May 10, 2018
To: AllCompany

Mitsubishi Materials Corporation

Representative

Akira Takeuchi, President(Securities Code: 5711 on the First Section of theTokyo Stock Exchange)
Inquiries to:

Nobuyuki Suzuki, General
Manager, Corporate
Communications Dept., General
Affairs Dept.

(TEL: 03-5252-5206)

Establishment of the “Committee for Monitoring of Measures to Enhance Governance” and the“Committee for Nomination and Compensation”
Mitsubishi Materials Corporation (“MMC”) is proceeding with specific initiatives toaddress the quality issues related to delivery of non-conforming products that deviated from
customer or internal specifications that occurred within the MMC group, and has implemented
the recurrence preventive measures (①) at each of the subsidiaries in which the issues occurred,and in addition, in order to enhance MMC’s group-wide corporate governance framework, hasformulated the “Restructuring Measures of the Governance Framework for Quality Control in
the MMC Group” (②) on December 28, 2017, and the “MMC Group Governance Framework
Enhancement Measures” (③) on March 28, 2018 (①, ② and ③, collectively, the “Measures”).
The details regarding the contents and progress of the implemention of the Measures are as
described in the Attachment.
In order to promote implementation of the Measures more promptly and with morecertainty, MMC’s Board of Directors resolved at its meeting today the establishment of the“Committee for Monitoring of Measures to Enhance Governance,” which will be comprised ofoutside directors of MMC and outside experts, as an organization to supervise the progress of the
Measures. In addition, in order to ensure the transparency and objectivity of the Board of
Directors’ decisions regarding the appointment and dismissal of directors and officers as well as
their compensation, the Board of Directors resolved the establishment of the “Committee for
Nomination and Compensation,” a voluntary organization with more than half of the committee
members being outside directors, as an advisory body to the Board of Directors.

- 1 -MMC recognizes that prompt recovery of trust from each of the stakeholders, including
the shareholders, customers and the society, through steady implementation of the Measures iscritical to the maintenance of MMC’s corporate value. Moreover, MMC considers that consistent
implementation of the various measures under the mid-term management strategy (for the period
between fiscal year 2017 and fiscal year 2019) is necessary to enhance MMC’s sustainablecorporate value.
MMC will enhance its corporate governance framework by establishing these committees,
and will strive to maintain and enhance MMC group’s sustainable corporate value.

1. Establishment of the Committee for Monitoring of Measures to Enhance Governance(1) Purpose of Establishment
To supervise the progress of the Measures from a position independent from thecompany’s executive body.
(2) Composition of the Committee(a) All members of the Committee will be outside directors or outside experts.
(b) The chairperson of the Committee will be one of the outside directors appointed by
the committee members through consultation.
(c) The initial members of the Committee are as follows:
Mariko Tokuno (outside director)
Hiroshi Watanabe (outside director)
Kazuaki Takenaka (Executive Vice President, Japan Management Association (Nihon
Noritsu Kyokai))(3) Responsibility
The Committee will be responsible for the following:(a) Confirmation and supervision of the progress of the Measures.
(b) Reporting of the results of (a) above to the Board of Directors, and advising on andproposing measures to address any issues, taking into account such results, to theBoard of Directors.
(4) Date of Establishment- 2 -May 10, 2018 (today)

2. Establishment of the Committee for Nomination and Compensation(1) Purpose of Establishment
To ensure transparency and objectivity of the Board of Directors’ decisions regarding theappointment and dismissal of MMC’s directors and executive officers as well as theircompensation.
(2) Composition of the Committee(a) The members of the Committee will not exceed five and will be appointed fromdirectors other than the Chairman and the President by resolution of the Board of
Directors. More than half of the members will be outside directors.
(b) The chairperson will be selected from committee members who are outside directors
by resolution of the Board of Directors.
(c) The initial members and chairperson of the Committee are expected to be as follows
on the condition that they will be elected as directors in the 93rd Annual General
Meeting of Shareholders.
Members

