Taiyo Yuden : Corporate Governance Report(651KB)

Corporate Governance Report

Last Update: July 3, 2020

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]	Update

[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.Questionnaire

Method of Evaluation Self-evaluation by questionnaire survey

The Company conducts the deeper identification of issues by a multiple-choice method (to choose issues on which sufficient discussion has not been conducted at Board of Directors meetings) and a questionnaire on strengths and weaknesses of the Board of Directors.

Implementation period February 2020 Subjects

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

1. The operation and composition of the Board of Directors, 2) Management strategies, 3) Corporate ethics and risk management, monitoring, and dialogue with shareholders, etc., 4) Nomination Committee and Remuneration Committee, 5) Provision of information

2. Analysis/Evaluation

• 2 -

Analysis and evaluation meetings were conducted first separately by Operating Officers and Non-operating Officers based on the results of the questionnaire with Directors and Audit & Supervisory Board Members, and then a discussion is conducted at a Board of Director meeting based on the results of those meetings.

In the past four years, the effectiveness evaluation of the Board of Directors was conducted internally. This year, we employed an external organization and received advice on the question design, analysis, possible response measure, etc. to improve the objectivity and the transparency of evaluation.

3. Evaluation results

The external organization commented that there are points to be evaluated positively about past four effectiveness evaluations of the Board of Directors, such as the identification of issues and the implementation of countermeasures, holding an evaluation meeting attended only by Non-operating Officers, free and open discussions conducted at Board of Directors meetings, and efforts to reduce any information gap with Outside Officers.

Regarding the "improvement in reporting content of key measures" (insufficient reporting on risk mitigation measures concerning key measures), which was among the issues identified in the previous fiscal year, we introduced quarterly reporting by all headquarters.

The effectiveness has generally been ensured 4. For Further Improvement of Effectiveness

The following three issues were identified as a result of the effectiveness evaluation of the Board of Directors in the current fiscal year. 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. "Discussion on medium-term plan and long-term management strategies (what we should become in 10 years)"

"Discussion on human resource development and strategies" "Revision of the risk map"

[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%

- 3 -

[Status of Major Shareholders]		Update
		Name / Company Name			Number of Shares			Percentage (%)
				Owned
	The Master Trust Bank of Japan, Ltd. (Trust Account)	27,240,900	21.70
	Japan Trustee Services Bank, Ltd. (Trust Account)	13,510,000	10.76
	BBH BOSTON CUSTODIAN	FOR NEXT GENERATION	4,783,000	3.81
	CONNECTIVITY FUND A SERIES TRUST 620818
	Trust & Custody Services Bank, Ltd. (Securities Investment Trust	3,002,000	2.39
	Account)
	The Iyo Bank, Ltd.								3,000,100	2.39
	GOLDMAN, SACHS & CO. REG						2,544,878	2.02
	Sumitomo Mitsui Banking Corporation	2,000,000	1.59
	Japan Trustee Services Bank, Ltd. (Trust Account 9)	1,989,900	1.58
	Sato Traffic Orphan Welfare Fund						1,916,640	1.52
	Japan Trustee Services Bank, Ltd. (Trust Account 5)	1,811,000	1.44
		Controlling Shareholder (except	for Parent	―
		Company)
		Parent Company						None
		Supplementary Explanation		Update

1. The information above concerns large shareholders as of March 31, 2020.
2. The company holds 4,715,775 of its own shares, 3.62% 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
3. • 4 -

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
[Directors]
		Maximum Number	of Directors	Stipulated in
		Articles of Incorporation			10
		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)

Name

Attribute

Relationship with the Company*

a

b

c

d

e

f

g

h

i

j

k

Masashi Hiraiwa

Attorney

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. • 5 -

k. Others

Outside Directors' Relationship with the Company (2)

	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
			attorney specializing in corporate legal affairs. He has
			demonstrated a high sense of ethics by offering
			constructive opinions and organizing points of discussion
			or debate from an objective perspective, and fulfilling the
			monitoring function over the Company's overall
			management such as governance and legal compliance
			including internal control, at meetings of the Company's
			Board of Directors. For these reasons, it was judged that
			he would be able to fulfill his duties as Independent
			Outside Director who supervises business execution.
			Therefore, he was reappointed as an Outside Director.
			Although Mr. Hiraiwa has not been involved in corporate
			management in ways other than being an outside officer,
			it was judged for the above-mentioned reasons that he
			would be able to appropriately execute the duties of
			Outside Director.
			[Independence]
			He meets the requirements for Independent Officer
			defined by the Tokyo Stock Exchange and is registered
			with the Exchange to that effect. In addition, he meets the
			"Standards for the Independence of Outside
			Directors/Outside Audit & Supervisory Board Members."
			Therefore, he is judged to be sufficiently independent.
Seiichi	○	―	[Reasons for election]
Koike			Mr. Seiichi Koike has engaged in material development
			for automotive components and research and development
			related to production technology at an automotive maker
			over many years, and possesses wide-ranging expertise in
			relation to the automotive electronics business. In
			addition, the Company also believes it will be valuable to
			the Group for his wide-ranging expertise from an
			investor's perspective to be reflected in the management
			of the Company, utilizing his abundant experience,
			including corporate management in the automotive
			components industry and strengthening governance
			systems as an Audit & Supervisory Board Member. For
			these reasons, it was judged that he will be able to provide
			valuable advice and suggestions regarding overall
			management at meetings of the Company's Board of
			Directors, and therefore he was appointed as an
			Independent Outside Director.
			[Independence]
			He meets the requirements for Independent Officer
			defined by the Tokyo Stock Exchange. In addition, he
			meets the "Standards for the Independence of Outside

