Denka Corporate Governance Guidelines(Preface)
Since its establishment in 1915, Denka Company Limited (the “Company”) has responded
appropriately to market needs, starting with manufacturing and sale of calcium cyanamide(nitrogenous limestone), and followed by its advancement into acetylene carbide business,organic chemicals, cement business using Omi Industrial Complex, petrochemicals
business at Chiba Plant, inorganic products and other electronic materials business at
Omuta Plant, pharmaceuticals business, and various business fields, including vaccinesand reagents, at Denka Seiken Co., Ltd.
In 2015, the Company celebrated its centennial. It recognizes that this achievement is dueto the support and cooperation of its many shareholders and other stakeholders since its
establishment.
In 2016, which marks the 101st anniversary of the Company, as well as the first year of a
new century, looking upon the next centennial, we established “The Denka Value” corporate
philosophy that serves as the basis for the Group’s corporate activities.
Under the new corporate philosophy “The Denka Value” and in compliance with thiscorporate governance guideline（“these guidelines”）, the Denka Group, as a transparent
and open global corporation, strives to gain the support and understanding of its
shareholders and stakeholders, and to promote its further growth and business activities asa sustainable company that can contribute to society.
* References in brackets “( )” after provisions of these Guidelines are to the respective
corresponding provisions of Japan’s Corporate Governance Code, established by the Tokyo
Stock Exchange.
Chapter 1. General Provisions
Article 1 (Purpose)
The purpose of these Guidelines is to gain the trust of the Company’s shareholders and allits other stakeholders and ensure the best corporate governance to achieve sustainablegrowth and increased corporate value over the medium- to long-term, based on the
Corporate Philosophy referred to in Article 2.
(General Principle 2, General Principle 4)
Article 2 (Corporate Philosophy, Denka Principles, and Management Plan)
1. The Company shall establish “The Denka Value” corporate philosophy that serves as thebasis for the Group’s corporate activities.
The corporate philosophy “The Denka Value” consists of the Denka Mission, which
represents our uppermost mission statement, and the Denka Principles, a set of precepts
guiding actions taken by every Group employee. The uppermost Denka Mission isdefined as “taking on the challenge of expanding the possibilities of chemistry to create
new value and contribute to sound social development.”“The Denka Value” is a superordinate concept for all corporate activities, including
management planning. Through the implementation of “The Denka Value,” the Company
aims to respond to the expectations and trust of society going forward.
(Principle 2.1, Principle 3.1 i), General Principle 4 (1), Principle 4.1, Principle 5.2)
“The Denka Value” (Corporate Philosophy)
 The Denka Mission
Taking on the challenge of expanding the possibilities of chemistry to create newvalue and contribute to sound social development.
Note:Based on the corporate slogan “Possibility of Chemistry.”Denka PrinciplesWe:
Boldly confront challenges with determination and sincerity.
Think and take action today with the future in mind.

Deliver new values, and inspire customers through innovative
monozukuri.
Respect the environment and create a cheerful workplace that prioritizes
safety.

Contribute to a better society, whilst taking pride in being a trusted
corporate citizen.
12. The Company has established the Denka Group Ethics Policy, which includes
compliance with laws and regulations, rules, the Articles of Incorporation, and social
norms. With the Ethics Policy as the foundation of its daily activities, the Company strives
to carry out its social responsibilities and ensure compliance with the Ethics Policy
broadly across the Company, including the front line of its domestic and global
operations.
(Principle 2.2, Supplementary Principle 2.2.1, Principle 4.3, Supplementary Principle 4.3.2)
Article 3 (Basic Approach to Corporate Governance)
1. To respond to the expectations and trust of its many stakeholders, including shareholders,customers, local communities, and employees, the Company strives to increase its
corporate value by strengthening its business base through expansion of its earnings
power and business operations, while ensuring that it holds a stance to continue being acompany that is able to gain the trust and sympathy of society.
As it considers corporate governance to be the foundation for this, the Company works toinvigorate its Board of Directors, strengthen its audit system, optimize its management
system, and enhance its compliance system.
