Notice of Establishment of Basic Policy for Corporate Governance

Transcription

1 URL: For Immediate Release Notice of Establishment of Basic Policy for Corporate Governance At its Board meeting held on November 26, 2015, the company established a Basic Policy for Corporate Governance, the description of which is as follows: Description This basic policy has been established as a revision to the company s previous corporate governance initiatives for improving corporate governance in accordance with the intent and spirit of the Corporate Governance Code prescribed by the Tokyo Stock Exchange. In doing so, the company aims to increase its corporate value through sustained growth and to implement its corporate vision through its business activities. Please refer to the attached Basic Policy for Corporate Governance and the company s website for further details.

2 Note: The numbers in refer to the Principle number in the Corporate Governance Code. Basic Policy for Corporate Governance Preface To improve the corporate value of Taiyo Yuden Co., Ltd. (the Company or we ) through its sustainable growth and continue to put its corporate philosophy into practice through business activities, we need to achieve better corporate governance. For this purpose, we have clarified the basic policy of corporate governance of the Company as follows and in case this basic policy is revised in the future, the revised content shall be disclosed in a timely and appropriate manner. Chapter 1: General Principles 1. Basic Concept of Corporate Governance The Company s management philosophy is to implement employee well-being, betterment of local communities and responsibility to provide returns to shareholders. The Company s Board of Directors and Operating Officers believe that the Company s social responsibility and managerial mission is to establish/maintain good social and public relationships, protect public interests and achieve sustainable business development from a global perspective. The Company s corporate vision is to be an excellent company that enjoys the trust and highest regard from our customers. To implement our management philosophy and vision steadily, we promote earnings improvement measures consisting of both growth strategies and structural reforms; emphasize management transparency, fairness and information disclosure; and establish a structure and schemes that allow swift decision making and business execution to enhance our competitiveness. 2, 2.1 Chapter 2: Ensuring Shareholder Rights and Equal Treatment of Shareholders 1. General Meeting of Shareholders 1-(1) Positioning the General Meeting of Shareholders of the Company as its highest decision-making function and with the recognition of the meeting as a valuable venue for communicating with shareholders, the Company shall improve the environment whereby all shareholders of the Company including those who are unable to attend the Company s General Meeting of Shareholders can exercise their voting rights appropriately. 1.2

3 1-(2) The Company shall provide information for shareholders in a swift and appropriate manner via its Web site, the Tokyo Stock Exchange and the electronic voting platform, etc., and improve the methods to provide information to facilitate the understanding of shareholders (3) To ensure shareholders of the Company have enough time to inspect and think about each proposal on the agenda of a General Meeting of Shareholders to exercise their voting rights appropriately, the Company shall dispatch a Notice of Convocation of Ordinary General Meeting of Shareholders (or the Convocation Notice below) no later than three weeks prior to the date when the General Meeting of Shareholders takes place. Also, from the perspective of swift information disclosure, the content of the Convocation Notice shall be disclosed on the Company s Web site, the Tokyo Stock Exchange and the electronic voting platform, etc., before the date when the Convocation Notice is dispatched (4) The Company shall prepare an English translation of the Convocation Notice and provide it on the Company s Web site, the Tokyo Stock Exchange and the electronic voting platform, etc., before the date when the Convocation Notice is dispatched for the purpose of quick and fair information disclosure to institutional and/or foreign investors (5) To allow many shareholders to attend a General Meeting of Shareholders, the Company shall set up an optimal meeting venue with consideration of convenience for shareholders and sufficient capacity. The date of the General Meeting of Shareholders shall be determined by prioritizing the securing of an optimal meeting venue (6) It is prescribed in the Company s Articles of Incorporation that a shareholder of the Company may exercise his/her voting rights through a proxy, who must be another shareholder of the Company with voting rights, and a beneficial shareholder is not, in principle, allowed to attend a General Meeting of Shareholders. Provided, however, in case a beneficial shareholder demands his/her attendance at the General Meeting of Shareholders via the shareholder on the shareholder register, such a beneficial shareholder shall be allowed to observe after completing a certain procedure (7) After a General Meeting of Shareholders, the Board of Directors of the Company receives the results of the analysis of the voting rights exercised and learns shareholders thoughts and opinions to utilize the knowledge for dialogues with shareholders. In case a significant number of opposing votes were cast against a certain proposal, the Board of Directors shall figure out the reasons behind such results and examine future measures to address the situation. The results of voting for or against each proposal shall be disclosed on the Company s Web site, etc (8) In case the Board of Directors judges that it is desirable to delegate part of the resolutions of the General Meeting of Shareholders to the Board of Directors from the perspective of ensuring the flexibility of management decisions and professionalism, the Board of Directors

