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Corporate Governance(As of June 24, 2020)

Japanese

The Company believes that the cornerstone of corporate governance is ensuring management soundness and transparency by establishing a management system that enables quick decision-making to respond promptly to changes in the operating environment, and by practicing timely, appropriate disclosure. To that end, the Company has adopted a Board of Corporate Auditors system and has established a corporate governance system in which the Board of Directors and Board of Corporate Auditors play key roles.

I. Description of Corporate Organs

(1) Board of Directors and Board of Corporate Auditors

The Board of Directors is composed of nine Directors, including three outside Directors. In addition to maintaining the number of Directors at an optimum level for quick decision making, the Company has regulate the terms of Directors to one year in order to clarify the management responsibility of Directors and strengthen its management structure.
The Board of Corporate Auditors consists of four Corporate Auditors, including two outside Auditors. It decides audit policies and related matters, and reports on the status of audits performed by each Auditor. Corporate Auditors also attend Board of Directors meetings and other important meetings, examine significant documents related to final decisions, and listen to Directors and employees on performance of their duties, thus contributing to a system for sufficiently scrutinizing Directors' performance of their duties. The Company is staffed to assist the execution of duties of Corporate Auditors.

(2) Executive Officers, Executive Committee, and Business Execution Committee

The Company has adopted an executive officer system to clearly demarcate the supervisory function and the business execution function. Based on the executive officer system, the Company also formed the Executive Committee, to discuss policies pertaining to key management and operating issues, consisting of mainly executive officers at senior vice president level and higher and Corporate Auditors, and the Business Execution Committee, to monitor the progress of and report on significant matters concerning business execution.

(3) Corporate Auditing Division

The Corporate Auditing Division has been established as an internal audit unit independent from the business execution divisions. It examines through internal audits whether business execution is being conducted legally and properly according to relevant laws, regulations and Company rules.

(4) Accounting Auditors

The Company has an audit contract with KPMG AZSA LLC as its accounting Auditors. KPMG AZSA LLC expresses its views on the financial statements as an Auditor from an independent viewpoint.

II. Development of Internal Control Systems

The Company has established a basic policy for the development of internal control systems, as shown below, under Article 362, Paragraph 4, Item 6 of the Companies Act and Article 100, Paragraphs 1 and 3 of the Enforcement Regulations of the Companies Act. The Company maintains the appropriate execution of operations under the basic policy, laws and regulations, and internal regulations.

Development of Internal Control Systems

III. Situation of Outside Director and Outside Corporate Auditors

Of the Company’s nine Directors, three are outside Directors. The Company believes that this is a sufficient number for giving advice and participating in decision making from a fair and objective standpoint, thereby strengthening the Company’s corporate governance.

Outside Director Michiko Ashizawa has an abundance of experience, including business experience as a certified public accountant at an audit firm and engaging in revitalization projects of major companies at Industrial Revitalization Corporation of Japan. She also possesses expertise in business administration as a whole, mainly researching M&A for corporate restructuring and serving as an instructor at a graduate school. She gives appropriate advice and provides supervision relating to the business management of the Company using her knowledge and experience from a standpoint that is independent from that of the Company’s executives. Ms. Ashizawa attended all 12 meetings of the Board of Directors held in the fiscal year ended March 31, 2020. She has been designated as an independent Director as defined in Rule 436-2, Paragraph 1 of the Securities Listing Regulations of the Tokyo Stock Exchange.

Outside Director Kuniko Muramatsu has experience as an officer of Ethics Office as well as a responsible role for promoting diversity at a foreign-affiliated semiconductor manufacturer. She has been acting as an advisor to improve corporate ethics and promote CSR and diversity while managing the business. She also has experienced various positions such as a chair of the board of a non-profit organizattion and a university lecturer. She gives appropriate advice and provides supervision relating to the business management of the Company using her knowledge and experience from a standpoint that is independent from that of the Company’s executives. Ms. Muramatsu attended all 10 meetings of the Board of Directors held in the fiscal year ended March 31, 2020 after her appointment on June21, 2019. She has been designated as an independent Director as defined in Rule 436-2, Paragraph 1 of the Securities Listing Regulations of the Tokyo Stock Exchange.

Outside Director Mamoru Yoshida demonstrated broad management skills and strategy building ability through his career as manager of various areas after joining a major electrical appliance manufacturer. He also served as CTO and gained extensive discernment and experience in technology management, manufacturing, marketing, etc. Since 2016, he has promoted corporate management governance reform as Senior Audit & Supervisory Board Member. The Company appointed him as an Outside Director to have appropriate advice and supervision relating to management of the Company from an objective standpoint by making use of his extensive experience as business executive, and he has taken office at the ordinary general meeting of shareholders held on June 24, 2020. He has been designated as an independent Director as defined in Rule 436-2, Paragraph 1 of the Securities Listing Regulations of the Tokyo Stock Exchange.

Of the Company’s four corporate Auditors, two are outside Corporate Auditors. We believe that this is a sufficient number for auditing the Directors’ execution of their duties from a fair and objective standpoint, thereby strengthening the Company’s corporate governance.

Outside Corporate Auditor Yuji Kikuchi is qualified as a lawyer and has considerable knowledge of company law and corporate governance. Using his professional knowledge and perspective, Mr. Kikuchi audits the Directors’ performance of their duties from the fair and objective standpoint of an outsider. Mr. Kikuchi attended all 12 meetings of the Board of Directors and all 14 meetings of the Board of Corporate Auditors held in the fiscal year ended March 31, 2020. Mr. Kikuchi has been designated as an independent Auditor as defined in Rule 436-2, Paragraph 1 of the Securities Listing Regulations of the Tokyo Stock Exchange.

Outside Corporate Auditor Masayuki Horie audits the Directors' performance of their duties from the fair and objective standpoint of an outsider using his expert knowledge of business administration, including internal control. Mr. Horie attended all 12 meetings of the Board of Directors and all 14 meetings of the Board of Corporate Auditors held in the fiscal year ended March 31, 2020. Mr. Horie has been designated as an independent Auditor as defined in Rule 436-2, Paragraph 1 of the Securities Listing Regulations of the Tokyo Stock Exchange.

There are no special interests between the Company and its outside Directors or outside Corporate Auditors.

The outside Director and the outside Corporate Auditors regularly exchange information and consult with the Corporate Auditing Division and staff departments, receiving reports on business execution at meetings of the Board of Directors and on other occasions.

The outside Corporate Auditors cooperate with the independent Auditors, exchanging information and consulting with them regularly at meetings of the Board of Corporate Auditors and on other occasions.

IV. Internal Audits and Audits by Auditors

The Corporate Auditing Division cooperates with the Corporate Auditors. The division reports the results of audits carried out under an audit plan for each fiscal year to the Corporate Auditors at least twice a year and exchanges opinions with them as necessary.

The Corporate Auditors, the Corporate Auditing Division, and the accounting Auditors cooperate with each other, exchanging opinions as necessary for statutory audits.

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