Specifically, it has introduced an Executive Officer System to speed up its
decision-making, and by delegating powers and roles in the execution of business to the
Executive Officers, clearly separates the execution of business by executive officers andthe overseeing and supervision of such execution by the Directors. In addition, it has
strengthened its corporate governance system by in principle abolishing executive roles
for Directors (such as senior managing director and managing director). In this way, it
has established a system in which each Director oversees and supervises businessexecution from an equal position. Also, to promote flexibility of monitoring, it appoints
Directors for one year terms.
With regard to its outside officers system, the Company appoints Outside Directors aswell as Outside Audit & Supervisory Board Members prescribed by the Companies Act.
Personnel appointed as outside officers are sufficiently independent and have extensive
knowledge in their respective areas. In addition to carrying out supervision ofmanagement from an external perspective, they have established places for regularexchanges of opinions with top management. This enables them to provide sufficientadvice through exchanges outside the Board of Directors meetings and enables theCompany to monitor its management from an external perspective.
(Principle 3.1 ii))
2. The Company respects the rights of its shareholders. Together with ensuring fairness andtransparency in management, it considers that an essential goal of corporate governanceis to increase management vitality through an appropriate balance of proactiveness andprevention, and therefore the Company has formulated and strives to realize thefollowing basic principles:(Principle 3.1 ii))
(1) Relationship with Shareholders
1) We secure the rights and equal treatment of shareholders.
(General Principle 1, Principle 1.1)
22) We engage in constructive dialogue with shareholders.
(General Principle 5)3) We build good relationships with shareholders and other stakeholders.
(General Principle 2)4) We appropriately disclose financial and non-financial information and ensuretransparency.
(General Principle 3)(2) Basic System for Corporate Governance1) The Company has chosen a company with Audit & Supervisory Board structure. The
execution of duties by the Directors and Executive Officers is audited by Audit &Supervisory Board Members and the Audit & Supervisory Board.
2) The Company has adopted the Executive Officer System to separate management
decision-making and supervisory functions from executive functions. The
decision-making and supervisory functions are the responsibility of the Board of
Directors and the Directors comprising the Board, and the Executive Officers are
responsible for the execution of business.
The scope of operations delegated by the Board of Directors to the Directors andExecutive Officers is separately disclosed in summary form in Corporate
Governance Reports in accordance with the Board of Directors Regulations and the
Executive Officers Regulations.
(Supplementary Principle 4.1.1)
3) The Company has established a Management Committee comprised of Directors,
Audit & Supervisory Board Members and selected Executive Officers for the
purpose of deliberating and discussing important managerial issues to streamline
discussion on important managerial matters and accelerate decision-making.
4) For reasons of management transparency and soundness, the Company appoints
up to 10 Directors, and in order to build a management system that combines
proactiveness and prevention, the Company ensures the appointment of at least two
independent Outside Directors. Also, independent Outside Directors comprise atleast one third of the Directors at the Board of Directors.
Furthermore, the Board of Directors as a whole is to possess a good balance of
personnel with diverse knowledge, experience and skills due to the appointment ofinternal Directors from persons who have sufficient expert knowledge and businessexperience in the Company’s business and administrative divisions and theappointment as Outside Directors of persons with the necessary high level ofexpertise and broad insight to increase the Company’s corporate value.
(Principle 4.8, Principle 4.11, Supplementary Principle 4.11.1)
5) A round table conference of Directors and Audit & Supervisory Board Members isheld once a month to promote more in depth discussion in relation to management
matters of particular importance. The conference provides a place for uninhibitedand constructive discussions, exchange of opinions and information, and enhancing
of cooperation between internal and Outside Directors and Audit & Supervisory
Board Members.
(Supplementary Principle 4.8.2, Principle 4.10, Supplementary Principle 4.10.1)
6) To strengthen its risk management and compliance systems, the Company appoints
a Chief Compliance Officer (CCO) from among the Directors or Executive Officers.
(Principle 4.2, Principle 4.3, Supplementary Principle 2.3.1)
7) The Company has established a department in charge of Corporate Social
Responsibility (CSR) to create broad recognition of and compliance with theCompany’s CSR, including at the front line of its domestic and global operations,and sincere handling of CSR throughout the Company.