4 shall propose such content to the General Meeting of Shareholders Ensuring the Equal Treatment of Shareholders 2-(1) The Company shall respect shareholders rights such as their voting rights at General Meetings of Shareholders; disclose information in a timely, appropriate, accurate, fair and sincere manner to ensure their rights; strive to improve the environment whereby shareholders can exercise their rights appropriately; and ensure equal treatment of shareholders, also paying sufficient attention to minority and foreign shareholders. 1, (2) The Company shall not do anything to prevent shareholders from exercising their rights. With regard to minority shareholders specifically, the Company shall facilitate the smooth exercise of their rights in accordance with laws and regulations Basic Policy for Capital Policy 3-(1) The Board of Directors shall set the target ROE as a management indicator and strive to work on growth strategies and structural reform. As to growth strategies, the Company shall reinforce three bases the market base, the product base and the customer base. Concerning structural reform, the Company shall aim to reinforce its financial base and strive to strengthen its human resource base. 3-(2) Regarding the distribution of plentiful returns to its shareholders as one of the most important issues for management, the Board of Directors shall set and disclose a policy for the total return ratio (3) The Board of Directors shall not, in principle, conduct a capital policy that could change the right to control the Company or cause significant dilution (including a capital increase and MBOs). In case a significant change is made in the capital policy of the Company, the Board of Directors shall discuss the matter based on the opinions of experts and Outside Corporate Officers to prevent the existing shareholders from being harmed unreasonably and provide a full explanation to the shareholders by disclosing the opinions received and the decision-making process, etc Basic Policy for Stock Held by the Company under Its Policy 4-(1) The Company can hold the stock of another company under a business relationship with the Company based on a decision of the Board of Directors if such holding is deemed to help maintain and strengthen business relationships conducive to the enhancement of the mid- to long-term corporate value and the sustainable development of the Company. Such holding shall be examined regularly at the Board of Directors each year to determine whether to continue holding the stock of the company, the content of which shall be disclosed in the

5 Corporate Governance Report (or the Governance Report below). 4-(2) With regard to the exercise of voting rights, due to the importance as the method that affects the partner company s management and the improvement of the Company s corporate value, on condition that no legal violation or antisocial actions are being conducted, and that the proposal is deemed by the shareholders to be conducive to the sound management of the Company, this matter shall be delegated to a Director in charge Plan to Defend Against Takeovers 5-(1) The Board of Directors of the Company shall not implement a Policy on the Large-Scale Purchase of the Company Shares (Plan to Defend against Takeovers) that might harm the common interests of the shareholders (2) In case a large-scale purchase offer is made, the Board of Directors of the Company shall strive to disclose the related information in a timely and appropriate manner in accordance with the Basic Policy on the Control over the Company, which has been disclosed to the Company s shareholders, etc., and take measures that are appropriate at that time. 5-(3) In case a tender offer is made for the Company s stock, the Company shall respect the rights of its shareholders and shall not take measures that would frustrate shareholder rights to sell their shares in response to the tender offer Chapter 3: Appropriate Cooperation with Stakeholders 1. Action Guidelines 1-(1) For each Corporate Officer and employee to fulfill their duties ethically and responsibly, the Company shall disseminate the Taiyo Yuden Group CSR Charter (or the CSR Charter below) and the Taiyo Yuden Group CSR Code of Conduct (or the CSR Code of Conduct ), which were formulated by resolution of the Board of Directors, among all the Corporate Officers and employees throughout the Taiyo Yuden Group (2) To observe the CSR Charter and the CSR Code of Conduct, the Company shall establish a CSR management system and all the Taiyo Yuden Group companies shall conduct CSR activities in accordance with the CSR management system. The Board of Directors of the Company shall receive reports on the actual results of the CSR activities through the Internal Control Committee and review how thoroughly the corporate culture that observes the CSR Code of Conduct has been disseminated throughout the Taiyo Yuden Group

