The Nikkiso Group’s Corporate Governance Basic Policy

Chapter 1

General Provisions

Chapter 2

Securing the Rights and Equal Treatment of Shareholders

Chapter 3

Appropriate Cooperation with Stakeholders Other Than Shareholders

Chapter 4

Ensuring Appropriate Information Disclosure and Transparency

Chapter 5

Responsibilities of the Board

Section 1 Responsibilities of the Board as a Supervising Body
Section 2 Effectiveness of the Board of Directors
Section 3 Remuneration System
Chapter 6

Dialogue with Shareholders

Supplementary Provision
Chapter 1 General Provisions
Article 1
1.

(Business Principle/Business Strategies and Basic Views on Corporate Governance)

While holding sound social ethics and values as a member of society, the Company Group shallcomply with laws and regulations, the Company's Articles of Incorporation and social norms;
build up good relationships with stakeholders of the Company Group (hereinafter referred to as“stakeholders”), including shareholders, customers, employees and their families, business
partners, and creditors; and strive to achieve the Company Group’s sustainable growth andincreased corporate value over the mid- to long-term, setting it as its business principle to makea creative contribution to diversified industries handling fluids including crude oil and natural
gas production sectors, and the fundamental fields of life, such as aerospace and dialysis
treatment business areas, through providing unique technologies to realize a better quality of life.
Under this business principle, the Company Group maintains a basic policy of contributing tosociety through leveraging unique technology in each sector to provide products and services
with notable features that meet market needs.

2.

The Company Group shall ensure transparency and fairness in decision-making as a Company
with its Audit & Supervisory Board and simultaneously consider it the essence of corporate
governance to be striven for in order to realize the business principle set forth in the preceding
paragraph by prompt and decisive decision-making. The Company Group shall also work on
building up the best corporate governance that fits in with the Company Group’s stage ofdevelopment in line with the following basic views:(i)Respecting the rights of and securing equal treatment of shareholders;
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(ii) Respecting interests of stakeholders and appropriate cooperation with such stakeholders;(iii) Ensuring appropriate information disclosure and transparency of the Company Group;(iv) In order to promote the effectiveness of separation between oversight and business executionof the management, ensuring effective supervision/audit frameworks of management
through tie-ups with independent outside directors, Audit & Supervisory Board Members,internal Audit & Supervisory Board Members and outside accounting auditors, andestablishing an environment that supports enhancement of business profitability by businessexecution departments led by the President; and(v) Implementing constructive dialogue with shareholders who have investment policies that
accord with mid- to long-term shareholder interests
Article 2
1.

(Positioning of the Basic Policy)

This basic policy, aiming to contribute to the Company Group’s sustainable growth and increased
corporate value over the medium to long term, sets forth the basic concept in conducting its
corporate governance and shall be the primary rules concerning its corporate governance next to
the Companies Act, relevant laws and regulations, and the Company’s Articles of Incorporation.

2.

The enactment, abolition and amendments of the Basic Policy shall be subject to the approval of
the Board of Directors.
Chapter 2

Article 3
1.

Securing the Rights and Equal Treatment of Shareholders(Appropriate Cooperation with Shareholders)With the basic recognition that securing rights and equal treatment of shareholders is an importantfirst step in building up appropriate corporate governance, the Company Group shall strive tocarry out various measures to secure rights and equal treatment of shareholders toward therealization of sustainable growth.

2.

The Board shall analyze the reason for the objection and the cause for a sizable number ofobjections to the Company’s proposal(s) at general shareholder meetings and examine whether
or not it is necessary to have dialogue with shareholders or conduct other activities.

Article 4 (General Shareholder Meetings)
1.

The Company shall strive to send convening notices for ordinary general shareholder meetings
early enough to give its shareholders sufficient time to consider the agenda. Before sending such
notices, it shall disclose information included in the convening notice on the Company’s website.

2.