(Supplementary Principle 2.3.1)
Article 4 (Positioning of these Guidelines)
These Guidelines are rules that rank next after the Companies Act, related laws andregulations, and the Articles of Incorporation, and they take precedence in application overother Company rules.

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Chapter 2. Relationships with Shareholders
Article 5 (Fiduciary Responsibility)
To fulfil their fiduciary responsibilities to shareholders, the Directors, Audit & Supervisory
Board Members and the management of the Company act through appropriate cooperation
with stakeholders for the improvement of common value of the Company and shareholders.
(Principle 4.5)
Article 6 (Respect for Voting Rights)
1. The Company recognizes that the General Meeting of Shareholders is a place for
dialogue with shareholders and, from the perspective of shareholders, seeks to enable
shareholders to appropriately exercise their rights.
(General Principle 1, Principle 1.1, Principle 1.2)
2. The Company establishes policies as set forth below for promoting constructive dialogue
with shareholders and investors. It also works to gain the understanding of shareholders
and investors by formulating management plans aimed at sustainable growth andincreased corporate value over the medium- to long-term, setting up various
opportunities and endeavouring to provide explanations.
(General Principle 5, Principle 5.1)
(1) The Investor Relations Department and the Administrative Department are thepoints of contact for responding to shareholders and investors, and actions aretaken under the supervision of the Executive Officer in charge.
(Supplementary Principle 5.1.1, Supplementary Principle 5.1.2)(2) Related departments actively cooperate in information sharing and other measuresin order to provide timely and appropriate disclosure of information.
(3) Results briefings for share analysts and institutional investors, as well as businessbriefings and tours of the Company’s plants as appropriate, are held to promote
fuller understanding of the Company’s business structures, management plans
and results by shareholders and investors. Also, yearly corporate briefings are held
for individual investors.
(4) Opinions and matters of concern communicated during dialogue with shareholders
and investors are reported as appropriate to the Executive Officers in charge and,if necessary, to the Board of Directors.
(5) The Company has established Regulations on Insider Information Management
and Prevention of Insider Trading as measures for the management of insider
information, and conducts appropriate information management based on theseregulations.
3. The Company works to enable all its shareholders to appropriately exercise their voting
rights.
Notices of Convocation of General Meetings of Shareholders and reference documents
are sent, in principle, three weeks prior to the date on which the meeting is to be held.
Also, to ensure that the shareholders have time to examine the contents, that information
is disclosed on TDnet and the Company’s website during the period between the Boardof Directors’ approval of convening of the General Meeting of Shareholders and thesending of the Notices of Convocation.
Furthermore, in keeping with the Company’s shareholder composition, the Company
participates in the Electronic Voting Platform, and the Notices of Convocation aretranslated into English and published on TDnet and the Company’s website.
(Supplementary Principle 1.2.1, Supplementary Principle 1.2.2, Supplementary Principle
1.2.4)
Article 7 (General Meetings of Shareholders)
1. The time, date and place of the General Meetings of Shareholders are established by theCompany with a view to enabling more shareholders to attend the meetings and greaterreflection of shareholders’ intentions.
(Supplementary Principle 1.2.3)
2. The Board of Directors analyses the voting results for proposals from the Company atGeneral Meetings of Shareholders to obtain a detailed understanding of the reasons forapproval or opposition to proposals, and it makes use of such analysis at constructive
dialogue between management and shareholders and others.
(Supplementary Principle 1.1.1)
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3. To foster a relationship of trust with shareholders, the Directors and Executive Officers
provide sufficient explanations of the Company’s policies and measures to theshareholders and do their best to respond to questions at General Meetings ofShareholders.
(Principle 1.1, Principle 1.2)
Article 8 (Returns to Shareholders)
1. Recognizing that profit sharing is a basic right of shareholders, the Company has
established policies concerning dividends from surplus and other returns to shareholders
which are disclosed on the Company’s website.
(Principle 1.3)
2. In accordance with the Articles of Incorporation, interim dividends from surplus are
decided by the Board of Directors, and policies for year-end dividends are decided by the
Board of Directors, and they are then deliberated and determined by the General
Meeting of Shareholders.
