Mitsubishi Materials : Corporate Gorvernance Report

Corporate Governance Report

Last Update: June 24, 2021 Mitsubishi Materials Corporation Naoki Ono, Chief Executive Officer

Contact: Yuji Omura, General Manager, Corporate Communications Dept.

TEL: [phone] Securities Code: 5711 https://www.mmc.co.jp/

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

1. Basic Approach to Corporate Governance, Capital Structure, Corporate Profile and

Other Basic Information

1. Basic Approach

We have, based on the corporate philosophy of the Group, vision, values, code of conduct, mission and the Basic Policy on Corporate Governance(*) established by the Board of Directors, developed trust with all stakeholders related to the Company and its subsidiaries (hereinafter, the "Group"), such as shareholders and investors as well as employees, customers, client or supplier companies, creditors and local communities, and also develop our corporate governance. Among the governance systems under the Companies Act, we have chosen to be a Company with a Nomination Committee, and by separating supervision and execution, will strengthen the Board of Directors' management supervisory functions, improve the transparency and fairness of management and accelerate business execution and decision making.

We acknowledge the enhancement of corporate governance to be one of the most important management issues, and continuously make efforts to improve our corporate governance.

1. We have prepared the "Basic Policy on Corporate Governance," which is disclosed on the Company's website, as a compilation of the basic approach to and framework of corporate governance.
   https://www.mmc.co.jp/corporate/en/csr/view/governance.html

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

We have implemented all provisions of each principle of the corporate governance code. *This Report is based on the Corporate Governance Code before its revision in June 2021. Updating of this Report based on such revision is planned to be made by December 2021.

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[Disclosure Based on the Principles of the Corporate Governance Code]	Updated
	[Principle 1-4: Strategic share holdings]
	The Company's basic policy on shares acquired for purposes other	than pure investment
	(hereinafter, "Shares in the Form of Strategic Share Holdings") shall be as follows:

• The Company shall not acquire or hold Shares in the Form of Strategic Share Holdings unless doing so is necessary for the purpose of its business strategy.
• With regard to the Shares in the Form of Strategic Share Holdings, the appropriateness of such holdings shall be specifically reviewed and examined at a meeting of the Board of Directors on an annual basis. As a result of such reviews and examinations, the Company will reduce any Shares in the Form of Strategic Share Holdings if it is not deemed to be necessary to hold such shares.
• In exercising the voting rights attached to any Shares in the Form of Strategic Share Holdings, the Company will examine relevant proposals and decide whether to vote for or against it from the perspective of improving the corporate value of the Company and issuing company over

the medium- to long-term viewpoint.

In FY2021, out of all of the Strategic Share Holdings (Listed shares held by the Company at the beginning of fiscal year: Shares issued by 60 issuing companies), we sold all or a part of the shares issued by 31 issuing companies. The sales price was approximately 62.4 billion yen (at market value) in total, which accounted for about 54% of the amount stated on the balance sheet as at the end of March 2020 (including those succeeded from Mitsubishi Shindoh Co., Ltd., which the Company acquired through an absorption-type merger, effective April 1, 2020).

(Article 7 of the Basic Policy on Corporate Governance)

[Principle 1-7: Transactions between related parties]

With respect to competitive transactions between the Company and Directors / Executive Officers and conflict-of-interest transactions between the Company and Directors / Executive Officers, the Company will conduct advance deliberations and make reports on the actual results of approved transactions (if any) at the Board of Directors Meetings, in accordance with the provisions of laws and regulations and the Board of Directors Rules. Further, any transaction between the Company and any major shareholder over a certain amount shall be deliberated at the Board of Directors Meeting in advance, in accordance with the provisions of the Board of Directors Rules.

(Article 31 of the Basic Policy on Corporate Governance)

[Principle 2-6: Fulfillment of function as corporate pension funds owner]

The Company has been developing the asset mix of pension funds based on the risk and return at different times, in order to ensure the payment of pensions in the future. Pension Committee, comprised of the Executive Officer who oversees Finance & Accounting matters and the

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Executive Officer who oversees Human Resources & General Affairs matters or the Executive Officers' Meeting members as well as the personnel with knowledge and experience of fund management and human resource system planning, conduct periodic monitoring as to the investment status of the pension funds, and consider the review of the asset mix, and then the Executive Officers' Meeting determines the same after deliberation. In order to perform appropriate fund management, we conduct comprehensive evaluation and monitoring as to the institution entrusted with the investment by means of the combination of a quantitative evaluation and qualitative evaluation.

