Corporate Governance Report
Corporate Governance

June 20, 2024
FUJIMORI KOGYO CO.,LTD.
Taku Shimoda, Representative Director, President
Contact:

03-5804-4221
Securities Code: 7917
https://www.zacros.co.jp

The corporate governance of the “Company” is described below.

I. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other Basic Information
1. Basic Views
FUJIMORI KOGYO CO.,LTD. (the “Company” or “we”) believes that enhancing corporate governance is an
important management issue to improve management transparency in accordance with corporate ethics and thespirit of legal compliance, and to maximize corporate value from the perspective of shareholders while increasing
competitiveness.

[Reasons for Non-compliance with the Principles of the Corporate Governance Code] Update
The Company complies all principles of the Corporate Governance Code.

[Disclosure Based on the Principles of the Corporate Governance Code] Update
Principle 1-4 [Cross-Shareholdings]
Policy on cross-shareholdings
The Company strategically holds shares in companies that we believe will contribute to enhancing our corporate
value in terms of helping to maintain and strengthen medium to long-term business-to-business transactions,forming business alliances, building good relationships with business partners, and facilitating business
operations. The Company comprehensively examines the rationality of holding shares for each stock by carefully
considering future prospects and potential synergies in our core business, and any stock that we determine is notreasonably held will be subject to reduction. As of June 20, 2024, the Company held 20 stocks.
・Standards for ensuring appropriate exercise of voting rights for cross-shareholdings
With respect to the exercise of voting rights pertaining to cross-shareholdings, we decide to approve or reject
proposals by comprehensively examining them from the viewpoint of improving the medium to long-term
corporate value of the Company and the companies whose shares we hold, and we have dialogue with themregarding proposals as necessary before exercising our voting rights.

Principle 1-7 [Related Party Transactions]Corporate Governance Report
Corporate GovernanceAny competitive transactions and conflict-of-interest transactions between the Company and any Directors or
corporations substantially controlled by a Director require deliberation and a resolution by the Board of
Directors, and information on such transactions is disclosed in the convocation notice of general meeting ofshareholders and the annual securities report. The Company has established a system that ensures there will be nodisadvantage for the Company when a corporation substantially controlled by any of our Directors or major
shareholders does business with us as our customer.

Principle 2-4-1 [Ensuring Diversity in the Company, Including the Promotion of Female Participation and Career
Advancement](1) Our View on Ensuring Diversity
In order to further enhance corporate value and competitiveness through new ideas and identifying challenges
from diverse perspectives, the Company is promoting the creation of a workplace where all members can work
lively and play an active role, regardless of gender, age, career background, nationality, disability, sexual
orientation, gender identity, etc. We believe that ensuring and accepting diversity will facilitate new value
creation, which will in turn lead to the growth of the ZACROS Group.

(2) Promoting Women’s Success
The Company is actively working to promote the advancement of women. Specifically, we have set a key
performance indicator (KPI) to increase the ratio of female employees to 30% by FY2030. We have also set a
KPI to increase the ratio of women in managerial positions to 25% or higher by FY2030, and have establishedinterim targets in the general business owner action plan which is based on the Act on the Promotion of Women's
Active Engagement in Professional Life[A1], which we are systematically promoting. To drive women's
advancement, we are making wide-ranging efforts towards early development of manager candidates, providing
support for balancing work and family life, and fostering a positive workplace culture. Going forward, we willfurther enhance our initiatives to create a working environment where female employees can build long-term
careers and thrive.

(3) Foreign National Employees
The Company continues to hire, develop, and promote capable human resources regardless of nationality. While
we do not set targets specifically for foreign national employees, we hire several new graduates and mid-career
foreign nationals every year. Going forward, we will continue our efforts to maintain and improve this level, inorder to expand our business areas by utilizing a market-in perspective and local networks, and to achieve
competitive advantages through enhancing functions.

(4) Mid-Career Hiring
Regarding mid-career hiring, we prioritize the utilization of human resources with advanced expertise andCorporate Governance Report
Corporate Governancediverse perspectives and values, while responding to changes in the business environment. In addition to hiring
mid-career candidates for general and managerial positions, we also actively promote non-regular employees toregular staff. Going forward, we will continue to strive to secure human resources through various hiring
approaches and promote the transformation of our business structure.

(5) Employment of People with Disabilities
In FY2023, the employment rate of people with disabilities reached 2.4%. We will continue to work on creating a
comfortable working environment and expanding job opportunities, aiming to achieve a 3.0% such rate as a KPI
in 2030.

(6) Human Resource Development Policy, Internal Environmental Improvement Policy, Etc. to Ensure Diversity
Amid the increasingly rapid and intense changes in the environment surrounding the Group, we recognize that it
is crucial for our employees to maximize their abilities and thrive for the development of our business. With thisunderstanding, we are promoting initiatives such as improving productivity through the use of ICT andstreamlining operations to reduce long working hours. Additionally, as part of our support for diverse working
styles, we are enhancing support measures for employees who are transferred and reviewing our overseas
assignment system.
Going forward, based on the recognition that the growth of our employees is essential for business development
and social contribution, we will continue our efforts such as improving employee engagement and workplaceenvironment and promoting diversity, as well as further increasing training and educational opportunities andexpenses.

Principle 2-6 [Roles of Corporate Pension Funds as Asset Owners]
The Company does not have a corporate pension fund plan, but has introduced a defined contribution corporate
pension plan in order to ensure stable asset formation by employees.

Principle 3-1 [Full Disclosure](1) The Company’s management philosophy, financial results summaries, securities reports, financial results
explanatory materials, etc. are disclosed on our website, etc. (https://www.zacros.co.jp/company-profile/zacros/ ,https://www.zacros.co.jp/ir/library/)

(2)

The

Company’s

basic

policyon

corporate

governance(https://www.zacros.co.jp/company-profile/corporate-governance/)

and

is

disclosedonourwebsiteinour

securities

report,annualconvocation notice of general meeting of shareholders (delivery documents), etc.

(3) Please refer to II (Disclosure of Policy for Determining Remuneration Amounts and Calculation Methods) forCorporate Governance Report
Corporate Governancethe remuneration of Directors, etc.