- 6 -

			Directors/Outside Audit & Supervisory Board Members."
			Therefore, he is judged to be sufficiently independent.
Emiko	○	NGK	[Reasons for election]
Hamada	INSULATORS,	While Ms. Emiko Hamada was employed by the
		LTD.	Company, she engaged in the development and
		Outside Director	commercialization of CD-R and DVD-R. After she left the
			Company, she has conducted research activities for many
		Ms. Hamada	years as a university professor mainly focusing on
		worked for the	industry-academia-government collaboration projects.
		Company from	She also has experience in serving as an Outside Director
		April 1984 to April	at another company. The Company believes her
		2007 as a business	suggestions of business execution and management
		operator, there has	supervision as an Outside Director will be valuable to the
		been no transaction	Group. For these reasons, it was judged that she will be
		to be noted	able to provide advice and suggestions regarding overall
		between Ms.	management at the meetings of the Company's Board of
		Hamada and the	Directors, and therefore she was appointed as an
		Company, and no	Independent Outside Director.
		special interests	[Independence]
		currently exist	Other than the left she meets the requirements for
		between her and	Independent Officer defined by the Tokyo Stock
		the Company.	Exchange. In addition, he meets the "Standards for the
			Independence of Outside Directors/Outside Audit &
		She serves as an	Supervisory Board Members." Therefore, he is judged to
		outside director of	be sufficiently independent.
		NGK
		INSULATORS,
		LTD.
		However, the
		amounts
		transactions with
		the said company
		accounted for less
		than 0.1% of the
		Company's
		consolidated net
		sales, and there is
		no possibility of
		conflicts of interest
		with general
		shareholders.

Voluntary Establishment of Committee(s) Corresponding Establishedto Nomination Committee or Remuneration Committee

Committee's Name, Composition, and Attributes of Chairperson
	Committee	Corresponding	to	Committee	Corresponding	to
	Nomination Committee		Remuneration Committee
Committee's Name	Nomination Committee		Remuneration Committee
All Committee Members	5			5
Full-time Members	0			0
		- 7 -

	Inside Directors	1		1
	Outside Directors	3		3
	Outside Experts	0		0
	Other	1		1
	Chairperson	Outside Director	Outside Director
	Supplementary Explanation	Update

1. Nomination Committee

The Nomination Committee is composed of the President and Chief Executive Officer, Outside Directors, and an Audit & Supervisory Board Member and is chaired by an Independent Outside Director to ensure the objectivity of deliberation. The Nomination Committee deliberates on, among others, the nomination of candidates for Officer (including candidates for reappointment), any proposal for dismissal of Officers including the President and Chief Executive Officer, any proposal for the selection of a rank for or dismissal of each Operating Officer, and disciplinary matters based on the "Officer Appointment and Dismissal Standards" and reports the deliberation results to the Board of Directors. The consent of the Audit & Supervisory Board is obtained in advance for the nomination of a candidate for Audit & Supervisory Board Member or the dismissal of an Audit & Supervisory Board Member.

The Nomination Committee held three (3) meetings during the fiscal year under review. Main activities are as follows:

・Selection of the Chairman of the Nomination Committee

・Deliberations on the selection of the Representative Director and the Chairman of the Board of Directors ・Deliberations on the determination of the order of turns in acting as a chairman at General Meetings of

Shareholders

・Deliberations on the revision of "Operating Officer Rules"

・Deliberations on candidates for Officer (including candidates for reappointment) ・Deliberations on the appointment of Operating Officers

2. Remuneration Committee

The Remuneration Committee is composed of the President and Chief Executive Officer, Outside Directors, and an Audit & Supervisory Board Member and is chaired by an Independent Outside Director to ensure the objectivity of deliberation. The Remuneration Committee deliberates on remuneration plans and amounts of Directors and Operating Officers and reports the deliberation results to the Board of Directors. Remuneration for Directors (excluding Outside Directors) and Operating Officers of the Company consists of "basic remuneration," "performance-based bonus," and "stock compensation-type stock options" under a remuneration system that takes into consideration performance-based incentives.

The Remuneration Committee held one (1) meeting during the fiscal year under review. Main activities are as follows:

・Selection of the Chairman of the Remuneration Committee

・Deliberations on the evaluation and bonuses of individual Operating Officers ・Deliberations on the revision of "Officers' Stock Option Rules"

・Deliberations on stock remuneration (stock compensation-type stock options)

[Kansayaku]

Establishment of Kansayaku Board		Established

- 8 -

	Maximum Number of Kansayaku Stipulated in		5
	Articles of Incorporation
	Number of Kansayaku		4

Cooperation among Kansayaku, Accounting Auditors and Internal Audit Departments	Update

Three parties consisting of Accounting Auditors, Internal Audit Departments, and Kansayaku hold regular joint meetings, including information exchange meetings for supporting the audit of each party.

In collaboration with Internal Audit Departments, we exchange opinions on risk assessment, mutually report and exchange opinions on audit plans and results, and conduct joint audits, among others.

In association with Accounting Auditors, we exchange opinions on risk assessment, conduct hearing of the audit plan by Accounting Auditors, perform on-site audits, conduct hearing of audit results, evaluate Accounting Auditors, and provide feedback on the evaluation results to Accounting Auditors.

