Corporate Governance Guidelines

Chapter 1: General provisions(1) Corporate philosophy–

We act to live in harmony with the Earth.

(2) Management policy–
With the “customer perspective” as a starting point, we shall undertake an unwavering
pursuit of solutions to customers’ inconveniences and discontent, and strive to create
and revitalize markets by providing products and services that offer value for customers.
(3) Basic approach to corporate governance–
We shall position the strengthening and enhancement of corporate governance as animportant issue for management, and strive to earn the trust of stakeholders as acompany that offers value, applying these Guidelines to make management decisions
quickly, direct the execution of operations, ensure thorough compliance, and disclose
information appropriately, at the appropriate times.
Chapter 2: Ensuring shareholders’ rights and equality(1) Ensuring shareholders’ rights–
We shall proactively disclose information to practically ensure the rights of allshareholders.
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Articles of Incorporation and Share Handling Regulations shall be displayed on thecompany’s website, to clearly indicate procedures for the execution of rights and otherrelevant information.
(2) General Meeting of Shareholders–
When holding General Meetings of Shareholders, schedule overlap with general meetings
held by other companies shall be avoided whenever possible, and the venue shall beselected to maximize convenience.
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To enable appropriate judgments by shareholders on items raised at General Meetingsof Shareholders, the accuracy of information shall be guaranteed, and information shallbe provided quickly, in an easy-to-understand format.
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Responses to requests from shareholders regarding the execution of voting rights shall be
studied while consulting with trust banks and other relevant parties.
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The Board of Directors shall receive reports on analysis results related to the executionof voting rights at General Meetings of Shareholders. If a company proposal receives
a significant number of dissenting votes, the Board shall discuss the need for an
appropriate response. The results of the execution of voting rights shall be posted on
the company’s website.
(3) Basic approach to capital policies–
The company shall effectively use internal reserves in strategic investments that lead tofuture growth and in strengthening financial structures, and shall continue stable payment
of dividends.
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In the event that the company’s shares become subject to a tender offer, the Board of
Directors shall promptly disclose its views to shareholders. It shall respect the rights ofshareholders, and shall not impede those shareholders from releasing their shares in
response to the tender offer.
-1-–When implementing capital policies that would bring about a change in control or a largescale dilution, the Board of Directors shall give full consideration to the necessity andrationality of those policies, and shall implement those policies in accordance withappropriate procedures. The board shall also provide appropriate explanations regarding
the intent of the policies in question and the deliberation process at a General Meeting of
Shareholders, financial results briefing, or other appropriate venue.

(4) Policy regarding cross-shareholdings–
In the event that the company owns listed shares for the purpose of cross-shareholding,there shall be a basic recognition of economic rationality in the medium to long term,
taking into account risks and returns, with an expectation of business tie-ups, maintaining
or strengthening transactions, promoting smoother financial activities, or other significant
benefit. The company’s policy shall be to minimize the ownership of issues deemed tohave insufficient rationale for such ownership. The appraised value of individual issues
shall not exceed 5% of total consolidated assets.
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The Board of Directors shall verify the medium- to long-term economic rationality of crossshareholdings on an annual basis, and shall make a judgment on the continuation,
expansion, reduction, or elimination of owned shares. The purpose of ownership shall be
disclosed in securities reports.
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If the owner of the cross-held shares expresses an intent to sell or otherwise dispose of
Earth Corporation’s shares, such disposal shall not be impeded.
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Voting rights attached to cross-held shares shall be executed appropriately based on
thorough investigation of each proposal and a comprehensive judgment on whether the
proposal will contribute to improvements in the company’s corporate value in the medium
to long term.
(5) Transactions with related parties–
Transactions with directors that could represent a conflict of interest must be approvedby the Board of Directors, and directors with special interest relationships shall not be
involved in decisions on such approvals. Furthermore, transactions with main
shareholders that exceed a specified amount shall be reported at meetings of the Boardof Directors.
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Directors and auditors shall respond to a regular questionnaire to confirm the existenceof transactions with related parties.
Chapter 3: Appropriate cooperation with stakeholders other than shareholders(1) Earth’s Conduct Guidelines–
The company established “Earth’s Conduct Guidelines” as a standard of conduct for
directors and employees, and strives to entrench these Guidelines as the foundation of
day-to-day operations.
(2) Sustainability–
To earn the trust of stakeholders, the company established the “Basic Environmental
Policy,” and conducts environmental protection activities based on this policy while at thesame time striving to provide products that prioritize safety and to create energetic
workplaces.
(3) Diversity within the company–
Earth Corporation promotes active participation by women, and develops products anddesigns sales floors that incorporate a female perspective. The company also
encourages the use of the childcare leave and childcare working hour systems
regardless of the employee’s gender.

