[Translation: Please note that the following purports to be a translation from the Japanese original Notice of Convocation of the 112th Annual General Meeting of Shareholders for the business term ended December 31, 2022 of Chugai Pharmaceutical Co., Ltd. prepared for the convenience of shareholders outside Japan with voting rights. However, in the case of any discrepancy between the translation and the Japanese original, the latter shall prevail.]

Start date of measures for electronic provision: February 28, 2023

Other Items Provided Electronically for the Notice of Convocation of the 112th Annual General Meeting of Shareholders for the Business Term Ended December 31, 2022

(Items Omitted from the Paper Copy)

Business Report

Company's Stock Acquisition Rights, etc.

Accounting Auditor

Framework to Ensure Operational Adequacy

Consolidated Financial Statements

Consolidated Statement of Changes in Equity

Notes to the Consolidated Financial Statements

Non-Consolidated Financial Statements

Non-consolidated Statement of Changes in Shareholders' Equity Notes to the Non-Consolidated Financial Statements

CHUGAI PHARMACEUTICAL CO., LTD.

Business Report

Company's Stock Acquisition Rights, etc.

(1) Stock Acquisition Rights Held by Corporate Officers (as of December 31, 2022)

In order to increase the Group's corporate value by enhancing the Directors' motivation and morale leading to the growth of the business results of the Company, and by securing superior human resources, the Company issues stock acquisition rights as common stock options.

Amount payable

Stock acquisition rights held by

Type and

Period for

Corporate Officers

Name

Number of

upon exercise

number of

Audit &

(Issuance date)

rights issued

per stock

exercise

shares issued

Directors

Supervisory

acquisition right

Board Members

Tenth issue of

19,200 shares

From May 13,

stock acquisition

of the

64 units

JPY83,400

2013 to April 25,

rights

Company's

2023

(May 13, 2013)

common stock

Eleventh issue of

98,100 shares

From May 12,

stock acquisition

of the

327 units

JPY89,200

2014 to April 24,

rights

Company's

2024

(May 12, 2014)

common stock

Twelfth issue of

167,100 shares

From May 11,

40 units

20 units

stock acquisition

of the

557 units

JPY133,600 2015 to April 22,

rights

Company's

(two persons)

(one person)

2025

(May 11, 2015)

common stock

Thirteenth issue of

245,400 shares

From May 10,

stock acquisition

of the

80 units

60 units

818 units

JPY124,900

2016 to April 22,

rights

Company's

(two persons)

(two persons)

2026

(May 10, 2016)

common stock

(Notes) 1. Since the Company implemented a three-for-one stock split on July 1, 2020, the number of shares issued per stock acquisition right has been revised to 300 shares. The amount payable upon exercise per stock acquisition right has been adjusted, according to the split ratio of each issue.

    1. Notwithstanding the aforementioned exercise periods, the Stock Acquisition Right Granting Agreement concluded with each holder of stock acquisition rights offered as a common stock option stipulates that the stock acquisition rights are not exercisable for approximately two years from their respective issuance resolution dates.
    2. These stock acquisition rights are not allotted to Non-Executive Directors and Audit & Supervisory Board Members. "Stock acquisition rights held by Corporate Officers" indicated above include stock acquisition rights allotted prior to their appointment as Director or Audit & Supervisory Board Member.
  1. Overview of Stock Acquisition Rights Issued to Company's Employees and Others during the Fiscal Year under Review, etc.

There is no applicable information.

(3) Other Important Matters on Stock Acquisition Rights, etc.

There is no applicable information.

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Accounting Auditor

  1. Name of Accounting Auditor
    KPMG AZSA LLC
  2. Amount of Fees, etc. Paid to Accounting Auditor

Previous fiscal year

Fiscal year under review

Amount of fees paid

Category

Amount of fees paid

Amount of fees paid

Amount of fees paid

for audit and

for non-audit

for audit and

for non-audit

attestation services

services

attestation services

services

(JPY millions)

(JPY millions)

(JPY millions)

(JPY millions)

The Company

128

128

Consolidated

15

15

Subsidiaries

143

Total

143

(Notes) 1. Based on the "Operational Guideline for Company Auditors Concerning the Assessment and Election Standard Formulation of Accounting Auditors" released by the Japan Audit

