Fujitsu : （delayed）Corporate Governance Report

Corporate Governance Report

Last Update: July 20th, 2021

Fujitsu Limited

Takahito Tokita, Representative Director & CEO

Contact: Public & Investor Relations Division Securities Code: 6702 https://www.fujitsu.com/global/

The corporate governance of Fujitsu Limited (the "Company") is described below.

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

1. Basic Views

Our basic approach to corporate governance and how the company streamlines mechanism and exercises corporate governance based on this approach are described in the Corporate Governance Policy (the Policy) in the following website.

Corporate Governance Policy ("Policy") (English Translation) https://pr.fujitsu.com/jp/ir/governance/governancereport-b-en.pdf

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

Our company is implementing each of the principles of the Japan's Corporate Governance Code.

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

[Principle 1.4 Strategic Shareholdings]

The Company holds only those strategic shares with clear-cut objectives and meaningful significance in a positive manner. Board of Directors meetings examine the weighted average capital cost of the Company as the standard to evaluate quantitatively whether returns (quantitative factors, such as dividends and the state of transactions), or risks are well balanced with the cost. If quantitative significance in shareholdings is not detected, Board of Directors meetings will further evaluate whether there is a qualitative reason that provides backing for reasonableness to still hold those shares and discuss the continuation of such holdings.

For FY2020, the Company sold 23 issues, and the Board of Directors meeting, held on June 24, 2021, discussed strategic shareholdings held by the Company as of the end of March, FY2020.

The Company deals with strategic shareholders on an equal footing just like with other business partners. Even when strategic shareholders indicate their sales of shares, we do not prevent them from selling them. Said that, we sometimes call upon them the timing of sales, or ways of selling them.

In addition, for the policy for strategic shareholdings and the standard of exercising voting rights as to the strategic shareholdings, please refer to 3.(4) of the Policy in the following website. https://pr.fujitsu.com/jp/ir/governance/governancereport-b-en.pdf

[Principle 1.7 Related Party Transactions]

The Board of Directors performs the oversight on the transactions involving the conflict of interest by Directors in accordance with the relevant laws, regulations, and the Regulations of the Board of Directors. For the procedure framework, please refer to 2.(2)c of the Policy in the following website. https://pr.fujitsu.com/jp/ir/governance/governancereport-b-en.pdf

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[Principle 2.6 Fulfill the function as asset owner of corporate pension]

The Company elects the one with experience of and insights into related operation as the manager of Fujitsu Corporate Pension Plan, which the Company and its subsidiaries participate in. The Company puts in place the structure where the manager is engaged in management over a long period of time. The Company also refers to an external consultant firm for advice on management.

[Principle 3.1 Full Disclosure]

(i) Company objectives (e.g., business principles), business strategies, and business plans

In Fujitsu Way, our company shows the purpose of our existence in society, our values, and principles (code of conduct) for how each employee should behave.

For Fujitsu Way, please refer to the following website. https://www.fujitsu.com/global/about/philosophy/index.html

We disclosed our Management Direction in July 30, 2020. For our Management Direction, please refer to the following website.

https://www.fujitsu.com/global/about/ir/library/presentations/

(ii) The Basic approach to corporate governance and guidelines

The basic approach to corporate governance and how the company streamlines mechanism and exercises corporate governance based on this approach are described in the Policy in the following website. https://pr.fujitsu.com/jp/ir/governance/governancereport-b-en.pdf

1. Board policies and procedures in determining the remuneration of the senior management and Directors For the policies and procedures in determining the compensation of the Directors and Auditors (hereinafter, the term used for the combination of Directors and Audit & Supervisory Board Members), please refer to 2.(8) of the Policy in the following website.https://pr.fujitsu.com/jp/ir/governance/governancereport-b-en.pdf
2. Board policies and procedures in the appointment and dismissal of senior management and candidates nomination of Directors and Auditors

For the policies and procedures in the appointment and/or dismissal of Directors and Auditors, please refer to 2.(7) of the Policy in the following website. https://pr.fujitsu.com/jp/ir/governance/governancereport-b-en.pdf

Given the term of the Company's director is one year, the Company will not dismiss a Director during one's tenure as a general rule, but the Company consider whether the Director should be re-elected or not during the appointment process.

