Maxell : Corporate Governance Report

Corporate Governance Report

Last Update: March 29, 2019

Maxell Holdings, Ltd.

Yoshiharu Katsuta

President and Representative Director

Contact: Branding & Corporate Communication Dept.

Securities Code: 6810

http://www2.maxell.co.jp

The corporate governance of Maxell Holdings, Ltd. (the "Company") is described below.

I.Basic Views on Corporate Governance, Capital Structure, Corporate Profile and

Other Basic Information

1. Basic Views

At the Maxell Group (the "Group"), one of the basic management policies is to enhance the Group's corporate value over the medium- to long-term through the implementation of management measures that reflect the viewpoints of all stakeholders, including shareholders and other investors, customers, and employees. Accordingly, the Group endeavors to reinforce its corporate governance by expediting both management decision making and business execution, while simultaneously strengthening oversight systems.

The Company has established the Corporate Governance Guidelines that provide the basic views and basic policies concerning the corporate governance of the Group, which are posted on the Company's website. (Corporate Governance Guidelines: http://www2.maxell.co.jp/ir/governance/)

[Reasons for Non-compliance with the Principles of the Corporate Governance Code]

The Company has implemented all of the principles of the Corporate Governance Code.

[Disclosure Based on the Principles of the Corporate Governance Code]

[Principle 1-4.Cross-Shareholdings]

The Company sets forth the policy on cross-shareholdings of listed companies as follows and handles shares held by the Company as cross-shareholdings in accordance with such policy.

(1)The Company holds shares as cross-shareholdings for the purpose of the enhancement of its corporate value over the medium- to long-term through the maintenance and reinforcement of business relationships.

(2)The Company regularly examines the purpose, medium- to long-term economic rationality, future prospects, etc., of major cross-shareholdings and carries out a review including deliberation involving the Board of Directors with regard to the sale of such shares.

(3)The Company appropriately exercises its voting rights pertaining to cross-shareholdings upon

comprehensive consideration of whether or not the proposal contributes to the enhancement of corporate value of the issuing company and the Group over the medium- to long-term.

Based on the policy, the Company assesses whether or not to hold each individual cross-shareholding every year at the Board of Directors and confirms that the Company sells shares for which the Company assessed the necessity and rationality to hold were decreased.

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[Principle 1-7. Related Party Transactions]

At the Company, competitive transactions and conflict-of-interest transactions between the Company and the Company's directors or other related parties shall require prior approval of the Board of Directors. Related party transactions shall be regularly reported to the Board of Directors and disclosed in accordance with the Companies Act, the Financial Instruments and Exchange Act, and applicable laws and regulations, as well as regulations prescribed by the Tokyo Stock Exchange.

[Principle 2-6. Roles of Corporate Pension Funds as Asset Owner]

Corporate pension fund plan of the Company has transitioned to defined contribution pension fund plan since April 2015. And the previous defined benefit pension fund is managed by Maxell Pension Fund as closed pension fund.

For the management of Maxell Pension Fund, in order to perform the expected roles as an asset owner, the Company allocates personnel with appropriate qualifications who have work experience in finance & accounting and human affairs, etc., and implements systematic monitoring through regular reports, etc. from the board of representatives.

Also, as the trust assets are invested by multiple asset management institutions, and by entrusting the selection of each investment destination and exercise of voting rights to each asset management institution, the Company prevents conflict of interests between beneficiaries of corporate pension and the Company.

[Principle 3-1. Enhanced Information Disclosure]

(1)Company objectives (e.g., business principles), management strategy and management plan

The Company's management philosophy, management strategy, and management plan are disclosed in integrated reports and on the Company's website in addition to securities reports.

(2)Basic views and basic policies on corporate governance

The basic views and basic policies on the corporate governance of the Company are stated in the Corporate Governance Guidelines.

(3)Policies and procedures in determining the remuneration of directors

The policies and procedures in determining the remuneration of the Company's directors are stated in the Corporate Governance Guidelines.

(4)Policies and procedures for nomination of candidates for directors and dismissal of directors

The policies and procedures for nomination of candidates for directors and dismissal of directors of the Company are stated in the Corporate Governance Guidelines.

(5)Explanations for the appointment and nomination of each candidate for director

Regarding the explanations for the appointment and nomination of candidates for directors of the Company, a brief profile of each candidate and reasons for election are stated in the convocation notices of the General Meeting of Shareholders.

[Supplementary Principle 4-1-1. Scope of Matters to be Delegated to the Management]

In addition to the matters provided for in laws and regulations and the Articles of Incorporation, the Company provides the matters to be decided by the Board of Directors in the Board of Directors Rules. Regarding the important matters concerning business execution other than the matters to be decided by the Board of Directors, the Company defines the scope of matters to be delegated to the management by setting up various approval guidelines.

[Principle 4-9. Independence Standards and Qualifications for Independent Outside Directors]

The Company selects, in accordance with the independence standards prescribed by the Tokyo Stock Exchange and other criteria, independent outside directors who have no interests with the Company and may not have a conflict of interests with general shareholders.

[Supplementary Principle 4-11-1. Balance, Diversity, and Size of the Board of Directors as a Whole]

To exercise important managerial decision making and the supervisory function effectively, the Board of Directors of the Company has established appropriate systems taking into consideration the balance between diversified knowledge, experience, expertise, etc., of the Board of Directors as a whole. In addition, the Company ensures that the management supervisory system is in place by appointing an independent outside director who expresses opinions from an independent and objective standpoint at the Board of Directors.

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The policies and procedures for appointment of directors are stated in the Corporate Governance Guidelines.

[Supplementary Principle 4-11-2. Concurrent Holding of Positions as Officers at Other Listed Companies by Directors]

Directors of the Company shall not concurrently serve as directors or auditors at no more than four listed companies excluding the Company in order to ensure the time and effort required to appropriately fulfill their respective roles and responsibilities.