Accounting Auditors

The primary certified accountants executing the auditing tasks include

Kiyoshi Hirai, CPA

Shingo Iwamiya, CPA

Yoshiko Imai, CPA

Appointment of Outside Kansayaku		Appointed
Number of Outside Kansayaku	2
Number of Independent Kansayaku	2

Outside Kansayaku's Relationship with the Company (1)

Name

Attribute

Relationship with the Company*

a

b

c

d

e

f

g

h

i

j

k

l

m

Hajime Yoshitake

From another company

Tomomi Fujita

Attorney

• 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 subsidiary
2. Non-executivedirector or accounting advisor of the Company or its subsidiaries
3. Non-executivedirector or executive of a parent company of the Company
4. Kansayaku of a parent company of the Company
5. Executive of a fellow subsidiary company of the Company
6. A party whose major client or supplier is the Company or an executive thereof
7. Major client or supplier of the Company or an executive thereof
8. Consultant, accountant or legal professional who receives a large amount of monetary consideration or other property from the Company besides compensation as a kansayaku
9. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a legal entity)
10. Executive of a client or supplier company of the Company (which does not correspond to any of f, g, or h) (the kansayaku himself/herself only)
11. • 9 -

k. Executive of a company, between which and the Company outside directors/kansayaku are mutually appointed (the kansayaku himself/herself only)

l. Executive of a company or organization that receives a donation from the Company (the kansayaku himself/herself only)

m. Others

Outside Kansayaku's Relationship with the Company (2)	Update
	Designation as	Supplementary
Name	Independent	Explanation of	Reasons of Appointment
	Kansayaku	the Relationship
Hajime	○	Adjunct Lecturer	[Reasons for election]
Yoshitake		of Meiji		Mr. Hajime Yoshitake has many years' experience of
		University		auditing operation at financial institutions and internal
		Professional		control consulting operation at business corporations, is
		Graduate School	qualified as a certified internal auditor, etc., has
				contributed to audit-related meetings in Japan and
		General Manager	overseas, and possesses exceptional insight, abundant
		of The Institute	experience and a good track record regarding auditing
		of Internal		operation. As an Audit & Supervisory Board Member of
		Auditors - Japan	the Company, based on his knowledge and experience,
				he has actively helped establish a highly transparent, fair
				system for auditing management of the Company,
				carried out auditing on the appropriateness of
				deliberation and decision-making on important matters,
				and diligently conducted on-site audits of other
				sites.Thus, he was elected as an Outside Auditor.
				[Independence]
				He has no particular interests involving the company. He
				satisfies the company's "Standards for the Independence
				of Outside Directors/ Outside Audit & Supervisory
				Board Members" and all requirements for independent
				directors as prescribed by the Tokyo Stock Exchange.
				We have asked him to perform auditing tasks (as an
				independent director) to ensure objectivity and neutrality
				while verifying the overall effectiveness of the Board.
Tomomi	○	Attorney	of	[Reasons for election]
Fujita		Innoventier LPC	Ms. Tomomi Fujita has abundant experience as an
				attorney and a thorough knowledge of legal affairs in
		Outside Director	general and corporate legal affairs in particular. As such,
		(Audit	&	she has sufficient insight to audit corporate management.
		Supervisory		For these reasons, Ms. Fujita was appointed as candidate
		Committee		for Independent Outside Audit & Supervisory Board
		Member)	of	Member as she is expected to be able to audit
		TAKUMA	CO.,	management decisions at meeting of the Board of
		LTD.		Directors and business execution by Directors
				objectively based on her strong expertise.
				[Independence]
				She has no particular interests involving the company.
				She satisfies the company's "Standards for the
				Independence of Outside Directors/ Outside Audit &
				Supervisory Board Members" and all requirements for
				independent directors as prescribed by the Tokyo Stock
				Exchange. We have asked him to perform auditing tasks
				(as an independent director) to maintain objectivity and

- 10 -

neutrality while verifying the overall effectiveness of the Board.

[Independent Directors/Kansayaku]

Number of Independent Directors/Kansayaku	5

Matters relating to Independent Directors/Kansayaku

Although the company's five independent directors meet the requirements imposed by the Corporation Act and the company's "Standards for the Independence of Outside Directors/ Outside Audit & Supervisory Board Members," they do not qualify for any of the requirements outlined in Section 211, Subsection 4-5 of the Securities Listing Regulations Enforcement Guidelines. Therefore, the five directors are considered to be independent directors.

[Incentives]

Incentive Policies for Directors		Performance-linked Remuneration / Stock Options /

Supplementary Explanation

Described in the "Director Remuneration" section.

Recipients of Stock Options				Inside Directors / Other
Supplementary Explanation	Update

The details of the stock options are as follows.

Name: Taiyo Yuden Co., Ltd. Stock Options Issued July 2020

Total number of options: 590

Those eligible for stock options, their number and the number of options granted include Company Board members (excluding outside Board members): 5 persons, 330 options

Company Operating Officer (excluding those also serving on the Board): 10 persons, 260 options

Type and number of shares underlying options: 59,000 shares of common stock in the company

[Director Remuneration]

Disclosure of Individual Directors'

No Individual Disclosure

Remuneration

Supplementary Explanation	Update

Remuneration of directors for the period ending March 2020 (79th term) is as follows:

• Directors: 333,000,000yen (paid to 8 persons)
• Audit & Supervisory Board Members: 81,000,000 (paid to 6 persons)

Policy on Determining Remuneration Amounts

Established

and Calculation Methods

- 11 -

Executive Directors

Outside Directors

Audit & Supervisory Board Members

Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods	Update

1. Policy to determine the remuneration paid to Corporate Officers

1. The Company shall provide remuneration that emphasizes the linkage with financial results and medium- to long-term corporate value, to share the same value with shareholders.
2. Remuneration shall be set at levels that can attract and retain excellent human resources with global competitiveness.
3. Remuneration shall emphasize transparency and fairness to be able to fulfill accountability.