The Company delegates management execution authority to Corporate Executive Officer in accordance with the Policy on the Internal Control System. According to Representative Director's proposal, the Board of Directors' meeting makes a resolution on appointment of Corporate Executive Officer. According to Representative Director's proposal, the Board of Directors' meeting may dismiss relevant Corporate Executive Officer for lack of competency as defined by Agreement of Corporate Executive Officer

(v) Explanations with respect to the individual appointments and/or dismissal and nominations

For the individual appointments and/or dismissal and nominations of Directors and Auditors, the Company explains the reasons in the reference materials for the Annual Shareholders' Meeting. Regarding the reference materials for the Annual Shareholders' Meeting, please refer to the following website. https://www.fujitsu.com/global/about/ir/stock/meeting/

Appointment and/or dismissal of Corporate Executive Officer are disclosed on the website whenever required.

[Supplementary Principle 4.1.1 The scope and content of matters delegated to the management]

For the delegation of authorities by Board of Directors to Management Executives, please refer to 2.(6) of the Policy in the following website. https://pr.fujitsu.com/jp/ir/governance/governancereport-b-en.pdf

[Principle 4.9 Independence Standards and Qualification for Independent Directors]

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The Company provides in 2. (1)c, f of the Policy that Independent Directors and Independent Audit & Supervisory Board Members shall qualify for our Independence Standards. For Independence Standards, please refer to the Appendix of the Policy in the following website. https://pr.fujitsu.com/jp/ir/governance/governancereport-b-en.pdf

[Supplementary Principle 4.11.1]

The view on the appropriate balance between knowledge, experience and skills of the Board of Directors as a whole, and on diversity and appropriate board size]

For our view on the appropriate balance between knowledge, experience and skills of the Board of Directors as a whole, and on diversity and appropriate board size, please refer to 2.(1), (7) of the Policy in the following website.

https://pr.fujitsu.com/jp/ir/governance/governancereport-b-en.pdf

[Supplementary Principles 4.11.2 Situation of Directors and Auditors who are in the management at other companies]

For the situation of Directors and Auditors who are in the management at other companies, we explain about them if they fall under category of important positions in reference materials for the Annual Shareholders' Meeting and Business Report. For reference materials for the Annual Shareholders Meeting, please refer to the following website.

https://www.fujitsu.com/global/about/ir/stock/meeting/For Business Report, please refer to the following website.https://www.fujitsu.com/global/about/ir/library/reports/

[Supplementary Principle 4.11.3 Summary of the results of analysis and evaluation for effectiveness of Board of Directors as a whole]

It is stipulated in the Policy (2.(3)d) that the Board of Directors analyzes and evaluates the performance of the board of directors meetings every year to maintain and improve their effectiveness, which is publicized in our website (https://pr.fujitsu.com/jp/ir/governance/governancereport-b-en.pdf).

1. Action taken in FY2020 based on the evaluation of FY2019

To improve the availability of documents as well as the efficiency of meetings of the Board of Directors and Independent Directors & Auditors Council, these documents have been digitized.

Also, to facilitate access to information outside Board of Directors meetings , the company had business heads provide briefings on business overviews for Independent Directors and Auditors .

Furthermore, Independent Directors and Auditors continued to hold the Independent Directors and Auditors Council in an effort to facilitate exchange of information and formulation of opinions between them, and private sessions hosted by Independent Director were introduced as a platform for Independent Directors and Auditors to form opinions.

2. Evaluation of FY2020

(1) Evaluation method

The evaluation of FY 2020 includes an evaluation of the Chairman, and as in FY 2019, an anonymous questionnaire with a five-grade evaluation was conducted. From this fiscal year and onwards, self-evaluations by Directors and Audit & Supervisory Board Members are also being carried out.

The results of the survey were reported at the regular Board of Directors Meeting and discussions based on the results were carried out at the meeting.

Furthermore, the evaluation of the company's Board of Directors by a proxy advisory firm was also reported.

(2) Evaluation

As a result of the above, the following evaluations were made.

• Compared to the previous year, overall improvements were recognized. However, there is room for further improvement in document format and volume as well as the information provided.
• To enable the review of high priority items, sharing information in advance and enhancing vital communication between board members is important. While continuing to hold the Independent Directors and Auditors Council, private sessions, and briefings on business overviews by Management Executives the
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company strives to provide a platform for the further provision of information and the exchange of views outside of the Board of Directors Meeting.