6 2. Sustainability-Related Issues Including Social and Environmental Matters 2-(1) Recognizing that to fulfill corporate social responsibility is essential for the sustainable development of a company, the Company shall stipulate codes of conduct related to human rights, labor, the environment and fair business practices in the Taiyo Yuden Group CSR Code of Conduct and conduct initiatives to fulfill its social responsibility (2) With the recognition that issues related to human rights, labor, safety and health, the environment and fair business practices are important risk elements in fulfilling the Company s social responsibilities, the Board of Directors of the Company shall assign a Corporate Officer in charge of each risk category. 2-(3) The Corporate Officers responsible for a risk category shall identify and evaluate risks conforming to the CSR management system, implement other risk management measures proactively, identify the risks and review the risk assessment according to changes in stakeholder requests and interests Diversity The Company shall stipulate The diversity, personality and individuality shall be respected and the work environment without any discrimination shall be ensured. in the Taiyo Yuden Group CSR Code of Conduct, based on which the employment, nurturing, deployment and utilization of human resources shall be conducted. Furthermore, the Company shall take a measure to enhance the work environment, whereby employees can perform their capabilities to the fullest, with a child-care and elderly care leave system, measures to alleviate workload and a system to allow employees to take a leave to care for their children or family members when they are sick. Harnessing these systems, the Taiyo Yuden Group as a whole promotes aggressive employment and the utilization of female and local human resources Related Party Transactions 4-(1) The Company can, by resolution of its Board of Directors, determine a Competition and Conflicting Interest Transaction to be conducted by a Director of the Company in accordance with the Board of Directors Regulations. In case related party transactions occur, such transactions shall be disclosed, complying with the Companies Act, the Financial Instruments and Exchange Act and relevant laws and regulations, as well as rules stipulated by the stock exchange (2) The Board of Directors shall monitor such related party transactions to ensure that such transactions are being conducted appropriately. 4.3

7 Chapter 4: Ensuring Appropriate Information Disclosure and Transparency 1. Information Disclosure 1-(1) With the recognition that the timely and appropriate disclosure of management information and other corporate information is the Company s responsibility to its shareholders and investors, etc., the Board of Directors shall strive to make descriptions of such disclosed documents easy to understand and specific to provide accurate information for shareholders and other stakeholders (2) Other than legally required disclosure, in compliance with the provisions in the Taiyo Yuden Group CSR Charter and the CSR Code of Conduct, the Company shall proactively disclose information that is deemed to be important for stakeholders such as shareholders (including nonfinancial information) via the Company s Web site and other methods as described below. 3 The Company shall disclose 1 Management philosophy, vision, management strategies and plans on the Company s Web site, presentation materials for Earnings Release Conferences, and the Annual Report, etc. 2 Basic concept and policy for corporate governance on the Company s Web site, in the Securities Report and the Corporate Governance Report, etc. 3 Policy and procedures for the Board of Directors to determine remuneration for Directors in the Securities Report and the Convocation Notice for the General Meeting of Shareholders, etc. 4 Policy and procedures for nominating candidates for Directors and Audit & Supervisory Board Members in the Securities Report and the Corporate Governance Report, etc. 5 Reasons for nomination of each candidate for Director and Audit & Supervisory Board Member in the Convocation Notice for the General Meeting of Shareholders English translation of financial statement-related materials, the Annual Report, the Convocation Notice for the General Meeting of Shareholders, and press releases, etc., on the Company s Web site Whistleblowing 2-(1) For early detection and correction of violations of laws and regulations or internal regulations of the Company at the worksite, or acts that could potentially pose violation, the Board of Directors shall improve the whistleblower system and monitor the status of operation of the system via the Internal Control Committee (2) The whistleblower system shall include provisions that stipulate receiving a report on illegal or inappropriate behavior, investigation, assessment of the importance of the reported issue,

