Mitsubishi Chemical : Corporate Governance Report 2021/04/09

Corporate Governance Report

Last Update: April 9, 2021

Mitsubishi Chemical Holdings Corporation

Chief Executive Officer Jean-Marc Gilson

Contact: Osamu Shimizu

General Manager, Public Relations and Investor Relations Office

Securities Code: 4188

https://www.mitsubishichem-hd.co.jp/english/

The corporate governance of Mitsubishi Chemical Holdings Corporation (the "Company") is described below.

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

Other Basic Information

1. Basic Views

The Mitsubishi Chemical Holdings Corporation (MCHC) Group defines KAITEKI as "the sustainable well- being of people, society and our planet Earth", and has "realizing KAITEKI" as its vison. The MCHC Group will not stop at providing solutions to environmental and social problems, but also aim to contribute to a sustainability in both through our corporate activities.

For Realizing KAITEKI, in accordance with these guidelines, MCHC shall establish a system to enhance both the soundness and efficiency of business administration, improve the transparency of its business administration through suitable disclosure of information and dialogue with stakeholders, and endeavor to establish a better suitable corporate governance system.

Please refer to our "Mitsubishi Chemical Holdings Corporate Governance Guidelines" on the Company's website for basic policies concerning corporate governance such as the roles, constitution and appointment criteria of the Board of Directors.

(https://www.mitsubishichem-hd.co.jp/english/group/governance/policy.html )

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

The company complies with the all principles of the Corporate Governance Code.

[Disclosure Based on the Principles of the Corporate Governance Code] (Updated)

As used in this report, the following terms shall have the following meanings: "senior management" means corporate executive officers.

"officers" means directors and corporate executive officers.

Cross-Shareholdings>

(Mitsubishi Chemical Holdings Corporate Governance Guidelines [Development of a framework that improves the soundness and efficiency of management])

The Company and major subsidiaries shall acquire and hold shares of clients, etc. if the shareholding contributes to medium- to long-term improvement in corporate value. The Board of Directors shall review the

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adequacy of such cross-shareholdings on a regular basis. Considering the effect on the market, we make effort to sell such cross-shareholdings as assessed insufficient in adequacy.

On September 25, 2020, the Board of Directors reviewed the adequacy of all cross-shareholdings of Group as of the end of March, 2020, in light of economic rationale as measured by ROIC and necessity for business, etc. As a result of the review, we have found insufficiency in adequacy of a part of cross-shareholdings. Considering the effect on the market, we will proceed to sell such cross-shareholdings as assessed insufficient.

The Company sets transactions between members of the board or corporate executive officers and the company as a matter to be resolved by the Board of Directors, who confirm the adequacy of the transactions.

In order for corporate pension funds to perform their roles as asset owner, Mitsubishi Chemical Corporation which is the core business company of the Company group has taken measures based upon the guidelines as published by Ministry of Health, Labor and Welfare.

Specifically, Mitsubishi Chemical Corporation has set guidelines for management of pension assets, established committee for management of pension assets, determined proportion of composition of political assets and implemented the total assessment of asset management companies.

In addition to the foregoing, in cooperation with consultants, Mitsubishi Chemical Corporation has performed measures for proper management of corporate pension funds.

(What the company aims for)

The Company Group aims to realize KAITEKI through our corporate activities. KAITEKI is the Company's original concept that means "the sustainable well-being of people, society and our planet Earth." To realize KAITEKI, the Company Group promotes KAITEKI Management with the objective of increasing corporate value based on our three core management policies of improving capital efficiency, creating innovative technologies, and enhancing sustainability for people, society and the Earth with an emphasis on time. Please refer to KAITEKI Management on the Company's website for details. (https://www.mitsubishichem- hd.co.jp/english/kaiteki_management/kaiteki/)

(Management plan)

In February 2021, the Company has formulated its new medium-term management plan APTSIS 25, Step 1, which will commence from fiscal 2021. With regard to the impact of the COVID-19 pandemic, the situation will likely remain uncertain. Based on this awareness, the five-year period of APTSIS 25 from fiscal 2021 has been divided into two phases: Step 1 (With COVID-19) and Step 2 (After COVID-19). The principal measures in Step 1 (fiscal 2021 to fiscal 2022) have been formulated. The plan for Step 2 (fiscal 2023 to fiscal 2025) will be formulated in fiscal 2022.

Please refer to the Medium-Term Management Plan on the Company's website for details. (https://www.mitsubishichem-hd.co.jp/english/ir/pdf/01033/01180.pdf)

(The Company's view on overall corporate governance)

Please refer to our "Mitsubishi Chemical Holdings Corporate Governance Guidelines" on the Company's website for our view on overall corporate governance. (https://www.mitsubishichem- hd.co.jp/english/group/governance/policy.html)

(Policy and procedures for deciding compensations of senior management and directors)

(Mitsubishi Chemical Holdings Corporate Governance Guidelines [Development of a framework that improves the soundness and efficiency of management]3(3), [Enhancement of management transparency]5) The Compensation Committee determines the individual amount of compensation for each director, corporate executive officer and major subsidiaries president (excluding listed subsidiaries).

Policy on Determining Remuneration of senior management and directors is [Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods]

(Policy and procedures in the appointment/dismissal of the senior management and the nomination of directors)

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(Mitsubishi Chemical Holdings Corporate Governance Guidelines [Development of a framework that improves the soundness and efficiency of management]3(1), [Enhancement of management transparency]4) The Nominating Committee nominates candidates for directors, corporate executive officers and the presidents of major subsidiaries that are non-listed companies (Mitsubishi Chemical Corporation. and Life Science Institute, Inc.). In consideration of transparency and fairness in the process of nominating candidates, an outside director serves as the head of the committee.

Policy on appointment/dismissal of senior management and nomination of directors is described at [Policy on appointment/dismissal of senior management and nomination of directors].

(Reason for the Appointment of Officers)

The reason for appointment of officers are described at the end of this report [Reason for appointment of the Director] and [Reason for appointment of the corporate executive officers].

The Company delegates authority to corporate executive officers to make all business execution decisions, with the exception of matters that must be legally resolved by the Board of Directors and important matters in terms of portfolio management.

(Mitsubishi Chemical Holdings Corporate Governance Guidelines Attachment 2)

Independence Standards for Independent Directors are described at [Matters relating to Independent Directors].

(Mitsubishi Chemical Holdings Corporate Governance Guidelines [Development of a framework that improves the soundness and efficiency of management]2(2))

In order to establish the Group's basic management policies and oversee management appropriately, Directors who possess an advanced level of knowledge and deep insight in management experience, finance and accounting, science technology, IT and production, risk management, business strategy and marketing, laws and regulations, etc., and globalism and diversity are appointed.

Furthermore, in a bid to enhance oversight functions, a majority of Directors of the Board will not concurrently take on the role of Corporate Executive Officer.

Please refer to our "Mitsubishi Chemical Holdings Corporate Governance Guidelines" on the Company's website for our view on the constitution of the Board of Directors. (http://www.mitsubishichem- hd.co.jp/english/pdf/governance_guidelines.pdf)

Yoshimitsu Kobayashi, Directors of the Board and Chairperson, is concurrent with Toshiba Corporation and Mizuho Financial Group, Inc.

Also, the Outside Directors of the Board's concurrent positions are described at [Outside Directors' Relationship with the Company (2)]

- Implementation of the Board of Directors Effectiveness Evaluation

In accordance with the Mitsubishi Chemical Holdings Corporate Governance Guidelines, the Board of Directors is evaluated for their effectiveness annually and a summary of the results are disclosed.

- Evaluation methods and processes

In FY 2019, we have evaluated the effectiveness of the Board of Directors, focusing on whether we were able to properly discuss key themes for improving the Group's corporate value (portfolio management, risk management, and corporate governance). A questionnaire was conducted for all directors by means of evaluating each item in four levels with comments and we have understood the current situation and identified issues. We also asked for the opinion of the Board of Directors on the themes that should be discussed intensively in the future. Based on the results of the questionnaire, the Board of Directors discussed issues and remedial measures. Based on these discussions, the Chairperson evaluated the effectiveness of

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the Board of Directors and reported the results to the Board of Directors. External consultants were appointed for the planning and compilation of questionnaires.

- Outline of evaluation results

We have commended that the effectiveness of the Board of Directors is generally ensured in terms of both its composition and discussion. On the other hand, issues were pointed out regarding the ideal way in which portfolio management and risk management should be discussed, and it was also confirmed that continuous improvement measures are necessary. Hereafter, we will deepen discussions on priority topics to be discussed at meetings of the Board of Directors and continue to make efforts to create an environment conducive to enhanced discussions.

[Outline of results of the Evaluation on the Effectiveness of the Board of Directors in fiscal 2019] is described at the end of this report.

(Mitsubishi Chemical Holdings Corporate Governance Guidelines [Development of a framework that improves the soundness and efficiency of management]4(1))

MCHC shall explain to outside directors the Group's business contents and organization on a continuing basis, and provide opportunities to visit domestic and overseas business sites as well as opportunities for dialogue with the management on a regular basis.

For internal directors, opportunities to develop qualities suitable for directors shall be provided through external seminars held by various organizations, in addition to trainings on compliance and internal control.

(Mitsubishi Chemical Holdings Corporate Governance Guidelines Attachment 1)

MCHC will ensure appropriate disclosure so as to gain the trust of our shareholders and encourage long-term holding of MCHC's shares. MCHC also intends to engage in active dialogue with shareholders and reflect it in our corporate activities.