Article 9 (Protection of Shareholders’ Rights)
As the Board of Directors and the Audit & Supervisory Board have fiduciary responsibilities
to all the shareholders, before implementing a capital policy resulting in a change of control
or significant dilution, the Company examines the policy carefully to avoid unfairly harming
the interests of existing shareholders, makes sure that the appropriate procedures are taken,
and provides sufficient explanations to the shareholders.
(Principle 1.6)
Article 10 (Basic Strategy for Capital Policy)
1. The Company holds shares in cases where it judges that doing so is in accordance withthe creation of stable business relationships and will maintain and strengthen businessalliances in line with growth strategies and contribute to increased corporate value overthe medium- to long-term.
(Principle 1.4)
2. The Company reviews the shares annually at the Board of Directors meetings incompliance with the policies in the preceding paragraph. The purpose of holding said
shares shall be stated in the securities report.
(Principle 1.4)
3. Regarding the exercising of voting rights in relation to shares held as strategic
shareholdings, in principle, the Company respects the business policies and strategies of
the issuing company. After consideration of the issuing company’s management situationby the department in charge of the management of those shares, the Company carefully
examines proposals individually from the perspective of whether they will ultimately
contribute to increased shareholder value before making its decision for or against the
proposals.
(Principle 1.4)
4. The Company does not implement the so-called anti-takeover measures. In the case of
tender offers, the Company sufficiently and clearly explains the position of the Board of
Directors and takes appropriate procedures in accordance with the Basic Policies
regarding the Control of the Company previously decided by the Board of Directors.
(Principle 1.5)
Article 11 (Securing Equal Treatment of Shareholders)
The Company treats all shareholders equally according to the features and number of theirshares, and does not provide property benefits or other special benefits to specificshareholders.
Article 12 (Prevention of Transactions that are Contrary to Shareholders’ Interests)
1. To protect the interests of shareholders, the Company strives to prevent abuse of theirpositions by its Directors, Executive Officers, employees and other related parties andtransactions that are contrary to the interests of the Company and the shareholders.
(Principle 4.3)
2. The Company requires, in the Board of Directors Regulations, that the prior consent of theBoard of Directors must be obtained for any competing transactions and self-dealing
matters by Directors and the results must be reported afterwards. In the case ofcontinuing transactions, the results of competing transactions and self-dealing in theprevious fiscal year are reported to the Board of Directors once a year, and prior approval
for the current fiscal year is sought.
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Also, related party transactions are determined in the same way as general transaction
terms, and are disclosed in the notes to financial statements and securities reports inaccordance with laws and regulations.
(Principle 1.7)
3. The Company appropriately discloses material facts concerning the transactions set forthin the preceding paragraph.
(General Principle 3, Principle 4.3)
4. To prevent insider trading by persons related to the Company, the Company has
established and strictly enforces regulations concerning the handling of undisclosed
material facts.
(Principle 4.3)
Chapter 3. Appropriate Cooperation with Stakeholders other than Shareholders(for sustainable enhancement of corporate value)
Article 13 (Appropriate Cooperation)
1. The Company fully recognizes that its sustainable growth and creation of corporate value
over the medium- to long-term are the result of the provision of resources andcontributions by its various stakeholders, including employees, customers, business
partners, creditors and local communities, and it endeavours to appropriately cooperatewith these stakeholders.
The Company’s Directors and Executive Officers exercise leadership in establishing a
corporate culture and climate of respect for the rights and positions of stakeholders andsound business ethics.
(General Principle 2)
2. To gain the support of shareholders, employees, customers, business partners, creditors,
local communities and other stakeholders when addressing sustainability issues,
including those social and environmental, the Company handles those matters withsincerity and fairness broadly across the Company, including the front line of its domestic
and global operations, based on the Denka Principles set forth in Article 2.
(Principle 2.3, Supplementary Principle 2.3.1)
3. For its sustainable growth, the Company promotes diversity (utilization of diverse humanresources), based on the basic principle that it is necessary for each of our employeeswith their diverse personalities and values to fully demonstrate their abilities.