8 correction measures and instructions to prevent a recurrence. Furthermore, to protect whistleblowers, the system shall stipulate the prohibition of unfavorable treatment of whistleblowers and monitoring activities as to whether whistleblowers are being treated unfavorably. Moreover, in cases where it is difficult to report to the designated office of each Taiyo Yuden Group company, the whistleblower shall be able to directly report to Audit & Supervisory Board Members who are independent of management Chapter 5: Responsibilities of the Board of Directors, etc. Section 1: Organizational Design 1. Organizational Design 1-(1) The Company shall install a Board of Directors, an Audit & Supervisory Board and Accounting Auditors. Also, to further clarify roles and responsibilities of persons who supervise the management of the Company and those who execute business duties, the Operating Officer system shall be employed. 1-(2) The Board of Directors shall consist of 10 or fewer Directors, of which two or more shall be independent Outside Directors. In addition, to reinforce the independence, objectiveness and accountability in the Board of Directors functions related to nomination of and remuneration for Directors and Operating Officers, the Nominations Committee and the Remuneration Committee, both of which are chaired by an independent Outside Director, shall be installed. 4.8, (3) The Audit & Supervisory Board shall consist of five or fewer Audit & Supervisory Board Members, of which more than half shall be independent Outside Audit & Supervisory Board Members. One or more Audit & Supervisory Board Members with appropriate financial and accounting knowledge shall be elected to ensure the effectiveness of auditing operations Section 2: Responsibilities of the Board of Directors as an Oversight Function 1. Roles and Responsibilities of the Board of Directors 1-(1) The Directors, the Audit & Supervisory Board Members and the Operating Officers shall fulfill fiduciary responsibilities to shareholders and strive to enhance the interests of the Company and the common interests of its shareholders, aiming to become an excellent company that enjoys the trust and highest regard from our shareholders, customers, employees, local communities and other stakeholders (2) To determine the basic policies for management strategies and plans, the Board of Directors shall discuss such matters at its meetings, freely exchanging opinions, including the Outside

9 Corporate Officers. Important business executions shall be determined by deliberating the content based on the basic policies for management strategies and plans. 4, (3) The Company shall draft a Mid-Term Management Plan at the Management Implementation Committee meetings, deliberate the content of the draft at meetings of the Board of Directors and explain the content to shareholders at the General Meeting of Shareholders. The Board of Directors shall monitor the progress of the Mid-Term Management Plan. With regard to the targets that the company fails to meet, the reasons underlying the failure of achievement shall be analyzed and those analytical findings shall be reflected in a plan for the ensuing years, and such content shall be disclosed appropriately (4) For the timely and appropriate disclosure of information on financial statements and important facts and to conduct risk management appropriately, the Board of Directors shall improve the internal control system (5) The Company shall improve its internal control system and operate internal control related to compliance, financial reporting and risk management. The Board of Directors shall receive reporting on the status of operation of the internal control system through the Internal Control Committee and evaluate the appropriateness of the internal control system and the effectiveness of related activities (6) The Board of Directors shall conduct an objective evaluation of performance of the Company as a whole and each business division/department. A system shall be established to appropriately reflect such evaluation in selecting Operating Officers and determining their remuneration Matters That Are Decided by the Board of Directors and Those Delegated to Management Staff 2-(1) From a long-term standpoint and for the sustainable improvement of corporate value, the Board of Directors shall determine by resolution of its meetings matters stipulated in laws and regulations and the Company s Articles of Incorporation, the Mid-Term Management Plan of the Taiyo Yuden Group as a whole, the year s business plan, business alliance and joint projects with other companies, and other matters that are important for the Company. 2-(2) For efficient decision making, the Board of Directors shall install the Management Implementation Committee, which consists of all the Operating Officers of the Company, and the TM (Top Management) Meeting, which consists of the Directors with a rank of Executive Operating Officer or higher. The Management Implementation Committee shall deliberate important matters regarding business executions for Group management, whereas the TM Meeting shall deliberate such matters concerning personnel, organization and remuneration for the entire Group (excluding the authority of the Nominations Committee and the