Five, being Mariko Tokuno (outside director), Hiroshi Watanabe(outside director), Hikaru Sugi (outside director), Naoki Ono(Director, Executive Vice President, General Manager, Corporate
Strategy Div.), Yasunobu Suzuki (Director, Senior Managing
Executive Officer, President, Metals Company)

Chairperson

Mariko Tokuno(3) Matters to be Discussed
The Committee will recommend to the Board of Directors the following matters:(a) Policy and criteria regarding appointment and dismissal of directors and executive
officers; selection of each candidate(b) Plans regarding successors of managerial positions, including the President(c) Structure and standard regarding Director’s and officer’s compensation(d) Any matters ancillary to the above- 3 -(4) Date of Establishment
June 22, 2018 (date of the Annual General Meeting of Shareholders)

3. Framework to Promote Implementation of the Measures after the Establishment of theCommittees
By establishing the Committees described in 1. and 2. above, MMC has formulated thefollowing new framework to promote implementation of the Measures.
(1) Internal Promotion Framework
As of April 1, 2018, MMC established the Group Governance Enhancement andPromotion Division as a cross-sectional organization to steadily carry out and confirm theprogress of implementation of the Measures, and the said Promotion Division is
promoting implementation of the Measures by coordinating closely with the businessdivisions. In addition, as a deliberative body to discuss annual policies and plans ofbusiness divisions regarding governance, including the Measures, MMC established theGovernance Deliberative Council as of April 1, 2018.
In addition, the Group Governance Enhancement and Promotion Division andbusiness divisions will report to the Corporate Strategy Committee and the Board of
Directors about the status of business executions, and the Corporate Strategy Committee
and the Board of Directors will provide appropriate supervision and guidance.
(2) Monitoring Framework
The Committee for Monitoring of Measures to Enhance Governance will confirm
and supervise the progress of implementation of the Measures and report the results to
the Board of Directors, and will advise on and propose measures to address issues to theBoard of Directors. In addition, the said Committee will monitor the performance andachievement of inside directors with respect to the Measures.
The Committee for Nomination and Compensation will recommend to the Boardof Directors the policy and criteria regarding appointment and dismissal of directors andexecutive officers, list of candidates, plans regarding successors of managerial positions,director’s and officer’s compensation structure and standard, and other matters, by taking
into account information necessary to decide on the appointment and dismissal of
directors obtained from the Committee for Monitoring of Measures to Enhance
Governance. The said Committee will, as an important organization to enhance MMC’s
corporate governance framework, responsibly play an important role in the determination- 4 -of the appointment and dismissal of directors and officers and their compensation
structure, and will contribute to the assurance of its transparency and objectivity.

(Reference) Flow Chart of MMC Group Governance Framework Enhancement Measures

END

- 5 -

Overview of the Matters of Non-Conforming Products

Attachment

Products

Number ofcustomers

Details

Sealing parts

218

Rewriting of inspection records data, non-inspection, etc.

MEXCEL®

5

Rewriting of inspection records data, etc.

Brass strips andcopper strips

30

Rewriting of inspection records data, etc.

Rolled products

8

Rewriting of inspection records data, inadequate testing
method, etc.

Extruded products

114

Rewriting of inspection records data, inadequate testing
method, etc.

Tachibana Metal
Manufacturing Co.,Ltd.

Extruded products

339

Rewriting of inspection records data, inadequate testing
method, etc.

Diamet Corporation

Sintering machineryparts, etc.

113

Rewriting of inspection records data, non-inspection,etc.

Company name

Mitsubishi Cable
Industries, Ltd.

Mitsubishi Shindoh
Co.,Ltd.

Mitsubishi AluminumCo., Ltd.