(4) The Company comprehensively considers the following matters, etc. in the process of nomination ofcandidates for Directors.
In order to establish independent, objective, and transparent procedures, the Board of Directors established, at a
meeting in June 2022, a voluntary Nomination and Remuneration Committee, chaired by an Independent Outside
Director. As a result, the Company has established a system whereby the Board of Directors makes decisions on
the nomination of management executives after a process of consulting and reporting to the Committee. The
Board of Directors will decide on the candidates for the Board of Directors, and then the matter will be put on theagenda for the General Meeting of Shareholders.

(a) Selection of senior management and Director candidatesa. Understand the Company’s founding spirit, corporate philosophy, etc., and has a strong will to contribute to thesustainable development of the Group.
b. Have integrity trusted by stakeholders and treat others with respect.
c. Comply with laws and regulations, the corporate code of conduct, and social norms, and possess the necessary
insight, fairness, and sense of balance as an officer.
d. Have the ability to make decisions from a broad and long-term perspective without being biased toward one’s
own specialty.
e. Have an attitude to keep learning and can act to make up for and develop their shortcomings.
(b) Selection of candidates for Directors serving as Audit and Supervisory Committee Members
a. Have significant insight into key management areas (corporate management, compliance, crisis management,
finance, global management, marketing, production management, etc.).
b. Can make frank, fair and constructive contributions to important meetings, such as the Board of Directors,
based on understanding of the facts.
(c) Selection of candidates for Outside Directors
a. The candidate must meet the independence requirements set out by the Tokyo Stock Exchange and must have a
wealth of knowledge and experience in taking leadership roles in areas such as management, legal affairs, financeand accounting, and human resources and labor affairs, etc.;
b. Must have the ability to understand the nature of the Company’s issues and appropriately provide opinions andguidance to management and oversee it.
The procedures for dismissal of Directors shall be followed in cases where a Director engages, or is likely toengage, in any act in violation of laws and regulations and/or the Articles of Incorporation or in any other cases
where it is deemed difficult for a Director to perform duties appropriately. In any such cases, the Board of
Directors will decide on their dismissal based on the opinion of the Audit and Supervisory Committee and thedeliberation and recommendations by the Nomination and Remuneration Committee. This decision will then beCorporate Governance Report
Corporate Governancesubmitted to the General Meeting of Shareholders for approval.

(5) The reasons for the appointment and dismissal of candidates for Directors will be disclosed in the
convocation notice of general meeting of shareholders (delivery documents).

Supplementary Principle 3-1-3 [Sustainability Initiatives and Investment in Human Capital and Intellectual
Property](1) Corporate sustainability initiatives
The Company has announced its Basic Policy on Sustainability and the Sustainability Committee, chaired by the
Representative Director, President, is leading the Company’s initiatives for individual stakeholders. Since
FY2023, the Company has set and disclosed indicators and targets based on the identified materiality.
(https://www.zacros.co.jp/sustainability/)(2) Investments in human capital and intellectual property
In order to contribute to society sustainably through value creation, the Company aims to create an organization
where diverse people come together and develop themselves. For this purpose, we will create a culture in which
the Company and our employees can build mutually beneficial relationships and grow together.
(Our initiatives on this matter are disclosed on our website, https://www.zacros.co.jp/sustainability/employee/).
As for the allocation of management resources to intellectual property and the implementation of strategies
related to the business portfolio, the Management Strategy Committee regularly shares information, discusses
issues, and formulates and reviews policies in a timely manner.
(3) Risks and opportunities related to climate change
These are disclosed on our website (https://www.zacros.co.jp/sustainability/sus_environment/).

Supplementary Principle 4-1-1 [Scope of Delegation to Management]
Based on the criteria for approval authority, the Company clearly defines the authority for final decisions,deliberation, and approval, etc. for each of decision-making body and decision makers such as the Board of
Directors, management strategy committee, Representative Director, Directors in charge, and General Managers,
etc.
The Board of Directors serves as the decision-making and supervisory body for management, and the
management strategy committee serves as the business execution system based on decisions of the Board of
Directors. We also have chief officers in respective business areas, meeting bodies, and executive officers. By
doing so, we ensure the clear separation of management decision-making functions and business executionfunctions.

Anoverview

of

this

topic

is

disclosedonourwebsite(https://www.zacros.co.jp/company-profile/corporate-governance/) and elsewhere.
The Board of Directors makes decisions on matters stipulated by laws and regulations and the Articles ofIncorporation, as well as important matters regarding the Company and Group companies, etc.

Corporate Governance Report
Corporate GovernancePrinciple 4-9 [Independence Standards and Qualifications for Independent Directors]
The Company selects candidates for Independent Directors who, in addition to meeting the criteria stipulated by
the Companies Act and the Tokyo Stock Exchange, do not fall under the following categories in our own criteria
for independence.
(a) An executive of a major business partner of the Group. A “major business partner” means a business partnerwith whom the transaction value in the most recent fiscal year exceeds 2% of the consolidated net sales of theGroup or the business partner (including its parent company and significant subsidiaries).
(b) An executive of a major lender to the Group. A “major lender” means a lender that has extended loans to theCompany in an amount exceeding 2% of the Group’s consolidated total assets as of the end of the most recent
fiscal year.
(c) Lawyers, certified public accountants, tax accountants, or consultants, etc. who received monetary or otherproperty benefits from the Company in excess of 10 million yen in the most recent fiscal year, other than
executive remuneration.
(d) A person who received a donation or subsidy exceeding 10 million yen from the Company in the most recent
fiscal year or an executive thereof.
(e) A person who falls under any of (a) through (d) above in the past two fiscal years.
(f) When a person who falls under any of (a) to (d) above is a director, operating officer, executive officer, or an
executive with the rank of general manager or higher, or an executive with equivalent authority, or their spouse or
relative within the second degree of kinship.
(g) A person who has served as an outside director of the Company for 10 years or longer

Supplementary Principle 4-10-1 [Nomination and Remuneration Committees]
In June 2022, the Company established a voluntary Nomination and Remuneration Committee to ensure
independence, objectivity, and transparency in the nomination and remuneration of directors and executive
officers. The Committee consists of four members, half of whom are Independent Outside Directors, and ischaired by an Independent Outside Director. Nomination and remuneration of directors and executive officers
will be decided by the Board of Directors after a process of consulting and reporting to the Committee. The
nominees for the Board of Directors will be put on the agenda for the General Meeting of Shareholders.
A total of 9 meetings were held in FY2023, and the attendance rate of committee members at each meeting was
100%. The main topics of deliberation included consideration of director candidates, interviews with new
candidates, and others, and the conclusion of the deliberation was reported to the Board of Directors.