[Supplementary Principle 4-11-3. Evaluation of Effectiveness of the Board of Directors]

In order to further increase the effectiveness of the Board of Directors, the Company provides in the Corporate Governance Guidelines to implement analysis and assessment by the Board of Directors with respect to its effectiveness as a whole based on the self-evaluation of each director, etc. The evaluation of effectiveness of the Board of Directors has been implemented since fiscal year 2015 and the summary of the results has been disclosed every year.

[Supplementary Principle 4-14-2. Training Policy for Directors]

The Company continuously provides its directors with information and training necessary to fulfill their roles and responsibilities appropriately, both at the time of and after the assumption of their offices. Specifically, the Company explains the outline of its business and other matters to them upon assumption of their offices and regularly holds lectures on compliance inviting external experts. In addition, the Company provides information and training in a timely manner on the occasions of the revision of important laws, etc.

[Principle 5-1. Policy for Constructive Dialogue with Shareholders]

In order to promote constructive dialogue with shareholders and thereby facilitate the sustainable growth of the Group and the enhancement of its corporate value over the medium- to long-term, the Company has established the Basic Policy for Dialogue with Shareholders, which is included in the Corporate Governance Guidelines.

2. Capital Structure

		Foreign Shareholding Ratio	More than 30%
[Status of Major Shareholders]
		Name / Company Name				Number of Shares			Percentage (%)
						Owned (Shares)
	Japan Trustee Services Bank, Ltd.				7,823,990			14.81
	MSIP CLIENT SECURITIES				2,580,300			4.88
	The Master Trust Bank of Japan, Ltd.				2,465,500			4.67
	Nichia Corporation				2,001,600			3.79
	TAIYO HANEI FUND, L.P.				1,877,200			3.55
	CGML PB CLIENT ACCOUNT/COLLATERAL				1,831,200			3.47
	Hitachi, Ltd.				1,603,000			3.03
	STATE STREET BANK AND TRUST COMPANY 505019				1,448,410			2.74
	BNYM TREATY DTT 15				1,319,800			2.50
	Morgan Stanley MUFG Securities Co., Ltd.				1,312,930			2.48
		Controlling Shareholder (Except for Parent		-
		Company)
		Parent Company		None
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Supplementary Explanation

1.In the change reports on possession of large volume that were provided to public inspection on January 22, 2018, it was mentioned that Simplex Asset Management Co., Ltd. has 3,453,900 shares (6.48%) as of January 15, 2018. Despite this report, they are not included in the above list of major shareholders, since it is not possible for the Company to confirm the actual status as of March 31, 2018.

2.In the change reports on possession of large volume that were provided to public inspection on February 15, 2018, it was mentioned that Taiyo Fund Management Co. LLC, Taiyo Hanei GP, Ltd., Taiyo Pacific CG LLC, Taiyo Maki GP, LTD and Taiyo Hinata GP LLC have 4,996,100 shares (9.37%) in total of related partners as of February 7, 2018. Despite this report, they are not included in the above list of major shareholders, since it is not possible for the Company to confirm the actual status as of March 31, 2018.

3.In the change reports on possession of large volume that were provided to public inspection on March 23, 2018, it was mentioned that Mizuho Securities Co., Ltd. and Asset Management One Co., Ltd. has 2,914,900 shares (5.46%) in total of related partners as of March 15, 2018. Despite

this report, they are not included in the above list of major shareholders, since it is not possible for the Company to confirm the actual status as of March 31, 2018.

4.

In the change reports on possession of large volume that were provided to public inspection on April 5, 2018, it was mentioned that Nomura Securities Co., Ltd., NOMURA INTERNATIONAL PLC and Nomura Asset Management Co., Ltd. have 2,475,355 shares (4.64%) in total of related partners as of March 30, 2018. Despite this report, they are not included in the above list of major shareholders, since it is not possible for us to confirm the actual status as of March 31, 2018.

3. Corporate Attributes

	Listed Stock Market and Market Section		Tokyo Stock Exchange
			First Section
	Fiscal Year-end		March
	Type of Business		Electric Appliances
	Number of Employees (Consolidated) as of the		1,000 or more
	End of the Previous Fiscal Year
	Sales (Consolidated) as of the End of the		¥100 billion to less than ¥1 trillion
	Previous Fiscal Year
	Number of Consolidated Subsidiaries as of the		10 to less than 50
	End of 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

―

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II. Business Management Organization and Other Corporate Governance Systems regarding Decision-making, Execution of Business, and Oversight in Management

1. Organizational Composition and Operation

		Structure of Organization		Company with an Audit and Supervisory Committee
[Directors]
		Maximum Number of Directors		19
		Stipulated in Articles of Incorporation
		Term of Office		1 year
		Stipulated in Articles of Incorporation
		Chairperson of the Board		Chairman (excluding in the case of holding President
				position)
		Number of Directors [updated]		7
		Appointment of Outside Directors		Appointed
		Number of Outside Directors		3
		Number of Independent Directors		3

Outside Directors' Relationship with the Company (1)

Name

Attribute

Relationship with the Company*

a

b

c

d

e

f

g

h

i

j

k

Tatsuhiko Izumi

From Other Company

Wataru Kitao

From Other Company

Shinobu Watanabe

From Other Company

*Categories for "Relationship with the Company"

*"○" when the director presently falls or has recently fallen under the category; "△" when the director fell under the category in the past

*"●" when a close relative of the director presently falls or has recently fallen under the category; "▲"when a close relative of the director fell under the category in the past

a.Executive of the Company or its subsidiaries

b.Non-executivedirector 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 the Company 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)

h.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

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