Nippon Steel : (Delayed)Corporate Governance Report 202107

(Translation)

Corporate Governance Report

Last Update: July 7, 2021

Nippon Steel Corporation

Representative Director and President

Eiji Hashimoto

Contact: General Administration Dept.

Securities code: 5401

https://www.nipponsteel.com/en

The corporate governance of Nippon Steel Corporation (the "Company" or "NIPPON STEEL") is described below.

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

Other Basic Information

1. Basic Views

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The Corporate Governance Report dated July 7, 2021 contains the following updates among others: I-1. Basic Views

• [Principle 3.1] (Full Disclosure):
  Descriptions on the "NIPPON STEEL Group's Medium- to Long-term Business Plan" were added to "(1) Corporate Philosophy, Management Strategies, and Management Plans."
  "(3) Board Policies and Procedures in Determining the Compensation of Directors" was updated.
• [Supplementary Principle 4.11.3] (Analysis and Evaluation of the Effectiveness of the Board of Directors as a Whole):
  Descriptions on the results of the evaluation of the effectiveness of the Board of Directors in fiscal year 2020 were added.

For other descriptions of actual results, figures and other information have been updated.

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1. The Company has established a corporate governance system suited to the businesses of the NIPPON STEEL Group in order to achieve the sound and sustainable growth of the NIPPON STEEL Group and increase its corporate value over the medium- to long-term, in response to the delegation of responsibilities by and trust of all stakeholders, including its shareholders and business partners.
2. The basic structure of NIPPON STEEL's corporate governance is as follows.
3. 1. Reasons for Adopting a Company with an Audit & Supervisory Committee
      The Company has adopted a company structure with an Audit & Supervisory Committee for the purpose of, among others, expediting management decision-making, enhancing discussions by the Board of Directors relating to matters such as the formulation of management policies and strategies by limiting the number of items for deliberation by
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the Board of Directors, and strengthening the supervisory function of the Board of Directors over management.

1. Corporate Governance System

.

Currently, the Board of Directors of NIPPON STEEL is comprised of eighteen (18) members, of whom eleven (11) are Directors (excluding Directors who are Audit & Supervisory Committee Members) and seven (7) are Directors who are Audit & Supervisory Committee Members. By all Directors appropriately fulfilling their respective roles and responsibilities, prompt decision-making is achieved corresponding to changes in the management environment, and multifaceted deliberations and objective and transparent decision-making by the Board of Directors are secured. In addition, Directors who are Audit & Supervisory Committee Members have voting rights on the Board of Directors regarding decisions on proposals for the election and dismissal of Directors as well as the election and dismissal of Representative Directors, and other decisions in general regarding business execution (excluding decisions that have been delegated to Directors). The Audit & Supervisory Committee has the authority to give its opinions at the General Meeting of Shareholders regarding the election, compensation, etc. of Directors, excluding Directors who are Audit & Supervisory Committee Members. This structure strengthens the supervisory function of the Board of Directors over management.

In accordance with a provision in the Articles of Incorporation, the Board of Directors of NIPPON STEEL delegates part of the decisions regarding execution of important operations (excluding matters listed in each item of Article 399-13, Paragraph 5 of the Companies Act) to the Representative Director and Chairman and Representative Director and President, thereby expediting management decision-making, and limiting the number of items for deliberation by the Board of Directors and enhancing discussions by the Board of Directors relating to matters such as the formulation of management policies and strategies. In order for all Outside Directors to obtain the necessary information and sufficiently fulfill their roles, the Chairman, the President and other senior management regularly hold meetings with all Outside Directors to share the management challenges and exchange opinions.

Independent Outside Directors account for more than one-third (7 out of 18) of all members of the Company's Board of Directors.

(Board of Directors' structure)

NamePosition

[Directors (excluding Directors who are Audit & Supervisory Committee Members)]

Kosei Shindo	Representative
	Director and
	Chairman
Eiji Hashimoto	Representative
	Director and President
	(Chairperson)
Shinichi Nakamura	Representative
	Director and
	Executive Vice
	President
Akio Migita	Representative
	Director and
	Executive Vice
	President
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Shuhei Onoyama	Representative
	Director and
	Executive Vice
	President
Naoki Sato	Representative
	Director and
	Executive Vice
	President
Takahiro Mori	Representative
	Director and
	Executive Vice
	President
Tadashi Imai	Managing Director
Noriko Iki	Director	Outside Director	Independent
			Director
Tetsuro Tomita	Director	Outside Director	Independent
			Director
Masato Kitera	Director	Outside Director	Independent
[Directors who are Audit & Supervisory Committee Members]	Director
Masato Matsuno	Senior Audit &
	Supervisory
	Committee Member
	(full-time)
Shozo Furumoto	Senior Audit &
	Supervisory
	Committee Member
	(full-time)
Nobuhiro Miyoshi	Senior Audit &
	Supervisory
	Committee Member
Hiroshi Obayashi	(full-time)	Outside Director	Independent
Audit & Supervisory
	Committee Member		Director
Jiro Makino	Audit & Supervisory	Outside Director	Independent
	Committee Member		Director
Seiichiro Azuma	Audit & Supervisory	Outside Director	Independent
	Committee Member		Director
Hiroshi Yoshikawa	Audit & Supervisory	Outside Director	Independent
	Committee Member		Director

(Note) The details of each member, including titles and brief personal histories, are described in "4. Corporate Governance, etc., (2) Status of Officers, (a) List of Officers" in "Part 1, IV. Status of the Reporting Company" of the 96th Term Securities Report.