2. Process to determine remuneration paid to Corporate Officers and content of remuneration

In order to ensure the transparency and fairness of the process to determine remuneration for Officers, a Remuneration Committee has been established as an advisory panel to the Board of Directors.

The Remuneration Committee is composed of the President and CEO, Outside Directors, and an Audit & Supervisory Board Member and is chaired by an Independent Outside Director to ensure the objectivity of deliberations. It deliberates and reports on matters pertaining to remuneration for Officers such as remuneration policy, plan, calculation methods, and specific remuneration content of individual Officers.

After the Remuneration Committee has deliberated and reported, specific remunerations for Directors are deliberated at the Board of Directors meeting, and specific remunerations for Audit & Supervisory Board Members are discussed at the Audit & Supervisory Board meeting, within the limits of remunerations approved at the General Meeting of Shareholders, and with the amount of remunerations calculated based on rules and regulations established by the Company.

Composition of remuneration by position

・Their remuneration consists of "basic remuneration," "performance-based bonus, "and "stock compensation-type stock options."

・If they achieve the targets underlying "performance-based bonus," their remuneration will consist of 40% of basic remuneration, 40% of performance- based bonus, and 20% of stock remuneration.

In the interest of maintaining independence, Outside Directors receive only "basic remuneration," with no performance-based remuneration.

In the interest of promoting audits of legality, Audit & Supervisory Board

Members receive only "basic remuneration."

Remuneration structure

	Type of	Remuneration	Description	Form of
	remuneration	item	payment
			・Levels are determined in consideration of, among
	Basic	Fixed	others, the economic climate and the growth potential of
	the Company.	Cash
	remuneration	remuneration
	・Fixed remuneration based on roles and
			responsibilities.
			・Given the responsibility of Executive Directors for
			meeting Group performance targets each year,
			consolidated profit is chosen as the relevant
			performance indicator to establish a clearer linkage
			between factor contributing to the enhancement of
		Performance-	corporate/shareholder value and remuneration.
	Performance-	・The amount of bonus for each individual is
	based	determined by allocating the total theoretical capital	Cash
	based bonus	remuneration
	amount calculated based on consolidated profit using
		(Single year)
		the ratio determined based on one's position and by
			multiplying the result by a coefficients related to
			performance evaluation of the organization in his or her
			charge and strategic behavior evaluation of the
			individual. The total theoretical capital amount is 0.76%
			of consolidated profit for the fiscal year under review.
			- 12 -

			・Introduced as an incentive toward medium- to long-
	Stock	Stock	term enhancement of corporate value, and to nurture	Shares
	shared value with shareholders and Directors' awareness
	compensation-	remuneration	(Share
	to stock price.
	type	(Medium- to	acquisition
	・The number of share acquisition rights granted to
	stock options	long-term)	each Director is determined based on his or her position	rights)
			and rank.

[Supporting System for Outside Directors and/or Kansayaku]

Outside Board members and Outside Auditors may request various departments to provide information to gather the information required to perform their duties.

In addition, the company has established a system that makes available important company information to outside Board members and Outside Auditors, as necessary. The company has also appointed a person responsible for promptly providing required company information to outside Board members and Outside Auditors upon request.

[Retired presidents/CEOs holding advisory positions (sodanyaku, komon, etc.)]

Information on retired presidents/CEOs holding advisory positions (sodanyaku, komon, etc.)

Employment terms

Date when former

Name

Job title/

Responsibilities

(Full/part time, with/without

role as president/

Term

position

compensation, etc.)

CEO ended

―

―

―

―

―

―

Number of retired presidents/CEOs holding advisory

0

positions (sodanyaku, komon, etc.)

Others

The Company do not have the system such as the senior executive advisor (Sodanyaku) or advisor (Komon) that the person who retired from the president and representative director take office.

2.Matters on Functions of Business Execution, Auditing, Oversight, Nomination and Remuneration Decisions (Overview of Current Corporate Governance System)

1. Roles and responsibilities of the Board of Directors

1. The Board of Directors shall aim for corporate management to be an excellent company that enjoys the trust and highest regard from stakeholders, including shareholders, customers, employees and local communities, to accomplish the fiduciary responsibility entrusted by shareholders and increase the Company's interests and the common interests among shareholders.
2. The Board of Directors shall deliberate and determine important matters for the entire Group with ample time, including management policies, management strategies, business plans, capital policy and the matters on internal control, for the purpose of continuously increasing corporate value from a long-term perspective.
3. The Board of Directors shall strengthen the management system for risk factors surrounding corporate management of the Company and always monitor the execution of business operations.

2. Delegation of authority by the Board of Directors to top management

• 13 -

1. To ensure the effective decision making by the Board of Directors, the Management Implementation Committee shall deliberate in advance policy matters regarding business operations for Group management, whereas the TM (Top Management) Meeting shall deliberate in advance matters concerning personnel, organization and remuneration systems for the entire Group. Both organs shall determine matters delegated by the Board of Directors.
2. Operating Officers are in place in order to further clarify roles and responsibilities of Directors who monitor and supervise the management of business and persons who execute business operations. The Operating Officers shall conduct business flexibly and quickly as an executor responsible for the section he or she is in charge, under the direction of the President and Chief Executive Officer , in accordance with management policies and strategies determined at meetings of the Board of Directors.