Supplementary Principle 4-11-1 [Disclosure of Policy on Appointment of Directors, etc.]
The Board of Directors consists of six Directors (excluding Directors serving as Audit and Supervisory
Committee Members) and three Directors serving as Audit and Supervisory Committee Members. We have at

Corporate Governance Report
Corporate Governanceleast three Outside Directors in principle.
In light of the Company’s management strategy, we have identified the following skills that the Board of
Directors must be equipped with: corporate management; manufacturing and development; sales and marketing;finance, accounting and legal affairs; internationalization and diversity; and environment and the ESGs. Theseskills are considered in the process of appointment, and at least one Independent Director must have experiencein corporate management. By doing so, we make sure to build a well-balanced Board of Directors by appointing
individuals who are diverse in knowledge, experience and capabilities.
The policies and procedures for appointment of individual Directors are as explained in Principle 3-1 (4) and (5).

Supplementary Principle 4-11-2 [Disclosure of Concurrent Positions of Directors at Other Listed Companies]
The Company stipulates in its internal rules that if an inside Director concurrently serves as an officer of anotherlisted company, the approval of the Board of Directors is required. In addition, we have established a system tomanage the status of concurrent positions of all Directors, in which the status of related party transactions andconcurrent positions are verified for all Directors each fiscal year. The status of concurrent positions held by
Outside Directors at other companies is disclosed annually through the convocation notice of general meeting ofshareholders, the annual securities report and the corporate governance report, etc.
All Directors do not concurrently serve as officers of other listed companies not affiliated with the Group, so they
can concentrate on the duties of Directors.

Supplementary Principle 4-11-3 [Implementation and Disclosure of Analysis and Evaluation of the Board of
Directors’ Effectiveness]
The members of the Board of Directors, including Outside Directors, engage in active discussions based on theirdiverse knowledge and abundant experience, and strive to enhance the management of meetings so thatmanagement decisions can be made in a timely and appropriate manner.
With regard to the analysis and evaluation of the effectiveness of the Board of Directors, the Chairperson of theBoard of Directors collects opinions of Directors on the effectiveness of the Board through questionnaires or byother means, and reports to the Board of Directors whenever there are points for improvement.
In FY2022, we reviewed the agenda items of the Board of Directors and the Management Strategy Committee toensure that the Board of Directors has sufficient time to deliberate on proposals related to group-wide strategy
and management oversight.
What skills are required for directors is discussed at the Board of Directors based on the consultation to andrecommendations from the Nomination and Remuneration Committees, and the conclusion is utilized in the
deliberation of candidate selection proposals.

Supplementary Principle 4-14-2 [Disclosure of Training Policy for Directors and Kansayaku]
Training for Directors is designed to help them to manage the Company in a way that grows our business based

Corporate Governance Report
Corporate Governanceon our corporate philosophy and also contributes to society and the industry. At the time of assuming office,Directors and executive officers are encouraged to take part in training programs provided by external training
bodies that are necessary for them to manage the Company and perform their duties, including programs in areas
such as legal, accounting, governance and compliance. They are also encouraged to join external organizations
and participate in human networks (interactions across industries) in order to achieve personal development, etc.
by gaining new insights and real-life information. The relevant expenses are paid by the Company when claimed
by Directors and executive officers. Outside Directors are also given sufficient training to enhance theirunderstanding of the Company’s business, including explanations and visits to research laboratories and businesslocations.

Principle 5-1 [Matters Related to Constructive Dialogue with Shareholders](1) The Company has appointed a Director in charge of IR who oversees departments involved in IR activities,
such as the President’s Office and the Finance & Accounting Department, and ensures day-to-day coordination
among these departments.
(2) The Director in charge of IR stipulated above actively accepts IR interviews, including telephoneinterviews from investors, small meetings and individual meetings, and holds semi-annual financial results
briefings for analysts and institutional investors, where the President and Director in charge of IR, etc. provide
explanations.
(3) Opinions and concerns, etc. from shareholders are shared among the departments in charge of IR, and when
deemed important, such opinions and concerns, etc. are reported to senior management, Directors, etc., and also
shared as necessary with senior employees.
(4) When we engage in dialogue with investors, whether in financial results briefings, small meetings orindividual interviews, such dialogue is always focused on matters relating to sustainable growth and medium tolong-term enhancement of corporate value of the Company, in order to ensure thorough management of
information under the “Insider Trading Prevention Regulations.” We also take great care of the management of
insider information, for instance by refraining from commenting on our financial and business results from eachclosing date until the announcement date.
(5) A shareholder identification survey will be conducted as necessary.