(Policy on Dialogue with Shareholders)

Disclosure to and dialogue with shareholders shall be implemented by each relevant department, in cooperation with each other, under the supervision of the President, officer in charge of IR and officer in charge of corporate governance. Opinions obtained through the dialogue will be reported to the Board of Directors, etc., and shared by the management.

Please refer to our "Mitsubishi Chemical Holdings Corporate Governance Guidelines" on the Company's website for our Policy on Dialogue with Shareholders. (http://www.mitsubishichem- hd.co.jp/english/pdf/governance_guidelines.pdf)

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2. Capital Structure

		Percentage of Foreign Shareholders		more than 20%
[Status of Major Shareholders]
		Name / Company Name		Number of Shares Owned	Percentage (%)
	The Master Trust Bank of Japan, Ltd. (Trust account)	120,980,500	8.50
	Custody Bank of Japan, Ltd. (Trust account)		78,280,100	5.50
	Meiji Yasuda Life Insurance Company		64,388,743	4.52
	Nippon Life Insurance Company		42,509,094	2.99
	Custody Bank of Japan, Ltd. (Trust account 5)		27,297,400	1.92
	Custody Bank of Japan, Ltd. (Trust account 7)		25,766,900	1.81
	Custody Bank of Japan, Ltd. (Trust account 4)		21,980,300	1.54
	Custody Bank of Japan, Ltd. (Trust account 9)		21,903,100	1.54
	JP MORGAN CHASE BANK 385781		21,245,710	1.49
	MUFG Bank, Ltd.		20,552,904	1.44
		Controlling Shareholder (except for Parent		None
		Company)
		Parent Company		None

Supplementary Explanation

Although the Company has made the Statements of Large-Volume Holdings (including the Change Report) available for public inspection, since the actual number of shares as of September 30, 2020 cannot be confirmed, such figures have not been listed in the above list of major shareholders (top 10).

Name

Date of public inspection

Number of shares owned (ratio of shares owned to total number of issued shares)

Mitsubishi UFJ Financial Group, Inc. June 15, 2020

104,036,458 shares (6.91%)

Nomura Securities Co., Ltd. July 21, 2020

104,087,998 shares (6.57%)

3. Corporate Attributes

	Listed Stock Market and Market Section		Tokyo Stock Exchange
		First Section
	Fiscal Year-End		March
	Type of Business		Chemicals
	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
			- 5 -

Number of Consolidated Subsidiaries as of the

End of the Previous Fiscal Year

More than 300

4. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling Shareholder

None

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5. Other Special Circumstances which may have Material Impact on Corporate Governance

Based on our company philosophy of "We create innovative solutions globally based on our core values of Sustainability, Health and Comfort, striving for the well-being of people, society and our planet Earth.", we have been promoting, in a smooth and efficient manner, our group's portfolio management, financial strategy, corporate governance, the enhancement of group strength and branding management, demonstrating our group's collective strengths, making efforts to maximize the corporate value of our group as a whole.

Also, we are deeply aware of the fact that corporate activities are supported by the general public. When performing group management, we make every effort to enhance governance of our group as a whole so that the group companies will promote compliance, comply with social rules, faith fully meet the demands of society as a good corporate citizen, and perform corporate social responsibilities.

Among our consolidated subsidiaries, Nippon Sanso Holdings Corporation("NSHD") is listed on the Tokyo Stock Exchange. NSHD is a listed subsidiary that supports the Industry Gases Segment, which is our Group's main business. Under the four-pronged business system of Japan, the United States, Europe and Asia/Oceania, NSHD has been working to further expand its business scale and improve profitability by developing its gas utilization technologies globally. We believe that maintaining the listing of NSHD and conducting business independently will serve the interests of NSHD and us. We also believe that working closely with NSHD to achieve its objectives will lead to maximizing the corporate value of our Group.

Pursuant to Master Agreement dated 13 May 2014 (the "Agreement"), NSHD and we have agreed to maintain the listing of NSHD shares.

We have put in place a system to ensure the appropriateness of operations within our Group, and share compliance, risk management and other Group internal control policies with NSHD.

Meanwhile, NSHD and we have agreed to respect the autonomy of NSHD management in the Agreement, and NSHD has established a voluntary Nomination and Compensation Advisory Committee, which advises the Board of Directors on the nomination of candidates for Directors and Statutory Auditors and the election and dismissal of CEOs and other executive officers. This committee consists of the President and two independent outside directors, and is chaired by an independent outside director. This ensures NSHD's independence from us regarding the selection of management team members. In addition, NSHD appoints two independent outside directors and two full-time independent outside statutory auditors to oversee conflicts of interest between us and other shareholders.

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 Three Committees (Nomination, Audit
			and Remuneration)
[Directors]

	Maximum Number of Directors	Stipulated	in	20
	Articles of Incorporation
	Term of Office Stipulated	in	Articles	of	1
	Incorporation
	Chairperson of the Board				Company Chairperson
	Number of Directors				12

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[Outside Directors]

Number of Outside Directors	5
Number of Independent Directors	5

Outside Directors' Relationship with the Company (1)

Name

Attribute

Relationship with the Company*

a

b

c

d

e

f

G

h

i

j

k

Hideko Kunii

From another company

Takayuki

From another company

△

Hashimoto

Chikatomo Hodo

From another company

△

Kiyomi Kikuchi

Lawyer

○

Tatsumi Yamada

CPA

△

• Categories for "Relationship with the Company"
• "○" when the director presently falls or has recently fallen under the category; "△" when the director fell under the category in the past
• "●" when a close relative of the director presently falls or has recently fallen under the category; "▲" when a close relative of the director fell under the category in the past

1. Executive of the Company or its subsidiaries
2. Non-executivedirector or executive of a parent company of the Company
3. Executive of a fellow subsidiary company of the Company
4. A party whose major client or supplier is the Company or an executive thereof
5. Major client or supplier of the listed company or an executive thereof
6. Consultant, accountant or legal professional who receives a large amount of monetary consideration or other property from the Company besides compensation as a director/kansayaku
7. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a legal entity)
8. Executive of a client or supplier company of the Company (which does not correspond to any of d, e, or f) (the director himself/herself only)
9. Executive of a company, between which and the Company outside directors/kansayaku are mutually appointed (the director himself/herself only)
10. Executive of a company or organization that receives a donation from the Company (the director himself/herself only)
11. Others

Outside Directors' Relationship with the Company (2)

	Designation as	Supplementary
Name	Independent	Explanation	of	the	Reasons of Appointment
	Director	Relationship
	○	-			Ms. Kunii has extensive experience in
					company management and expertise in
					the information processing domain, as
Hideko Kunii					well as profound insight in diversity
					promotion as a member of the Cabinet
					Office Gender Equality Promotion Joint
					Meeting. During Board of Directors
		- 8 -

			meetings, she provides oversight of
			overall corporate management from an
			independent	and	impartial standpoint,
			while making useful suggestions in
			relation to matters such as woman's
			empowerment	promotion,	science
			technology, and IT. As she is expected to
			continue	making contributions	to
			establishing basic management policies
			and ensuring proper oversight of
			management by the Board of Directors
			of MCHC through such initiatives, the
			Board of Directors elected Ms. Kunii as
			an outside director.
			In addition, Ms. Kunii satisfies our
			standards for director independence. We
			thereby designated Ms. Kunii as an
			independent director in accordance with
			the regulations stipulated by the Tokyo
			Stock Exchange.
	○	For Mr. Hashimoto,	Mr.	Hashimoto	has	extensive
		Honorary Executive	experience in corporate management and
		Advisor of IBM Japan,	profound insight into digital business,
		Ltd., with which our	having served successively as a president
		Group had a very small	and a chairperson of a Japanese
		amount of business	subsidiary of a global corporation that
		transactions in fiscal	provides products and services related to
		2019, no more than 1%	information system. During Board of
		of its consolidated net	Directors	meetings,	he	provides
		sales or our consolidated	oversight		of	overall	corporate
		net sales, we sees no	management from an independent and
		issue with his	impartial	standpoint,	while	making
		independence.	useful suggestions in relation to global
Takayauki			management, business portfolio strategy,
		and risk	management,	etc. As	he	is
Hashimoto
		expected		to	continue	making
			contributions	to	establishing	basic
			management	policies	and	ensuring
			proper oversight of management by the
			Board of Directors of MCHC through
			such initiatives, the Board of Directors
			elected Mr. Hashimoto as an outside
			director.
			In addition, Mr. Hashimoto satisfies
			our standards for director independence.
			We thereby designated Mr. Hashimoto as
			an independent director in accordance
			with the regulations stipulated by the
			Tokyo Stock Exchange.
	○	For Mr. Hodo, Senior	Mr. Hodo has extensive experience in
		Corporate Advisor of	corporate	management	and	profound
		Accenture Japan Ltd,	insight in knowhow in company
Chikatomo Hodo		with which our Group	management successively as a president
	had a very small amount	and a chairperson of a Japanese
		of business transactions	subsidiary of a global corporation, which
		in fiscal 2019, no more	provides management consulting and IT
		than 1% of its	services.	During	Board of	Directors
		- 9 -