(Principle 2.4)
4. The Company has established the Denka Group Ethics Policy to enable itself to identify
and mend organizational issues that may arise, and has set up the Ethics Committee toensure thorough compliance with the Ethics Policy and oversee compliance. The
Committee quickly and appropriately addresses reports received through theCompliance Hotline.
Reports are received from internal administrative office as well as from the Audit &Supervisory Board Members Department and the labor union, which operate on a neutral
basis. Whistleblowers can also make reports to an independent law firm. Furthermore,
the Company clearly states in the Denka Group Ethics Policy that whistleblowers mustnot be subject to any discriminatory treatment or disadvantage due to their actions.
(Principle 2.5, Supplementary Principle 2.5.1)
Chapter 4. Ensuring Appropriate Information Disclosure and Transparency
Article 14. Information Disclosure
1. To build long-term relationships of trust with domestic and overseas shareholders,institutional investors and all its other stakeholders, the Company’s basic policy is todisclose and promptly, accurately, fairly and equally communicate not only statutory
disclosure matters but also management policies and financial information, information
about business initiatives, and information which includes non-financial information, suchas the management environment, necessary for investment decisions.
(General Principle 3)
2. The Company discloses, in Corporate Governance Reports, policies and outlines ofprocedures decided upon by the Board of Directors for remuneration of Directors andExecutive Officers.
(Principle 3.1 iii))
3. The Company discloses, in Corporate Governance Reports, policies and procedures forthe nomination of Director and Audit & Supervisory Board Member candidates and theappointment of Executive Officers by the Board of the Directors. Based on this, to explain
6

the appointment and nomination of individual Director and Audit & Supervisory Board
Member candidates, the reasons for the appointment of outside and internal officers areincluded in the reference documents for General Meetings of Shareholders.
(Principle 3.1 iv), Principle 3.1 v))
4. Due to the percentage of overseas investors included among its shareholders, theCompany endeavours as much as possible to disclose and provide information in English
to a reasonable extent.
(Supplementary Principle 3.1.2)
Chapter 5. Responsibilities of the Board of Directors, etc.
Article 15 (Roles and Responsibilities of the Board of Directors)
1. As one of the roles and responsibilities of the Board of Directors is the making of strategic
proposals for the realization of the Company’s Corporate Philosophy “The Denka Value,”the Board formulates management plans, etc. and makes decisions for the execution ofimportant business based on those plans, etc. Also, in case that the goals of the
management plans are not achieved, the Board of Directors is responsible for analysing
the causes and providing clear explanations to the shareholders, which are reflected in
the plans for the following fiscal years.
(General Principle 4, Principle 4.1, Supplementary Principle 4.1.2)
2. The Board of Directors makes decisions on important matters stipulated in laws andregulations, the Articles of Incorporation and the Board of Directors Regulations, andsupervises the execution of business by the Directors and Executive Officers.
(Supplementary Principle 4.1.1)
3. To increase management vitality by enhancing the agility and flexibility of businessexecution, the Board of Directors resolves on the assignment of duties and authority of
the Executive Officers responsible for business execution. As well as delegating
business execution to Executive Officers within that scope, the Board of Directors
receives reports on status of their execution of business. It also assists in the executionof business by creating an environment that supports risk-taking.
(General Principle 4 (2), Supplementary Principle 4.1.1, Principle 4.2)
4. The Board of Directors exercises supervision to ensure that timely and accurate
information disclosure is provided, and appropriately establishes the internal control andrisk management systems.
(Principle 4.3)
5. The Board of Directors recognizes that it also has responsibilities in terms ofmanagement for the future, and based on the Company’s Corporate Philosophy andchanging trends in the future economic environment, it shares information on andappropriately supervises succession planning for the President & CEO.
(Supplementary Principle 4.1.3)
6. The Board of Directors endeavours to create an environment where there is always a freeexchange of opinions and positive debate, and it respects the raising of issues by
Outside Directors.
(Principle 4.12)
7. The Board of Directors encourages active deliberation by ensuring the following mattersin the operation of Board of Directors meetings:(Supplementary Principle 4.12.1)(1) Prior distribution of materials for Board of Directors meetings. This includes ensuringthat materials relating to agenda items to be resolved are distributed to Directors andAudit & Supervisory Board Members, including Outside Directors and Audit &Supervisory Board Members, in advance to allow sufficient time for examination sothat vigorous debate can take place on the day of the meeting.