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(4) Internal reporting system–
The company established the “Speak Up Line” internal reporting system, and encourages
the use of this system.
–“Speak Up Line” is operated by a committee comprising multiple directors as well as
auditors, the head of the HR division, the head of the internal auditing division, and thehead of the legal affairs division, and reports to the Board of Directors on the details of
discussions as deemed necessary.
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Reporting contact points have been established within the company as well as with outside
third-party agencies, and reports may be submitted anonymously if the reporting party sowishes.
–In the operation of the “Speak up Line,” in-house regulations prohibit disadvantageous
treatment of the reporting party, and in the event that a reporting party is subject to any
such disadvantageous treatment, the situation shall be dealt with promptly.
(5) Corporate Pension Funds functioning as asset owners–
Earth Corporation’s Corporate Pension Fund shall be accumulated and operated throughthe Otsuka Pharmaceutical Group Pension Fund.
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Persons from Earth Corporation with knowledge of finances and HR also participate inthis fund, to regularly monitor the status of pension assets operations jointly with othercompanies participating in the Otsuka Pharmaceutical Group Pension Fund, and toreview the pension asset configuration as deemed necessary.
Chapter 4: Ensuring appropriate information disclosure and transparency–––

To earn the trust of shareholders and other stakeholders, in addition to disclosures based onlaws and regulations, the company proactively provides information outside of suchdisclosures.
The company discloses information using simple and specific expressions so as to provide
content that offers substantial out in value for users, and also discloses information in English
when deemed necessary.
In addition to financial information, the company discloses nonfinancial information such as thecorporate philosophy, management policies, and medium-term management plans.

Chapter 5: Responsibilities of the Board of Directors(1) Configuration, roles, and responsibilities of the Board of Directors① Configuration–
The Board of Directors shall comprise no more than 10 members, two or more ofwhom shall be outside directors.
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The Board shall comprise in-house directors with extensive experience and adetailed knowledge of the company’s operations and market environment, andindependent outside directors with a broad range of knowledge.
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Diversity of the Board shall be ensured, for example with persons having overseas
managerial experience, so that the Board can effectively fulfill its roles andresponsibilities.
② Roles and responsibilities–
Matters to be discussed at meetings of the Board of Directors are stipulated in thein-house regulations. Authority for decisions on other items is delegated to thepresident and executive officers, and reports are received from executive officers
regarding the status of the execution of duties.
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Medium-term management plans are regarded as a commitment. In the event thattargets laid out in these plans, including annual plans, are not achieved, the causes
shall be analyzed, and the results of the analysis shall be reflected in plans for the
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following term and beyond.
The Board of Directors shall maintain an environment that supports appropriate risktaking by the management team, through the effective functioning of internal
controls. Furthermore, the Board shall appropriately and objectively study proposals
from directors and executive officers.
The upper limit on total monetary compensation for directors is stipulated atGeneral Meetings of Shareholders. The compensation structure shall comprise a“basic compensation” in addition to a “bonus,” the payment of which shall be studied
when the plan for a given year is achieved. Directors may also be granted a “stockbased compensation with limits on transfer” as incentive for increasing corporate
value over the medium to long term.
The nomination of director candidates and auditor candidates, as well as theappointment and dismissal of executive officers and other officers, shall be inaccordance with (6) Director/auditor candidate nomination policies and executive
officer nomination and dismissal policies/procedures as noted below, and shall be
evaluated appropriately.

③ Ensuring effectiveness–As a rule, meetings of the Board of Directors shall be held once each month.
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An annual schedule for meetings of the Board of Directors and the expecteddiscussion items shall be set up in advance, and related materials shall be
distributed ahead of the meeting.
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The number of discussion items at meetings of the Board of Directors shall be set
appropriately based on importance, and sufficient time for discussion shall be set
aside for each item.
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Upon receiving a request from a director, members of the relevant divisions shallprovide support in discussions at Board of Directors meetings (e.g., by obtaining
information)–
In the event that a director has concurrent duties as an officer at another listedcompany, the status of those duties shall be disclosed each year.
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Directors and auditors shall respond to a survey regarding the effectiveness of theBoard of Directors. The Board of Directors shall receive a report on the results ofthe survey analysis, and based on these results, shall evaluate the Board’s
effectiveness.
(2) Roles and responsibilities of directors–
To fulfill the responsibilities delegated to them by the shareholders and increase thebenefits to both the company and to shareholders, Directors shall collaborate
appropriately with various stakeholders in keeping with “Earth’s Conduct Guidelines,”and shall strive for the continuous growth of the company and for increased corporate
value in the medium and long term.
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Directors shall submit requests to related divisions for appropriate information required in
the execution of their own duties.
(3) Roles and responsibilities of independent outside directors–
As members of the Nomination and Compensation Committee, independent outside
directors are consulted by the Board of Directors in determining matters related to thenomination and compensation of directors.
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Independent outside directors attend meetings of the Board of Directors with a fullunderstanding of the items to be discussed, based on materials distributed in advance.
(4) Configuration, roles, and responsibilities of the Audit & Supervisory Board① Configuration–
The Audit & Supervisory Board shall comprise no more than five auditors, more than-4-–half of whom shall be independent outside auditors.
One or more of the appointed members shall have appropriate knowledge of finances
and accounting.