10 Remuneration Committee) and propose or report the content to the Board of Directors. 2-(3) In accordance with management policies and strategies determined at meetings of the Board of Directors, the Operating Officers shall conduct business flexibly and quickly as persons responsible for business executions in each business division/department of which he or she is in charge under the direction of the Chief Executive Officer Roles of Independent Outside Directors 3-(1) The Board of Directors shall formulate the Company s own Standards for the Independence of Outside Directors/Outside Audit & Supervisory Board Members, and select candidates for independent Outside Corporate Officers based on these standards, clarify the reasons for nomination in the Convocation Notice and propose of the election at the General Meeting of Shareholders. The Standards for the Independence of Outside Directors/Outside Audit & Supervisory Board Members shall be disclosed on the Company s Web site (2) The independent Outside Directors, based on their broad insight utilizing their management-related professional knowledge and experience, from a standpoint independent from business execution, shall express opinions from the perspectives of shareholders and other stakeholders, and from a professional viewpoint. Through involvement in the decision-making process in such an objective way, the independent Outside Directors help strengthen the authority of management oversight, thereby contributing to the Company s sustainable growth and improving the mid- to long-term corporate value. 4.6, 4.7,4.8 3-(3) To make substantial contribution to discussions at the Board of Directors meetings, the independent Outside Directors shall participate not only in the Board of Directors meetings but also in meetings of the Management Implementation Committee as observers to share information. Moreover, the independent Outside Directors shall conduct an active exchange of opinions with the Directors, the Operating Officers, the Audit & Supervisory Board Members including the Outside Audit & Supervisory Board Members, and the Internal Audit Department, etc., as necessary (4) The independent Outside Directors shall elect from among themselves a head independent Outside Director, who acts as a coordinator with the management staff and acts as a liaison with the Audit & Supervisory Board Members Section 3: Effectiveness of the Board of Directors 1. Composition of the Board of Directors 1-(1) The Executive Directors shall be elected from among those with excellent personality and knowledge who have had outstanding business performance in the duties they were in charge of and are adept at management and business. The Outside Corporate Officers shall be elected,

11 regardless of gender, based on such conditions as excellent personality, business experience, expertise and the level of independence. The composition of the Board of Directors shall be well balanced, in terms of knowledge, experience and capabilities, etc (2) One or more Audit & Supervisory Board Members with appropriate knowledge in finance and accounting shall be elected to ensure the effectiveness of auditing (3) To clarify management responsibilities during a given year, the term of the Directors shall be one year. To ensure the transparency and fairness of the election of the Directors, the candidates for Director shall be determined by the Board of Directors via recommendation by the Nominations Committee. The decision shall be put on the agenda for the General Meeting of Shareholders, with the reasons for nomination disclosed in Reference Documents for the Convocation Notice for the meeting (4) Except in the case deemed by the Board of Directors to be necessary for the Company, the Company shall not allow its Executive Directors and full-time Audit & Supervisory Board Members to concurrently serve as an officer of another company. In case the Company s Outside Director or Outside Audit & Supervisory Board Member happens to concurrently serve as an officer of another company, such assumption of office shall be approved after confirming that the person has sufficient time to work for the Company. The status of significant concurrent positions assumed by the Outside Directors or the Outside Audit & Supervisory Board Members shall be disclosed in the Convocation Notice for the General Meeting of Shareholders, the Securities Report and the Governance Report Voluntary Nominations Committee and Remuneration Committee 2-(1) To execute highly transparent and fair management, the Nominations Committee and the Remuneration Committee shall be installed (2) To ensure the objectivity of deliberated matters, the Nominations Committee and the Remuneration Committee both shall be chaired by an independent Outside Director and consist of Directors with the rank of Executive Operating Officer or higher, Outside Directors and one Audit & Supervisory Board Member. 2-(3) The Nominations Committee shall deliberate the nomination of candidates for Director and Operating Officer, draft proposals for the dismissal of Directors and Operating Officers, draft proposals for the designation of rank of Operating Officers, and deliberate matters related to disciplinary actions, etc. The Remuneration Committee shall deliberate systems for the remuneration of the Directors and Operating Officers and the specific remuneration for each individual, etc. The matters deliberated at meetings of the respective committees shall be discussed and determined by the Board of Directors. 4.10