3. Effectiveness of the Board of Directors

1. To ensure the fairness of meetings and strengthen the authority of management oversight, the Board of Directors shall be chaired by the Chairman of the Board of Directors. If the Chairman of Board of Directors is absent, the President and Chief Executive Officer shall be chaired the Board of Directors. (2) At the Board of Directors meeting, the Directors and the Audit & Supervisory Board Members shall evaluate by themselves the effectiveness of the Board of Directors every year. The Board of Directors shall disclose issues to be addressed and others based on analysis results and address how to resolve such issues.

4. Directors

1. The Board of Directors shall be composed of not more than ten (10) Directors, not less than one third (1/3) of whom shall be Independent Outside Directors.
2. To clarify management responsibilities during a given fiscal year and increase shareholders' confidence, Directors' term of office is one (1) year.
3. To ensure ample diversity in terms of gender and nationality and adequate balance in the composition of the Board of Directors, candidates for Executive Director are selected from among persons who have excellent personality and insight, have achieved a good track record to date in business areas of which they have been in charge, and have a thorough knowledge of management and business based on the "Officer Appointment and Dismissal Standards." Candidates for Outside Director are selected based on selection criteria including personality, experience, strong expertise, and the "Standards for the Independence of Outside irectors/Outside Audit & Supervisory Board Members."
4. Except for Outside Directors, the Directors concurrently serve as Operating Officers who are in charge of both oversight and the execution of operations. Directors shall report with emphasis on the business performance and oversight operations of the divisions/departments they are in charge of to the Board of Directors.

5. Audit & Supervisory Board and Audit & Supervisory Board Members

1. The Company has adopted an Audit & Supervisory Board Members system. The Audit & Supervisory Board meeting is held monthly, in principle.
2. The Audit & Supervisory Board shall be composed of not more than five (5) Audit & Supervisory Board Members, a majority of whom shall be Independent Outside Audit & Supervisory Board Members. The Company elects persons who have adequate experience and skills as well as sufficient knowledge of finance, accounting, and legal affairs as Audit & Supervisory Board Members to ensure the effectiveness of audits.
3. To raise the effectiveness of audits, each Audit & Supervisory Board Member attends Board of Directors meetings and attends meetings related to the execution of business operations and other important meetings by sharing the tasks with each other. Moreover, Audit & Supervisory Board Members strive to strengthen the auditing system through frequent communications with the Accounting Auditors and the internal audit department by meeting regularly, witnessing accounting audits as observers and conducting joint audits with the internal audit department.
4. The Audit & Supervisory Board has its own dedicated staff to conduct highly effective auditing operations such as information communications and data management.

6. Voluntary advisory panels

1. The Nomination Committee is composed of the President and Chief Executive Officer, Outside Directors, and an Audit & Supervisory Board Member and is chaired by an Independent Outside Director to ensure
2. • 14 -

the objectivity of deliberation. The Nomination Committee deliberates on, among others, the nomination of candidates for Officer (including candidates for reappointment), any proposal for dismissal of Officers including the President and Chief Executive Officer, any proposal for the selection of a rank for or dismissal of each Operating Officer, and disciplinary matters based on the "Officer Appointment and Dismissal Standards" and reports the deliberation results to the Board of Directors. The consent of the Audit & Supervisory Board is obtained in advance for the nomination of a candidate for Audit & Supervisory Board Member or the dismissal of an Audit &Supervisory Board Member.

1. The Remuneration Committee is composed of the President and Chief Executive Officer, Outside Directors, and an Audit & Supervisory Board Member and is chaired by an Independent Outside Director to ensure the objectivity of deliberation. The Remuneration Committee deliberates on remuneration plans and amounts of Directors and Operating Officers and reports the deliberation results to the Board of Directors. Remuneration for Directors (excluding Outside Directors) and Operating Officers of the Company consists of "basic remuneration," "performance-based bonus," and "stock compensation-type stock options" under a remuneration system that takes into consideration performance-based incentives.

7. General policy regarding the roles and election of Outside Corporate Officers

1. In electing Outside Directors, to ensure transparency in the authority of management oversight, the Company has established rigorous "Standards for the Independence of Outside Directors/Outside Audit & Supervisory Board Members" as requirements for their appointment referencing, and making it more rigorous than, other standards for independence established by financial instrument exchanges and organizations advising the exercise of voting rights, including the "Securities Listing Regulations" set forth by the Tokyo Stock Exchange.
2. The three (3) Outside Directors meet the Company's independency requirements. They make efforts to strengthen the supervisory capability of the Company and strive to strengthen objective management. Specifically, they fulfill a role that is important to the decision-making process and provide opinions from the perspective of either technical experts or shareholders independent of executive management, based on a broad view that leverages knowledge of corporate legal affairs and the experience of corporate managers.
3. The two (2) Outside Audit & Supervisory Board Members meet the Company's independency requirements. They cooperate with each other to monitor the status of internal control of operations on a daily basis. Specifically, they are responsible for investigating and verifying whether the Directors' duties are legally conducted in compliance with the relevant laws. In addition to possessing technical and practical knowledge of their own in the fields of law and accounting, they objectively monitor the execution of duties by Directors.

3. Reasons for Adoption of Current Corporate Governance System

The Company is a company with an Audit & Supervisory Board and established organizations: Board of Directors, Audit & Supervisory Board and the Accounting Auditors. In addition, the Company has adopted a corporate governance structure under which all the Outside Directors and Outside Audit & Supervisory Board Members are designated as Independent Officers for whom there is no possibility of conflicts of interest with general shareholders. Consequently, the Outside Directors and Outside Audit & Supervisory Board Members work closely with the Audit & Supervisory Board Members and the internal audit department, thereby enabling the effective utilization of the Audit & Supervisory Board Members' functions and enhancing the authority of management oversight.