		consolidated net sales or	meetings, he provides oversight of
		our consolidated net	overall corporate management from an
		sales, we sees no issue	independent	and	impartial	standpoint,
		with his independence.	while making useful suggestions in
			relation to matters such as global
			management, functions of a pure holding
			company, and business models for
			enhanced corporate value. As he is
			expected		to	continue		making
			contributions	to	establishing	basic
			management	policies	and	ensuring
			proper oversight of management by the
			Board of Directors of MCHC through
			such initiatives, the Board of Directors
			elected Mr. Hodo as an outside director.
			In addition, Mr. Hodo satisfies our
			standards for director independence. We
			thereby designated Mr. Hodo as an
			independent director in accordance with
			the regulations stipulated by the Tokyo
			Stock Exchange.
	○	For Ms. Kikuchi, a	Ms. Kikuchi has abundant experience
		lawyer with TMI	working at financial institutions in
		Associates, with which	addition to her profound insight as a
		our Group had a very	lawyer specialized in corporate legal
		small amount of	affairs.	During	Board of	Directors
		business transactions in	meetings, she provides oversight of
		fiscal 2019, no more	overall corporate management from an
		than 1% of the firm's	independent	and	impartial	standpoint,
		revenue or our	while making useful suggestions in
		consolidated net sales,	relation to matters such as the functions
		we sees no issue with	and responsibilities of the Board of
		her independence.	Directors, legal risk assessments in
			individual	cases, and	compliance
Kiyomi Kikuchi			matters.	As she is expected to continue
			making	contributions	to	establishing
			basic management policies and ensuring
			proper oversight of management by the
			Board of Directors of MCHC through
			such initiatives, the Board of Directors
			elected Ms. Kikuchi as an outside
			director.r
			In addition, Ms. Kikuchi satisfies our
			standards for director independence. We
			thereby designated Ms. Kikuchi as an
			independent director in accordance with
			the regulations stipulated by the Tokyo
			Stock Exchange.
	〇	For Mr. Yamada, former	Mr. Yamada has profound insight as an
		Board Member of	international	accounting	expert, in
		KPMG AZSA LLC,	addition to abundant experience as a
		with which our Group	certified public accountant.		With this
Tatsumi Yamada		had a very small amount	experience and insight, his contributions
		of business transactions	as an independent Outside Director,
		in fiscal 2019, no more	primarily in terms of finance,
		than 1% of its	accounting, and disclosures inside and
		consolidated net sales or	outside	Japan,	are	expected	in
		- 10 -

our consolidated net

establishing basic management policies

sales, we sees no issue

and

ensuring

proper

oversight

of

with his independence.

management by the Board of Directors.

As such, the Board of Directors newly

elected Mr. Yamada as an outside

director.

In addition, Mr. Yamada satisfies our

standards for

director

independence.

We thereby designated Mr. Yamada as an

independent director in accordance with

the regulations stipulated by the Tokyo

Stock Exchange.

[Committees]

Committee's Composition and Attributes of Chairperson

All

Committee

Full-time

Inside Directors

Outside

Chairperson

Members

Members

Directors

Nomination

5

0

1

4

Outside Director

Committee

Remuneration

5

0

2

3

Outside Director

Committee

Audit

5

2

2

3

Inside Director

Committee

[Executive Officers (Shikkoyaku)] (Updated)

Number of Executive Officers (Shikkoyaku)

6

Status of Additional Duties

Representative

Additional Duties as Director

Additional

Nomination

Remuneration

Name

Duties

as

Authority

Committee

Committee

Employee

Member

Member

Jean-Marc Gilson

Yes

No

No

No

No

Yoshihiro Ikegawa

Yes

No

No

No

No

Larry Meixner

No

No

No

No

No

Hidefumi Date

No

Yes

No

Yes

No

Ken Fujiwara

No

Yes

No

Yes

No

Shigeki Habuka

No

No

No

No

No

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[Auditing Structure]

	Appointment of Directors and/or Staff to		Appointed
	Support the Audit Committee

Matters Related to the Independence of Such Directors and/or Staff from Executive Officers (Shikkoyaku)

The Office of Audit Committee was established as an organization to assist the Audit Committee in its duties. This office supports the committee in its duties following the instructions provided by the Audit Committee. In addition, personnel (transfers, evaluations, etc.) decisions on employees in the Office of Audit Committee and the office budget must be approved by the Audit Committee.

Cooperation among Audit Committee, Accounting Auditors and Internal Audit Departments

The Company has appointed Ernst & Young ShinNihon LLC as our accounting auditor. The Audit Committee regularly exchanges information and receives reports, including those from the accounting auditor, and on audit plans and results. In addition, the Audit Committee works with the Audit Office, an Internal Control Office, which is the internal control division, to efficiently implement audits.

The Audit Office (composed of 6 auditors) conducts audits of the Company's operations in accordance with an annual internal audit plan, collaborates with the internal audit departments of (Mitsubishi Chemical Corporation, Mitsubishi Tanabe Pharma Corporation, Life Science Institute, Inc., and Nippon Sanso Holdings Corporation("Major Subsidiaries"), and improves and administers a system designed to ensure that internal audits of the Group are carried out appropriately.

Moreover, the Audit Office proposes an annual internal audit plan after prior consultation with the Audit Committee, and then formulates the plan with approval from the President and the Audit Committee. In addition, the Audit Office reports to the Audit Committee on internal audit plans, their implementation status, and audit results. The Audit Office also cooperates with audits conducted by the Audit Committee, including reporting on the status of audits by the Audit Committee at meetings attended by the head of the Audit Office. In addition, we are working to strengthen our cooperation with our accounting auditor, including regular information exchanges on mutual audit policies and audit results.

[Independent Directors]

Number of Independent Directors	5

Matters relating to Independent Directors

The Company shall elect those as Outside Directors who do not fall under any of the following and are capable of overseeing the Company's management from a fair and neutral standpoint, free of a conflict of interest with general shareholders.

[Standards for Independence of Outside Directors] 1.Related party of the Company

1. A Person engaged in execution of operation of the Company Group (executive director, corporate executive officer, executive officer, manager, employee, partner, etc. The same shall apply hereafter.)
2. A Person who has been engaged in execution of operation of the Company Group in the past 10 years 2.Major shareholder
   A person who directly or indirectly holds 10% or more of the Company's total voting rights or a person engaged in execution of operation of a company that directly or indirectly holds 10% or more of the Company's total voting rights
   3.Major business partner

1. A person engaged in execution of operation of a company*1 whose major business partner includes the Company and Group Major Subsidiaries (Mitsubishi Chemical Corporation, Mitsubishi Tanabe Pharma Corporation, Life Science Institute, Inc., and Nippon Sanso Holdings Corporation. The same shall apply hereafter.)
2. • 12 -

1. A person engaged in execution of operation of a major business partner*2 of the Company and Group Major Subsidiaries

4.Accounting Auditor

Accounting Auditor of the MCHC Group or an employee thereof 5.Transaction as an individual

A person who receives money and other financial benefits of 10 million yen or more per year from any of MCHC and Group Major Subsidiaries

6.Donation

A person who receives a donation or financial assistance of 10 million yen or more per year from any of MCHC and Group Major Subsidiaries or a person engaged in execution of operation of a company that receives a donation or financial assistance of 10 million yen or more per year from any of MCHC and Group Major Subsidiaries

7.Reciprocal assumption of the position of Director

A person engaged in execution of operation of a company that has elected any of the Directors and employees of the MCHC Group as its Director

8.Close relatives, etc.

(1)Close relatives, etc. of a person engaged in execution of important operations of the MCHC Group (spouse, relatives within the second degree of relationship or any person who shares the same livelihood. The same shall apply hereafter.)

(2)Close relatives, etc. of any person who meets the definition of items 3 through 7 above

*1 If the said business partner receives from MCHC and Group Major Subsidiaries an amount equivalent to 2% or more of its annual consolidated net sales in the latest fiscal year, this company shall be considered as the one whose major business partner includes MCHC.

*2 If MCHC and Group Major Subsidiaries receives from the said business partner an amount equivalent to 2% or more of MCHC's annual consolidated net sales in the latest fiscal year or the said business partner loans to the MCHC Group an amount equivalent to 2% or more of MCHC's total consolidated assets, the said business partner shall be considered as a major business partner of MCHC.

*3The party is deemed to fall under the items 3 to 7 when the relevant conditions were met any time in the past 3 years.

[Incentives]

	Incentive Policies for Directors and/or Executive		Stock Options, Performance-based Share Compensation
	Officers (Shikkoyaku)		Plan etc.
	Supplementary Explanation

Remuneration for corporate executive officers comprises base remuneration (fixed remuneration), performance-based remuneration, and restricted stock remuneration introduced in fiscal 2020. In order to secure talented management personnel and enhance our competitiveness, the Compensation Committee sets remuneration levels and ratios for each position and responsibilities by comparing and evaluating the levels of remuneration and performance-linked remuneration with other companies of the same size in Japan, using data from the Compensation Survey of Directors and External & Supervisory Board Members conducted by an outside specialist organization.

Performance-linked remuneration consists of cash bonuses and stock remuneration, and is designed to motivate management with a good balance between short-term and medium-tolong-term performance and the improvement of corporate and shareholder value.

Cash bonuses vary from 0% to 200% of the standard amount determined by rank according to the achievement of goals (KAITEKI value assessment) for each fiscal year on the basis of the three KAITEKI management axes, in principle.

In addition, the Company will increase or decrease such individual performance targets within the range of 20% according to the degree of achievement (individual evaluation).

Individual cash bonus amount = Standard amount by position × KAITEKI value evaluation (0% to 200%) × Individual evaluation (± 20%)

- 13 -

Share compensation is a system in which we distribute our shares of common stock through the executive remuneration BIP trust. In accordance with the achievement of the target (KAITEKI value assessment) for each fiscal year, we give points annually to the base points determined by rank in the range of 0% to 200% in principle, and pay dividends accruing to our common stock and our common stock, etc., which correspond to the number of points accumulated at the time of the resignation of the corporate executive officer.