Total

1｜

762 *

* Excluding overlap between subsidiaries

Preventive measures of the Matters of Non-Conforming Products
Main causes of the shipment of non-conforming products◆Inadequate framework for exerting influence on productdevelopment and order receiving processes at order
receiving stage◆Attitude excessively prioritizing "order receiving" and"delivery date“◆Order received and mass production that the specifications
exceeding manufacturing capability◆Insufficient framework of quality assurance system◆Pressure on quality assurance departments from otherdepartments◆Low awareness of compliance with specifications◆Arrogance in thinking that quality control is being achieved◆Low sensitivity to risk in relation to quality issues

Preventive measures(Restructuring Measures of the Governance Framework
for Quality Control in the Group)1) Implementation of a front loading system fororder receiving

2) Enhancement of the framework and authority ofthe quality control department
3) Expansion of quality training

4) Promoting automated inspection equipment◆Insufficient business resources(insufficient inspectors, inspection equipment, etc.)

5) Enhancement of quality audits◆Audit procedures that has become a mere facade6) Utilization of outside consultants

Final report from Special Investigation Committee
In terms of results, given the fact that the Company
failed to discover and remediate the misconduct earlier,measures based on the understanding that transforming
the corporate culture and strengthening governance isnecessary, has to be stated that timeliness of required
reactions was insufficient in some ways.
2｜

Need to work on recurrence prevention byenhancement of the group governance, etc.
including quality control with further enhanced
sense of crisis and in a more timely manner

Group Governance Framework Enhancement Measures
1

Enhancement offramework for discussion,and reporting ofgovernance-related
matters◆ We will implement a framework for reducing risks and preventing problem occurrences⇒ In April 2018, we have deliberated and shared policies, plans, etc. on governance-related
matters through the “Governance Deliberative Council”

Improvement of functionsof management divisions
and their collaboration
with operating divisions◆ Launch of Governance Division on April 1, 2018
We have established the Governance Division to improve administrative division’s control andsupport functions for governance-related matters

Improvement of humanresources training andencouragement of active
interaction◆ We will expand educations regarding governance-related matters◆ In addition to promoting human resources interactions in the Group, and endeavoring todeepen communication, we will provide human resources training throughout the Group by
developing the knowledge and experience in various divisions

Internal audit
strengthening◆ The frequency and content of audits will be enhanced through cooperation with eachdepartment within the Governance Division.

Studies with a business
optimization focus◆ Effectiveness of the governance is one of the important decision-making criteria when
considering business portfolio◆ We will seek to achieve an appropriate balance so that the Group’s governance capabilities
match the business domains

2

3

4

5

* We plan to announce the progress of Group Governance Framework Enhancement Measures through opportunities such as Investor Conference.

3｜

Group Governance Framework Enhancement Measures
Group Governance Framework Enhancement Measures (1/4): Tasks already implemented: Tasks being or to be implemented

Implementation schedule

Name of measure

FY2019Outline of measureFirst half

Subsequent fiscal year
Second half

Establishment of Governance Division

1

2
Improvement offunctions ofmanagement divisions
and their collaboration
with operating divisions◆Design of PDCA cycle for risk
management across the entire
Group◆Promoting implementation ofrisk reduction measures acrossthe entire Group andmanagement of progress

Establishment of provisions
on the reporting framework /content
Formulationof annualplan

Enhancement offramework fordiscussion, andreporting of governancerelated matters◆Formulation of annual plan
regarding governanceenhancement◆Restructuring of the Group’s
internal reporting framework
regarding initiatives on
governance-related matters◆Redesign of matters to bereported and discussed atmeetings of Corporate Strategy
Committee and Board of
Directors including in-housecompanies and subsidiaries

Investigation andanalysis of corporate
management at
subsidiaries

Consideration of outline of the Group
Governance Policy (GGP)

Enhancement measures of governance of subsidiaries

Design and development of PDCA cycle for risk
management(including development of the Group Risk
Management Policy (GRP))

Promoting implementation of risk
reduction measures and managementof progress

Introduction of Group risk management

4｜

◆Apr.
Deliberative
Council◆Holding of Group Governance
Deliberative Council andmonitoring

Continued operation and monitoring

Introduction of GRP to subsidiaries,
evaluation and improvement after
introduction