The Company shall strive to put in place an environment (including appropriate determination ofgeneral shareholder meeting-related schedules) where all shareholders including those not
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attending the general shareholder meeting can exercise their voting rights, allowing the use of theElectronic Voting Platform or exercise of voting right by electronic means.
Article 5 (Capital Policy)
The Company shall make it its basic capital policy to realize the sustainable growth and increased
corporate value over the mid- to long-term of the Company Group while pursuing optimal balanceamong financial soundness, capital efficiency and return to shareholders. With the basic recognition
that returning continuous and stable profits to shareholders supporting the Company Group is a key
pillar of the Company’s capital policy, the Company Group shall formulate medium-term businessplan upon accurately identifying the capital cost and facilitate the growth of existing businesses toachieve sustainable development from a longer-term standpoint. In addition, the Company Groupsimultaneously diverts its retained earnings appropriately to reinvestment toward developing new
businesses, and enhancing and promoting its productivity.
Article 6 (Policy on Cross-Shareholdings and Standards for Exercising Voting Right)
1.

The Company may, when deemed helpful to the Company Group’s sustainable growth andincreased corporate value over the mid- to long-term when considering building up stable andlong-term transactional relationships, business alliances, and the strengthening of ties withbusiness partners, hold shares of such business partners.

2.

Cross-shareholdings out of those held based on the preceding paragraph shall be examined on anannual basis with respect to holding effect in terms of the mid- to long-term economic rationale
and maintenance/strengthening of the relationship with such business partners, and whether therisks and benefits of holding the shares are commensurate with the capital cost. The outcome
thereof shall be reported to the Board of Directors.

3.

Concerning exercise of the Company’s voting right of cross-shareholdings, the Company shall
exercise its voting right to reinforce relationships with business partners except for cases where
shareholder value might be largely impaired or there are serious concerns for corporate
governance.

4.

In the event that a company holding the shares of the Company indicates its intention to sell thoseshares, the Company shall not engage in any activity that would impede said sale, including any
suggestion of a reduction in transactions.

5.

The Company shall not engage in any transactions with cross-shareholders that lack economic
rationale.

Article 71.

(Anti-Takeover Measures)

The Company shall, in the event that a large acquisition of the Company’s shares is made, strive
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to disclose necessary and sufficient information to shareholders and ensure time to make anappropriate judgment on the large-scale acquisition of the Company’s shares and will
simultaneously take appropriate measures to the extent allowed by laws and regulations and theCompany’s Articles of Incorporation.
2.

Measures set forth in the preceding paragraph shall not have any objective associated withentrenchment of the management or the Board of Directors. When taking such measures, theCompany will conduct a thorough study of their necessity and reasonableness, ensure appropriate
procedures and give sufficient explanation to shareholders.

Article 8(Related Party Transactions)

The Board of Directors shall, when the Company engages in transactions with related parties, such as
its officers or major shareholders, conduct appropriate monitoring including prior approval according
to the size of the amount, transaction form and qualitative importance so that such related party
transactions do not harm the interests of the Company or the common interests of its shareholders. The
scope, specific standards and approval procedures of the related party transactions shall be provided
for in the Authority Regulations and other internal regulations.
Chapter 3 Appropriate Cooperation with Stakeholders Other Than Shareholders
Article 9(Basic Approach to Sustainability)

We recognize that solving sustainability-related issues including social and environmental challenges
is important for the Company Group to achieve its sustainable growth and increased corporate value
over the medium to long term. Hence, the Company has prescribed the Nikkiso Group Global Codeof Conduct (hereinafter referred to as the “Code of Conduct”) and “Nikkiso Environmental
Declaration (Environmental Philosophy and Activity Guidelines for Contributing to a Circulation
Society)” as a basic attitude of the Company Group.
Through pursuing these basic attitudes, the Company strives to earn the trust of stakeholders, andfulfill social responsibility toward the realization of sustainable growth of the Company Group andsociety, while making efforts to improve mid- to long-term corporate value.
Article 10
1.

(Corporate Ethics & Code of Conduct)

To ensure officers and employees, etc. always behave in an ethical manner, the Board of Directorsof the Company adopts a resolution to set out a Code of Conduct, and make it known to all ofthem in the Corporate Group.

2.

The Code of Conduct provides basic matters concerning consideration for global environmental
issues, respect for human rights, consideration for the health and work environment and fair and4 / 15

adequate treatment of employees, fair and appropriate transactions, etc. with business partners,
etc., thereby building and developing a system to comply with these matters.
3.