Number of Points Granted by Individual = Base Point by Position × KAITEKI Valuation (0% to 200%)

The following shows the method of determining the indices for performance-linked remuneration and the amount of performance-linked remuneration.

(1) KAITEKI Value Assessment

We are pursuing three management policies: Management of Sustainability (MOS), which aims to improve sustainability; Management of Technology (MOT), which seeks to create innovation; and Management of Economics (MOE), which emphasizes economic efficiency and capital efficiency. We are pursuing KAITEKI management, which is designed to enhance corporate value in an integrated manner while keeping time and time in mind. By using the management indicators of MOS, MOT, and MOE as the axis for evaluating performance-based compensation, we have established a compensation system that is strongly aware of the "KAITEKI management" that will help us realize our vision of KAITEKI.

Proportion of each indicator for evaluation of performance compensation are as follows;

Indicator	Content	Proportion
MOS indicator	Indicator for reduction of environmental burden,	10%
	contribution to health and medical treatment,
	compliance, prevention of accidents and fire, etc.
MOT indicator	Indicator for efficiency of research and development,	80%
	superiority of technologies, and consistency with
	social needs
MOE indicator	Indicator for core operating income, ROE, ROIC, free	10%
	cash flow and the like

The major indicators listed above and the reasons for their selection are as follows.

		Major Indicators		Reason
	MOS	Promotion	of	energy saving	To actively promote energy saving activities for prevention
		activities				of global warming and to evaluate the reduction effect
		(amount	of	reduction	of	thereof
		resources)
		Provision of medical products		To evaluate the contribution to people's life and health by
		(index for	contribution	to	responding to unmet medical needs and by increasing the
		provision of medical products)		number of indications and sales territories
		Establishment	of organizations	To evaluate the progress of establishing organizations
		that is rewarding and has a vitality	where diverse human resources can work lively and
		and harmony			vigorously
		(index for employees wellness)
	MOT	Rate of creating new products		To evaluate the efficiency of research and development
						from the ratio of new products and services to sales revenue
		Rate of request for patent	To evaluate the superiority of technology from the ratio of
		examination				results to the planned number of request for patent
						examination
		Rate of progress of core	To evaluate the progress of acquisition plan of new core
		technology				technology by adopting advanced technology and digital
						transformation

- 14 -

	MOE	Core operating income	To evaluate the absolute value of operating income
			excluding extraordinary items as the earning power of
			business
		ROE	To evaluate the efficiency to aim for sustainable
			improvement of corporate value
		Free cash flow	To evaluate cash flow creation for allocation of resources to
			the next generation, stable shareholder return and financial
			soundness

KAITEKI value is assessed by the Corporate Executive Officers' Meeting based on the achievement of annual targets. The Remuneration Committee verifies the appropriateness of the assessments after deliberations by the Corporate Executive Officers' Committee. The Compensation Committee works with the Nominations Committee to verify the fairness and reasonableness of the achievement of targets declared at the beginning of the fiscal year.

Performance compensation (variable) is decided, for each type, as follows;

Type of performance compensation	Decision method
Cash bonus	The coefficient (0 to 200%) is determined by adding
	qualitative evaluations related to the status of
	initiatives for management issues to the
	comprehensive evaluation of the three axes of MOE
	indicator, MOT indicator and MOS indicator
Share compensation	The coefficient (0-200%) is determined by the total
	evaluation of the three axes of MOE indicator, MOT
	indicator and MOS indicator

• The evaluation of performance-linked remuneration (cash bonuses and share remuneration) is determined by the comprehensive evaluation of the three axes of the MOE metric, MOT index and MOS index. However, since the target values of these indices include figures not published externally, these target values are not stated. The coefficient of performance-based compensation (0 to 200%) based on the comprehensive evaluation of the three axes in FY 2019 was 50%.

(2) Individual evaluation

The President's goals are determined after deliberation by the Compensation Committee and the Nominating Committee on the goals declared by the President at the beginning of the business year to be evaluated. As of the end of the applicable business year, the remuneration committee and the nominating committee deliberate and decide on the evaluation based on the self-evaluation of the president.

As of the beginning of the fiscal year to be evaluated, the goals of Corporate Executive Officers other than the President are determined through interviews between the President and Corporate Executive Officers, which are then deliberated and approved by the Compensation Committee. As of the end of the fiscal year, the evaluation is determined through an interview between the president and each corporate executive officer, which is then deliberated and approved by the Compensation Committee. The Compensation Committee works with the Nominating Committee to confirm the fairness and rationality of the goals and evaluations of each corporate executive officer.

In fiscal 2020, the compensation structure for the President and CEO was set as follows: Basic remuneration:

Performance-linked remuneration (cash bonus (standard amount): Performance-linked remuneration

(standard amount): Share remuneration (standard amount): Restricted shares (standard amount) = 50:25:12.5:12.5. The ratio of variable remuneration for other corporate executive officers is set so that the higher the corporate executive officer ranks, the higher the ratio of variable remuneration.

In conjunction with the introduction of the stock compensation plan through the BIP Trust, the Company has decided not to issue new stock acquisition rights as stock compensation-type stock options from fiscal 2019 onward.

- 15 -

	Recipients of Stock Options		Corporate Executive Officers (Shikkoyaku) / Executive
		Officers
	Supplementary Explanation

This applies to all corporate executive officers and executive officers (including those that have retired from the Company).

[Remuneration for Directors and Executive Officers (Shikkoyaku)]

	Disclosure	of	Individual	Directors'	No Individual Disclosure
	Remuneration
	Disclosure of	Individual Executive Officers'	Selected Executive Officers (Shikkoyaku)
	(Shikkoyaku) Remuneration

Supplementary Explanation

In FY 2019, we paid 13 members of the board of directors, for a total of 296 million yen. In addition, there is ¥2 million in remuneration, etc., from our subsidiary, in which our boards of directors concurrently hold positions as officers. The remuneration of directors includes performance-based remuneration of ¥15 million paid to directors who served concurrently as corporate executive officers in the previous term as performance- based remuneration from the BIP Trust.

In fiscal 2019, we paid seven Corporate Executive Officers and paid a total of 371 million yen. In addition, there is ¥6 million in remuneration, etc., from our subsidiary, in which our corporate executive officers concurrently hold positions as officers. The remuneration paid to Corporate Executive Officers includes a performance fee of ¥53 million from the BIP Trust.

Also, the Company disclose the individual corporate executive officers'(Shikkoyaku) remunerations whose are over 100 million yen on Annual securities report.

Policy on Determining Remuneration Amounts

Established

and Calculation Methods

Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods

The remuneration system for directors and corporate executive officers shall be separate and determined by the Compensation Committee based on the following principles.

(Basic Policy on Decision on Directors' Compensation)

• In view of the role of supervising and auditing our management from an independent and objective standpoint, we have only established a basic remuneration (fixed remuneration).
• In order to secure human resources suitable for fulfilling our responsibilities as a director, the level of

remuneration will be determined by taking into account trends in other companies, expected roles, and functionals, etc.

(Basic Policy on Decision on Corporate Executive Officer Remuneration)

• We have established a remuneration system that is strongly aware of the three axes of KAITEKI

management toward realizing our corporate vision of KAITEKI : Management of Sustainability (MOS), Innovation (Management of Technology), and Economic Efficiency (Management of Economics).

• The remuneration system will function effectively as an incentive to promote short-term and medium-tolong-term performance and the improvement of sustainable company and shareholder value.
• We will establish competitive remuneration levels that will lead to the retention and acquisition of talented management personnel that will drive the Group's sustainable growth.
• • 16 -

• We will operate with a fair and rational compensation decision process that enables us to fulfill our accountability to all stakeholders, including shareholders, customers, and employees.

Based on the above basic policy, the Compensation Committee stipulates the compensation structure for corporate executive officers as follows.

• Basic remuneration
• Incentive fee

Cash bonuses shall be paid by multiplying the standard amount for each position by KAITEKI value appraisal and individual evaluations (achievement of targets and demonstration of leadership in the medium-to long- term management plan, etc.)

Share remuneration: The number of points obtained by multiplying standard points by KAITEKI value appraisal of each term shall be awarded, and the number of common shares, etc., of the Company equivalent to the cumulative number of points shall be awarded at the time of resignation.

• Restricted stock compensation: Compensation to create and enhance corporate value over the medium to

long term and sustainably, and to further promote the sharing of value with shareholders. The transfer restriction is cancelled at the time of resignation by delivering shares with restriction on transfer for each term equivalent to the standard amount to be determined by rank.

We may take advantage of other extraordinary rewards and benefits, if necessary, after discussing them individually at the Compensation Committee. In addition, in the event of a material misconduct or violation of any act committed by a director or corporate executive officer, after deliberation by the Compensation Committee, we may demand that such director or corporate executive officer confiscate (malus) the beneficial interests of compensation of corporate executive officer or refund (claw-back) the remuneration

[Supporting System for Outside Directors]

Secretariats have been set up for the Board of Directors and each of the Company's committees and provide support and assistance to outside directors. When the Board of Directors or one of the committees holds a meeting, the respective secretariat supplies the outside directors with materials and other pertinent information beforehand. In addition, individual explanations are provided to ensure that the outside directors can perform a full review in advance. That being said, the Office of Audit Committee, which was set up as a unit to assist the Audit Committee, has its own independent and exclusive staff.

Furthermore, in addition to the Board of Directors and each committee meetings, a proper environment is being maintained, including the holding of regular meetings that are attended by the outside directors, to ensure the outside directors' oversight functions work effectively.

- 17 -

[Status of persons retired from Representative Director and President, etc.]