[Supplementary Principles 4.14.2 Training policy for Directors and Auditors]

For training policy for Directors and Auditors, please refer to 2.(9)b of the Policy in the following website. https://pr.fujitsu.com/jp/ir/governance/governancereport-b-en.pdf

[Principle 5.1 Policy for a Constructive Dialog with Shareholders]

For our policy for a constructive dialog with shareholders, please refer to 3.(2) of the Policy in the following website.

https://pr.fujitsu.com/jp/ir/governance/governancereport-b-en.pdf

2. Capital Structure

		Foreign Shareholding Ratio	More than 30%
[Status of Major Shareholders]
		Name / Company Name			Number of Shares Owned	Percentage (%)
		The Master Trust Bank of Japan, Ltd. (for trust)			16,807,300	8.45
		Ichigo Trust Pte. Ltd.			14,899,500	7.49
		Custody Bank of Japan, Ltd. (for trust)			10,395,800	5.22
		GIC PRIVATE LIMITED - C			5,491,500	2.76
		Fujitsu Employee Shareholding Association			4,442,315	2.23
		Asahi Mutual Life Insurance Company			3,518,052	1.77
		Custody Bank of Japan, Ltd. (for trust 7)			3,396,200	1.71
		STATE STREET BANK WEST CLIENT - TREATY		3,220,701	1.62
	505234
		STATE STREET BANK AND TRUST COMPANY 505103		3,002,315	1.51
		Fuji Electric Co., Ltd.			2,844,856	1.43
		Controlling Shareholder (except for Parent		N/A
		Company)
		Parent Company		N/A

Supplementary Explanation

Notes 1: The shares held by The Master Trust Bank of Japan, Ltd. (for trust), Custody Bank of Japan, Ltd. (for trust) and Custody Bank of Japan, Ltd. (for trust 7) pertain to the trust business by the institution.

2: In the Report of Possession of Large Volume made available for public inspection (a report on change) dated April 21, 2020, BlackRock Japan Co., Ltd. and five (5) joint holders thereof are reported as the shareholders, but this has not been taken into account in the above "Status of Major Shareholders," as the number of shares substantially held as of March 31, 2021 has not been able to

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confirmed by the Company.

[Personal name or company name/number of shares held/shareholding percentage] BlackRock Japan Co., Ltd. and five (5) other companies /10,990,492 shares / 5.31%

1. In the Report of Possession of Large Volume made available for public inspection (a report on change) dated June 4, 2020, Sumitomo Mitsui Trust Asset Management Co., Ltd. and one (1) joint holder thereof are reported as the shareholders, but this has not been taken into account in the above "Status of Major Shareholders," as the number of shares substantially held as of March 31, 2021 has not been able to confirmed by the Company.
   [Personal name or company name/number of shares held/shareholding percentage]
   Sumitomo Mitsui Trust Asset Management Co., Ltd. and one (1) other company /10,437,099 shares / 5.04%

3. Corporate Attributes

	Listed Stock Market and Market Section		Tokyo Stock Exchange, First Section
		Nagoya 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	More than ¥1 trillion
	Previous Fiscal Year
	Number of Consolidated Subsidiaries as of the	More than 300
	End of the Previous Fiscal Year

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

■ Views and policies for Group management

Fujitsu manages the Fujitsu Group with the aim of achieving continuous growth and the generation of medium- to long-term corporate value of the entire Group while also urging each Group company to realize its potential to the maximum extent possible.

For some subsidiaries, we publicly list them with the aim of further improving their business value through diversification of the capital procurement necessary for sustainable growth and enhancing the value of the entire Group. By publicly listing subsidiaries, it is possible to focus on investment in specific businesses rather than just in the Group as a whole, thus contributing to diversifying investment opportunities. As there are some concerns regarding the possibility of a conflict of interest with minority shareholders and our publicly listed subsidiaries, we respect the independence of their management and make efforts to provide advice and support to enhance the corporate value of relevant subsidiaries by holding reporting sessions on an as-needed basis. To further promote our policies for group management, we established a department in February 2020 as a corporate function that specializes in formulating and conducting plans and measures for the most suitable

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