The compliance of the Group’s officers and employees, etc. with the Code of Conduct shall be
reviewed periodically at the Board of Directors of the Company.

Article 11
1.

(Whistleblowing)

The Company Group shall, with the aim of conducting transparent and fair group management,
put in place both in Japan and abroad a framework for whistleblowing in which employees of theCompany Group detecting a fact(s) violating laws and/or regulations within the Company Group,
they can report it/them directly, anonymously or not, to specialists including outside attorneys
without suffering from disadvantageous treatment for that reason.

2.

The Board of Directors shall conduct a regular monitoring of the enforcement of the framework
for whistleblowing.

Article 12
1.

(Measures to Protect the Global Environment)

Placing Life and the Environment as a starting point, the Company promotes its corporate
activities with the aim of contributing to the world with its unique technologies. It aims to achieve
growth for the Company and society as a provider of technologies, products and services which
may help build a society to promote sustainable development in harmony with nature.

2.

The Company Group shall, under the following action guidelines, contribute to realizing asustainable environment by reducing pressure on the natural environment through continuous
technical innovations in each field of diversified industries handling fluids including crude oiland natural gas production sectors, and aerospace and dialysis treatment business areas, etc:(i)

Development of products taking environmental conservation into consideration by
conducting an environmental and safety evaluation at the development and designphases;(ii)

Minimization and appropriate treatment of waste and pollutants generated at the stagesof production, distribution, services and disposal; and saving resources and energy;(iii)

In addition to compliance with environment-related laws, regulations and agreements,
enhancement in the level of environment management by establishing voluntary
management targets; and(iv)

Establishing the importance of making efforts for environment conservation as acompany employee or a member of society by providing employees with a thoroughenvironmental education.

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Article 13(Ensuring Diversity)

We recognize that diverse perspectives and values reflecting various experiences, skills andcharacteristics are a strength supporting the achievement of corporate sustainable growth. Hence, theCompany Group shall strive to develop an environment where diverse human resources canappropriately play an active part, including by encouraging active participation of women, andpromoting employees to managerial positions and the like which will be the core human resources,
based on performance and ability, etc., regardless of their gender, nationality, and career, among others.
Article 14 (Fulfilling the function as an Asset Owner of a Corporate Pension Funds)
Based on the fact that management of corporate pension funds affect the stability of employee assets,
and also has an effect on the company’s financial condition, the Company shall set up the Corporate
Pension Funds Management Committee, comprising members including the General Managers of
Administration Division and Corporate Planning Division, formulate and review policy-based asset
composition ratio, and monitor operation status of corporate pension funds.
Chapter 4 Ensuring Appropriate Information Disclosure and Transparency
Article 15(Disclosure of the Company’s Policy on Risk Management, Internal Control System,

etc. )
1. The Board of Directors shall, based on the Companies Act and other applicable laws andregulations, decide the Company’s policies on the Company Group’s risk management, internal
control system, and compliance with laws and regulations, and disclose them in both Japaneseand English in a timely and appropriate manner.
2. The Board of Directors shall, pursuant to the Companies Act, the Financial Instruments andExchange Act, other applicable laws and regulations and applicable rules of financial instruments
exchanges, disclose matters concerning finance and business in a fair, detailed and plain mannerin both Japanese and English in a timely and appropriate manner.
3. Notwithstanding the preceding two paragraphs, the Company shall appropriately work on thedisclosure of the matters concerning finance and businesses that it deems are useful to deepen
understanding of stakeholders including shareholders who have mid- to long-term investment
policy with regard to the Company’s management and businesses.

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Chapter 5 Responsibilities of the Board
Section 1 Responsibilities of the Board as a Supervising Body
Article 16 (Roles and Responsibilities of the Board of Directors)
1.

The Board of Directors shall, given its fiduciary responsibility and accountability to shareholders,assume responsibility for sustainably growing the Company Group and maximizing the corporate
value over the mid- to long-term through efficient and effective corporate governance.

2.

The Board of Directors shall play the following roles in order to fulfill the responsibilities set
forth in the preceding paragraph:(i)

Set the broad direction of management, including business strategy;(ii)

Put in place a company structure that supports prompt and decisive business judgment;
and

(iii)

Ensure the fairness and transparency of management by demonstrating its supervisory
function over management as a whole.