② Roles and responsibilities–
The Audit & Supervisory Board shall select and evaluate outside accounting auditors
based on their ability to maintain a fair and objective attitude and an independent
position, and to undertake appropriate audits, taking into account a wide range offactors including those outside accounting auditors’ independence, status ofexecution of duties, and compensation levels.
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The Audit & Supervisory Board shall collaborate with outside accounting auditors andthe Audit Office (an Internal Auditing Dept.), for example through accounting audits,
operational audits, and quarterly reviews. It shall also collaborate with outside
directors as deemed necessary.
(5) Roles and responsibilities of auditors–
To fulfill the responsibilities delegated to them by the shareholders and increase thebenefits to both the company and to shareholders, auditors shall cooperate to achieve
the continuous growth of the company and increased corporate value in the medium andlong term, in keeping with “Earth’s Conduct Guidelines.”–
Auditors shall attend meetings of the Board of Directors and other important meetings,
and shall actively express opinions. Auditors shall also arrange opportunities formeetings and secure collaborations with independent outside directors as deemednecessary.
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Auditors shall submit requests to related divisions for appropriate information required in theexecution of their own duties.
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In the event that an auditor has concurrent duties as an officer at another listedcompany, the number of those appointments shall be kept within a reasonable scope.
The status of concurrent duties shall be disclosed each year.
(6) Director/auditor candidate nomination policies, executive officer nomination and dismissal
policies and procedures① Director candidate nominations and procedures–
A director’s term shall be one year, per the Articles of Incorporation, and reappointments
shall not be limited.
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In order to ensure transparency and fairness, the Board of Directors shall consult with
the Nomination and Compensation Committee, the majority of whose members are
independent outside directors, on the proposed candidates, which are formulated by
the President and Representative Director based on their ability to contribute to thesustainable growth of the Company and the enhancement of its corporate value overthe medium to long term.
② Auditor candidate nominations and procedures–
An auditor’s term shall be four years, per the Articles of Incorporation, andreappointments shall not be limited.
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Candidates are selected based on their ability to remain independent of parties
executing operations and to always maintain a fair and objective attitude, as well as
their ability to contribute to the healthy and continuous growth of the company andestablish a corporate governance structure that earns the trust of society. Finaldecisions on these candidates shall be made by the Board of Directors, having
gained a consensus with the Audit & Supervisory Board.