12 3. Successor Plan 3-(1) Mainly for the purpose of organizational revitalization, the Board of Directors shall introduce the mandatory retirement age system for the Operating Officers including the President. 3-(2) Nurturing the successors of the Chief Executive Officer is an important management issue. The Nominations Committee shall discuss the plan to nurture successors, ensure transparency and fairness, and operate an appropriate system for the nomination of successors Collection of Information by the Board of Directors and the Supporting System 4-(1) The Directors and the Audit & Supervisory Board Members can request the provision of information from each department/division to actively collect information that is necessary for the execution of duties (2) The Company shall improve the system via which the Directors and the Audit & Supervisory Board Members including the Outside Corporate Officers can obtain the Company s important information as needed using the intranet and other systems. In addition, the Company shall elect a person in charge of providing the Company s information appropriately upon requests from the Outside Directors and/or the Outside Audit & Supervisory Board Members (3) The full-time Audit & Supervisory Board Members shall attend important meetings, obtain information appropriately through a liaison with the Internal Audit Department and share information with the Outside Audit & Supervisory Board Members via the Audit & Supervisory Board (4) The Directors and the Audit & Supervisory Board Members can receive advice from external experts at the Company s expense if such advice is necessary for the execution of duties Education and Training for Directors and Audit & Supervisory Board Members The Company offers and arranges training opportunities by facilitating participation in external seminars and holding in-house training related to laws and regulations taught by external experts, etc., for the Directors and the Audit & Supervisory Board Members including the newly appointed Corporate Officers, so that they can acquire knowledge and information other than that of their professional fields such as the roles and responsibilities required from them. Expenses for such training shall be paid by the Company. The plans for providing and arranging such training shall be formulated at the beginning of each fiscal year and the results of such training shall be disclosed in the Governance Report. 4.14, ,

13 6. Effectiveness of the Board of Directors 6-(1) The Board of Directors shall establish an evaluation system for the efficiency and effectiveness of the Board of Directors, and the evaluation results shall be disclosed. 4.11, (2) To ensure the fairness of the meetings and strengthen the authority of management oversight, the Board of Directors shall be chaired by the Chairman of the Board of Directors (or an independent Outside Director, if the Chairman of the Board of Directors is absent). 6-(3) The Board of Directors shall strive for the Outside Directors to accurately understand the status of the Company and be able to engage in vigorous and constructive discussion at the Board of Directors meetings (4) The Board of Directors shall conduct the following operations to enhance deliberation Materials for the Board of Directors meetings shall be distributed to the Corporate Officers no later than two business days before each meeting of the Board of Directors to secure enough time to think about the agenda. 2 Materials for the Board of Directors meetings shall be prepared mainly in the form of presentation materials with well-sorted and -analyzed content for easy understanding. If necessary, the content of the material shall be explained to the Outside Directors before the meeting. 3 The annual schedule for the Board of Directors meetings and other important meetings shall be reported to the Board of Directors. 4 The Board of Directors shall meet once a month ordinarily, but meet twice a month in which a quarterly financial reporting occurs. It shall also hold extraordinary meetings as needed. 5 With regard to important issues such as management strategy, sufficient time should be spent for deliberation. 7. Remuneration for Directors, etc. 7-(1) For the Company s Directors and Operating Officers excluding the Outside Directors, a remuneration system including consideration of business performance-based incentives shall be employed for the purpose of improving business performance. 7-(2) The Company shall pay remuneration at a standard level of amounts that ensures fairness considering the amounts paid by competitors and economic and social situations. The remuneration consists of a fixed monthly remuneration, which is paid according to rank; a performance-based Director bonus, which is paid according to the business performance of each fiscal year; and stock option remuneration, which aims to improve the mid- to