III. Implementation of Measures for Shareholders and Other Stakeholders

1. Measures to Vitalize the General Shareholder Meetings and Smooth Exercise of Voting Rights

	Supplementary Explanations
Early Notification of General	We will send the notices regarding the convocation of regular shareholders'
Shareholder Meeting	meetings three weeks prior to the day of the meeting to ensure that our
	esteemed shareholders have adequate time to review the agenda for the
	shareholders' meeting and properly exercise their voting rights. In addition,
	in the interest of more prompt disclosure, on the day prior to sending the
	- 15 -

								notices, we will place them on our website, the Tokyo Stock Exchange, and
								the voting rights exercise platform.
		Scheduling	AGMs	Avoiding		Times and dates for holding general shareholders' meetings shall be
		the Peak Day					considered to avoid meeting congestion and to ensure that there are no clashes
								of dates or items with other meetings.
								Efforts shall be made to facilitate the participation of all shareholders in
								general shareholders' meetings by setting the time of meetings in the
								afternoon if they fall on a so-called "congested date."
		Allowing Electronic	Exercise		In the interest of the shareholders and institutional investors who cannot
		of Voting Rights				directly attend the shareholder's meeting, we will employ electromagnetic
								methods (including electronic voting platforms) to exercise voting rights.
		Participation	in	Electronic		In the interest of ensuring an adequate period of review for voting purposes
		Voting Platform				and early disclosure, we will utilize an electronic voting system for
								institutional investors run by ICJ., Co. Ltd.
		Providing Convocation Notice		In addition to placing an English version of the notice of convocation on our
		in English						website, on the day before the notice of convocation is sent, , we will also
								provide the notice to the voting rights exercise platform and Tokyo Stock
								Exchange to speed up disclosure to foreign investors.
		Other						To provide easy-to-understand information to investors, we will make the
							notice of convocation more visual, with color images of the candidates,
								graphs, and other related material. In addition, we will post the presentation
								materials from the shareholders' meeting as well as the voting results
								(provision reports) on our website.
2. IR Activities
								Supplementary Explanations
		Preparation and Publication of		We have formulated a disclosure policy, which is available on at our website.
		Disclosure Policy
		Regular Investor Briefings for		―
		Individual Investors
		Regular Investor Briefings for		A results briefing or update meeting for securities analysts and institutional
		Analysts	and	Institutional		investors shall be held quarterly (by tele-conference) with the President and
		Investors						Chief Executive Officer or Director responsible for IR in attendance.
		Regular Investor Briefings for		The President and Chief Executive Officer, management executive, or a
		Overseas Investors				person responsible for IR shall visit major cities in Europe, the U.S., and Asia
								to participate in individual meetings and conferences, and to maintain a
								dialogue with institutional investors.
		Posting of IR Materials on		We have created a shareholder and investor information site on our website,
		Website						where we post IR materials, such as earnings bulletins and supplemental
								materials to financial statements, consolidated financial statements, ad hoc
								reports, English financial statements, integrated reports, and notices of the
								convocation of shareholders' meetings.
								Japanese website: https://www.yuden.co.jp/jp/ir/library/
								English website: https://www.yuden.co.jp/ut/ir/library/
		Establishment	of	Department		Department responsible for Public Relations Department
		and/or Manager in Charge of
		IR
		Other						―

3. Measures to Ensure Due Respect for Stakeholders Supplementary Explanations

• 16 -

	Stipulation of	Internal Rules		The TAIYO YUDEN Group believes that it is the Company's social
	for Respecting the Position of		responsibility and management mission to develop its business considering
	Stakeholders				society, the public benefit, and the public spirit from a global perspective in
					accordance with the three principles of its management philosophy:
					"Employee Well-being," "Betterment of Local Communities" and
					"Responsibility to Provide Returns to Shareholders." along with
					accomplishing the group's management vision "To be an excellent company
					that enjoys the trust and highest regard from our customers."
	Implementation	of		We are promoting various environmental and CSR activities in line with our
	Environmental Activities, CSR		management philosophy. We have prepared a "Safety and Environment
	Activities etc.				Report" that summarizes our annual activities in security and the
					environment. This report can be found on our website.
	Development	of Policies	on		We have created an information disclosure policy, which can be found on our
	Information	Provision	to
		website.
	Stakeholders
	Other				―

IV. Matters Related to the Internal Control System

1. Basic Views on Internal Control System and the Progress of System Development

1. Systems to ensure the execution of duties by Directors, Operating Officers and employees complies with laws, regulations and the Articles of Incorporation, and other systems to ensure appropriate business operations of the Company and the Group

1. The Board of Directors shall resolve important matters in accordance with laws, regulations and the Articles of Incorporation, as well as the "Board of Directors Regulations" and other internal regulations.
2. The Board of Directors shall strengthen the management system for risk factors surrounding the management and supervise the execution of duties by Directors.
3. Audit & Supervisory Board Members shall monitor the appropriateness of resolutions by the Board of Directors, as well as the execution of duties by Directors and Operating Officers.
4. An Internal Control Committee shall be established as a system to promote the Group's compliance activities. The committee shall designate a responsible person for each of the items set forth in the "Taiyo Yuden Group CSR Code of Conduct" of the Company and conduct compliance activities on an ongoing basis in accordance with the compliance management system.
5. A whistleblower system shall be operated for early detection of compliance-related problems of the Group. The detected problems shall be investigated and corrective measures shall be taken to prevent a recurrence.
6. Corporate information and other materials relating to the Group shall be swiftly and appropriately disclosed to shareholders and investors.
7. A firm and uncompromising stance will be taken on an organizational basis against antisocial movements or groups.
8. Internal control shall be streamlined and operated for the purpose of ensuring the reliability of financial reports in accordance with the Financial Instruments and Exchange Act.
9. As for the execution of business operations at subsidiaries, the relevant operating division/departments of the Company shall be the contact to grasp the circumstances thereof, and sufficient exchange of information and coordination of interests shall be conducted with regard to important information in accordance with the "Group Management Rules" to ensure appropriateness of business operations while respecting the management intentions of the respective subsidiaries.