Principle 5-2 [Formulation and Publication of Management Strategies and Plans)[Measures for realizing management that is conscious of capital costs and stock prices] [Disclosed in English]
The Company formulated a medium to long-term management plan for a period from FY2024 to FY2030(evolution of solution creation activities.)
We aim to improve capital efficiency and achieve long-term stock price growth through the steady
implementation of this plan.
The Company has been offering Japan's first and world-first solutions to address potential societal issues. We aim

Corporate Governance Report
Corporate Governanceto further evolve these efforts, thereby achieving sustainable enhancement of corporate value. With a target ofachieving a 12% ROE by FY2030, we set the next three years as “the period of structural reform throughproactive investment,” aiming for sustained enhancement of corporate value.
From FY2021 to 2023, we positioned the three-year period as “the period of foundation reinforcement andpreparation.” Even amid the COVID-19 disaster, various investment projects progressed, but actual investment
expenditure remained at 17.9 billion yen. To turn around this situation, we set the three-year period from FY2024
to 2026 as “the period of proactive upfront investments.” We will actively invest in investment projects preparedover the past three years, thereby executing the three fundamental policies: evolution of business models,transformation of business portfolios, and balance sheet reform. As depreciation expenses associated with the
upfront investments are expected, FY2026's profit levels are forecasted to stay at the current levels. However,through this approach, we aim to structurally transform into a high-value creation entity in the future.
As for shareholder returns, in addition to our traditional stable and continuous dividends, we aim to enhance
returns with a target payout ratio of 40% over the three-year period from FY2024 to 2026.
More details on the medium- to long-term management plan (evolution of solution creation activities) areprovided in the Medium- to Long-Term Management Plan Materials on the Company's corporate website.
(https://www.zacros.co.jp/ir/library/presentations/)[Status of Dialogue with Shareholders, etc.]
As stated in Principle 5-1.
The Company has appointed a Director in charge of IR, who actively accepts IR interviews, including telephoneinterviews from investors, small meetings and individual meetings, and holds semi-annual financial results
briefings for analysts and institutional investors. In each case, the President and the Director in charge of IR, etc.
explain matters relating to sustainable growth and medium to long-term enhancement of corporate value of theCompany, as themes of the dialogue.

2. Capital Structure
Foreign Shareholding Ratio

From 20% to less than 30%[Status of Major Shareholders] Update
Name / Company Name
The Master Trust Bank of Japan, Ltd. (Trust

Number of Shares Owned

Percentage (%)

2,745,800

14.80

Custody Bank of Japan, Ltd. (Trust Account)

749,000

4.03

Cad LLC.

724,500

3.90

H&N Co., Ltd.

718,800

3.87

Account)

Corporate Governance Report
Corporate Governance

Misako Fujimori

578,000

3.11

BNP

562,000

3.02

Nobuhiko Fujimori

536,000

2.88

Masahiko Fujimori

514,000

2.76

Yukihiko Fujimori

505,000

2.72

Chiyako Kataoka

480,500

2.58

PARIBAS/2S/LUXEMBOURG/JASDEC/FIM/LUXEMBOURG FUNDS/UCITS ASSETS (Standing
proxy: The Hong Kong and Shanghai Banking
Corporation

Limited,Tokyo

Branch,CustodyServices Department)

Name of controlling shareholder (excluding parent―――

company)

Name of parent company

Not Adopted

Supplementary Explanation Update
The status of major shareholders is as of March 31, 2024.

3. Corporate Attributes
Market segment to be listed

TSE Prime

Fiscal Year-End

MarchType of Business

Chemicals

Number of Employees (consolidated) as of the End

1,000 or moreof the Previous Fiscal YearSales (consolidated) as of the End of the Previous

From 100 billion yen to less than 1 trillion yen

Fiscal Year
Number of Consolidated Subsidiaries as of the End

From 10 to less than 50of the Previous Fiscal Year
4. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling Shareholder―――

5. Other Special Circumstances which may have Material Impact on Corporate Governance―――Corporate Governance Report
Corporate Governance

II. Business Management Organization and Other Corporate Governance Systems regarding Decision-making,Execution of Business, and Oversight in Management
1. Organizational Composition and Operation
Organization Form

Company with Audit and Supervisory Committee[Directors]
Maximum Number of Directors Stipulated in

14 persons

Articles of Incorporation
Term

of

OfficeStipulatedin

Articlesof

1 year

Incorporation
Chairperson of the Board

President

Number of Directors

9 personsElection of Outside Directors

Appointed

Number of Outside Directors

3 persons

NumberofOutsideDirectors

Designatedas

3 persons

Independent Directors

Outside Directors’ Relationship with the Company (1) Update
Outside Directors’ Relationship with theName of Director

Company (*1)

AttributeaManabu Sakai

From another company

Satoko Takeuchi

From another company

Kumi Izawa

From another company

b

c

d

e

f

g

h

i

j

k

(Current surname:Sugimoto)*1 Categories for “Relationship with the Company”
a. Executive of the Company or its subsidiaries
b. Non-executive director or executive of a parent company of the Company
c. Executive of a fellow subsidiary company of the Company
d. A party whose major client or supplier is the Company or an executive thereof
e. Major client or supplier of the listed company or an executive thereof
f. Consultant, accountant or legal professional who receives a large amount of monetary consideration or other property from theCompany besides compensation as a director/kansayaku
g. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a legal entity)

Corporate Governance Report
Corporate Governanceh. Executive of a client or supplier company of the Company (which does not correspond to any of d, e, or f) (the director
himself/herself only)
i. Executive of a company, between which and the Company outside directors/kansayaku are mutually appointed (the director
himself/herself only)
j. Executive of a company or organization that receives a donation from the Company (the director himself/herself only)
k. Others

Outside Directors’ Relationship with the Company (2) Update
Audit

and
Independent

Supervisory
Name of Director

Supplementary
Designation as Independent

Director

Explanation of theCommittee

Director
Relationship

MemberManabu Sakai〇〇

Designated as Independent

Mr. Sakai was appointed

Directorbywith the expectation thatTokyo Stock Exchange, Inc.

his long experience andon the grounds that he isdeep insight into R&D

unlikely to have conflicts ofactivities

interest

managementasstipulated

withgeneralshareholders.

andcorporatewillbeutilized in the managementof the Company. He was
also

designatedasIndependent Director basedon our judgement that hemeets the requirements forindependence that would
not

cause

interest

conflicts
withofgeneralshareholders and that hehas abundant experienceand a career as a manager
withadvancedmanagement
decision-making abilities.
Satoko Takeuchi〇〇

Designated as Independent

Ms.

Director

appointed

asstipulatedbyTokyo Stock Exchange, Inc.

