragraph 2,
Article 436 of the Companies Act.
In our opinion, the financial statements and the accompanying supplementary schedules referred to above present
fairly, in all material respects, the financial position of the and the results of its operations for the year then ended inconformity with accounting principles generally accepted in Japan.
Basis for the Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibility under
the auditing standards is stated in “Auditor’s Responsibility for the Audit of the Financial Statements.” We are independentof the Company in accordance with the provisions related to professional ethics in Japan, and are fulfilling other ethicalresponsibilities as an auditor. We believe that we have obtained sufficient and appropriate audit evidence to provide abasis for our audit opinion.
Responsibilities of Management, Audit & Supervisory Board Members and the Audit & Supervisory Board for the
Financial Statements and the Accompanying Supplementary Schedules
Management is responsible for the preparation and fair presentation of the financial statements and theaccompanying supplementary schedules in accordance with accounting principles generally accepted in Japan, and fordesigning and operating such internal control as management determines is necessary to enable the preparation and fairpresentation of the financial statements and the accompanying supplementary schedules that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements and the accompanying supplementary schedules, management is responsible
for assessing whether it is appropriate to prepare the financial statements and the accompanying supplementary schedulesin accordance with the premise of a going concern, and for disclosing matters relating to going concern when it is required
to do so in accordance with accounting principles generally accepted in Japan.
Audit & Supervisory Board Members and the Audit & Supervisory Board are responsible for monitoring theexecution of Directors’ duties related to designing and operating the financial reporting process.
Auditor’s Responsibility for the Audit of the Financial Statements and the Accompanying Supplementary Schedules
Our responsibility is to obtain reasonable assurance about whether the financial statements and the accompanying
supplementary schedules as a whole are free from material misstatement, whether due to fraud or error, and to express an
opinion on the financial statements and the accompanying supplementary schedules from an independent standpoint in anaudit report, based on our audit. Misstatements can occur as a result of fraud or error, and are deemed material if they canbe reasonably expected to, either individually or collectively, influence the decisions of users taken on the basis of thefinancial statements and the accompanying supplementary schedules.
We make professional judgment in the audit process in accordance with auditing standards generally accepted inJapan, and perform the following while maintaining professional skepticism.
・ Identify and assess the risks of material misstatement, whether due to fraud or error. Design and implement
audit procedures to address the risks of material misstatement. The audit procedures shall be selected and applied asdetermined by the auditor. In addition, sufficient and appropriate audit evidence shall be obtained to provide a basis for theaudit opinion.
・ In making those risk assessments, the auditor considers internal control relevant to the entity’s audit in order todesign audit procedures that are appropriate in the circumstances, although the purpose of the audit of the financial
statements and the accompanying supplementary schedules is not to express an opinion on the effectiveness of the entity’s
internal control.
・ Assess the appropriateness of accounting policies adopted by management and the method of their application,
as well as the reasonableness of accounting estimates made by management and the adequacy of related notes.

51

(Translation)
・ Determine whether it is appropriate for management to prepare the financial statements and the accompanying
supplementary schedules on the premise of a going concern and, based on the audit evidence obtained, determine whether
there is a significant uncertainty in regard to events or conditions that may cast significant doubt on the entity’s ability tocontinue as a going concern. If there is a significant uncertainty concerning the premise of a going concern, the auditor isrequired to call attention to the notes to the financial statements and the accompanying supplementary schedules in theaudit report, or if the notes to the financial statements and the accompanying supplementary schedules pertaining to thesignificant uncertainty are inappropriate, issue a modified opinion on the financial statements and the accompanying
supplementary schedules. While the conclusions of the auditor are based on the audit evidence obtained up to the date of
the audit report, depending on future events or conditions, an entity may be unable to continue as a going concern.
・ Besides assessing whether the presentation of and notes to the financial statements and the accompanying
supplementary schedules are in accordance with accounting principles generally accepted in Japan, assess thepresentation, structure, and content of the financial statements and the accompanying supplementary schedules including
related notes, and whether the financial statements and the accompanying supplementary schedules fairly present thetransactions and accounting events on which they are based.
The auditor reports to Audit & Supervisory Board Members and the Audit & Supervisory Board regarding the scope
and timing of implementation of the planned audit, material audit findings including material weaknesses in internal
control identified in the course of the audit, and other matters required under the auditing standards.
The auditor reports to Audit & Supervisory Board Members and the Audit & Supervisory Board regarding theobservance of provisions related to professional ethics in Japan as well as matters that are reasonably considered to havean impact on the auditor’s independence and any safeguards that are in place to reduce or eliminate obstacles.
Conflicts of Interest
We have no interest in the Company which should be disclosed in compliance with the Certified Public Accountants Act