[Principle 3-1: Fulfillment of information disclosure]

1. Management philosophy, management strategy and management plan
   (a) Management philosophy
   1) Corporate philosophy, etc.
   Based on its corporate philosophy of "For People, Society and the Earth", the Group's vision is "We will become the leading business group committed to creating a sustainable society though materials innovation with use of our unique and distinctive technologies, for People, Society and the Earth".
   In order to realize such Corporate Philosophy and Vision, the Group believes that "Values" should be respected and the "Code of Conduct" should be complied with as a rule, both of which are established.
   For details, please refer to our website. https://www.mmc.co.jp/corporate/en/company/policy.html

2) Mission

The Group has established the Group mission as medium- and long term goals from FY 2031 to FY2051 to fulfill the corporate philosophy and achieve the Group's vision.

① We aim to contribute to build a prosperous society by providing nonferrous metal materials, predominantly copper, and high value-added functional materials and products.

②We aim to contribute to build a recycling-oriented society by providing recyclable products and advanced technology-based waste recycling.

③We aim to contribute to build a decarbonized society by developing and promoting the use of renewable energies such as geothermal energy, and ensuring to consider the reduction of environment impact in manufacturing.

1. Management strategy and management plan 1)Value creation process
   The Group will utilize its strengths that include "an advanced recycling technology and business platform," "value chain from raw materials to products with a stable supply," "unique material
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development and manufacturing technology," and "a team that can unite to resolve issues," etc., to solve social issues and promote key group initiatives to strengthen its management foundation and core businesses, and thereby further both social and economic values.

2) The Medium-term Management Strategy (FY2023 Strategy)

In March 2020, we established a new Medium-Term Management Strategy ("FY2023 Strategy") covering the period from FY2021 to FY2023, and we established the Group-wide Policy as follows:

Group-wide Policy

• Optimization of business portfolio
• Comprehensive efforts to increase business competitiveness
• Creation of new products and businesses

FY2023 Strategy was partially reviewed as of May 14, 2021. For details, please refer to our website. https://www.mmc.co.jp/corporate/en/company/strategy.html

1. Basic approach to and policy on corporate governance Please refer to "I.1. Basic Approach" in this Report.
2. Remuneration for Directors and Executive Officers

Please refer to "Remuneration System for Directors and Executive Officers" attached at the end of this Report.

1. Nomination of Candidates for Director and the Election and Dismissal of Executive Officers
   (a) Policy for Nomination of Candidates for Director
   Our basic approach to the structure of the Board of Directors, which fulfills the roles of determining the direction of management and exercising supervision over the progress of business execution, is to ensure that it comprises a diverse range of human resources with different expert knowledge, experience, and other qualities. In particular, the Nomination Committee will consider candidates for Outside Director to ensure that they comprise individuals who possess experience and knowledge in corporate management (business similar to or different from the Group's business, etc.) and organizational management, and individuals who possess broad and advanced expert knowledge and extensive experience in relation to finance and accounting, legal affairs, production engineering, research and development, sales and marketing, or international relations, etc.
   In light of the basic policy on the structure mentioned above, the Nomination Committee will nominate and select individuals who satisfy the following requirements as candidates for Director, regardless of individual attributes concerning gender, nationality and race, etc.:
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• An individual of exceptional insight and character;
• An individual with a strong sense of ethics and a law-abiding spirit; and
• An individual who can properly fulfill his or her duties concerning the exercise of supervision over the management of the Company and the determination of the direction of management.
  Further, with respect to candidates for Independent Outside Director, the Nomination Committee will nominate and select individuals who satisfy the following requirement in addition to the above requirements:
• An individual who has no material interest in the Group and who can remain independent.

The specific selection of personnel shall be decided after deliberation by the Nomination Committee.

(Exhibit 1 of the Basic Policy on Corporate Governance)

(b) Policy for Election and Dismissal of Executive Officers

In electing Executive Officers responsible for the execution of business tasks, the Nomination Committee will elect individuals who satisfy the following requirements, regardless of individual attributes concerning gender, nationality and race, etc.:

• An individual of exceptional insight and character;
• An individual with a strong sense of ethics and a law-abiding spirit; and
• An individual well-versed in management and the business activities of the Group.

In relation to the election process, the Chief Executive Officer will first draft a proposal for the election of Executive Officers after consulting with relevant officers as necessary. The Chief Executive Officer will then submit a proposal for the election of Executive Officers to the Board of Directors based on the deliberations and responses to inquiries at a Nomination Committee meeting, and Executive Officers will be elected by resolution of the Board of Directors based on a comprehensive review of the candidates' personal history, achievements, specialist knowledge, and other capabilities.

In addition, if any event occurs that makes an Executive Officer highly ineligible in light of these standards, the Executive Officer shall be dismissed by resolution of the Board of Directors following a review by the Nomination Committee.

(Exhibit 3 of the Basic Policy on Corporate Governance)

(5) Explanations of individual nomination, election and dismissal

In case of the nomination of candidates for Directors and the election or dismissal of Executive Officers, the reason for each nomination, election or dismissal is disclosed on the Company's website.

https://www.mmc.co.jp/corporate/ja/company/governance.html

Further, the reason for the nomination of each of the candidates for Directors is described in the Notice of the General Meeting of Shareholders as well.

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