Takeuchi
with

was
the

expectation that her longCorporate Governance Report
Corporate Governanceon the grounds that she ismanagement

unlikely to have conflicts ofexperience and expertiseinterest

will be utilized in thewithgeneralshareholders.

consulting

management

of

the

Company. She was also
designated as Independent
Director

based

on

our

judgement that she meetstherequirementsforindependence that would
not

cause

interest

conflicts
withofgeneralshareholders and that shehasknowledge

experience

in

and

advancedmanagement strategies andhumanresource

development.
Kumi Izawa〇

Designated as Independent

She was appointed with(Current surname:

Directorbythe expectation that her

Sugimoto)

Tokyo Stock Exchange, Inc.

specialized knowledge as aon the grounds that she isuniversity

unlikely to have conflicts ofresearcher, along with herinterest

extensiveas

stipulatedwithshareholders.

generalandNPO

researchexperiencein

corporate

analysis, will be utilized in
the management of theCompany. She was also
designated as Independent
Director

based

on

our

judgment that she meetstherequirementsforindependence that would
not

cause

interest

conflicts
withofgeneralshareholders and that sheCorporate Governance Report
Corporate Governancehasknowledge

experience

in

and

advancedinnovation.

[Audit and Supervisory Committee]
Committee’s Composition and Attributes of Chairperson

Audit

All Committee

Full-timeMembers

Membersand3

Inside Directors

OutsideChairperson

Directors

1

1Supervisory2

OutsideDirector

Committee

Appointment of Directors and/or Staff to Support the
Appointed
Audit and Supervisory Committee

Matters Related to the Independence of Such Directors and/or Staff from Executive Directors
The Audit and Supervisory Committee may assign audit staff to assist the Committee in its operations asnecessary. Employees who have received orders necessary for audit operations from the Audit and Supervisory
Committee shall not be directed or ordered by Directors (excluding Directors who are Audit and Supervisory
Committee Members) with respect to such orders.

Cooperation among Audit and Supervisory Committee, Accounting Auditors and Internal Audit Departments
Both Directors serving as members of the Audit and Supervisory Committee and audit staff attend important
meetings, conduct on-site inspections of offices, research laboratories and subsidiaries, etc., hear feedback andopinions from administrative departments, exchange opinions with the Representative Director, and conduct
audits on documents requiring approval, etc.
The Company holds regular meetings with the Accounting Auditor as well as the Audit Office, which wasestablished as an internal audit department, and closely works with them, including exchanging information andopinions as necessary, in order to enhance the effectiveness and efficiency of audits.

[Voluntary Establishment of Nomination/Remuneration Committee]
Voluntary

Establishment

Corresponding

toofNomination

Remuneration Committee

Committee(s)CommitteeorEstablishedCorporate Governance Report
Corporate Governance

Voluntary Establishment of Committee(s), Committee’s Composition and Attributes of Chairperson
Committee Corresponding to Nomination Committee
Name of Committee

Nomination and Remuneration Committee

All

Full-time

InsideOutsideIn-house

Committee

Members

Directors

Directors

experts

OthersChairperson

Members

4

0

2

2

0

0

OutsideDirectors

Committee Corresponding to Remuneration Committee
Name of Committee

Nomination and Remuneration Committee

All

Full-time

InsideOutsideIn-house

Committee

Members

Directors

Directors

experts

OthersChairperson

Members

4

0

2

2

0

0

OutsideDirectors

Supplementary Explanation
The Nomination and Remuneration Committee's objective is to clarify the objectivity, transparency and fairnessof procedures related to the nomination and remuneration of Directors and executive officers, and to enhance andstrengthen corporate governance. Members of the Committee are selected by resolution of the Board of Directors
based on the achievement of these objectives. Currently, there are four committee members, consisting of Satoko
Takeuchi (Chairperson and Outside Director), Manabu Sakai (Outside Director), Akihiko Fujimori (Chairman
and Director), and Taku Shimoda (Representative Director, President). The Committee reports its deliberations to
the Board of Directors, which makes decisions. Through the establishment of the Committee, the Company will
ensure the transparency and objectivity of the evaluation and decision-making process regarding nomination andremuneration of senior management, strengthen the supervisory function of the Board of Directors and its
accountability to shareholders, and further enhance the corporate governance system.

[Independent Directors]
Number of Independent Directors

3 persons

Matters relating to Independent Directors
The Company designates all Outside Directors who meet the qualifications for Independent Directors as

Corporate Governance Report
Corporate GovernanceIndependent Directors.
[Incentives]
Incentive Policies for Directors

Introductionofperformance-linked

remuneration

system, etc.
Supplementary Explanation
The Annual General Meeting of Shareholders held on June 18, 2021, approved the introduction of a restricted
sock remuneration scheme replacing the existing stock option remuneration scheme. This new scheme isintended to provide incentives for the sustainable enhancement of the Company’s corporate value and also topromote further value sharing with our shareholders. Recipients of restricted stock remuneration: Directors(excluding Directors who are Audit and Supervisory Committee Members, Outside Directors and part-time
Directors)

Recipients of Stock Options
Supplementary Explanation―――[Director Remuneration]
Status of Disclosure

No Individual Disclosure

Supplementary Explanation
Information on remuneration paid to Directors is disclosed in our annual securities report and business report,
which is posted on our website for public view. None of our Directors are subject to the individual disclosure
requirements (consolidated remuneration of 100 million yen or more) stipulated by the Cabinet Office Ordinanceon Disclosure of Corporate Affairs, etc.

Policy on Determining Remuneration Amounts andEstablishedCalculation Methods Update
Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods
Our Board of Directors decides on policy for determining details of remuneration for individual Directors. The
details are as follows.
[Basic Views on Remuneration]
1. The remuneration for Directors who execute business operations consists of base remuneration (fixed monthly
remuneration); bonus (short-term performance-linked remuneration); and restricted stock remuneration(stock-based remuneration as a medium to long-term incentive). The remuneration framework for Directors istherefore focused on reflecting the Company’s performance as well as their duties and achievements.
2. The remuneration for Outside Directors, part-time Directors, and Directors who are Audit and Supervisory
Committee Members consists only of base remuneration, which is fixed monthly remuneration.