3.

The Board of Directors shall, from the perspective of increased corporate value over the medium
and long term, formulate a basic policy regarding sustainability initiatives and supervise theimplementation status so that they contribute to sustainable growth of the Company.

4.

To ensure the Company Group’s business activities are conducted in an appropriate andcontrolled manner, the Board of Directors has adopted the Internal Control Basic Policy andutilizes the Internal Audit Department to supervise how the appropriateness of financial reportingis ensured and how the risk management system, etc. are developed and operated.

Article 17 (Delegation to the Management)
From the viewpoint of facilitating prompt and decisive decision-making by the group management, inorder to make separation between management oversight and business execution effective, theCompany Group shall delegate authority for execution of individual business to the group management
to the extent allowed by the applicable laws and regulations on the premise of establishing andenhancing the oversight structure of exercise of authority regarding the execution of individual
business.
Article 18(Roles and Responsibilities of Audit & Supervisory Board Members and Audit &Supervisory Board)
1.

Given the fiduciary responsibility to shareholders, Audit & Supervisory Board Members and the
Audit & Supervisory Board, who are independent from directors and the Board of Directors, shallrecognize that it is their main responsibility to conduct an audit of directors and the Board of
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Directors’ fulfilling their responsibilities in a lawful and appropriate manner.
2.

Audit & Supervisory Board Members and the Audit & Supervisory Board shall aim to fulfill the
responsibilities set forth in the preceding paragraph. To this end, they shall proactively utilize
functions allowed by laws and regulations, while closely cooperating with Outside Directors,
accounting auditors and the Internal Audit Department. They shall do this from the viewpoint of
the Company Group’s sustainable growth and increased corporate value over the medium to longterm. In addition, Audit & Supervisory Board Members and the Audit & Supervisory Board shallexpress their opinions at the Board of Directors Meeting or to the management without being
excessively restrained in performing their own functions to the management.

Article 19 (Roles and Responsibilities of Independent Outside Directors)
Independent outside directors shall, in light of business strategy and business plans decided by the
Board of Directors, verify and evaluate results of the Company Group’s management and businessexecution by the management from time to time from objective and expert standpoint independentlyof business execution, fulfill supervisory functions of management by reflecting the opinions ofstakeholders to the Board of Directors in an appropriate manner, and provide proper advice from theviewpoint of promoting the Company’s sustainable growth and increasing corporate value over themid- to long-term based on their own knowledge and experience.
Article 20(Outside Accounting Auditors)

The Board of Directors shall, in order to ensure high quality accounting audits conducted by outsideaccounting auditors, strive to ensure adequate time for audits and interviews by outside accounting
auditors with the Company’s management. In addition, in the case where outside accounting auditors
detect any misconduct and request the Company to make a proper response thereto, a director in chargeof finance shall report the matter immediately to the President and independent outside officers,
simultaneously verify the matter pointed out and disclose results of verification where appropriate ina timely and appropriate manner.
Section 2 Effectiveness of the Board of Directors
Article 21 (Composition of the Board of Directors)
1. Based on the Company’s Article of Incorporation, the number of the Board of Directors Members
shall be nine or less, of which two or more shall be independent outside directors.
2. The Board of Directors shall basically consist of people who share core values regarding theCompany Group’s business execution with the Company Group and can empathize with theCompany Group’s business principles due to their superior character, perception, capability and8 / 15

wealth of experience. In addition, the Board of Directors shall be composed while taking diversity
into consideration, regardless of gender, nationality and career, etc., to ensure the effectiveness of
its functions. The Board of Directors shall also disclose the skill matrix, a list of perceptions,capabilities and experience, etc. which are considered especially important by the Company’s
Board of Directors from the viewpoint of corporate management with consideration to
management environment and business characteristics, etc.
Article 22 (Chairperson of the Board of Directors)
1.

The chairperson of the Board of Directors shall strive to improve the quality of discussions at
Board of Directors Meetings and to run the Board of Director Meeting in an effective and efficientmanner.

2.

To fulfill the responsibilities set forth in the preceding paragraph, the chairperson of the Board of
Directors shall ensure that sufficient time is allowed for all agenda items (especially for strategic
agenda items) and that each director can receive appropriate information in a timely manner.