(2) Providing Directors with sufficient information from the Company other than thematerials for the Board of Directors meetings as necessary. Also, the Board of
Directors confirms that information is smoothly provided by the Company.
(3) Deciding in advance on the yearly schedule for the Board of Directors meetings.
(4) Appropriate setting of the number of agenda items for deliberation and the frequency
of Board of Directors meetings.
(5) Ensuring more deliberation time mainly for vigorous discussions with Outside
Directors in relation to agenda items to be resolved.
(6) Promptly incorporating suggestions and requests from Outside Directors and Audit &Supervisory Board Members into the operation of the Board of Directors.
78. The Company analyzes and evaluates the effectiveness of the Board of Directors
annually through individual Directors and Audit & Supervisory Board Members. The results
are then disclosed in the Corporate Governance Report.
(Supplementary Principle 4.11.3)
Article 16 (Roles and Responsibilities of Directors)
1. Directors are appointed each year at the General Meeting of Shareholders for a term of
one year.
2. Directors have a duty of loyalty and a duty to act with the due care of a prudent manager.
3. In the execution of their duties, the Directors take the utmost care to gather full
information, request explanations at the Board of Directors meeting, do their best to
actively express and discuss their opinions with other Directors, and exercise their voting
rights after ensuring that the decision-making process is reasonable.
4. The Directors seek to resolve management issues of the Company that have come totheir knowledge by exercising their rights to propose agenda items for Board of Directors
meetings and request the convening of Board meetings in a timely and appropriatemanner.
Article 17 (Common Roles and Responsibilities of Directors and Audit & Supervisory Board
Members)
1. In order that Directors and Audit & Supervisory Board Members focus on carrying out
their roles and responsibilities, any posts concurrently held by them as officers of otherlisted companies are disclosed in reference documents for General Meetings ofShareholders and business reports in accordance with laws and regulations.
(Supplementary Principle 4.11.2)
2. In order for Directors and Audit & Supervisory Board Members to carry out their roles andresponsibilities, in cases where they judge that they have insufficient information, they
may ask the Executive Officer in charge of the relevant department to provide additional
information. Also, if considered necessary, they may seek the opinions of lawyers orother external experts at the Company’s cost.
(Principle 4.13, Supplementary Principle 4.13.1, Supplementary Principle 4.13.2)
3. For both Outside Directors and Outside Audit & Supervisory Board Members, theCompany selects candidates for appointment as independent officers based onjudgement focused on substantiality, such as whether they can be expected to contributeto increasing the Company’s corporate value. Details are specified in the Attachment andare based on the externality requirements prescribed in the Companies Act and the
independence criteria set by the Tokyo Stock Exchange.
(Principle 4.9)
4. The Company conducts tours of its offices and plants and training sessions about theCompany’s business, particularly for newly-appointed Outside Directors and Outside
Audit & Supervisory Board Members, to enable them to gain information about theCompany. Also, all newly appointed Directors and Audit & Supervisory Board Members,
including outside officers, are encouraged to participate in external seminars to learn
necessary legal and other knowledge for the purpose of increasing their understanding of
the roles and responsibilities required of them. In addition to providing and arranging
these opportunities and assisting with the costs, the Company provides training in thesame way to incumbent officers as necessary in order to continually update theirknowledge.
(Principle 4.14, Supplementary Principle 4.14.1, Supplementary Principle 4.14.2)
Article 18 (Roles of Executive Officers)
1. Executive Officers are appointed for a term of one year. Each year, candidates forappointment as Executive Officers are recommended by the President & CEO, and theBoard of Directors then deliberates on the candidates and makes the appointments.
2. Executive Officers are appointed in accordance with the appointment criteria set out in the
Executive Officers Regulations (1. Abundant business experience and familiarity with thebusiness of the Company; 2. Excellent management sense; 3. Superior guidance,
leadership, vitality and planning abilities; 4. Personality and insight suited to an Executive
Officer; and 5. Good physical and mental health).