Corporate Governance Report
Corporate Governance3. The amount of remuneration shall be within the maximum amount of remuneration approved at the general
meeting of shareholders.
4. Remuneration levels are determined by the Board of Directors after consideration based on benchmarking
analysis of companies of similar business sizes or companies belonging to related industries and businesses inorder to ensure that remuneration levels reflect the Company’s business performance and are consistent with theirpositions and roles. In the process of such consideration, Directors who are Audit and Supervisory Committee
Members are also involved and the results of research and advice provided by external professional bodies aretaken into account. The remuneration for Directors who are Audit and Supervisory Committee Members isreviewed and determined by the Audit and Supervisory Committee.
5. In designing the remuneration framework, the Board of Directors shall consider remuneration of officers with
Directors who are Audit and Supervisory Committee Members, by taking into account the results of research andadvice provided by external professional bodies so that remuneration levels will reflect the Company’s businesssize and performance, as well as changes in business environment, and are consistent with the positions and rolesof individual Directors. After such consideration, the officers remuneration regulations, etc. shall be establishedby resolution of the Board of Directors.
(a) Basic Remuneration Policy
The base remuneration for Directors is fixed monthly pay consisting of supervisory remuneration and executive
remuneration, and shall be set at an appropriate level according to positions and roles and in line with the size of
the Company’s operations and the business environment.
(b) Policy on Performance-linked Remuneration

Bonuses are determined based on the calculation standards that reflect items related to key performanceindicators (KPIs) and the enhancement of corporate value and shareholders’ value, with the level of target
achievement taken into consideration as an indicator.
(c) Policy on Non-monetary Remuneration, etc.
As medium to long-term performance-linked remuneration (stock remuneration), restricted shares are granted to
Directors who execute business operations, with the aim of ensuring their commitment to the achievement of the
management plan and the enhancement of corporate value. Allotted shares on which restrictions have not been
lifted will be acquired by the Company without consideration, except when there are rational reasons including
resignation before the expiration of his/her term of office.
(d) Matters Concerning the Delegation of Decisions on Remuneration, etc.

(i) The Representative Director, President shall be entrusted with authority for the amount of base remunerationand the evaluation of individual Directors in accordance with the remuneration regulations, etc. for Directors andother rules, and shall decide on bonuses allocated based on the evaluation of individual Directors in terms of
performance of the business operations for which they are responsible.

Corporate Governance Report
Corporate Governance(ii) In order to ensure that the Representative Director, President may appropriately exercise such authority, theBoard of Directors deliberates on the remuneration regulations, etc. for officers, following the recommendationsof the Nomination and Remuneration Committee. The Representative Director, President who is delegated as
described above shall make decisions in accordance with the said rules. With regard to stock remuneration, theBoard of Directors determines the number of shares allotted to each Director, in accordance with laws andregulations and based on the resolution of the General Meeting of Shareholders.

[Support System for Outside Directors (Outside Kansayaku)]
Before taking office, Outside Directors (Outside Kansayaku) are provided with explanations of the Company’s
products and internal terminology with materials and go through site visits.

2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination and Remuneration Decisions(Overview of Current Corporate Governance System) Update
The “Board of Directors” consists of 9 members: Six Directors (excluding Directors who are Audit andSupervisory Committee Members) and three Directors who are Audit and Supervisory Committee Members. In
principle, the Board of Directors meets once a month to make important management decisions. The Board alsosupervises the execution of operations by Directors (excluding Directors who are Audit and Supervisory
Committee Members) and executive officers. The Board is operated in accordance with the Board of Directors
regulations.
The “Management Strategy Committee” consists of 12 members including the Chairman, President, Quality
Control Officer, Supply Chain Control Officer, R&D Administrative Officer, Administrative Division Managing
Officer, General Manager of the Business Division, Manager of the Industrial Infrastructure Business segment,
Head of R&D, and Head of the President’s Office[A2]. It meets approximately twice a month to deliberate on
important matters related to the management of the Company and the Group based on the basic policy decided by
the Board of Directors, make decisions on the scope of executive authority, and deliberate on matters to be
decided by the Board of Directors and matters to be reported to the Board of Directors.
・The executive officer system has been in place since 2001.
・We seek guidance and advice on compliance issues from our legal advisor as necessary.
・Starting from 2024, we will appoint full-time Audit and Supervisory Committee members.
The Company has appointed EY Ernst & Young ShinNihon LLC as its “accounting auditor”. There is no special
interest between the Company and the auditor’s engagement partners who are engaged in audits of the Company.
The Company enters into an audit agreement with the audit firm and pays fees based on the agreement.
The names of certified public accountants who conducted audits during the fiscal year under review and their
number of years of continuous service are as follows.
The names of the certified public accountants who conducted audits and their number of years of continuousCorporate Governance Report
Corporate Governanceservice
Designated Attestation and Engagement Partner, Seiji Kuzunuki (Note)
Designated Attestation and Engagement Partner, Shotaro Shimafuji (Note)(Note) Their number of years of continuous service is seven years or less and is therefore not indicatedabove.
The composition of audit assistants is as follows.
Number of assistants in audit operations
Six certified public accountants
21 in other professions

3. Reasons for Adoption of Current Corporate Governance System
The Company believes that adopting a system of the Audit and Supervisory Committee in order to further
strengthen corporate governance and improve corporate value over the medium to long-term will further
strengthen the audit and supervisory function by allowing Directors who are Audit and Supervisory Committee
Members to hold voting rights at the Board of Directors meetings, and will encourage more opinions fromIndependent Directors and improve management transparency and mobility, as well as facilitate understanding
from overseas stakeholders.

III. Implementation of Measures for Shareholders and Other Stakeholders
1. Measures to Vitalize the General Shareholder Meetings and Smooth Exercise of Voting Rights Update
Supplementary Explanation
Early

DispatchofNoticesofConvocationof

We dispatch notices early.

General Meetings ofShareholders
SchedulingAGMs

We schedule our general meeting of shareholders on a day other than the peak day.

Avoiding the PeakDay
Allowing Electronic

You can exercise your voting rights via the internet.