Names, etc., of advisors ("sodanyaku," "komon," etc.) who have formerly served as Representative Director and

President, etc.

Working Arrangement /

Name

Title / Position

Activity

Conditions

（Full-time /

Date of

Retirement

Term

Description

Part-time, Compensation）

from President, etc.

Ryuichi

i)The

Outside

i)The Company:

i)The Company:

Not

Tomizawa

Company:

activities,

etc. at

-Working

Arrangement:

June 26, 2012

Specified

Senior Advisor

industry

Part-time

ii)

Mitsubishi

ii)Mitsubishi

associations,

etc.

-Compensation: No

Chemical

Chemical

on behalf

of

the

ii)Mitsubishi Chemical

Corporation:

Corporation:

company

Corporation:

April 1, 2012

Senior Advisor

-Working

Arrangement:

Part-time

-Compensation: No

Kanji

Mitsubishi

Outside

-Working

Arrangement:

October 3, 2007

Not

Shouno

Chemical

activities,

etc. at

Part-time

Specified

Corporation

industry

-Compensation: No

Senior Advisor

associations,

etc.

on behalf

of

the

company

Masanao

Mitsubishi

Outside

-Working

Arrangement:

April 1, 2016

Until 80

Kanbara

Chemical

activities,

etc. at

Part-time

years old

Corporation

industry

-Compensation: Yes

Senior Advisor

associations,

etc.

on behalf

of

the

company

Hiroaki

Mitsubishi

Outside

-Working

Arrangement:

April 1, 2017

Not

Ishiduka

Chemical

activities,

etc. at

Part-time

Specified

Corporation

industry

-Compensation: Yes

Senior Advisor

associations,

etc.

on behalf

of

the

company

- 18 -

Takumi	Mitsubishi	Outside			-Working Arrangement:	April 1, 2017	Not
Ubagai	Chemical	activities,	etc. at	Part-time		Specified
		Corporation	industry			-Compensation: Yes
		Senior Advisor	associations,	etc.
			on behalf	of	the
			company
	Total number of advisors ("sodanyaku,"
	"komon," etc.) who have formerly	served	as	5 persons
	President and Representative Director, etc.

Other information

-The table lists former presidents and chairpersons of the Company or Mitsubishi Chemical Corporation which is the core business company of the Company group.

-The Company does not have a consultant (sodanyaku) system, but there are some cases where former representative directors and presidents, etc., are appointed as senior advisors based on the Company's regulation. Also, there some cases where former representative directors and presidents, etc., are appointed as consultant, and the consultant will be appointed as senior advisors after retirement of consultant based on the Company's regulation.

-Special Advisor and Consultant do not participate in management.

-The date of retirement as the representative director and chairman of the Company or Mitsubishi Chemical Corporation (including former company) is stated in '' Date of Retirement from President, etc.'' in the table above.

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

(1) Oversight

A. Board of Directors (12 members (of which two members are female); five outside directors, chairman; inside director, term of directors; one year)

The Board of Directors determines basic management policies, such as the Medium-Term Management Strategy and the Annual Budget. Decisions on business execution based on these basic policies are, in principle, delegated to Corporate Executive Officers, except for matters resolved by the Board of Directors as required by law, and mainly supervises the execution of duties by Corporate Executive Officers.

In addition to directors from within the Group who have a broad knowledge of the Group's three business fields of functional products, materials, and healthcare, we have appointed five outside directors with backgrounds such as corporate managers, experts in social and economic conditions, science and technology, certified public accountants, and lawyers. We reflect diverse opinions in management decisions and strengthen supervisory functions.

The Company's Articles of Incorporation stipulates that the number of directors shall not exceed 20. As of the date of submission of this report, the Company has 12 directors, including five outside directors (of which three are concurrently serving as corporate executive officers). In addition, the term of office for directors is set at one year in order to create a management system that can respond swiftly to changes in the business environment and to further clarify the management responsibilities and roles of directors.

In FY 2019, the Board of Directors met 11 times. The attendance of each director is as follows. Kenkichi Kosakai, Yoshihiro Umeba, Takeo Kikkawa, and Kazuhiro Watanabe describe the attendance of the Board of Directors until their retirement in June 2019, and Hidefumi Date, Shigeru Kobayashi, Chikatomo Hodo, and

- 19 -

Kiyomi Kikuchi describe the attendance of the Board of Directors after their assumption of office in June 2019.

• Yoshimitsu Kobayashi: 11/11 (100%)
• Hitoshi Ochi: 11/11 (100%)
• Kenkichi Kosakai: 4/4 (100%)
• Ken Fujiwara: 11/11 (100%)
• Glenn Fredrickson: 11/11 (100%)
• Yoshihiro Umeba: 4/4 (100%)
• Hisao Urata: 11/11 (100%)
• Hidefumi Date: 7/7 (100%)
• Shigeru Kobayashi: 7/7 (100%)
• Takeo Kikkawa: 4/4 (100%)
• Taigi Ito: 11/11 (100%)
• Kazuhiro Watanabe: 4/4 (100%)
• Hideko Kunii: 11/11 (100%)
• Takayuki Hashimoto: 11/11 (100%)
• Chikatomo Hodo: 7/7 (100%)
• Kiyomi Kikuchi: 7/7 (100%)
  B. Nominating Committee (five members (of which two members are female); four outside directors; an outside director serves as chairman)
  In addition to nominating candidates for directors and corporate executive officers, the Nomination Committee nominates candidates for the President of major subsidiaries (Mitsubishi Chemical Corporation, Mitsubishi Tanabe Pharma Corporation, and Life Science Institution Inc.), excluding listed companies.
  The nominating committee consists of five members, including four outside directors as of the date of submission of this report. To enhance the transparency and fairness of the nomination process, the committee is chaired by an outside director.
  In FY2019, the Nominating Committee met six times. The attendance of each director is as follows. Kikkawa Takeo describes the attendance of the Board of Directors until their resignation in June 2019, Hitoshi Ochi describes the attendance of the Board of Directors until their resignation in June 2019, and Chikatomo Hodo and Kiyomi Kikuchi describes the attendance of the Board of Directors after their appointment in June 2019.

• Takayuki Hashimoto (Chairperson): 6/6 (100%)
• Takeo Kikkawa : 1/1 (100 %)
• Yoshimitsu Kobayashi: 6/6 (100%)
• Hitoshi Ochi: 1/1 (100%)
• Hideko Kunii: 6/6 (100%)
• Chikatomo Hodo: 5/5 (100%)
• Kiyomi Kikuchi: 5/5 (100%)
• • 20 -

C. Audit Committee (five members (of which two members are female); three outside directors; an inside director serves as chairman)

The Audit Committee audits the execution of duties by corporate executive officers and directors, and verifies the Group's internal control system. In principle, the Audit Committee meets once a month.

The Audit Committee consists of five members, including three outside directors, as of the date of submission of this report. In addition, the Audit Committee selects two full-time Audit Committee members and works closely with the Audit Committee, independent auditors, the Audit Office, which conducts internal audits, and the Internal Control Promotion Office, which formulates and promotes policies for internal control systems. Through these and other means, the Audit Committee is working to enhance the auditing system.

In order to ensure adequate cooperation with internal departments and to smoothly collect information, the chairperson of the committee is the internal director, who is a full-time audit committee member.

In FY 2019, the Audit Committee met 13 times. The attendance of each committee member is as follows. Yoshihiro Umeba and Kazuhiro Watanabe describe the attendance of the board members until their retirement in June 2019, and Shigeru Kobayashi and Kiyomi Kikuchi describe the attendance of the board members after their appointment in June 2019.

• Hisao Urata (chairperson): 13/13 (100%)
• Yoshihiro Umeba: 3/3 (100%)
• Shigeru Kobayashi: 10/10 (100%)
• Taigi Ito: 13/13 (100%)
• Kazuhiro Watanabe: 3/3 (100%)
• Hideko Kunii: 13/13 (100%)
• Kiyomi Kikuchi: 10/10(100%)

D. Compensation Committee (Five members; three outside directors; an outside director services as chairman) The Compensation Committee determines the amount of remuneration paid to individual directors and corporate executive officers, and determines the amount of remuneration paid to the presidents of major subsidiaries (Mitsubishi Chemical Corporation, Mitsubishi Tanabe Pharma Corporation, and Life Science

Institute, Inc.) excluding listed companies.

The Compensation Committee consists of five members, including three outside directors, as of the filing date of this report. To enhance the transparency and fairness of the decision-making process, the committee is chaired by an outside director.

The Compensation Committee met seven times in FY 2019. The attendance of each committee member is as follows. In addition, Takeo Kikkawa, Kazuhiro Watanabe, and Kenkichi Kosakai, three of the three members of the board of directors, stated their attendance until their resignation in June 2019, and Takayuki Hashimoto stated their attendance after assuming the position of the compensation committee in June 2019, and Chikatomo Hodo and Hidefumi Date were present after assuming the office of the board of directors in June 2019, respectively.

・ Taigi Ito (Chairperson):

7/7 (100%)

• Takeo Kikkawa : 2/2 (100%)
• Kazuhiro Watanabe: 2/2 (100%)
• Takayuki Hashimoto: 4/5 (80%)
• Chikatomo Hodo: 5/5 (100%)
• Kenkichi Kosakai: 2/2 (100%)
• Ken Fujiwara: 7/7 (100%)
• Hidefumi Date: 5/5 (100%)

- 21 -

(2) Business execution

A. Corporate Executive officers

The corporate executive officers decide the execution based on basic management policies (medium term business strategies and annual budgets, etc.).