Article 23
1.

(Nomination & Compensation Committee)

The Nomination & Compensation Committee shall play the role of enhancing the transparency
and objectiveness of the nomination of Directors and Audit & Supervisory Board Members andremuneration, etc. of Directors, thereby strengthening the Board’s supervisory function.

2.

The Nomination & Compensation Committee shall, upon accepting a consultation from the Boardof Directors, discuss the following matters in accordance with the standard for nominating
Directors and Audit & Supervisory Board Members and a policy for remuneration of Directors,
etc., and report the results to the Board of Directors.
(i)

Matters related to appointment and dismissal of Directors(ii)

Matters related to appointment and dismissal of President and Directors with special
titles(iii)

Matters related to appointment and dismissal of Audit & Supervisory Board Members(iv)

Matters related to the policy for the nomination of Directors and Audit & Supervisory
Board Members(v)

Matters related to succession planning (including training)(vi)

Matters related to the Director remuneration policy(vii)

Matters related to the policy for the payment of Director remuneration, etc.

(viii)

Other important matters for the management where the Board of Directors deems it
necessary

3.

The Nomination & Compensation Committee shall consist of three or more Directors, etc.
appointed by a resolution of the Board of Directors, the majority of which shall be independent
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Outside Directors to ensure its objectiveness and independence.
4.

The Nomination & Compensation Committee shall set out rules, etc. required to execute its duties.

Article 24 (Qualification of Directors, etc. and Procedures for Nomination/Dismissal)
1.

For directors, people who can overview the business environment surrounding the Company
Group, work on important business issues in a prompt and decisive manner, have the capability
to get results as well as build up a corporate governance system that supports the realization of
the business principles by transparent, fair, prompt and decisive decision-making shall be
nominated.

2.

For outside directors, people who do not have any personal relationship, capital relationship,transactional relationship or any other interest other than the relationship as an outside officer
with the Company; play their full part to supervise decision-making and execution of duty bydirectors from an objective and expert standpoint independently of the Company’s businessexecution as those who have no conflicts of interest with general shareholders; and can be
expected to provide proper advice from the viewpoint of promoting the Company’s sustainablegrowth and increasing corporate value over the mid- to long-term based on their own knowledge
and experience shall be nominated.

3.

For executive officers, people who can understand the Company Group’s business strategy, havethe capability to develop it into activities as a strategy of each business and to put in place andcontrol organizations that will execute business strategies; and have the counting capability to
manage business execution in a quantitative way, as well as a high sense of responsibility towardachieving business goals shall be appointed.

4.

Regarding the nomination of candidates for Directors and the appointment of the President andDirectors, etc., a draft shall be consulted with and discussed at the Nomination & Compensation
Committee, and then submitted to the Board of Directors.

5.

The reason for nominating each candidate for directors shall be disclosed by stating it on a
convocation notice for a general shareholder meeting.

6.

In the event that any of the Company’s directors becomes unable to supervise and execute
Company’s management by deception or other wrongful acts, the Board of Directors discuss thepolicy of dismissal of him/her, and depending on the result of discussion, the director may besubject to dismissal by a resolution at the general shareholders meeting.

Article 25(Qualification of Audit & Supervisory Board Members and Procedures for

Nomination/Dismissal)
1.

For Audit & Supervisory Board Members, people who play roles of business and accounting
audits as well as those who are able to proactively exercise authority to express their opinions at
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the Board of Directors Meeting shall be nominated. At least one of the Audit & Supervisory Board
Members shall have appropriate knowledge and experience with regard to finance and accounting.
2.

For outside Audit & Supervisory Board Members, people who do not have any personal
relationship, capital relationship, transactional relationship or any other interest other than therelationship as an outside officer with the Company; play their full part to audit decision-making
and execution of duty by directors from an objective and expert standpoint independently of theCompany’s business execution as those who have no conflicts of interest with generalshareholders; and can be expected to identify risks associated with the business strategy andprovide advice based on their broad knowledge and experience shall be nominated.

3.

When nominating candidates for Audit & Supervisory Board Members, diversity shall be taken
into consideration from the viewpoint of ensuring effective audit of management.