      • Supervisory Board Members Association, the Audit & Supervisory Board has verified and examined the contents of audit plans created by the Accounting Auditor, execution of duties of accounting audit, and calculation basis for fee estimates. As a result, the Audit
      • Supervisory Board agreed to the fees, etc. paid to the Accounting Auditor based on Article 399, Paragraph 1 of the Companies Act.
    1. The amount of auditing fees is neither distinguished nor effectively distinguishable under the auditing agreement concluded between the Company and the Accounting Auditor with respect to audits under the Companies Act, audits under the Financial Instruments and Exchange Act and audits of financial statements reported by the Company as a consolidated subsidiary to the parent company. Therefore, the amount in "Amount of fees paid for audit and attestation services" above represents the sum of the fees for such audits.
    2. Among the Company's principal subsidiaries, Chugai Pharma Europe Ltd. is subject to audits by an accounting corporation of the KPMG network, to which the Company's Accounting Auditor also belongs.
  1. Policy for Determining Dismissal or Non-reappointment of Accounting Auditor

The Audit & Supervisory Board shall propose to the general meeting of shareholders, as the objective of such meeting, dismissing or not reappointing the Accounting Auditor, in cases where it is deemed difficult to have audits conducted properly if circumstances that undermine the Accounting Auditor's aptitude and independence have arisen.

Also, if any of the provisions of the subparagraphs of Article 340, Paragraph 1 of the Companies Act are deemed to apply to the Accounting Auditor, the Audit & Supervisory Board shall dismiss the Accounting Auditor with the unanimous consent of all the Audit & Supervisory Board Members.

2

Framework to Ensure Operational Adequacy

  1. Overview of Contents of Resolutions on Framework to Ensure Operational Adequacy

The Group is pursuing transparent, fair and highly ethical corporate activities aimed at realizing the mission "to dedicate itself to adding exceptional value through the creation of innovative medical products and services for the benefit of the medical community and human health around the world." Moreover, in accordance with the provisions of the Companies Act, the Board of Directors has passed resolutions on basic policies concerning internal controls as follows, and we have built a robust framework to ensure the operational adequacy of the Group.

The framework was partially revised at the meeting of the Board of Directors held on December 16, 2022 and therefore, the framework after the revision is described.

  1. System for ensuring compliance of business operations executed by directors and employees with laws and articles of incorporation
    • Directors and employees comply with "Chugai Group Code of Conduct (CCC)."
    • The Company sets Risk & Compliance Department, which is in charge of the Company's compliance with laws and other relevant rules.
    • Audit Department performs internal audits in accordance with "Internal Audit Charter" and reports the results to the Executive Committee, the Audit & Supervisory Board and the Board of Directors.
    • The Company shall establish and implement the internal control system for ensuring the reliability of financial reporting, and also conduct its assessment appropriately.
  2. System for preserving and managing information relating to business operations performed by directors
    • Documents and other information that relate to directors' performance of its duties shall be properly preserved in accordance with "Record Management Rules" and other internal rules.
    • The Audit & Supervisory Board and each individual Audit & Supervisory Board Member at its request shall be given a timely access to the documents in the above.
  3. Regulations and systems regarding management of risks that may cause losses
    • The Company makes efforts to reduce risks that may affect business of the Company. Also, the Company resolves troubles promptly and properly, when troubles come out. In doing these, directors and employees of the Company comply with "Risk Management Regulations" and other internal rules.
  4. System for ensuring efficient functioning of directors
    • The Board of Directors supervises operation of each individual director in order for its effective operation.
    • The Company keeps the number of directors within proper range, and retains outside directors, so that the Board of Directors can perform more effectively its function, including supervision of each individual director, and can make decisions more promptly. Also, the Company adopts the executive officer system where each officer has specific roles and responsibilities for the Company's operation, in order for its effective operation.
    • The Company shall regularly examine if the Board of Directors is effectively and efficiently performing its function, and based on the results, take appropriate measures.
    • Directors and employees of the Company comply with "Regulations for Decision-Making" so that the Company can operate its business more promptly and effectively.
  5. System for ensuring appropriate business operations of the corporate group comprised of the Company, its parent company and subsidiaries
    • Each affiliated company sets each administration section in accordance with "Chugai Group Operation Policy" and "Chugai Group Administration Guidelines (Global)" in order to properly operate the Chugai Group, such as establishing the system to report matters on each affiliated company's business operations, regulations and systems regarding the management of risks that may cause losses, a system for ensuring efficient business operations and ensuring compliance with laws and the articles of incorporation.
    • Audit Department examines the affiliated companies in accordance with "Internal Audit Charter" and finds out whether the affiliated companies operate their business properly

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and effectively complying with laws, their articles and other relevant rules.