14 long-term corporate value and share interests and risks with the shareholders. 4.2, Roles of the Accounting Auditors, the Audit & Supervisory Board Members and the Audit & Supervisory Board 8-(1) The full-time Audit & Supervisory Board Members shall attend important meetings, communicate with employees and other staff, visit the subsidiaries and conduct audits to collect information, and report the results to the monthly meetings of the Audit & Supervisory Board to share information with the Outside Audit & Supervisory Board Members. The Outside Audit & Supervisory Board Members shall inspect the reported information from an independent standpoint and use the information for their business duties. 8-(2) The Audit & Supervisory Board shall improve the liaison structure with the Directors, the Internal Audit Department and the Accounting Auditors, such as exchanging opinions on regular or as-needed basis. 4.4, (3) For the Accounting Auditors to be able to fulfill auditing duties appropriately, the Audit & Supervisory Board shall strive to ensure sufficient hours for auditing duties by the Accounting Auditors and facilitate regular-basis communication between the Accounting Auditors and the President and/or other management staff (4) Based on the information related to the auditing plan, the actual status of auditing activities, auditing experience and expertise, as well as independence, the Audit & Supervisory Board shall formulate the standards for evaluating the external Accounting Auditors. In addition, the Audit & Supervisory Board shall receive explanation from the Accounting Auditors concerning the auditing plan and independence, and check the content. Furthermore, the Audit & Supervisory Board Members shall witness the auditing operations conducted by the Accounting Auditors and report the content to the Audit & Supervisory Board, thereby verifying the professionalism of the Accounting Auditors (5) In case the Accounting Auditors discover fraud and requests an appropriate measure to be taken, or indicates defective or problematic points, those that are not serious shall be investigated by the Finance and Accounting Department to install a system for correction and prevention of recurrence, which shall be reported to the Audit & Supervisory Board. Should serious fraud or such be reported to the Audit & Supervisory Board (Members), the Audit & Supervisory Board Members shall conduct investigations, report the results to the Board of Directors and request corrections

15 Chapter 6: Dialogue with Shareholders 1. Dialogue with Shareholders 1-(1) Based on the policy to widely communicate with society, strive to disclose corporate information in a timely and appropriate manner and disclose information to the public with the full understanding that the Company s corporate information such as management information contributes to investors interests, the Board of Directors shall enhance the information disclosure system and disclose the content on the Company s Web site, etc. In addition, the Public Relations Department shall listen to opinions from shareholders, etc., regarding the management strategy, business performance and dividend policy of the Company and report the content to the Board of Directors via the Director in charge of each matter. 5 1-(2) The Company shall explain management policies and the Mid-Term Management Plan, etc., at Earnings Release Conferences and/or by other methods. With regard to requests for interviews from domestic and overseas shareholders, the Company shall set up interviews with individuals or small meetings within a reasonable range (3) Dialogue (interviews) with shareholders shall be addressed by the personnel in charge of IR in the Public Relations Department. According to the level of the request from the shareholder and the importance of the interview, the President, the Director in charge or the Operating Officer might fulfill the request (4) With regard to the Company s IR activities, the Director in charge of IR shall handle related divisions/departments such as the Public Relations Department, the Management Planning Headquarters, the General Affairs Department, the Finance and Accounting Department and the Legal Affairs Division, and strive to facilitate a liaison among these divisions/departments on an ordinary basis. 1-(5) The Company, at its Public Relations Department, shall conduct IR activities such as interviews, phone interviews and small meetings, etc., with shareholders and others interested, actively accepting such requests. At the release of each quarterly financial reporting, an Earnings Release Conference shall be held for analysts and institutional investors, where the President or the Director in charge of IR will provide an explanation to them directly. 1-(6) With regard to opinions collected from shareholders, etc., at an Earnings Release Conference and interviews with individuals, the Company s Director in charge of IR shall report to the Board of Directors to share the information. As a measure related to the management of insider information, to prevent the leak of financial information and ensure fairness, the Company shall refrain from giving comments related to financial matters during a Quiet

16 Period, which is from the date following the end of the quarter until the release of the financial information (7) For aggressive IR activities, the Company shall conduct shareholder identification survey as needed to strive to grasp the composition of beneficial shareholders (8) The Company shall formulate management strategies and plans, and disclose mid-term objectives for net sales, operating income, and ROE, etc., on the Company s Web site and by other means. In addition, via the Earnings Release Conferences and other IR events, the Company shall strive to provide easy-to-understand explanations of specific measures toward the achievement of the objectives. 5.2 Enacted on November 26, 2015