4.

Regarding the nomination of candidates for Audit & Supervisory Board Members, a draft shallbe consulted with the Nomination & Compensation Committee and submitted to the Board of
Directors after the result of discussion and the appointment are approved at the Audit &Supervisory Board.

5.

The reason for nominating each candidate for Audit & Supervisory Board Members shall be
disclosed by stating it on a convocation notice for a general shareholder meeting.

6.

In the event that any of the Audit & Supervisory Board Members becomes unable to audit andexecute Company’s management by deception or other wrongful acts, the Board of Directors
discuss the policy of dismissal of him/her, and depending on the result of discussion, the director
may be subject to dismissal by a resolution at the general shareholders meeting.

Article 26(Independence Standards, Qualifications, and Restriction on Concurrent Posts ofIndependent Directors)
1.

The Company shall adopt the independence standards for independent Outside Directors andindependent Outside Audit & Supervisory Board Members provided for by the Tokyo Stock
Exchange. When interpreting and applying the standards, the aim shall be to enable independent
Outside Directors to play a full part in supervising management, as well as decision-making andexecution of duty by Directors, from an objective and expert standpoint independently of theCompany’s business execution. To this end, the Company shall substantively make a judgment
as to whether or not they have any personal relationship, capital relationship or transactional
relationship other than the relationship as Outside Directors with the Company and whether or
not nominating such Directors could produce any conflict of interests with shareholders.

2.

The Company’s independent outside directors and independent outside Audit & Supervisory
Board Members shall not in principle hold a concurrent post of directors or Audit & Supervisory
Board Members at more than three listed companies other than the Company. Such status of
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concurrent post of directors or Audit & Supervisory Board Members shall be disclosed by stating
it on a convocation notice for a general shareholder meeting.
Article 27 (Succession Plan)
The Board of Directors shall appropriately supervise a succession plan for the President. The said
succession plan shall include views on the qualification, experience and nature of the President basedon the Company’s business strategy.
Article 28 (Studies and Trainings of Directors and Audit & Supervisory Board Members)
1. Newly appointed directors (including outside directors) shall from time to time participate in the
training program prescribed by the Company at the Company’s expense in order to acquire andupdate their knowledge about the duty of directors.
2. Directors and Audit & Supervisory Board Members shall, in order to fulfill their roles, devote
themselves to their studies by always proactively gathering information about the Company’s
financial condition; complying with laws and regulations, corporate governance and other matters;
and participating every year in the training program prescribed by the Company with regard tobusiness strategy, finance, accounting, personnel affairs, and organizations.
Article 29 (Setting Agenda of the Board of Directors Meeting, etc. )1.

The Board of Director Meeting shall be in principle held immediately after the ordinary generalshareholder meeting and once each month on the predetermined day, and additionally, on atemporary basis where appropriate. At the Board of Directors Meeting, matters stipulated by laws
and regulations and other important business issues shall be deliberated and risk management,internal control and other key matters provided for in the Basic Policy shall be reported to the
Meeting. At the Board of Directors Meeting, the main resolution matters to be discussed at theBoard of Directors Meetings of each business year and the deliberation schedule of reporting
matters shall be determined in advance.

2.

Materials concerning the agenda and proposals (especially on strategic matters) to be discussed
at a Board of Directors Meeting shall be distributed to each director and Audit & Supervisory
Board Member including outside officer well ahead of the date when the relevant Board of
Directors Meeting is held so that productive discussions may be made at each Board of Directors
Meeting; provided, however, that this shall not apply to highly confidential matters in particular.

Article 30(Access by Independent Outside Directors and Audit & Supervisory Board

Members to Internal Information)
1.

Independent outside directors and Audit & Supervisory Board Members may from time to time
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request inside directors, executive officers and employees to provide explanations or reports, orto submit company data.
2.

The Company shall, at the request of independent outside directors, install staffers who support
independent outside directors’ business to which appropriate personnel and budget are allocated,so that they can perform their job duties in an appropriate manner.

3.

The Company shall, at the request of Audit & Supervisory Board Members, install staffers who
support the Audit & Supervisory Board Members’ business to which appropriate personnel andbudget are allocated, so that the Audit & Supervisory Board and each Audit & Supervisory Board
Member can perform their job duty in an appropriate manner.