Holding of Group Governance Deliberative Council and monitoring●August ◆Sep.
●May
Progress Monitoring
Progressannouncement announcement

◆Feb.
●Nov.
●Feb. Deliberative
Progress
Progress Council
announcement announcement(Progress report at Corporate Strategy Committee meeting each month)

Continued operation and monitoringGroup Governance Framework Enhancement Measures
Group Governance Framework Enhancement Measures (2/4): Tasks already implemented: Tasks being or to be implemented

Implementation schedule
Name of measure

FY2019Outline of measureFirst half
Implementation of management executives
training◆Training on governance-related
matters for executives of eachGroup company◆Familiarizing of reporting
system for risk management
and risk information

5｜

Subsequent fiscal year

Implementation of explanations and training on governance of subsidiaries and risk management- Leadership meetings by top of management -Implementation of training on quality control

Continued implementation of investigation regarding corporate culture and complianceawareness
◆May
◆Jul.
◆Oct.
◆Jan.
Investigation
Investigation
Investigation
Investigation

3
Improvement of humanresources training andencouragement of active
interaction

Second half

◆Encouragement of active
interaction of human resources
between departments, between
parent company andsubsidiaries and withinsubsidiaries◆Human resources training
throughout the Group

Consideration of human resources
measures to encourage active interaction(In conjunction with consideration ofoutline of GGP)

◆Transformation of Corporate
Culture- Organization with good andhealthy communication where
employee can be unrestrictedcommunication -Communication in small group activities(compliance and workplace activation)

Continued implementation of investigationof organizational culture and complianceawareness

Introduction and implementation of human resources measures to encourage active
interaction(In conjunction with introduction of governance of subsidiaries)

Formulation and implementation of Group-wide human resources development plans

Continued implementation of various
measures
Transformation of awareness among managers through leadership meetings(compliance training and creation of workplace with good communication)

Group Governance Framework Enhancement Measures
Group Governance Framework Enhancement Measures (3/4)- Aiming to Be a Organization with Good and Healthy Communication where Employee Can Be Unrestricted Communication FY2019
TargetName of measure

Description and Remarks
First half

Top level of management -President

Leadership
meetings(to be held
continuously)◆ Meetings with the presidents of the group companies and general managers of thelocations of the Company by the President◆ Grouping persons from different business divisions to eliminate the sectionalism mindset

Presidents ofthe groupcompanies◆ Expansion from the presidents of the Group companies to the
management executives at each company (General managers andhigher class + presidents of indirectly owned subsidiaries)◆ Expansion from executive officers at each company to generalmanagers and then employees◆ Expansion from president of indirectly owned subsidiaries tomanagers at each company and then employees

Generalmanager of
each location◆ Expansion from general managers of locations to managers and thenemployees

All manager levels

Dialogues from executive vicepresident and managing
executive officer

Front
line

Implementation of small group
activities

6｜

Second half

Compliance workshop◆ Endeavoring to deepen communication through lectures, direct dialogues andworkshops provided to managers of subsidiaries and each locations◆ Group training provided by a specialized agency (outside resources)◆ Workshop that uses the Matters of Non-Conforming Products in theGroup as a case study◆ Targets are managers level in business locations◆ Implement autonomous and continuous workshops using small group activities◆ Foster the sense of a compliance mindset◆ Improve communication in and between workplaces- Transformation of leadership mindset (foster the sense of a risk
management)
1) Report on the backgrounds, progress of implementation andpolicies of respond for the Matters of Non-Conforming
Products
2) Educate the importance of responsibility of the top ofmanagement
3) Explain the meaning of restructuring the governance system
4) Discuss of important issues and solutions regarding
governance at each company or location
5) Have management play the role of instructors to deepen
their understanding- Foster the sense of a mindset that management and managers
listen to the voices at workplace and respond sincerely- Enhance the support for expansion from the presidents at theGroup companies and general managers at locations (Dispatcha facilitator as required)- Close the gap between the head office and workplace throughdirect communication- Report on the backgrounds, progress of implementation andpolicies of respond for the Matters of Non-Conforming Products
to foster the senses of ownership and crisis, aiming to transformof awareness among managers- Create a sense of ownership based on the recognition of thecurrent situation of their own organization and ask how theywould like it to change- Repeatedly convey the Matters of Non-Conforming Products in
the Group as a case study to prevent weathering- Enhance support by dispatching inside or outside facilitators as
requiredGroup Governance Framework Enhancement Measures
Group Governance Framework Enhancement Measures (4/4): Tasks already implemented: Tasks being or to be implemented