-5-③ Securing the independence of outside officers–
The independence of outside officers shall be in accordance with the independence
judgment criteria stipulated by the company (see attached).
④ Executive officer nomination and dismissal policies and procedures–
An executive officer’s term shall be one year, and reappointments shall not be limited.
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The Board of Directors shall consult with the Nomination and Compensation
Committee, of which the majority is composed of independent outside directors, toensure transparency and fairness, and shall make a decision on the proposed
candidates, which are formulated by the President and Representative Director
based on whether the candidates have sufficient qualifications to execute in therelevant fields, taking into consideration their specialized knowledge, experience,
judgement in specific fields, as well as personality,etc., after a sufficient review period.
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In the event that any of the following applies, following deliberations with the adviceof all independent outside directors, a decision shall be made on the executive
officer’s dismissal or suspension of reappointment.
If the executive officer in question:i. is in violation of laws, regulations, or the Articles of Incorporation
ii. no longer satisfies the criteria described aboveiii. is unable to appropriately execute his or her duties for health reasonsiv. causes damage, or poses a risk of damage, to the company’s corporate value due
to dereliction of duties⑤ Configuration, Authority and Role of the Nomination and Compensation Committee–
The nomination and compensation committee shall consist of outside directors, thepresident of the board of directors, and internal directors. However, the number of
independent outside directors shall constitute a majority of the committee.
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The nomination and compensation committee shall respond to the following questions
as consulted by the board of directors.
i. Matters concerning the policy for determining the content of remuneration, etc. foreach individual director
ii. Matters Concerning the Amount and Details of Remuneration, etc., of Individual
Directorsiii. Matters concerning the maximum amount of remuneration for directors (matters tobe decided by the General Meeting of Shareholders)iv. Matters related to the election and dismissal of directors (matters to be decided at
the general meeting of shareholders)v. Matters concerning election and dismissal of representative directors
vi. Matters related to succession planning (including training)vii. Other matters consulted by the Board of Directors(7) Training–
Officers shall undergo training conducted by an outside instructor at least once eachyear, and shall participate in outside training as deemed necessary. The company shallbear the cost of participation in training and related activities.
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The company shall provide candidates for future upper management positions with
opportunities for management training by outside agencies.
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All officers shall respond to surveys to confirm the status of participation in training andrelated activities.
-6-(8) Relationships with outside accounting auditors–
Following prior deliberations, the company shall set an appropriate audit schedules tocontribute to sufficient audits, and shall report to the Audit & Supervisory Board.
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As deemed necessary, the company shall secure opportunities for meetings between
outside accounting auditors and the representative director, other directors, andexecutive officers.
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Auditors and the Audit Office (an Internal Auditing Dept.) shall collaborate with outsideaccounting auditors, for example through accounting audits, operational audits, andquarterly reviews. They shall also collaborate with outside directors as deemed necessary.
–In the event that an outside accounting auditor discovers some wrongdoing and requests
an appropriate response, or points out some omission or problem, the director in chargeof the division receiving the notification shall play a central role in investigating, and shallreport the results to the Board of Directors. The Audit & Supervisory Board shall request
a report from the parties involved, and if deemed necessary, shall conduct aninvestigation and request corrections.
Chapter 6: Dialogues with shareholders, etc.
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The company shall provide opportunities for dialogue with shareholders and investors tocontribute to continuous growth and increasing corporate value in the medium and long term.
An executive officer shall be assigned to oversee IR operations, and Group Business
Management Dept. at Group Management Headquarters shall be responsible for IR, including
meetings with shareholders and other parties. At financial results briefings for institutional
investors and analysts, the representative director and the executive officer in charge of IR
shall explain the company’s management policies and strategies.
Group Business Management Dept. at Group Management Headquarterst (the division
responsible for IR) shall collaborate with related divisions in gathering information required for IR.
The company shall regularly monitor the shareholding structure in the shareholder registry.
Opinions and requests identified through IR and related activities shall be fed back to therepresentative director.
In-house regulations shall be stipulated to ensure full attention to the management of insider
information.

Supplementary provisions––

Enactment, amendment, or abolition of these Guidelines shall be based on a resolution by the
Board of Directors.
These Guidelines are effective as of June 6, 2016.
① June 5, 2017: partial amendment② May 7, 2018: partial amendment③ December 6, 2018: partial amendment④ March 25, 2022: partial amendment⑤ July 7, 2022: partial amendment-7-

Attachment

Criteria for judgments on the independence of outside officers
Earth Corporation
Enacted: Feb. 4, 2016
Earth Corporation judges that outside directors and outside auditors (hereinafter collectively
referred to as “outside officers”) or outside officer candidates have independence when, as a resultof investigations conducted by the company within a reasonable scope, it is determined that theoutside officer in question meets all of the following criteria:
1.

2.
3.

4.
5.
6.
7.

8.

Has never served as a director (excluding outside director; same below), auditor (excluding
outside auditor; same below), executive officer, or key employee*1 (hereinafter referred tocollectively as “director, etc.”) at Earth Corporation or its subsidiary (hereinafter, the “EarthGroup”)
Has no second-degree or closer relatives serving as a director, etc., in the Earth Group
Within the past year, has not been a main shareholder*2 or director, etc., at Earth
Corporation, or a director, etc., at a company for which the Earth Group is a main
shareholder
Within the past three years, has not been a director, etc., at a main partner company of the
Earth Group*3
Is not currently a director, etc., at a company that has received a director or auditor fromthe Earth Group, or at a parent company or subsidiary of such a company
Is not a certified public accountant, or an employee, partner, or worker at an auditing
corporation that serves as an accounting auditor for the Earth GroupIs not a specialized service provider (e.g., a certified public accountant, certified tax
accountant, lawyer, or consultant) that has received a monetary or otherwise asset-related
profit exceeding JPY10mn per year excluding officers’ compensation from the Earth Group(If the party receiving the assets in question is a corporation or other organization: is notaffiliated with an organization for which total assets received from the Earth Group exceed
2% of total annual income)
Aside from the items above, is recognized as not having any special circumstances that
could result in a conflict of interest with Earth Corporation, and is not affiliated with acorporation or other organization having such circumstances[Notes]*1: “Key employee”: Division manager or higher position*2 “Main shareholder”: Direct or indirect holder of voting rights representing 10% or more of
the total*3 “Main partner company of the Earth Group”: A company involved in business transactions
with the Earth Group during the most recent business year, where amounts paid or
received account for 2% or more of consolidated sales for the Earth Group or the partnercompany-8-