Article 31
1.

(Independent Outside Officers’ Liaison Meeting)

Independent outside officers shall hold an Independent Outside Officers’ Liaison Meeting whichshall be attended by independent outside officers only from the viewpoint of proactively
contributing to discussions at Board of Directors Meetings, and exchange information and share
recognition based on independent and objective standpoints.

2.

The Company shall support activities of the Independent Outside Officers’ Liaison Meeting set
forth in the preceding paragraph and simultaneously utilize it as a place receiving
recommendations with regard to matters concerning corporate governance, such as the Company
Group’s businesses, nomination and remuneration of directors, a succession plan, etc.

Article 32 (Analysis and Evaluation of Effectiveness of the Board of Directors)
1.

Each year directors shall make self-evaluations on the effectiveness of the Board of Directors,
performance as a director, etc., and submit outcome thereof to the Board of Directors.

2.

Each year the Board of Directors shall analyze and evaluate its effectiveness as a whole based oneach Director’s self-evaluation as set forth in the preceding paragraph, and disclose a summaryof the result.
Section 3 Remuneration System

Article 33 (Remunerations, etc. of Directors)
1.

The Board of Directors shall provide for the proper proportion of monetary compensation andstock compensation so that remuneration of Directors may serve as a sound incentive forsustainable growth of the Company Group.

2.

Remuneration, etc. of Executive Directors shall consist of basic compensation in accordance with
their roles, bonuses (monetary compensation) in an amount that fluctuates with their performanceetc. and stock compensation linked with the achievement of mid- and long-term corporate value.
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3.

Remuneration, etc. of Outside Directors shall consist solely of basic compensation to ensure thesupervision of management from an objective and expert standpoint independent from businessexecution.

4.

Remuneration, etc. of Directors shall be determined in comprehensive consideration of their titles,
description and the execution status of duties, and contribution in addition to the Company’s
performance, to ensure appropriate remuneration is paid in exchange for services of Directors
striving to achieve increased sustainable corporate value. The Nomination & Compensation
Committee shall be consulted with the remuneration standards formulated based on the abovementioned policy, and report findings. The amount of remuneration of each Director shall be
determined by the President & CEO, subject to a resolution at the Board of Directors to delegate
the determination to the President & CEO, based on the above-mentioned remuneration standards
and fair evaluation of performance of individual Directors.
Chapter 6 Dialogue with Shareholders

Article 34 (Policy Concerning Constructive Dialogue with Shareholders, etc.)
1.

The Company shall, in order to contribute to the Company Group’s sustainable growth andincreased corporate value over the mid- to long-term, have constructive dialogues withshareholders and investors.

2.

To realize constructive dialogues as set forth in the preceding paragraph, the Company shall makea positive response to applications for dialogues from shareholders and investors within areasonable scope. In addition, the Board of Directors shall, to promote constructive dialogues
with shareholders and investors, nominate a director or executive officer in charge of IR
responsible for dialogue with shareholders as a whole, and carry out the following matters:(i)Regular briefings for analysts and institutional investors (approximately twice a year),appropriate responses to daily interviews and telephone interviews, and response in plain
language to inquiries from individual investors(ii)

Provide timely and appropriate information in close cooperation between the department
in charge of IR that possesses necessary and useful information for constructive
dialogues (Corporate Planning Department) and General Affairs Department,
Accounting & Finance Department, Legal Department and Human Resources
Department belong;(iii)

Report useful information, opinions and advice gained from dialogues with shareholders
to the Board of Directors and the management on a regular basis; and(iv)

To prevent insider information from unintended leaks on the occasion of dialogues withshareholders, centralize registration and management of insider information at Corporate
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Planning Department under the “Insider Information Management Regulations” of theCompany as well as setting a “Quiet Period” where no dialogues on financial closing
information shall take place from the day following the date of quarterly settlement until
the date of announcement of financial results.
Supplementary Provision
The Basic Policy shall be put into effect on October 20, 2015.
Established and put into effect on October 20, 2015
Amended on February 22, 2019
Amended on March 30, 2021
Amended on December 23, 2021
Amended on March 30, 2022
Amended on July 1, 2022

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