Regarding important matters in the management of the Group, deliberations are made at the corporate executive officers, which is the council by the corporate executive officers. In addition to determining the division of duties of each corporate executive officer for other matters, we make it appropriate and efficient decision-making by clarifying the authority to decide the corporate executive officer in charge,.

B. Corporate Executive Officers Committee

The Corporate Executive Officers Committee is composed of all corporate executive officers, deliberates and decides on important matters concerning the management of the Company and the Company group, and also monitors the Group's business based on the medium-term management plan, annual budget etc.

That being said, the Member of the Audit Committee and Major Subsidiaries' President and CEO (Mitsubishi Chemical Corporation, Mitsubishi Tanabe Pharma Corporation, Life Science Institute, Inc., and Nippon Sanso Holdings Corporation.) can attend the Corporate Executive Officers Committee at any time to express freely.

(3)Audits

We have appointed Ernst & Young ShinNihon LLC as our accounting auditor. The accounting auditor maintains close ties with the Audit Committee and reports on the audit system, audit plans, audit status, and audit results. In addition, we exchange necessary information and opinions with the accounting auditor to ensure that audits are efficiently and effectively carried out.

In FY2019, the following are the names of the certified public accounts that executed accounting audits and the number of personnel that assisted in accounting audit operations.

-Names of the CPS that executed operations (number of continuous audit years)

Kazuomi Nakamura (2 year), Noriaki Kenmochi (7 years), Takayuki Ueki (2 year) and Kosuke Kawabata (1year)

-Assistants that worked on the accounting audit

20 certified public accounts, and another 21 personnel

The status of internal audit is described at [Cooperation among Audit Committee, Accounting Auditors and Internal Audit Departments] above.

3. Reasons for Adoption of Current Corporate Governance System

In order to improve corporate value through agile management based on the Group's comprehensive strengths in the three business areas of functional products, industrial materials and healthcare, the Company adopts a holding company system that separates the Group business management functions and individual business operation functions.

The Company adopts a company with a nominating committee, etc. in a bid to enhance management transparency and openness, strengthen management oversight functions and improve management agility by accelerating decision-making.

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

Scheduling	AGMs	Avoiding	The 15th Ordinary General Shareholders Meeting was held on June 24, 2020,
the Peak Day		thereby avoiding the peak day, and allowing as many shareholders as possible
			to attend.
Allowing Electronic Exercise	Shareholders are able to exercise their voting rights using a number of
of Voting Rights		electronic devices (including the Internet). The method for doing so is
			included in the notice of convocation of the general shareholders meeting.
Participation	in	Electronic	The Company is participating in the Electronic Voting Platform.
Voting Platform
			- 22 -

	Providing Convocation Notice		The convocation notice appears in English on our website. It is also available
	in English		in English over the Electronic Voting Platform.
	Other		In addition to posting our convocation notice on our website in both Japanese
		and English and visuals of our business report, we use visuals and audio at
			the shareholders meeting for our business reports and to explain our
			resolutions as a way to better convey and thereby give shareholders a better
			understanding.

2. IR Activities

				Personal explanation		Supplementary Explanations
				by representative
	Regular	Investor	Briefings	Yes		We participate in investor briefings for individual
	for Individual Investors			investors and explain our business and future business
						development.
	Regular	Investor	Briefings	Yes		The following briefings are conducted by the president
	for	Analysts	and			and supervising director
	Institutional Investors			-Quarterly and fiscal year-end earnings results online
						conference
						-Business briefings, etc.
						- Individual visits
	Regular	Investor	Briefings	Yes		Each year individual visits are made to investors, rather
	for Overseas Investors			than having investors gather for a briefing.
	Posting of IR Materials on			Various materials are uploaded to our website.
	Website
	Establishment	of			An officer is in charge of IR and we have set up an office
	Department and/or Manager			to handle IR (PR and IR Office).
	in Charge of IR
	Other					We issue We WILL, a shareholders communication tool,
					and the KAITEKI Report, a integrated report. Both are
						available on our website.

3. Measures to Ensure Due Respect for Stakeholders Supplementary Explanations

	Stipulation of	Internal Rules	Rules on respecting the position of stakeholders is defined in the Mitsubishi
	for Respecting the Position of	Chemical Holdings Group Charter of Corporate Behavior.
	Stakeholders
	Implementation	of	We recognize CSR activities as the implementation of our group philosophy.
	Environmental Activities, CSR	Mitsubishi Chemical Holdings Corporation and its group companies are
	Activities etc.			implementing CSR activities, including responsible care activities.
	Development	of Policies	on	Mitsubishi Chemical Holdings Group Charter of Corporate Behavior also
	Information	Provision	to	includes rules on proper information disclosure and securing transparency.
	Stakeholders
	Other			-

- 23 -

IV. Matters Related to the Internal Control System

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

The Company intends to strengthen and thoroughly enforce the internal control system based on the basic policy concerning the internal control system resolved at the Board of Directors. At the end of each fiscal year, the Board of Directors reviews the operational status of the basic policy, and as necessary the Company will review its contents. The contents of the basic policy as of this report present are as follows.

1. System required for execution of duties of the Audit Committee

1. Management shall set the Office of Audit Committee as a body to assist the Audit Committee's duties and have it assist in auditing based on the instructions thereof. The appointment (transfer, evaluation, etc.) of employees of the Office of Audit Committee and the development of the budget of the Office of Audit Committee shall be subject to approval of the Audit Committee.
2. Pursuant to regulations such as the Audit Standard of the Audit Committee, Directors, Corporate Executive Officers, and employees shall inform the Audit Committee of any important management matters to MCHC and a corporate group with MCHC as a parent company under the Companies Act ("MCHC Group") (including any fact or fraudulent act that might do material harm to MCHC or any important fact in violation of laws, regulations or Articles of Incorporation).
3. Management stipulates that any Director, Corporate Executive Officer, Corporate Auditor, or employee of the MCHC Group who has made a report to the Audit Committee shall not be treated unfavorably because of the report.
4. Of expenses incurred by the Audit Committee or members of the Audit Committee, those deemed necessary for the execution of their duties shall be borne by MCHC.
5. In order to ensure that Audit Committee's audits are conducted in an effective manner, Management shall appoint full-time members of the Audit Committee as well as facilitate the Audit Committee's regular meetings with senior executives, including the President, and coordination and information exchange between the Audit Committee and the Internal Audit Office.

2. System for ensuring that Corporate Executive Officers execute their duties efficiently

1. Except matters that significantly affect the MCHC Group's portfolio management and matters to be resolved by the Board of Directors as required by law (basic management policy, etc.), the Board of Directors allows Corporate Executive Officers to make swift decisions by delegating all the business execution decisions to them in principle.
2. To make decisions on business execution delegated to Corporate Executive Officers, Management shall develop a system in which the MCHC Group's decisions and execution of business are made properly and efficiently by setting a rule that the MCHC Group's important management matters are decided by the President and Corporate Executive Officer after deliberation at the Executive Management Committee, and by defining the authority of responsible Corporate Executive Officers, responsibilities of each department, and authority assigned to subsidiaries on other matters.
3. Corporate Executive Officers shall conduct management administration of subsidiaries in accordance with the basic management policy formulated by the Board of Directors (the Group's medium-term management plan, annual budgets, etc.) in an effort to achieve them. In addition, Corporate Executive Officers shall develop a system in which important management matters of subsidiaries are reported to the Company through the Executive Management Committee and medium-term management plans, annual budget control, etc.

3. System for ensuring that Corporate Executive Officers' and employees' execution of their duties conform to laws, regulations, and Articles of Incorporation

(1) The MCHC Group shall treat the Group Charter of Corporate Behavior as the basic regulations on compliance matters within the MCHC Group.

(2) Management shall develop, properly operate and manage internal control systems in order to ensure the reliability of financial reporting.

(3) In accordance with the Group Compliance Promotion Regulations and other relevant rules and regulations, Management shall develop a promoting framework for compliance, training and education programs, audit/monitoring systems, hotlines, and other compliance promotion programs of the MCHC Group and properly operate and manage these programs by appointing a Corporate Executive Officer in charge of compliance promotion (Chief Compliance Officer).

• 24 -

4. Regulations, structure and systems for managing risks of loss

The President shall be the Chief Risk Management Officer. In accordance with the Group's Basic Regulations on Risk Management and other relevant rules and regulations, the President shall be responsible for preventing serious risks from occurring in connection with or arising from MCHC Group's business activities, and for developing, properly operating and managing risk management systems for minimizing damage if any risk occurs.

1. System for preserving and managing information related to Corporate Executive Officers' execution of their duties
   In accordance with the Information Security Policy, Information Management Rules, and other relevant rules and regulations of the MCHC Group, Management shall preserve and manage the minutes of the Executive Management Committee, approval documents, and other documents and electromagnetic records related to Corporate Executive Officers' execution of their duties and develop a system that allows Corporate Executive Officers and Directors to inspect them.
2. System for assuring operational legitimacy within the corporate group

In accordance with the above policy and the Group's Management Regulations and other relevant rules and regulations, Management shall implement the management of the MCHC Group (management of business objectives, reporting and approval of important matters and the Group's internal audits, etc.) and ensure operational legitimacy within the MCHC Group by sharing the Group's internal control policies and systems covering compliance and risk management within the Group.

2. Basic Views on Eliminating Anti-Social Forces

At the Mitsubishi Chemical Holdings Group, fair business practices outlined in the group Charter of Corporate Behavior in the basic policy 3 (1) of the aforementioned internal control system promote the severing of any ties with anti-social forces. To reject any and all unreasonable demands from antisocial forces, the general affairs department, which is in charge of handling these matters, works closely with related administrative organizations, and takes necessary action to ensure that everyone in the group is well-informed.