Implementation schedule
Name of measure

Outline of measure

FY2019First half

4Internal audit
strengthening◆ Implementation ofmanagement audits◆ Implementation of quality
audits(70-80 locations / year and2 year cycle)

Development offramework foraudited locations,
themes andprocedures

Second half

Implementation of management and quality audits

Examinatio
n of audit
themes,bases andprocedures

Formulation of audit plan fornext fiscal year

Trial
audits◆ Joint audits with Corporate
Auditor

5

7｜Studies with abusiness
optimization focus◆ Consideration of businessportfolio incorporating
governance perspective

Implementation of joint audits with Corporate Auditor

Examination in conjunction with measures (1) and (4)Subsequent fiscal year

Implementation of management andquality audits (continued)

Promotion Framework for Governance Framework Enhancement
Recommend

Report, advice,proposal

Board of Directors
Consultation

Committee for Monitoring of Measures toEnhance Governance <New>
Provision of
information

Report1

Governance Deliberative Council<New>

The Committee will deliberatebusiness divisions' policies andplans related to governance.
The Committee is composed of
the President, Officers at thelevel of Managing Executive
Officer and above, Standing
Corporate Auditor, etc.

Corporate Auditor- Checking of progress,
supervision andguidance

President(Chairman)

Report on performance of
operations (Quarterly)- Checking of progress ofenhancement measures, etc.,
supervision and guidance

8｜

4

Executive officers responsible
for corporate division
Management audits,quality audits, support

Business
locations of theCompany

Group Governance Enhancement and Promotion Division <New>(Support implementation of governance enhancement and confirm
progress）

2

Group
companies

Governance Division <New>
Strengthen management and support ofgovernance-related matters by management
divisions- Request business divisions to provide
necessary information- Propose improvements and measures for
implementation to business divisions
Safety & Environment Dept.

CSR Dept.

Quality Management Dept.

Internal Audit Dept.

32
Enhancement of framework fordiscussion, and reporting ofgovernance-related matterscollaboration

Report on performance of operations (monthly)- Progress and achievements of enhancement measuresin the Group

Report of progress,
confirmation

1

Supervision of establishment andimplementation of enhancement
measures, etc.

Members- Officers at the level of Managing
Executive Officer and above- Standing Corporate Auditor (Observers)

Corporate Strategy
Committee

Propose

Executive officers responsible
for business division
Business divisions(Implementation of
governance enhancement
measures)Committee for Nomination andCompensation <New>

Improvement of functions ofmanagement divisions and theircollaboration with operating
divisions

Corporate Strategy
Division3

Human Resources& General Affairs
Division
Technology
Division

54
Improvement of humanresources training andencouragement of active
interaction

5

Internal audit
strengthening

Studies with a business
optimization focus

Preventive measures of the Matters of Non-Conforming Products
Preventive measures of the Matters of Non-Conforming Products (1/3): Tasks already implemented: Tasks being or to be implemented

Implementation schedule
Name of measures

1) Implementation of a front loading
system (FLS) for order receiving
We will implement a system (FLS) for making
decisions on specifications and receiving
orders after considering whether the order canbe accepted taking into accountmanufacturing capability at each departmentin the business division.