(The 96th Term Securities Report (available only in Japanese),

URL: https://www.nipponsteel.com/ir/library/securityreport.html, pp. 60-61)

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1. Establishment and Operation of the Internal Control System
   To comply with applicable laws and regulations, and ensure the integrity of financial reports and the effectiveness and efficiency of business and affairs, NIPPON STEEL establishes and appropriately operates an internal control system, and strives to continually improve it. To create a sound and open organization, NIPPON STEEL establishes the internal control environment by emphasizing dialogue in and outside the workplace, regularly conducting attitude surveys with all employees, and establishing a whistleblower system to receive consultation and reports not only from employees of NIPPON STEEL and the Group companies, but also from temporary workers and employees of contractors and suppliers, and their families.
2. Appropriate Information Disclosure
   To enhance management transparency and advance a correct understanding by stakeholders on the management situation of the Group, NIPPON STEEL not only seeks to disclose information in accordance with applicable laws and regulations and the rules of financial instruments exchanges on which NIPPON STEEL is listed, but also seeks to disclose financial and non-financial information at an appropriate timing, in an easily understandable manner, and accurately.
3. Regular Examination and Review of Corporate Governance
   NIPPON STEEL regularly examines and reviews, at the Board of Directors, the corporate governance structure, its operating situation, and other relevant facts and circumstances, including the analysis and evaluation of the effectiveness of the Board of Directors as a whole so that NIPPON STEEL will be able to make improvements autonomously, considering the opinions of Outside Directors. For the specific initiatives and situations regarding the NIPPON STEEL's corporate governance, please see each item of this report.

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

NIPPON STEEL conducts all matters related to every principle of the Code.

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

[Principle 1.4] (Strategic Shareholdings)

1. Policy on Strategic Shareholdings

NIPPON STEEL, from the standpoint of sustainable growth and improvement of its corporate value in the mid- to long-term, believes that it is extremely important to maintain and develop the relationships of trust and alliance with its extensive range of business partners and alliance partners both in Japan and overseas, which have been cultivated through its business activities over the years. Accordingly, NIPPON STEEL shall continue to hold strategic shareholdings which are judged to contribute to maintaining and strengthening its business foundation such as the business relationships and alliance relationships between NIPPON STEEL and the investees, enhancing the profitability of both parties, and thereby improving the corporate value of NIPPON STEEL and the Group. Regarding companies for which we confirm to be able to achieve the objectives described above without holding their shares after sufficient dialogues, we will proceed with the sale of shares in such companies.

1. Examination of the Appropriateness of the Strategic Shareholdings

NIPPON STEEL confirms the appropriateness of its strategic shareholdings by specifically examining all shareholdings to determine, among others, whether the purpose of each shareholding is appropriate and whether the benefit and risk associated with each shareholding is commensurate with the cost of capital. Of these shareholdings, each shareholding with the market value exceeding a certain threshold is examined each year at the Board of Directors. The total market value of the shareholdings examined at the Board of Directors accounts for approximately 90% of the total market value of the strategic shareholdings held by NIPPON STEEL on a consolidated basis (as of March 31, 2021).

The number of stocks held as strategic shareholdings by NIPPON STEEL on a non- consolidated basis was 495, as of October 1, 2012, when Nippon Steel & Sumitomo Metal Corporation was found, while 301 stocks were held as of March 31, 2021 (total value on the balance sheet was 262.6 billion yen). (Despite an increase due to the merger with Nippon Steel Nisshin Co., Ltd. on April 1, 2020, the number of stocks held decreased by 7 from March 31, 2020, and the total value on the balance sheet increased by 24.7 billion yen partly due to rises in stock prices.)

1. Basic Policy on Exercise of Voting Rights Concerning Strategic Shareholdings

Regarding the voting rights concerning each strategic shareholding, NIPPON STEEL exercises its voting rights upon comprehensively evaluating whether the agenda of the General Meeting of Shareholders of the investee company contributes to the improvement of the respective corporate values of NIPPON STEEL and the investee company. Specifically, NIPPON STEEL formulates criteria for the exercise of voting rights which set forth guidelines for judgment according to the type of agenda items such as the appropriation of surplus, the election of Directors and Audit & Supervisory Board Members, etc., and exercises its voting rights based on these criteria together with the results of the examination of the appropriateness of the shareholdings in (2) above.

[Principle 1.7] (Related Party Transactions)

Regarding transactions (including indirect transactions) between NIPPON STEEL and Directors, NIPPON STEEL verifies the contents of each transaction. If the transactions fall under conflict-of-interest transactions, in accordance with applicable laws and regulations and NIPPON STEEL's internal rules, the "Rules for Board of Directors," NIPPON STEEL seeks approval at,

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