(Principle 3.1 iv))
3. Executive Officers who concurrently serve as Directors have supervisory responsibilities,
in their capacity as Directors, in relation to the overall management of the Company, andas Executive Officers are responsible for the execution of business of which they are in8charge.
4. The number of Executive Officers appointed is the appropriate number that can mostefficiently and effectively deliver the execution of business functions in accordance withthe decisions of the Board of Directors.
Article 19 (Roles and Responsibilities of Outside Directors)
1. The main roles of Outside Directors for the sustainable growth and medium- to long-term
increase of corporate value of the Company are as follows:(1) Providing advice in relation to overall management, based on their abundant
experience and broad insight;(2) Monitoring the Board of Directors and the execution of business by Executive
Officers;(3) Monitoring conflicts of interest between the Company and its Directors, Executive
Officers and other persons; and(4) Reflecting the views of minority shareholders and other stakeholders to the Board of
Directors.
(Principle 4.6, Principle 4.7)
2. The Outside Directors are continually provided with information regarding the status ofchanges to the Company’s Corporate Philosophy, corporate culture, management
environment and other matters through the Board of Directors Administrative Office(Administrative Department).
(Principle 4.13)
3. As appropriate, Outside Directors strives to hold meetings consisting solely of outside
officers to exchange information and develop a shared awareness about mattersconcerning the Company’s corporate governance and business.
(Supplementary Principle 4.8.1)
Article 20 (Roles and Responsibilities of Audit & Supervisory Board Members and the Audit& Supervisory Board)
1. Audit & Supervisory Board Members and the Audit & Supervisory Board conduct audits inrelation to the execution of duties by Directors, internal control, operations andaccounting by exercising authorities in relation to requests for Company business reports,
investigations relating to operations and accounting, and the appointment, dismissal andremuneration of the external accounting auditor, in accordance with laws andregulations.
(Principle 4.4)
2. When carrying out their roles and responsibilities referred to in the preceding paragraph,based on their fiduciary responsibilities to shareholders, Audit & Supervisory Board
Members and the Audit & Supervisory Board take objective positions, make appropriate
decisions, and actively state their opinions at the Board of Directors meetings and others.
(Principle 4.4)
3. In order for Audit & Supervisory Board Members and the Audit & Supervisory Board tocarry out their roles and responsibilities, the Company selects Audit & Supervisory Board
Member candidates based on the judgment that at least one of the Audit & Supervisory
Board Members has finance and accounting expertise.
(Principle 4.11)
4. To carry out their roles and responsibilities, Audit & Supervisory Board Members and the
Audit & Supervisory Board obtain reports relating to necessary matters in a timely andappropriate manner from the Company’s Directors, Executive Officers, employees andthe external accounting auditor, and strive to share necessary information with theexternal accounting auditor and internal audit organizations to improve auditing quality
and ensure the efficiency of audits.
(Supplementary Principle 3.2.2, Principle 4.13, Supplementary Principle 4.13.3)
5. The Audit & Supervisory Board establishes the necessary basic policies, regulations andprocedures for the execution of its duties.
6. To ensure the objectivity of audits, staff of the Audit & Supervisory Board Members
Department who perform duties based on resolutions of the Audit & Supervisory Boardand directions of Audit & Supervisory Board Members are guaranteed independence
from the management of the Company, such as Directors and Executive Officers, interms of operational directions, orders and personnel evaluations.
(Principle 4.13)
7. The Audit & Supervisory Board mutually supplements the independence of the Outside
Audit & Supervisory Board Members and the information gathering ability of the full-time
Audit & Supervisory Board Members to increase its effectiveness. The Audit &9Supervisory Board Members and the Audit & Supervisory Board also secure thecooperation with the Outside Directors to assist the Outside Directors in the carrying outof their roles and responsibilities.
(Supplementary Principle 4.4.1)
Article 21 (Information Gathering System)
1. The Company’s internal auditing organizations provide reports to the Board of Directors in
relation to internal control, and regularly exchanges information with the full-time Audit &Supervisory Board Members.
(Supplementary Principle 4.13.3)
2. The Secretary Department, Audit & Supervisory Board Members Department, Internal
Auditing Department and Administrative Department cooperate with each other andprovide necessary information to Outside Directors and Outside Audit & Supervisory
Board Members.