Outline of measures◆Establishment and wide dissemination ofguidelines◆Confirmation of operation status

FY2019FY
2018First half

Establishment
and widedissemination of
FLS guidelines- Review of FLS
guidelines

Second half

Subsequent fiscal year

- Confirmation (during quality audits) and periodic review of FLS operation status- Strengthening DR when making quotations- Accumulation of technical data
◆Primary preventive measures for quality
issues at 5 affected companies- Establish a structure to deliberate from the design
development stage- Reconsideration of order receiving determination process and improvementof operation◆Confirmation that independence ofquality assurance function in eachbusiness organization is ensured◆Confirmation of area of responsibility andstatus of fulfilment at quality assurance
department in each businessorganization
2) Enhancement of the framework andauthority of the quality control
department
Centered on the Governance Division and the
Quality Management Department, we will
establish a framework aimed at improving
quality control for the Group and will construct
the required quality control function for eachbusiness and product.

Investigation- Confirmation- Formulation of
improvement
measures- Confirmation of operation status during quality audits- Review of framework / authority and training- Change of organization of quality assurance departments- Increase in quality assurance-related human resources- Formulate the policy of quality control- Enhancement of the independence of quality assurance
department and ensuring the authority of shipment◆Primary preventive measures for quality
issues at 5 affected companies- Strengthening of system and equipment for
inspection before shipment- Review of quality assurance standards and construct quality control system- Strengthening of the quality and quantity of human resources for Quality Assurance Department

9｜- Rotation

Preventive measures of the Matters of Non-Conforming Products
Preventive measures of the Matters of Non-Conforming Products (2/3): Tasks already implemented: Tasks being or to be implemented

Implementation schedule
Name of measure

Outline of measures◆ Provision of quality training to relevant
employees at locations in Japan andoverseas3) Expansion of quality training
We will have all our employees understandthe importance of quality and what should bedone to maintain and improve quality. We will
establish a practical training systemcorresponding to each group company’sbusiness.

FY2019FY
2018- Training
preparation

First half
- Training
provision- Follow-up and review of training content- Compliance training- Education using materials based on this matter◆ Primary preventive measures for quality
issues at 5 affected companies- Leadership meetings for managers- Improvement and enhancement
the function of the Company's
enterprise system◆ Promotion of automated inspection
equipment (3 years)
4) Promoting automated inspection
equipment
By promoting initiatives such as automatedacquisition of inspection data and uploading
inspection data into manufacturing control
systems, we will aim to prevent misconduct,
including the rewriting of data.

Second half

- Collection andcollation ofdata- Skill support training for leaders ofworkplace- Confirmation of progress in promoting automated inspection equipment- Sharing information and applying within the Group- Introduction of the inspection equipment for automated- Automated uploading to the Company's enterprise system◆ Primary preventive measures for quality
issues at 5 affected companies- Introduction of the latest technology for measurement
and automatedContinuation- Improvement of issuance system forcertificate of analysis- Compilation of database for product specification- Automated collecting of inspection data

10｜

Subsequent fiscal year

Preventive measures of the Matters of Non-Conforming Products
Preventive measures of the Matters of Non-Conforming Products (3/3): Tasks already implemented: Tasks being or to be implemented

Implementation schedule
Name of measure5) Enhancement of quality audits
We will aim to establish more robust quality
audits by measures such as improving theindependence of our Group’s internal audit
departments and strengthening their authority
and increasing the frequency of quality audits.

Outline of measure

FY2019FY
2018First half

◆ Review of checklist for quality audits- Establishment◆ Implementation of quality audits of all
affected locations requiring quality audits- Planning andpreparation

Second half

From next fiscal year

- Review as necessary after establishment- Implementation of quality audits◆ Implementation of quality consultant
guidance meetings6) Utilization of outside consultants
In order to introduce a third-party perspectiveon quality control, we will utilize outside
consultants specializing in quality control on
an ongoing basis.

11｜- Implementation of quality consultant guidance meetings for each location- Confirmation of status of improvement and progress at each company, sharing of information and applying within the Group◆ Primary measures to prevent a
recurrence of quality issues at 5 affectedcompanies