Fanuc : Corporate Governance Report

Corporate Governance Report	FANUC CORPORATION

Last Update: May 28, 2021

FANUC CORPORATION

Kenji Yamaguchi, President Contact:Naoki Yukisada, Manager, Public Relations & Shareholder Relations Department TEL: [phone] Securities Code: 6954

https://www.fanuc.co.jp/eindex.html

The corporate governance of FANUC CORPORATION (the "Company") is described below.

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

Corporate Attributes and Other Matters

1. Basic Views

The Company has been engaged in business activities based on "Strict Preciseness and Transparency," as its fundamental management policy.

The Corporate Governance Guidelines (the "Guidelines") is posted on the Company's website to provide basic views and other matters concerning corporate governance of the Company. (https://www.fanuc.co.jp/en/ir/guideline/index.html)

[Reasons for Non-compliance with the Principles of the Corporate Governance Code] The Company has implemented all of the Principles of the Corporate Governance Code.

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

[Principle 1.4 Strategic Share Holdings (So-called"Cross-Shareholdings" in the Corporate Governance Code)]

1 The Company will hold shares of other companies only when it is deemed necessary for the maintenance and expansion of the business of our Group from a medium and long-term perspective based on the benefits, such as the development of new products, the stable procurement of parts and materials, the maintenance of business relationships with customers, etc., upon considering the holding costs, etc. as well. Every year, we will perform an assessment based on such perspectives, and will strive to reduce the number of shares for which the holding significance is determined to be tenuous.

2 In exercising our voting rights of cross-held shares, we will comprehensively consider impact on our business and on management of such other companies, and other such matters, from a medium and long-term perspective, and then we will appropriately exercise such voting rights.

[Principle 1.7 Related Party Transactions]

For transactions involving director conflicts of interest and the like, such directors must obtain approval of the Board of Directors as required by laws and regulations, and we will provide guidance to officers and employees from time to time so that they will not impair the shared interests of shareholders.

[Principle 2.6 Roles of Corporate Pension Funds as Asset Owners]

In order to secure future benefit resources in a stable manner while considering the risks, the corporate pension fund is making investments for the purpose of securing overall profits that are deemed to be necessary in the long term.

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Under the fund, the Asset Management Committee, which is led by the chief financial officer and is composed of executives and staff of the Accounting Department and the Labor Department, is established. The asset management policy and asset composition ratio according to policy are evaluated by the Asset Management Committee, and then determined at the Conference of Representatives. Investment status is monitored on a regular basis.

The party who is entrusted with the investment of the fund accepts the Japanese version of the Stewardship Code.

The fund incorporates personnel who have the appropriate skills as well as having office workers attend outside seminars, etc. in order to improve their skills.

[Principle 3.1 Full Disclosure]

1. Company Objectives (e.g., Business Principles), Business Strategies and Business Plans
   We ensure the practice of the principle, "Strict Preciseness and Transparency," which has been the basic principle of FANUC.
   Strict Preciseness
   The permanence and soundness of a company are created by Strict Preciseness.
   Transparency
   The corruption of an organization and the collapse of a company start from opacity.

While firmly maintaining "Strict Preciseness and Transparency," our Group strives to practice the following through the unified efforts of the Group.

• While keeping in mind the original notion that FANUC products are equipment to be used at production sites, we will ensure, in product development, that they are "Reliable" "Predictable" "Easy to Repair" in order to support our customers in minimizing downtime and improving the operating rates of their plants.
• Prioritizing service activities over sales activities, we will take a "Service First" attitude in which we provide high level services that meet the global standards of FANUC in all parts of the world.
• As long as customers continue to use FANUC products, we will keep on providing maintenance service, which we call "lifetime maintenance."
• Under the slogan of "one FANUC," we will make the fullest use of the following strength of our Group: the provision of total solutions that integrate FA, robots and robomachines, and the provision of customer service around the world as a united group.

1. Basic Views and Guidelines on Corporate Governance
   We think it is important for the practical functioning of governance to share such an easy-to-understand and simple principle among all officers and employees of the Group.
   We have the code of conduct while practicing "Strict Preciseness and Transparency," we will make efforts to maintain a high level of awareness of officers and employees of our Group into the future.
2. Board Policies and Procedures in Determining the Remuneration of the Senior Management and Directors.
   For remuneration of directors, we determine an amount of remuneration of inside directors, basically based on their positions, that consists of performance-based remuneration and fixed remuneration, and an appropriate amount of fixed remuneration of outside directors from the standpoint of ensuring independence, which are both determined by resolution of the Board of Directors to the extent approved at the shareholders' meeting. This decision shall be made through the deliberation of the Nomination and
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Remuneration Committee, which is chaired by independent outside directors and the majority of which is composed of independent outside directors.

1. Board Policies and Procedures in the Appointment and Dismissal of Senior Management and the Nomination of Director and Audit & Supervisory Board Member Candidates
   The appointment and dismissal of the candidates for directors, including the chief executive officer, shall be conducted through the deliberation of the Nomination and Remuneration Committee, which is chaired by independent outside directors and the majority of which is composed of independent outside directors.
2. Explanations with Respect to the Appointment, Dismissal and Nomination of Individuals
   Explanations on each of the election and nomination of candidates for Directors and Audit & Supervisory Board Members upon their nomination
   For the reasons for electing candidates for Directors and those for Audit & Supervisory Board Members, please refer to the Notice of Convocation of the Ordinary General Meeting of Shareholders posted on the Company's website.
   (https://www.fanuc.co.jp/en/ir/meeting/index.html)

[Supplementary Principle 4.1.1 Disclosure of Scope and Content of Matters Delegated to Management.]