V. Other

1. Adoption of Anti-Takeover Measures

Adoption of Anti-Takeover Measures	Not Adopted
Supplementary Explanation

The Company implements highly efficient and transparent group management to enhance its competitive and earnings strengths through the optimal allocation of management resources. As a group, we aim to further improve our corporate value to respond to the trust placed in us by our shareholders.

We have not introduced anti-takeover measures. In the event of a major purchase of our shares that would erode the group's corporate value or the profits we share with our shareholders, we will implement measures that we believe to be appropriate for addressing the situation.

2. Other Matters Concerning to Corporate Governance System

The following is a policy for disclosure of company information and summary of timely disclosure system.

1. Policy for disclosure of company information

Under our disclosure policy, MCHC has disclosed material information as defined in standards in the Securities Listing Regulations established by the Tokyo Stock Exchange ("timely disclosure standards") and Article 27-36 of the Financial Instruments and Exchange Act (such as information of MCHC Group, including

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that regarding decisions, incidents, and earnings results that may have an impact on the investment judgement of shareholders and investors, "material information").

Furthermore, we will exert an effort to actively disclose information that is deemed valuable to shareholders and investors, even if it is not material information.

The information for disclosure will be centrally controlled by the Public Relations and Investor Relations Office, and the General Manager of the office will serve as the person in charge of information disclosure.

2. Summary of timely disclosure system

1. Decisions on information related to earnings, which is covered under timely disclosure standards, is decided upon in resolutions taken up by the Board of Directors or in discussions by the Corporate Executive Officers Committee. After decisions have been made, the PR and IR offices implement timely disclosure.
2. In information related to decisions, which is covered under timely disclosure standards, matters that require resolutions taken up by the Board of Directors or discussions by the Corporate Executive Officers Committee are decided once approved by the body concerned. For matters that require approval using request forms, are decided once approval is received. In either case, the PR and IR office conducts a survey to determine whether these are matters that require timely disclosure. The result of this survey is reported to the director in charge of IR. In addition, timely disclosure is implemented should the matter require so.
3. For information related to an occurring incident, which is covered under timely disclosure standards, at the time the related department realizes the incident has occurred, it should work with the PR and IR office and conduct a survey of the incident to determine whether the matter requires timely disclosure. The result of this survey is reported to the director in charge of IR. When necessary, it should also be reported to the Board of Directors and Corporate Executive Officers Committee. Timely disclosure should be implemented if the matter requires so.

That being said, rules prohibiting insider training should be established to govern the handling the unpublished important information up to the moment of timely disclosure and to thoroughly prevent insider training.

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[Policy on appointment/dismissal of senior management and nomination of directors]

(Corporate executive officers)

The Nominating Committee nominates persons who fulfill the following criteria as candidates for corporate executive officers:

・possesses abundant experience, deep expertise and insight in each responsible area, objective and fair judgment and a high level of business management capability.

・possesses high ethical standards and a law-abiding mind.

・healthy enough to fulfill responsibilities as a Corporate Executive Officer.

Meanwhile, the Nominating Committee may dismiss the corporate executive officer who materially violates one of the criteria above.

(Directors)

The Nominating Committee nominates persons who fulfill the following criteria as candidates for directors:

・possesses deep insight as well as objective and fair judgment, which are necessary to fulfill the responsibilities of a director of Company with Nominating Committee, etc.

・possesses high ethical standards and a law-abiding mind. ・healthy enough to fulfill the responsibilities as a director.

・For outside directors, fulfills independence standards that are separately stipulated and be able to secure enough time to execute business. In addition, be able to secure diversity among outside directors.

[Reason for appointment of the Director]

Name	Present position and		Reason for choosing as candidate for Director
duty at the Company
Yoshimitsu	Director of the Board,	Yoshimitsu Kobayashi engaged in research and development
Kobayashi	Chairperson			departments and the performance products business domain and then has
	Member	of	the	served as Director of the Board, President and CEO of MCHC and
	Nominating			Mitsubishi Chemical Corporation ("MCC") successively. Also having
	Committee			acted as a member of the Council on Economic and Fiscal Policy and the
				Council for Industrial Competitiveness, and Chairperson of the Japan
				Association of Corporate Executives, he has abundant experience and
				profound insight. Serving as Chairperson of the Board of Directors, he
				focuses on heightening the effectiveness of the Board of Directors
				partially by endeavoring to create an environment that enables Outside
				Directors to speak out actively, and serving as an internal Director who
				does not concurrently serve as an Executive Officer he appropriately
				engages in management oversight. As he is expected to continue making
				contributions to establishing basic management policies and ensuring
				proper oversight of management by the Board of Directors of MCHC
				through such initiatives, the Board of Directors reelected him as the
				Director.
Hitoshi Ochi	Director of the Board	After having engaged in manufacturing departments and the Corporate
				Strategy Office and other departments of MCHC and MCC, Hitoshi Ochi
				served as Director of the Board, President and CEO of Mitsubishi Rayon
				Co., Ltd., and thus has abundant experience and profound insight. Taking
				on management of MCHC as its Corporate Executive Officer, President
				and CEO, he spearheads various initiatives to facilitate sustainable
				growth of the MCHC Group while also fulfilling accountability to the
				Board of Directors which involves regularly reporting to the Board of
				Directors on the state of overall corporate management. As he is expected
				to continue making contributions to establishing basic management
				policies and ensuring proper oversight of management by the Board of
				Directors of MCHC through such initiatives, the Board of Directors
				reelected him as the Director.
Hidefumi	Board of directors and	Hidefumi Date engaged in corporate management as well as accounting,
Date	Managing	Corporate	tax affairs, and finances in the accounting and financial departments of
	Executive Officer		the MCHC Group, and thus has abundant experience and profound
	Compensation		insight.	Serving as Managing Corporate Executive Officer (Chief
	committee member		Financial Officer), he engages in management of MCHC and spearheads
				efforts that involve developing financial strategy and carrying out
				investor	relations activities. During Board of Directors meetings, in

			addition, he fulfills accountability in relation to financial strategy of the
			MCHC Group, and makes suggestions drawing on such expertise. As
			he is expected to continue making contributions to establishing basic
			management policies and ensuring proper oversight of management by
			the Board of Directors of MCHC through such initiatives, the Board of
			Directors reelected him as the Director.
Ken Fujiwara	Director of the Board,	Ken Fujiwara engaged in international risk management and M&As in
		Managing Corporate	the legal departments of the MCHC Group, and thus has abundant
		Executive Officer	experience and profound insight. Serving as Managing Corporate
		Member of the	Executive Officer (Chief Group Compliance Officer), he engages in
		Compensation	management of MCHC and spearheads efforts that involve developing
		Committee	internal control systems and strengthening the compliance framework.
			During Board of Directors meetings, he fulfills accountability as an
			Executive Officer and makes suggestions pertaining to matters such as
			risk management and corporate compliance. As he is expected to
			continue making contributions to establishing basic management
			policies and ensuring proper oversight of management by the Board of
			Directors of MCHC through such initiatives, the Board of Directors
			reelected him as the Director.
Glenn	H.	Director of the Board	Glenn H. Fredrickson is a university professor in the U.S. and has
Fredrickson		profound insight as an international authority in the polymer chemistry
			domain and abundant experience as a consultant for global corporations.
			Acting as an internal Director who does not concurrently serve as an
			Executive Officer, he appropriately engages in management oversight
			and makes suggestions pertaining to the field of advanced technology
			and other such matters. As he is expected to continue making
			contributions to establishing basic management policies and ensuring
			proper oversight of management by the Board of Directors of MCHC
			through such initiatives, the Board of Directors reelected him as the
			Director.
Shigeru		Director of the Board	Shigeru Kobayashi engaged in the performance products and industrial
Kobayashi		Member of the Audit	materials business domains of the MCHC Group and served as a
		Committee	president of an overseas Group company successively, and thus has
			abundant experience and profound insight. Currently serving as a full-
			time member of the Audit Committee who hails from MCHC, he engages
			in management oversight primarily by ensuring effectiveness of audits,
			which involves assessing the operational status of internal control
			systems and regularly sharing information in meetings of the Audit
			Committee, drawing on his extensive understanding of MCHC Group
			operations and his management experience. As he is expected to

				continue making contributions to establishing basic management
				policies and ensuring proper oversight of management by the Board of
				Directors of MCHC through such initiatives, the Board of Directors
				reelected him as the Director.
Hiroshi				After having engaged in administration and legal, human resources, and
Katayama				internal control office of the MCHC Group, Hiroshi Katayama served as
				Managing Executive Officer of Mitsubishi Chemical Corporation, and
				thus has abundant experience and profound insight. As he is expected
				to make contributions to establishing basic management policies and
				ensuring proper oversight of management by the Board of Directors of
				MCHC, as an internal Director who does not concurrently serve as an
				Executive Officer, drawing on his extensive understanding of corporate
				governance, risk management, and his experience, the Board of Directors
				newly elected him as the Director.
Hideko Kunii	Director of the Board	Hideko Kunii has extensive experience in company management and
	Member	of	the	expertise in the information processing domain, as well as profound
	Nominating			insight in diversity promotion as a member of the Cabinet Office Gender
	Committee			Equality Promotion Joint Meeting.	During Board of Directors
	Member of the Audit	meetings, she provides oversight of overall corporate management from
	Committee			an independent and impartial standpoint, while making useful
				suggestions in relation to matters such as woman's empowerment
				promotion, science technology, and IT. As she is expected to continue
				making contributions to establishing basic management policies and
				ensuring proper oversight of management by the Board of Directors of
				MCHC through such initiatives, the Board of Directors reelected her as
				the Director.
Takayuki	Director of the Board	Takayuki Hashimoto has extensive experience in corporate management
Hashimoto	Member	of	the	and profound insight into digital business, having served successively as
	Nominating			a president and a chairperson of a Japanese subsidiary of a global
	Committee			corporation that provides products and services related to information
	Member	of	the	system. During Board of Directors meetings, he provides oversight of
	Compensation		overall corporate management from an independent and impartial
	Committee			standpoint, while making useful suggestions mainly in relation to global
				management, business portfolio strategy, and risk management, etc. As
				he is expected to continue making contributions to establishing basic
				management policies and ensuring proper oversight of management by
				the Board of Directors of MCHC through such initiatives, the Board of
				Directors reelected him as the Director.
Chikatomo	Director of the Board	Chikatomo Hodo has extensive experience in corporate management and
Hodo				profound insight in digital business successively as a president and a