Exercise of Voting
RightsParticipation in an

We have participated in an electronic voting platform beginning with the General

Electronic

Meeting of Shareholders for the fiscal year ended March 31, 2022.

VotingPlatform and OtherCorporate Governance Report
Corporate GovernanceInitiatives to Improve
the

VotingEnvironmentofInstitutional Investors
ProvisionofConvocation

Notice(Summary)in

We provide it in English.

English

2. IR Activities
Explanation by the
Supplementary Explanation
representative
Regular briefings for

We hold regular briefings.

Yes

Regular briefings for

The President holds financial results briefings twice a year, inYesanalysts

May and November, and gives interviews with analysts andindividual investors

andinstitutional investors

institutional investors, and also holds small meetings as needed.

Posting

We post the following: statutory and voluntary disclosureofIR

Materials on Website

materials,

timelydisclosurematerials,

securities

reports(semi-annual reports), digest versions of financial results
briefings, financial results summaries (summary of quarterly
financial and business results), financial results supplemental
materials, and convocation notice of general meeting ofshareholders and related materials.

3. Measures to Ensure Due Respect for Stakeholders
Supplementary Explanation
StipulationofIn the “Fujimori Kogyo Group Charter of Corporate Conduct” established by theInternalfor

Company and our Group companies, ethical responses to all stakeholders (including

Respecting

thecustomers, business partners, shareholders, local residents, employees, governments,

Positionofand the global environment) and strict compliance with laws are stipulated, and copies

Rules

Stakeholdersof the translated version of our Charter are distributed to all our business locations inJapan and overseas.

Implementationof“Fujimori Kogyo Group Charter of Corporate Behavior” and the “ZACROS

Environmental
Activities,

In addition to establishing the “Basic Sustainability Policy,” we have established the

CSR

Environmental Charter,” which stipulate that we will contribute to “reducing

Corporate Governance Report
Corporate Governanceenvironmental impact and creating a sustainable society” and be committed to

Activities, etc.

“developing and providing innovative technologies, products and services that
contribute to energy and resource conservation and environmental conservation.” We
are also actively engaged in environmental management, and are also promoting
company-wide action plans based on the Act on Advancement of Measures to Support
Raising Next-Generation Children.
Formulation
Updateof

We will not only disclose information in compliance with legal requirements but also

Policies Concerning

ensure appropriate disclosure of information such as management plans, strategies, andInformation

challenges that are deemed important to shareholders and other stakeholders.

Provisionto

Stakeholders

Additionally, we endeavor to disseminate information that fosters constructive dialogue
with shareholders, investors, and other stakeholders.

IV. Matters Related to the Internal Control System
1. Basic Views on Internal Control System and the Progress of System Development
In accordance with the provisions of the Companies Act requiring "development of a system to ensure that theexecution of duties by directors complies with laws and regulations and the articles of incorporation, and othersystems specified by the Ministry of Justice Ordinance as those necessary to ensure the appropriateness of theoperations of a Stock Company," the Company has established the following systems and strives to ensure thelegality and efficiency of our business operations and to manage risks under these systems. We are committed to
improving and enhancing our operations by constantly reviewing our business practices to make them in linewith changes in socioeconomic conditions and other environmental factors.

1. System to ensure that Directors and employees execute their duties in compliance with laws and regulations
and the Articles of Incorporation(a) The Company has established the Fujimori Kogyo Group Charter of Corporate Behavior and the basic
compliance rules as the basis of our compliance system. We will strive to disseminate and thoroughly
implement these rules, and Directors will take the lead in complying with laws and regulations and the Codeof Ethics. In addition, the “Compliance and Risk Management Committee,” chaired by the President and inprinciple with the participation of outside lawyers, shall be established to develop, maintain, monitor andimprove the compliance system of the Company.
Regulations and guidelines shall be established and training shall be conducted in each department incharge as necessary.
(b) The Company has established an Internal Audit Office as an internal audit body independent of businessexecution departments.
(c) Directors shall report to the President and the Audit and Supervisory Committee as soon as they becomeaware of any serious violation of laws or regulations or any other important compliance-related situation

Corporate Governance Report
Corporate Governanceor fact in the Company.
(d) As an internal reporting system for legal violations and other compliance-related issues, the Company shallestablish and improve an internal whistleblowing system in which the Audit and Supervisory Committee,
outside lawyer, and General Manager of the General Affairs Department are the direct recipients of
information. Based on the internal whistleblowing rules, the Compliance and Risk Management
Committee shall respond to issues or concerns, operate the whistleblowing system, and develop measures
to prevent recurrence.
(e) Directors who are Audit and Supervisory Committee Members may state their opinions and request theformulation of improvement measures if there is a problem with the Company’s legal compliance system or theoperation of its internal whistleblowing system.

2. System for retention and management of information concerning the execution of duties by Directors
In accordance with the document management regulations, the Company shall appropriately and reliably
retain and manage information pertaining to the execution of duties by Directors in a highly searchable way
suitable for the storage medium.
3. Rules and other systems for managing the risk of loss
In accordance with our “Risk Management Regulations,” the Company shall establish the “Compliance andRisk Management Committee,” chaired by the President, to oversee overall risk management.
In the event of an emergency, a “Crisis Management Headquarters” (or, in the event of a disaster, a Disaster
Management Headquarters), headed by the President, will be established to minimize damage and prepare
for business continuity and early recovery in accordance with the “Crisis Management Rules” and the“Disaster Prevention Rules.” In normal times, business divisions and departments shall identify their risks
and engage in activities to prevent and mitigate those risks.