  1. System for elimination of antisocial forces
    • The Company shall establish and maintain the corporate system that eliminates any connection with antisocial forces and groups in accordance with "Chugai Group Code of Conduct (CCC)."
  2. System concerning employees who are requested by Audit & Supervisory Board Members to provide support
    • The Company sets Office of Audit & Supervisory Board Members, which supports the Audit & Supervisory Board and each individual Audit & Supervisory Board Member.
  3. Assurance of the Independence of Employees in the Previous Section from Directors and Effectiveness of the Instructions of Audit & Supervisory Board Members
    • Office of Audit & Supervisory Board Members reports directly to the Audit & Supervisory Board and has full-time employees to ensure independence from directors and the effectiveness of instructions of Audit & Supervisory Board Members.
    • The Company shall have a prior approval from the Audit & Supervisory Board, when the Company does something that may cause a material effect to an employee of Office of Audit & Supervisory Board Members, such as new designation, transfer, evaluation and disciplinary action.
  4. System available to the Company's directors, employees, and each subsidiary's directors, Audit & Supervisory Board Members and employees for reporting to Audit & Supervisory Board Members; and other systems for reporting to Audit & Supervisory Board Members
    • Each director of the Company, and each director and Audit & Supervisory Board Member of each subsidiary makes a report regularly to the Audit & Supervisory Board in accordance with "Regulations of Audit & Supervisory Board" and "Audit & Supervisory Board Members' Auditing Standards" set by the Audit & Supervisory Board.
    • Required measures shall be taken in order for the person who has made the report under this section not to be treated unfavorably due to this report.
  5. System for ensuring effective auditing by Audit & Supervisory Board Members
    • Representative Directors have meetings regularly with the Audit & Supervisory Board to exchange opinions and deepen mutual understandings with regard to issues relating to audit which need to be improved by the Company, circumstances under which Audit & Supervisory Board Members perform audits, and other important issues relating to audits.
    • Directors and employees of the Company and its affiliated companies cooperate with Audit & Supervisory Board Members, when Audit & Supervisory Board Members perform audits of the companies in accordance with "Audit & Supervisory Board Members' Auditing Standards" set by Audit & Supervisory Board Members.
    • Costs or indemnification arising from business operations performed by the Audit & Supervisory Board Members are promptly processed upon the request of the Audit & Supervisory Board Members.
  1. Overview of Status of Operation of the Framework to Ensure Operational Adequacy Status of major operations for the fiscal year under review is as follows.

[Corporate Governance]

  • The Company has established the "Chugai Pharmaceutical Co., Ltd. Basic Corporate Governance Policy" and has ensured the appropriateness of its corporate governance in order to carry out its social responsibility to patients, consumers, and all other stakeholders, such as medical practitioners, business partners, the public, employees, and shareholders, and achieve sustainable growth and increased corporate value.
  • As for the affiliated companies in and outside of Japan, in accordance with the "Chugai Group Operation Policy" and the "Chugai Group Administration Guidelines (Global)," quarterly reporting meetings were held to regularly monitor business operations and appropriately manage the affiliated companies. We also periodically ascertain and enhance the state of risk management and compliance efforts of these affiliated companies.
  • Chugai Pharma China Co., Ltd. (CPCC) and Chugai Pharma Science (Beijing) Co., Ltd. (CPS) were integrated to strengthen governance, improve organizational efficiency, and enhance individual functions in the China business, effective April 1, 2022, and thus the clinical development function served by CPS was consolidated to CPCC.

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Chugai Pharmaceutical Co. Ltd. published this content on 22 February 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 February 2023 15:16:01 UTC.