	Member	of	the	chairperson of a Japanese subsidiary of a global corporation, which
	Nominating			provides management consulting and knowhow in company
	Committee			management.	During	Board of Directors meetings, he provides
	Member of the		oversight of overall corporate management from an independent and
	Compensation		impartial standpoint, while making useful suggestions in relation to
	Committee			matters such as global management, functions of a pure holding
				company, and business models for enhanced corporate value.	As he
				is expected to continue making contributions to establishing basic
				management policies and ensuring proper oversight of management by
				the Board of Directors of MCHC through such initiatives, the Board of
				Directors reelected him as the Director.
Kiyomi	Director of the Board	Kiyomi Kikuchi has abundant experience working at financial
Kikuchi	Member	of	the	institutions in addition to her profound insight as a lawyer specialized in
	Nominating			corporate legal	affairs.	During Board of Directors meetings, she
	Committee			provides oversight of overall corporate management from an
	Member of the Audit	independent and impartial standpoint, while making useful suggestions
	Committee			in relation to matters such as the functions and responsibilities of the
				Board of Directors, legal risk assessments in individual cases, and
				compliance matters.	As she is expected to continue making
				contributions to establishing basic management policies and ensuring
				proper oversight of management by the Board of Directors of MCHC
				through such initiatives, the Board of Directors reelected her as the
				Director. While she has not been involved in corporate management
				except for serving as Outside Director, the Board of Directors believes
				that she will properly execute her duties as an Outside Director of the
				Company based on the above reasons.
Tatsumi				Tatsumi Yamada has profound insight as an international accounting
Yamada				expert, in addition to abundant experience as a certified public
				accountant. With this experience and insight, his contributions as an
				independent Outside Director, primarily in terms of finance, accounting,
				and disclosures inside and outside Japan, are expected in establishing
				basic management policies and ensuring proper oversight of
				management by the Board of Directors. As such, the Board of
				Directors newly elected Mr. Yamada as an outside director. While he
				has not been involved in corporate management except for serving as
				Outside Director, the Board of Directors believes that he will properly
				execute his duties as an Outside Director of the Company based on the
				above reasons.

[Reason for appointment of the corporate executive officers]

Name	Present position and	Reason for appointment of the corporate executive officers
duty at the Company
Jean-Marc	President, CEO	Jean-Marc Gilson has successively held the positions of president or
Gilson			chief executive in charge of business operations at various US and
			European chemical companies and possesses a global outlook in the
			fields of specialty chemicals and life science. In previous experiences
			he worked at Roquette, headquartered in France, as CEO, he built a
			proven track record for decisively executing portfolio transformation.
			In addition, he fully understands how correctly establishing strategies
			and clearly disseminating these strategies to all stakeholders
			contributes to the improvement of corporate value. Given his
			performance and competencies, the Board of Directors thus believes
			that he is qualified for the chief officer for business execution of the
			Company to lead MCHC realizing our vision of sustainable growth
			by accelerating our portfolio transformation and globally undertaking
			initiatives to solve social issues.
Yoshihiro	Management	Having engaged in the management of the MCHC Group over many
Ikegawa	Corporate	Executive	years, Yoshihiro Ikegawa has abundant experience and profound
	Officer		insight especially in the industrial materials business domain. The
			Board of Directors thus believes that he is qualified for the chief
			officer of corporate strategies, production technology and marketing
			& branding of the Company.
Larry Meixner	Managing	Corporate	Larry Meixner has abundant experience in corporate management as
	Executive Officer	an officer of oversea companies and profound insight especially in
			ICT (information and communication technology). The Board of
			Directors thus believes that he is qualified for the chief officer of
			Emerging Technology and Business Development which promotes
			exploration of advanced technology and creation of new business of
			the Company.
Hidefumi Date	Managing	Corporate	Having engaged in the management of the MCHC Group over many
	Executive Officer	years, Hidefumi Date has abundant experience and profound insight
			especially in the accounting and finance domains. The Board of
			Directors thus believes that he is qualified for the chief officer of
			corporate management, information systems and IR of the Company.
Ken Fujiwara	Managing	Corporate	Having engaged in the management of the MCHC Group over many
	Executive Officer	years, Ken Fujiwara has abundant experience and profound insight
			especially in Legal and administration domains. The Board of
			Directors thus believes that he is qualified for the chief officer of
			corporate governance, legal, administration, human resources,

		internal controls, and overseas administrative headquarters of the
		Company.
Shigeki Habuka	Corporate Executive	Having engaged in several government offices such as Ministry of
	Officer	Finance and Cabinet Office of Japan over many years, Shigeki
		Habuka has abundant experience in administrative officer and
		profound insight in financial administration. The Board of Directors
		thus believes that he is qualified for the chief officer of Public Policy
		and Relation Office and PR of the Company.

June 12, 2020

Mitsubishi Chemical Holdings Corporation

Outline of the Results of Evaluation of the Effectiveness of the Board of Directors in Fiscal Year 2019 (draft)

1. Implementation of Board of Directors Effectiveness Assessment

Pursuant to "Mitsubishi Chemical Holdings Corporate Governance Guidelines", the Board of Directors evaluates its effectiveness and discloses an overview of the results each year. The methodology and results of our evaluation of the effectiveness of the Board of Directors in fiscal year 2019 are outlined below.

2. Evaluation methods and processes

In fiscal year 2019, based on the role of the Board of Directors (formulation of basic management policies and supervision of overall management), we have evaluated the effectiveness of the Board of Directors, focusing on whether they were able to appropriately discuss key themes aimed at increasing corporate value of our group. Specific processes are as follows.

1. A questionnaire was conducted (during March and April, 2020) for all directors, including the chairperson, covering the following items. By means of evaluating each item in four levels with comments, we have understood the current situation and identified issues. External consultant was appointed in the planning and compilation of questionnaires.
   ・Structure of the Board of Directors
   ・Discussions at the Board of Directors (portfolio management, risk management and corporate governance) ・Themes that should be discussed intensively by the Board of Directors (only for comments)
2. Based on the results of the questionnaire, the Board of Directors discussed issues and improvement measures (May 2020).
3. Chairperson assesses the effectiveness of the Board of Directors and reports the results thereof to the Board of Directors (June 2020)

3. Summary of evaluation results

(1) Summary

Questionnaire surveys revealed that the majority of answer to the questionnaire were positive between evaluations 4 and 3, and thus the effectiveness of our Board of Directors was generally assured in terms of both composition and discussion.

On the other hand, with regard to "discussions at the Board of Directors", there were several opinions calling for discussions from a more dynamic perspective regarding portfolio management, and also with regard to "risk management", there were some comments pointing out the rooms for improvement in the approach to risk assessment and evaluation methods when conducting business globally. Furthermore, there were opinions that the roles and positions of the Board of Directors and each committee as a holding company should be discussed again.

(2) Future Measures

i) Themes that should be discussed intensively by the Board of Directors

Pursuant to discussions at the Board of Directors based on the comments on "Discussions at Board of Directors" and opinions on "Themes that should be discussed intensively by the Board of Directors", we will further discuss the following themes in-depth on priority topics for the current fiscal year.

2

・Portfolio management and risk management at with/post COVID-19・Roles and functions of the Board of Directors of the holding company

ii) Improvement of environmental to enhance discussions

We will continue to make efforts to improve our management operations, etc. in order to enhance discussions at the Board of Directors.

・Improve of infrastructure and operations towards further utilization of the remote meetings of the Board of Directors

・To expedite delivery of materials for the Board of Directors

・Efficiency of explanations of each agenda at the Board of Directors

4. Efforts based on the previous assessment of the Board of Directors

Based on the results of the evaluation of the effectiveness in fiscal year 2018 and the suggestions by each director, we had implemented the following measures.

i) To further expansion and efficiency of discussions

・We had endeavored to further enhance our discussions by means of including regular discussions at the Board of Directors, which focus on priority issues, to our annual calendar.

・We had prepared the groundwork for more efficient management of the Board of Directors by means of reviewing our "Regulations of Board of Directors".

ii) Toward further exercising functions of the Outside Directors

・As part of the appropriate provision of information to Outside Directors, we had held discussions, at the Outside Directors Meeting, with outside consultants regarding the evaluations of institutional investors and other topics.

・Outside Directors exchanged opinions on the agenda of the Outside Directors Meeting for the next fiscal year.

We will continue to work to improve the effectiveness of the Board of Directors based on the results of the Board of Directors' evaluation and various recommendations from each Director.

End

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