2.System for the storage and management of information with regard to the execution of duties by Directors and Operating Officers of the Company

1. The Company shall record the statutory documents such as the minutes of the General Meetings of Shareholders and the minutes of the Meetings of the Board of Directors, and the minutes of other important meetings concerning the execution of duties by Directors and Operating Officers, in the form of documents or electromagnetic media, and store and manage them together with relevant materials, in accordance with laws and regulations, as well as the respective meeting rules.
2. • 17 -

1. The Company shall maintain an environment that enables Directors and/or Audit & Supervisory Board Members to access said information at any time in accordance with the respective meeting rules.

3.Rules for managing risks of loss with respect to the Company and other systems

1. An Internal Control Committee shall be established as a system to promote risk management activities. The committee shall designate a responsible person for each risk category. Risk management activities, which consist of risk identification, evaluation of risk levels, decision and execution of risk countermeasures and monitoring/review of the status of implemented countermeasures, shall be continuously performed as per the Group risk management system.
2. As per the Company's Group Business Continuity and Risk Management Regulations, the effects on business activities resulting from the occurrence of any risks including natural disasters shall be preassumed, an emergency task force shall be formed depending on the scale of expected adverse effects and preventive measures shall be taken in advance during peacetime. In case a business continuity problem arises, countermeasures shall be taken in compliance with the BCP (Business Continuity Plan) put in place to enable the early resumption of business activities.

4.System for ensuring the duties of Directors of the Company are efficiently performed

1. To ensure that decision making by the Board of Directors is appropriate and efficient, a collegial body to deliberate important matters regarding the execution of business operations and personnel affairs shall be established.
2. To improve the efficiency of the execution of duties by Executive Directors, Operating Officers shall be in place.
3. An Internal Control Committee shall be established as a collegial body that deliberates on the internal control system and evaluates its activities, and a person responsible for promotion shall be designated for each item set forth in this resolution. The Internal Control Committee shall regularly receive reporting from the aforementioned persons responsible for promotion on the activity achievements and report the achievements to the Board of Directors.
4. The decision-making process shall be simplified and accelerated by proactively leveraging various computer systems for such applications as workflows, video conferences, the sharing of information and information management by leveraging IT technology.

5.System for ensuring appropriate business operations within the Taiyo Yuden Group

1. System for reporting to the Company on matters concerning the execution of duties by Directors of the subsidiaries of the Company and other persons with similar authority
2. 1. The status of the performed business operations at subsidiaries shall be reported as per the Company's "Group Management Rules" to encourage the sharing of information with relevant departments of the Company.
   2. The Company shall strive to understand the management circumstances of its subsidiaries by dispatching some of its Operating Officers and/or employees to serve as Directors of the relevant subsidiaries.
3. Rules for managing risks of loss with respect to any subsidiary of the Company and other systems
4. 1. As per the Group risk management system, the subsidiary shall continuously perform its risk identification, evaluation of risk levels, decision and execution of risk countermeasures and monitoring/review of the status of implemented countermeasures.
   2. As per the Company's Group Business Continuity and Risk Management Regulations, the subsidiary shall preassume circumstances in which effects on business activities could result from the occurrence of risks including natural disasters, determine the possible formation of an emergency task force depending on the scale of expected adverse effects and take preventive measures in advance during peacetime. In case a business continuity problem arises, the subsidiary shall take countermeasures in compliance with the BCP (Business Continuity Plan) put in place to enable the early resumption of business activities.
5. System for ensuring the duties of Directors, etc., of any subsidiary of the Company are efficiently performed
6. 1. The Company shall formulate its "Group Management Rules" to help subsidiaries handle their decision making efficiently, whereas the subsidiaries shall put the rules into practice.
   2. The Internal Audit Office of the Company monitors whether business operations of subsidiaries are conducted appropriately and efficiently from an independent standpoint. The monitoring results shall
   3. • 18 -

be provided appropriately as feedback to the relevant subsidiaries and to the President and CEO of the Company. The information therein also shall be shared with the Audit & Supervisory Board Members of the Company.

1. System for ensuring that Directors and employees of any subsidiary of the Company perform their duties in accordance with laws, regulations and the Articles of Incorporation of said subsidiary
2. 1. As for important matters, the system to ensure the appropriateness of business operations at subsidiaries shall be streamlined and maintained as per the Company's "Group Management Rules."
   2. As a system to promote compliance activities, a responsible person for each of the items set forth in the "Taiyo Yuden Group CSR Code of Conduct" shall be designated to conduct compliance activities on an ongoing basis in accordance with the compliance management system.