4. System to ensure efficient execution of duties by Directors(a) The Company shall hold a regular meeting of the Board of Directors once a month and also haveextraordinary meetings as necessary, as the basis of a system to ensure the efficient execution of duties byDirectors. Important matters related to the Company’s management policies and management strategies
shall be discussed in advance by the Management Strategy Committee, and execution decisions shall bemade after deliberation.
(b) With regard to the execution of business operations based on decisions made by the Board of Directors, theorganization rules and the rules for division of duties shall set out the details on persons in charge, theirauthorities, and execution procedures.
5. System to ensure the appropriate business operations of a corporate group consisting of a stock company, its
parent company, and its subsidiaries(a) The Group shall establish and maintain a system for compliance and risk management of the entire Group,Corporate Governance Report
Corporate Governancein which the “Compliance and Risk Management Committee” supervises and promotes compliance and risk
management across the Group. In order to ensure proper operations of Group companies, the “Fujimori
Kogyo Group Charter of Corporate Behavior” shall be established and shall apply to all Group companies,
and each Group company shall establish its own rules and regulations based on this Charter.
With regard to business management, in accordance with the regulations on management of affiliatedcompanies, subsidiaries shall be managed through the approval and reporting system to the Company and bemonitored as necessary. Directors and employees of the Company or Group companies shall report to the
Audit and Supervisory Committee if they become aware of any violations of laws and regulations or otherimportant compliance-related situations or facts at Group companies.
(b) If a Group company finds that the content of business management and management guidance from theCompany violates laws and regulations or there are other compliance issues, it shall report to theCompany’s Audit and Supervisory Committee, which may state opinions and request the formulation of
improvement measures.
6. Systems pertaining to employees who are to assist the Audit and Supervisory Committee in its operations, andmatters concerning the securing of the independence of such employees from Directors and the effectiveness of
instructions given by the Audit and Supervisory Committee to such employees
The Audit and Supervisory Committee may, as necessary, have audit staff who assist the Committee in its
operations, and employees who have received orders necessary for audit operations from the Committee shall not
be directed or ordered by Directors (excluding Directors who are Audit and Supervisory Committee Members)
with regard to such orders.
7. Systems for Directors and employees to report to the Audit and Supervisory Committee and other systems forreporting to the Audit and Supervisory Committee
If a Director becomes aware of a fact that may cause substantial damage to the Company, the Director shallimmediately report to the Audit and Supervisory Committee in accordance with laws and regulations.
Directors serving as Audit and Supervisory Committee Members shall attend important meetings in addition tomeetings of the Board of Directors, and shall be able to view documents requesting approval and other important
documents related to business execution, and to request explanations from other Directors or employees asnecessary.
Employees shall report directly to the Audit and Supervisory Committee if they become aware of any matter that
may cause substantial damage to the Company or any material fact concerning a violation of laws, regulations or
the Articles of Incorporation.
8. System to ensure that audits by the Audit and Supervisory Committee are conducted effectively
The Company shall establish regular meetings between the Audit and Supervisory Committee and theRepresentative Director, President.
9. System to ensure the reliability of financial reporting
For the purpose of ensuring the reliability of financial reporting and the effective and appropriate submission ofCorporate Governance Report
Corporate Governanceinternal control reports as prescribed in Article 24-4-4 of the Financial Instruments and Exchange Act, a system
for internal control over financial reporting shall be established and operated under the direction of the President.

2. Basic Views on Eliminating Anti-Social Forces
With the aim of eliminating antisocial forces, the Company has stipulated in the Fujimori Kogyo Group Charterof Corporate Behavior that “the Company shall never engage with anti-social forces and groups that threaten theorder and security of civil society, and shall stand firmly against any pressure from them” and that it will respondto unjust acts committed by antisocial forces in cooperation with competent police authorities, legal advisors, andother external professional organizations.

V. Other
1. Adoption of Anti-Takeover Measures
Adoption of Anti-Takeover Measures

Not Adopted

Supplementary Explanation―――

2. Other Matters Concerning to Corporate Governance System―――

Corporate Governance Report
Corporate Governance[Corporate Governance Structure]

Appointment /Dismissal

General Meeting of Shareholders
Appointment

Appointment

Dismissal

Audit and Supervisory Committee

Dismissal

Board of Directors

Consultation

ReportLegal Advisor

Nomination andInternal Whistleblowing Contact Points

Remuneration

Cooperation

Committees

Audit

Representative Director,
PresidentInternal Audit
OfficeReporting

Dismissal

Taking action

Compliance and risk
management committee
Sustainability Committee

Committee

Business operative divisions and departments / Group companies

Giving directions about
implementation plans

Management Strategy

Reporting

Reporting(Audit and Supervisory Committee /Legal adviser / General Manager of General Affairs Dept.)

Supervision

Appointment

Audit

Reporting /Offering
improvement
suggestions

Audit

Audit Firm/Accounting Auditor

ReportingCorporate Governance Report
Corporate Governance[Outline of the Timely Disclosure System]
The Company has always strived to comply with laws and regulations such as the Financial Instruments andExchange Act and the rules set out by the stock exchange on which our securities are listed and to disclose important
information about our business in a timely manner, in order to promote the proper understanding and evaluation of
the Company by our shareholders and investors, thereby becoming a company that all stakeholders, including
customers, shareholders, employees, and suppliers, can be proud of.
Financial information is collected in the Accounting Department and management information is collected in the
President’s Office. After being presented to the General Manager of the General Affairs Department, who is in chargeof handling information, both categories of information are disclosed in a timely and appropriate manner based on
decisions by the Board of Directors or the Representative Director.

[Flowchart for Timely Disclosure of Corporate Information]

Departments or affiliated companies incharge of information

General managers of respective
departments

Accounting Department
President’s Office/

Confirmation

General Manager
Affairs Department

of

GeneralResponse

Proposal

Boardof
DirectorsorApproval

Information
disclosure

Lawyers and certified
public accountants

Representative
Director

Corporate Governance Report
CORPORATE GOVERNANCE[Director Skills Matrix] Update

Name of Director

Corporate
management

Manufacturing
anddevelopment

Sales andmarketingAkihiko Fujimori

○

○

○

Taku Shimoda

○

○

○

Eishi Fuyama○○○

Michihiko Sato
Norihiro Kusaka○

Kumi Izawa
NobuhikoFujimori○

Manabu Sakai○

Satoko Takeuchi

Finance,accounting andlegal affairs

○
○

○

○

○

○

○

○

○

Internationaliza
tion anddiversity○○○

Environment
and ESG

○

○

○

○

○
○
○

○

○

○

○

○

Circle four areas of expertise or experience of each director that the Company considers to be particularly
important27