Corporate Governance Report

Last Update: Jul. 4, 2019

TAIYO YUDEN CO., LTD. Shoichi Tosaka President and Chief Executive Officer Contact: 03-6757-8310 Securities Code: 6976 https://www.yuden.co.jp/

The corporate governance of TAIYO YUDEN CO., LTD. (the "Company") is described below.

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

Other Basic Information

1. Basic Views

Basic Policy for corporate governance

The management philosophy of the TAIYO YUDEN Group consists of the three principles of "employee well-being," "betterment of local communities" and "responsibility to provide returns to shareholders," and the vision of the Group is "to be an excellent company that enjoys the trust and highest regard from our customers." To put into practice the management philosophy and realize the vision, we are committed to corporate social responsibilities and the mission of management to develop businesses on an ongoing basis while fulfilling sociality, public interest and public nature of the Group from a global viewpoint.

With an emphasis on transparency and fairness of corporate management, the Company is making efforts to enhance corporate governance under the supervision of the Board of Directors, including the development of structures and mechanisms that enable timely and appropriate information disclosure, thorough compliance, and speedy decision making and execution of duties.

Basic Policy for Corporate Governance https://www.yuden.co.jp/ut/ir/management/governance/

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

The company shall abide by all principles of the corporate governance code.

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

[Principles 1-4: Policy on Shareholdings]

Policies for holding and reducing policy shareholdings and standards for exercising voting rights for policy shareholdings and individual verification of the appropriateness of holdings are listed in Chapter 2, 4-

(1).(2).(3) of the "Basic Policy for Corporate Governance."

[Principle 1-7: Create appropriate procedures and frameworks for transactions between related parties]

Our policy regarding transactions between related parties is described in Chapter 3, 3-(1)-(2) of the article "Basic Policy for Corporate Governance" found on our website.

[Principles 2-6: Roles of Corporate Pension Fund as Asset Owner] The company has no corporate pension system.

- 1 -

The company shall implement a defined contribution corporate pension plan to build stable assets for employees, and shall provide education and training regarding asset management.

[Principle 3-1: Full disclosure]

1.Our corporate philosophy, vision, management strategy, business plans are disclosed in the financial statement briefing materials and integrated reports on our website.

2.Our fundamental concepts of corporate governance as well as basic policies are disclosed in the financial and corporate governance reports on our website.

3.Policies and procedures for the Board to determine director Remuneration are disclosed in the financial reports and notices for the convening of shareholder meetings.

4.Policies and procedures for the nomination of candidates for directors and auditors are disclosed in the financial and corporate governance reports.

5.Individual reasons regarding the selection of candidates for directors and auditors are disclosed in the notices for the convening of shareholder meetings.

6. Policies and Process for Appointment and Dismissal of Officers are disclosed in the notices for the convening of shareholder meetings.

[Supplemental Principle 4-1-1: Scope of delegation to the management]

A synopsis of the scope of delegation to the management can be found in Chapter 5, Section 2, 2-(1).(2).(3) of the article "Basic Policy for Corporate Governance" found on our website.

[Principles 4-9: Independence Criteria and Qualification for Outside Director]

The Board of Directors shall select independent outside director candidates using the "Executive Appointment and Dismissal Criteria" and the "Independence Criteria for Outside Officers," and shall clearly state the reasons for their appointment in a general shareholders' meeting notification when proposing candidates at a general shareholders' meeting. The standards for the independence of outside director shall be disclosed on the company's website.

[Supplemental Principle 4-11-1: Concept of balance of knowledge, diversity, and size of the board as a whole] The concepts regarding the balance of knowledge, experience, and skills of the Board (as a whole) as well as its size are described in Chapter 5, Section 2, 3-(2) of the article "Basic Policy for Corporate Governance" found on our website.

[Supplemental Principle 4-11-2: Posts held concurrently by Outside Directors and auditors]

Directors concurrently holding other positions are discussed in Chapter 5, Section 5, 2-(1).(2) of the article "Basic Policy for Corporate Governance" found on our website. Important concurrent posts held by Outside Directors are disclosed in the notice of convocation of shareholder meetings, financial statements, and corporate governance reports.

[Supplemental Principle 4-11-3: Analysis and assessment regarding the effectiveness of the Board as a whole]

1. Method of Evaluation Self-evaluation by questionnaire survey

Subjects

Directors and Audit & Supervisory Board Members (including Outside Officers)

Implementation

February 2019

period

1) The operation of the Board of Directors, 2) The composition of the Board of

Evaluation items

Directors,3) Aggressive governance, 4) Defensive governance, 5) Provision of

information, 6) General evaluation

Answer form

Points evaluation from 5 (satisfied) to 1 (not satisfied), and free comments

Evaluation method

Evaluation was conducted by the Board of Directors after analysis and verification

of the survey results by Directors and Audit & Supervisory Board Members.

2. Outline of the Analysis and Evaluation Results

In the survey, all evaluation items scored 3.5 or more points, and it was confirmed that the effectiveness of the Board of Directors has generally been ensured.

- 2 -

Regarding the "diversity of the composition of the Board of Directors," which was identified as an issue in the previous fiscal year, candidates for Directors were selected based on the policy that the Company aims to achieve diversity in terms of skills, experience, and way of thinking through the long-term internal

development as well as external recruitment of candidates. As for the "opportunities for Directors to learn

knowledge and skills," which was also identified as an issue in the previous fiscal year, improvements have been recognized as a result of training provided to Directors as well as Operating Officers based on timely topics and case studies.