6.System for ensuring effective audits by the Audit & Supervisory Board Members of the Company

1. Matters regarding the employees appointed to support Audit & Supervisory Board Members of the Company (Independence of said employees from Directors, ensuring effectiveness of the direction of Audit & Supervisory Board Members, etc.)
2. 1. As dedicated staff who support Audit & Supervisory Board Members' auditing operations under the control of the Audit & Supervisory Board, employees who serve as secretariat members (the "Secretariat Staff") shall be in place.
   2. Designation, transfer, performance evaluation, promotion, disciplinary actions, etc., of the Secretariat staff shall be consulted with the Audit & Supervisory Board in advance to obtain its accord.
3. Treatment of expenses that derive from the execution of duties by Audit & Supervisory Board Members of the Company
   Unless otherwise recognized that such costs are not necessary with regard to the Audit & Supervisory Board Members' duties, the Company shall incur costs that have been caused in relation to the audits by Audit & Supervisory Board Members.
4. Other systems for ensuring effective auditing by the Audit & Supervisory Board Members of the Company
5. 1. The Board of Directors shall create a system that allows Audit & Supervisory Board Members to participate in important meetings on managerial matters and audit the decision-making of Directors, as well as the execution of duties by Directors and Operating Officers.
   2. The Board of Directors shall create a system that allows Audit & Supervisory Board Members to collect information in a timely manner that is necessary for their audits through communication with Directors, Operating Officers, and employees, and also request, as necessary, reports therefrom regarding the execution of their duties and inspect the relevant documents.
   3. The Board of Directors shall create a system that allows Audit & Supervisory Board Members to periodically exchange information with the Internal Audit Office, and take close cooperation therewith.
   4. The Board of Directors shall create a system that allows Audit & Supervisory Board Members to periodically, or on an as needed-basis, exchange information with the Accounting Auditor, and request reporting therefrom, as necessary.

7.System for reporting to Audit & Supervisory Board Members of the Company

1. System for reporting to Audit & Supervisory Board Members of the Company by Directors, Operating Officers and employees of the Company
2. 1. Directors, Operating Officers and employees of the Company, if any of them recognize a fact that violates any laws, regulations, the Articles of Incorporation and/or internal regulations, or a considerably improper fact that could be such a violating fact, or a fact that is feared to cause significant damage to the Company, shall immediately report thereof to the Audit & Supervisory Board Members.
   2. The system that allows any Director, Operating Officer or employee of the Company to directly report to an Audit & Supervisory Board Member of the Company shall be streamlined and maintained as per the Company's internal whistleblowing rules.
3. System for reporting to Audit & Supervisory Board Members of the Company by Directors and employees of any subsidiary of the Company
4. 1. The subsidiaries of the Company shall streamline and maintain the system that allows Directors, etc., and employees of any subsidiary to directly report to Audit & Supervisory Board Members of the Company with regard to the violation of laws, regulations and/or internal regulations by Directors, etc., as per their respective internal whistleblowing rules.
   2. • 19 -

1. 1. The Board of Directors shall endeavor to facilitate communication with full-time Audit & Supervisory Board Members, Directors and employees of the subsidiaries, collect information and maintain the environment for audits.
2. System for ensuring that anyone who has reported to an Audit & Supervisory Board Member does not suffer from detrimental treatment for the reason of having made said report
   The Group shall stipulate a scheme to fully protect informants in its internal rules, and streamline and maintain a preventive system, under which anyone who has used the whistleblower system to report to the Audit & Supervisory Board and/or the Audit & Supervisory Board Members shall not be unfavorably treated.

2. Basic Views on Eliminating Anti-Social Forces

◇Basic Policy for Exclusion of Anti-social Forces

The Company has determined to resolutely and systematically oppose anti-social forces and organizations that pose a threat to the order and safety of civil society. (This content is taken from a Board of Directors resolution on the Basic Policy on Internal Control.)

◇State of Implementation of a System for Exclusion of Anti-Social Forces

The TAIYO YUDEN Group CSR Code of Conduct sets forth the following matters pertaining to the severing of relations with anti-social forces.

1. Basic Policies for Antisocial Forces

1. The company shall have no relationship whatsoever with antisocial forces.
2. The company shall cooperate with external agencies and respond in an organized and appropriate manner to ensure no damage from antisocial forces arises.
3. The company shall not respond in any form to the unreasonable demands of antisocial forces, and shall take legal measures as necessary based on the three principles of "Do not pay," "Do not use," and "Do not be afraid."
4. The company shall not provide any funds to, or make any secret deal with any antisocial forces.

2. Creation of a department and manager responsible for the prevention of unreasonable demands.

This manager shall be the executive responsible for general affairs, and the general affairs division for each location shall handle any unreasonable demands.

3. Collaboration with external professional agencies, information collection, and training.

Each business office is affiliated with a professional agency, including the Tokubouren (Japan Metropolitan Police Department's violence prevention federation).

The company participates in regular training sessions held by professional agencies and collects and exchanges necessary information.

4. Creation of a Response Manual

A response manual that summarizes methods and a response checklist for responding via meetings and by telephone, as well as examples of consultations, etc. shall be created and distributed to the general affairs division of each work site.

5.During CSR training, we provide easy-to-understand explanations and familiarize employees with the severing of relations with anti-social forces using the CSR Code of Conduct Handbook.

V. Other

1. Adoption of Anti-Takeover Measures

Adoption of Anti-Takeover Measures		Not Adopted

Supplementary Explanation

- 20 -

At the close of the company's 69th general shareholders' meeting of the shareholders held on June 29, 2010, the company resolved to abolish the "Anti-takeover measures regarding large-scale purchases of company shares"(hereinafter referred to as "the plan"), adopted at the company's board of directors meeting held February 22, 2010.

Even after the abolition of the Plan, in the case of a large-scale purchase of company shares (to preserve and enhance joint shareholder interests), we will strive to disclose information as appropriate (and at the appropriate time) and develop a suitable response.

2. Other Matters Concerning to Corporate Governance System

―

- 21 -