(Supplementary Principle 4.13.3)
Article 22 (Internal Control System)
1. Recognizing that enhancement of the Company’s internal control is an important elementin gaining the trust of all its stakeholders including shareholders, the Board of Directors
has established the Basic Policy Concerning Internal Control in accordance with theCompanies Act and the Ordinance for Enforcement of the Companies Act.
(Principle 4.3, Supplementary Principle 4.3.2)
2. In accordance with the Basic Policy Concerning Internal Control and other resolutions of
the Board of Directors relating to internal control, the Executive Officers in charge haveestablished the system necessary for compliance with laws and regulations, ethicalnorms and codes of conduct, business effectiveness and efficiency and reliability offinancial reports, and they ensure that it functions effectively, including at the front line of
the Company’s domestic and global operations.
(Principle 2.2, Principle 4.3)
Article 23 (External Accounting Auditor)
1. To ensure the reliability and effectiveness of financial reports and the conducting ofappropriate audits, the Company takes the following measures in relation to the external
accounting auditor:(1) It ensures that there is sufficient time for auditing;(2) Regular meetings are held between the external accounting auditor and thePresident & CEO and Executive Officers in charge;(3) The external accounting auditor and the Internal Auditing Department cooperatewith each other in relation to the provision of information about the activities of the
Audit & Supervisory Board, accounting and internal control; and(4) If a report is received from the external accounting auditor to the effect that
misconduct or material facts in violation of laws and regulations or the Articles ofIncorporation have been discovered, the Company ensures that the appropriate
procedures are taken by the Audit & Supervisory Board.
(Principle 3.2, Supplementary Principle 3.2.2)
2. The Audit & Supervisory Board formulates policies concerning the appointment anddismissal of the external accounting auditor, and evaluates the external accounting
auditor through confirmation in the process of receiving financial and other reports.
(Supplementary Principle 3.2.1)

10Chapter 6. Other Provisions
Article 24 (Exemptions)
In the event that an exemption from these Guidelines is necessary, the Board of Directors
must specify the reason and make it clear that appropriate measures are being taken inaccordance with the intent of these Guidelines.
Article 25 (Amendments)
Amendments to these Guidelines are to be made by the resolution of the Board of Directors.
Established on November 9, 2015
Revised in June 22,2016

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(Attachment)
Independence Standards for Outside Officers
The independence standards for the Company’s Outside Directors and Outside Audit &Supervisory Board Members are that they must be persons who do not fall under any ofitems 1 to 5 below.
1. An operating officer(*1) of a main customer(*2), main supplier(*3) or main lender(*4) thatis a main business partner of the Company.
2. A consultant, accountant, lawyer or the like who has received money or other property
from the Company exceeding a yearly amount of 10 million yen, other than officer’s
remuneration, in the most recent fiscal year.
3. In the event that the party receiving the property referred to in item 2 above is anorganization, a person belonging to an organization in which the amount paid by theCompany to that organization in the most recent fiscal year comprised 2% or more of thatorganization’s net sales or gross revenue.
4. A person who fell under items 1 to 3 above within the period of the past year.
5. A person who is the spouse or a relative within the second degree of kinship of a person
listed below (excluding immaterial persons):(1) A person falling under items 1 to 4 above;(2) A person who is currently, or was within the period of the past year, an operating
officer at the Company or a subsidiary of the Company; or(3) A person who is currently, or was within the period of the past year, anon-executive director of the Company or a subsidiary of the Company (limited tocases of Outside Audit & Supervisory Board Members).
*1 Operating officer: an Executive Director, Operating Executive, Executive Officer, or other
employee or the like.
*2 Main customer: a customer that paid to the Company an amount that comprised 2% ormore of the Company’s net sales in the most recent fiscal year.
*3 Main supplier: a supplier to which the Company paid an amount that comprised 2% ormore of that supplier’s net sales in the most recent fiscal year.
*4 Main lender: a lender that, at the end of the most recent fiscal year, was essential to theCompany’s financing and is relied upon by the Company to the extent that
there is no substitute.

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