As a result of the latest questionnaire survey conducted during the fiscal year under review, "improvement in reporting content on key measures" and "establishment of opportunities for discussion on business risks" have been recognized as issues. The Board of Directors will endeavor to enhance the effectiveness of the Board of Directors and further strengthen corporate governance by continuing to address these matters systematically.

[Supplementary principles 4-14-2: Principles for Training of Directors and Audit & Supervisory Board Members]

Principles for training of directors and audit & supervisory board members are listed in Chapter 5, Section 5, 3-(4) of the "Basic Policy for Corporate Governance" found on the company website.

[Principles 5-1 : Policies for Constructive Dialogue with Shareholders ]

The company shall designate a director in charge of IR and conduct IR activities to promote a constructive dialogue with shareholders and investors.

The company shall also report to the Board of Directors any opinions and requests from shareholders and investors collected through IR activities.

Specifically, the following activities are to be included in the company's organizational structure.

  1. Strengthening collaboration between the management of the IR department and other departments through the director responsible for IR.
  2. Results briefings with securities analysts and institutional investors (quarterly).
  3. Handling group meetings and individual meetings with major foreign and domestic individual investors.
  4. Explanations to major investors regarding general shareholders' meeting proposals.
  5. Publishing consolidated reports to enhance the understanding of the company's mid- and long-term value creation.
  6. Conducting investigations of shareholder findings through external survey organizations.

For fairness in the disclosure of information and to prevent leaks of inside information, the information disclosed in dialogues with major shareholders and investors shall be within the bounds previously determined for disclosure.

2. Capital Structure

Foreign Shareholding Ratio

From 20% to less than 30%

[Status of Major Shareholders]

Name / Company Name

Number of Shares

Percentage (%)

Owned

The Master Trust Bank of Japan, Ltd. (Trust Account)

25,949,700

20.3

Japan Trustee Services Bank, Ltd. (Trust Account)

16,297,100

12.7

Sumitomo Mitsui Banking Corporation

4,000,000

3.1

Trust & Custody Services Bank, Ltd. (Securities Investment

3,915,500

3.0

Trust Account)

The Iyo Bank, Ltd.

3,000,100

2.3

Japan Trustee Services Bank, Ltd. (Trust Account 9)

2,766,700

2.1

- 3 -

J.P.MORGAN SECURITIES PLC FOR AND ON BEHALF OF

2,574,305

2.0

ITS CLIENTS JPMSP RE CLIENT ASSETS-SETT ACCT

Sato Traffic Orphan Welfare Fund

1,916,640

1.5

Japan Trustee Services Bank, Ltd. (Trust Account 5)

1,746,700

1.3

Nippon Life Insurance Company

1,666,450

1.3

Controlling Shareholder (except for Parent

Company)

Parent Company

None

Supplementary Explanation

  1. The information above concerns large shareholders as of March 31, 2019.
  2. The company holds 2,555,996 of its own shares, 1.96% of which are not shown on the list of large shareholders.

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

More than 1000

End of the Previous Fiscal Year

Sales (consolidated) as of the End of the

From ¥100 billion to less than ¥1 trillion /

Previous Fiscal Year

Number of Consolidated Subsidiaries as of the

From 10 to less than 50

End of the Previous Fiscal Year

  1. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling Shareholder
  2. Other Special Circumstances which may have Material Impact on Corporate Governance

None

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 Kansayaku Board

- 4 -

[Directors]

Update

Maximum

Number

of Directors

Stipulated in

10

Articles of Incorporation

Term of

Office

Stipulated in

Articles

of

One year

Incorporation

Chairperson of the Board

President and Chief Executive Officer

Number of Directors

8

Number of Outside Directors

3

Number of Independent Directors

3

Outside Directors' Relationship with the Company (1)

Update

Name

Attribute

Relationship with the Company*

a

b

c

d

e

f

g

h

i

j

k

Masashi Hiraiwa

Lawyer

Seiichi Koike

From another company

Emiko Hamada

scholar

  • 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
  1. Executive of the Company or its subsidiaries
  2. Non-executivedirector or executive of a parent company of the Company
  3. Executive of a fellow subsidiary company of the Company
  4. A party whose major client or supplier is the Company or an executive thereof
  5. Major client or supplier of the listed company or an executive thereof
  6. 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
  7. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a legal entity)
  8. 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)
  9. Executive of a company, between which and the Company outside directors/kansayaku are mutually appointed (the director himself/herself only)
  10. Executive of a company or organization that receives a donation from the Company (the director himself/herself only)
  11. Others

Outside Directors' Relationship with the Company (2)

Update

Designation as

Supplementary

Name

Independent

Explanation of the

Reasons of Appointment

Director

Relationship

Masashi

OHHARA LAW

[Reasons for election]

Hiraiwa

OFFICE:

Mr. Masashi Hiraiwa has served as an officer or in a

Attorney

similar position at investment corporations, and possesses

abundant experience and high-level expertise as an

- 5 -

This is an excerpt of the original content. To continue reading it, access the original document here.

Attachments

  • Original document
  • Permalink

Disclaimer

Taiyo Yuden Co. Ltd. published this content on 12 July 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 July 2019 03:24:04 UTC