52

(Translation)

Audit & Supervisory Board's Audit Report (Certified Copy)
AUDIT REPORT
We, the Audit & Supervisory Board, deliberated and prepared this audit report as follows on theexecution of duties by MGC Directors during the 93rd business term from April 1, 2019 to March 31,
2020, based on the audit report prepared by each Audit & Supervisory Board Member:
1. Method and Description of Audit by Audit & Supervisory Board Members and Audit by Audit &Supervisory Board(1) We determined the audit policy, audit duty assignments and the like, received reports from each
Audit & Supervisory Board Member on individual audit status and results, received reports fromthe Directors and Independent Auditor on the status of the execution of their duties, andrequested explanation as necessary.
(2) Each Audit & Supervisory Board Member conducted the audit by following method as well as
we made efforts to collect information and enhance the auditing environment by communicatingwith the Directors, Internal Audit Division, other employees, and others in accordance with the
Audit & Supervisory Board Members’ Audit Standards, audit policy, audit duties, and the like asdetermined by the Audit & Supervisory Board.
i) We attended the Board of Directors’ Meetings and other important meetings, received reports
from Directors, employees and others on the status of execution of their duties, requested
explanation as necessary, examined important decision-rendering documents and otherdocuments, and investigated the state of activities and assets at the head office and principal
business offices. With respect to subsidiaries, we communicated and exchanged information
with the division controlling each subsidiary in MGC, the directors and Audit & Supervisory
Board Members of subsidiaries, requested business reports therefrom as necessary, andvisited major subsidiaries to investigate the state of activities and assets.
ii) With respect to the contents of resolutions of the Board of Directors regarding thedevelopment of systems necessary to ensure that the execution of duties by directors complies
with laws and regulations and the articles of incorporation, and other systems prescribed by
Article 100, paragraph 1 and 3 of Ordinance for Enforcement of the Companies Act assystems necessary to ensure the properness of operations of group of enterprises consisting ofstock company and its subsidiaries, and the systems developed based on such resolutions(internal control systems), as stated in the business report, we periodically received reports
from the Directors, employees and others, requested explanations as necessary and madeopinions, regarding establishment and management of such systems.
iii) We monitored and verified that the Independent Auditor maintained its independence andperformed its auditing duties adequately, as well as received reports from the Independent
Auditor on the performance status of its duties and requested explanations as necessary. We
received a notice from the Independent Auditors to the effect that structures for ensuring that
duties are appropriately performed (matters stipulated in the items under Article 131 of theRegulations on Corporate Accounting) were being improved pursuant to Quality Management
Standards for Auditing (October 28, 2005; Business Accounting Council) and requested
explanations as necessary.
The business report and its supplementary schedules for this business term, the non-consolidated
financial statements (non-consolidated balance sheet, non-consolidated statement of income,non-consolidated statement on changes in net assets and notes to non-consolidated financial statements),
their supplementary schedules, and consolidated financial statements (consolidated balance sheet,consolidated statement of income, consolidated statement on changes in net assets and notes to theconsolidated financial statements) for this business term were examined based on the foregoing method.
2. Results of Audit(1) Audit Result of Business Report, etc.
i) The business report and its supporting schedules are recognized as correctly presenting thestate of MGC in accordance with the laws, regulations and the Articles of Incorporation.
ii) No dishonest acts or material violations of laws, regulations or the Articles of Incorporation
were recognized in connection with the performance by Directors of their duties.
iii) We acknowledge that the Board of Directors’ resolutions with respect to the internal control

53

(Translation)systems are appropriate. We also acknowledge that in terms of the development andmaintenance of said systems, continuous improvements are being made and therefore, did not
find any matter to be mentioned regarding such internal control systems.
(2) Audit Result of Non-Consolidated Financial Statements and Their Supplementary Schedule
We are of the opinion that the method and results of the audit performed by the Independent
Auditor, Crowe Toyo & Co., are appropriate.
(3) Audit Result of Consolidated Financial Statements
We are of the opinion that the method and results of the audit performed by the Independent
Auditor, Crowe Toyo & Co., are appropriate.
May 25, 2020
Mitsubishi Gas Chemical Company, Inc. Audit & Supervisory Board
Audit & Supervisory Board Member(full-time)(Outside Audit & Supervisory Board Member)
Takashi Kimura
Audit & Supervisory Board Member(full-time)
Katsuhiko Sugita
Audit & Supervisory Board Member(full-time)
Kunio Kawa
Outside Audit & Supervisory Board Member
Yasuomi Matsuyama- END -

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