In principle, the Board of Directors will delegate determinations regarding the execution of business to the President and CEO in order to make quick decisions, except matters that will be subject to arbitrary decisions by the Board of Directors as required by laws and regulations, and other important matters as set forth in the standards for matters referred to the meetings of the Board of Directors.

[Principle 4.9 Independence Standards and Qualification for Independent Directors]

We will select, as candidates for independent outside directors, individuals who have no material conflicts of interest and are expected to freely make honest statements, etc., at the meetings of the Board of Directors and in other situations. (For example, we would ensure that the amount of transactions between the company the individual worked for and our company accounts for small percent of the consolidated sales of each group, and (in the case where the individual worked for a bank) there are no borrowings.)

[Supplementary Principle 4.11.1 Balance between Diversity, Knowledge, and Experience etc. of the Board as a Whole]

We will select, as inside directors, individuals who are expected to contribute to the enhancement of corporate values, considering their past commitment to business, and we will select, as outside directors, individuals who have no material conflicts of interest and are expected to freely make honest statements, etc., at the meetings of the Board of Directors and in other situations.

[Supplementary Principle 4.11.2 The status of Directors and Audit & Supervisory Board Members Holding Concurrent Posts]

We discloses important concurrent posts of Directors and Audit & Supervisory Board Members along with the reasons for being selected as a candidate, in the notice of convocation of the general meeting of shareholders where the elections of Directors and Audit & Supervisory Board Members are proposed.

Additionally, at least once a year, the status of Directors and Audit & Supervisory Board Members holding of concurrent posts are checked and disclosed.

(https://www.fanuc.co.jp/en/ir/meeting/index.html)

[Supplementary Principle 4.11.3 Analyzing and Evaluating the Effectiveness of the Board of Directors]

As regards the assessment of the effectiveness of the Board of Directors meetings, we continued to perform a

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survey of all directors and auditors who constitute the Board Meeting this fiscal year as well. As a result thereof, we confirmed that the assessment result was still as good as the last fiscal year, due to such factors as there being an atmosphere in which opinions can be stated frankly; discussions being conducted in a flexible manner from a multilateral point of view; and that ample time is provided for deliberation. According to such assessments, it has been confirmed that the Board of Directors meetings are sufficiently effective.

[Supplementary Principle 4.14.2 Training Policy for Directors and Audit & Supervisory Board Members]

We will provide explanation to directors and auditors from time to time, focusing on important matters under laws and regulations. The section in charge will provide explanation about the overview of management of our company, etc., at the time of their assumption of office, especially to outside directors and outside auditors, and provide other such opportunities so that they can deepen their understanding about management of our company, and we will also provide opportunities for lectures, etc., by outside experts and provide other such opportunities, and thus provide them with necessary support.

[Principle 5.1 Policy for Constructive Dialogue with Shareholders]

We have a Public Relations & SR (Shareholder Relations) Department to serve as a point of contact in relation to constructive dialogue with shareholders, and we are taking the following actions.

1. Overview of Public Relations & SR (Shareholder Relations) Department

We think we should promote dialogue with shareholders, for the sustainable growth of the company and the medium and long-term enhancement of corporate value, while putting emphasis on our core business. We have a Public Relations & SR Department, as a section responsible for the promotion of constructive dialogue with shareholders both within and outside Japan.

2. Policy on Promotion of Constructive Dialogue with Shareholders

The Public Relations & SR Department works on the following as measures for the promotion of constructive dialogue with shareholders.

(1) Dialogue with Shareholders

The Public Relations & SR Department actively promotes dialogue by providing shareholders with opportunities to participate in various meetings, factory tours, etc. Dialogues are lively, except that information that is likely to be regarded as insider information or may interfere with our business activities is not discussed.

(2) Opinions, etc. Provided in Dialogue

To promote the sustainable growth of our company and the medium and long-term enhancement of corporate value, we will make efforts to utilize opinions, etc., provided by shareholders through such dialogues.

3. Point of Contact for Dialogue

Contact information is posted on our website (https://www.fanuc.co.jp/en/ir/index.html)

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2. Capital Structure

	Foreign Shareholding Ratio		More than 30%
[Status of Major Shareholders]
Updated
	Name / Company Name		Number of Shares		Percentage (%)
		Owned
	The Master Trust Bank of Japan, Ltd. (Trust Account)	32,662,600	17.03
	Custody Bank of Japan, Ltd. (Trust Account)		15,047,800	7.84
	SSBTC Client Omnibus Account		5,405,025	2.82
	Citibank, N.A. - NY, as Depositary Bank	for Depositary	4,343,259	2.26
	Shareholders
	JPMorgan Chase Bank 380055		3,957,870	2.06
	State Street Bank West Client - Treaty 505234		2,956,451	1.54
	Custody Bank of Japan, Ltd. (Securities Investment Trust Account)	2,934,700	1.53
	The Bank of New York Mellon 140044		2,827,629	1.47
	Government of Norway		2,728,081	1.42
	Custody Bank of Japan, Ltd. (Trust Account 5)		2,691,300	1.40
	Controlling Shareholder (excluding Parent		-
	Company)
	Parent Company		None

Supplementary Explanation Updated

1. As of March 31, 2021, the Company holds 10,108 thousand shares of treasury stock, but is excluded from the above list of the major shareholders.
2. As of July 20, 2020, a large shareholding report was filed with the EDINET system by Nomura Securities Co.,Ltd. which reported that Nomura Asset Management Co., Ltd., together with other joint holders, held the following shares as of July 15, 2020. However, we are not able to confirm the substantial ownership of the shares. The said large shareholding report includes the following information:

Company Name : Nomura Asset Management Co., Ltd.

Number of Shares Owned : 16,762,639 shares

Shareholding Ratio : 8.30%

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 1,000
	End of the Previous Fiscal Year
	Net Sales (consolidated) as of the End of the	From ¥100.0 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
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