Nissin Foods : Corporate Governance Report

Corporate Governance

Last Updated: December 1, 2021

NISSIN FOODS HOLDINGS CO., LTD.

Koki Ando, President & Representative Director, CEO Contact: General Affairs Division ([phone])

Securities Code: 2897 https://www.nissin.com/en_jp/

The corporate governance of NISSIN FOODS HOLDINGS CO., LTD. (the "Company") is described below.

1. Basic Concept on Corporate Governance, Capital Structure, Corporate Attributes and Other Basic Information

1. Basic Concept

While providing safe and worry-free foods, and promoting businesses to maximize benefits to all stakeholders including shareholders, consumers, employees, business partners, local communities, and local residents, the Company recognizes enhanced and strengthened corporate governance as one of the top priorities for management and strives for highly objective and transparent management. To achieve this objective, the Company has already appointed more than one Outside Director and Outside Audit & Supervisory Board Member, and has proactively incorporated the opinions of outside experts in management, thereby endeavoring to invigorate management and make it transparent. In particular, with regard to Directors, based on a resolution at the 68th Ordinary General Meeting of Shareholders held on June 28, 2016, we have reduced the number of Internal Directors by six, to three, and increased the number of Outside Directors by one, to five. By making Outside Directors the majority, the Company is further strengthening supervisory functions and promoting swifter decision-making.

As a company with an Audit & Supervisory Board, the Company has a system for monitoring the Directors' execution of duties with three Audit & Supervisory Board Members (of which, two are Independent Outside Audit & Supervisory Board Members). Furthermore, the Company is striving to further enhance corporate governance by placing several staff specializing in assisting the operations of Audit & Supervisory Board Members, enhancing the Internal Auditing Office, which improves the efficiency of audits by cooperating with Audit & Supervisory Board Members, and reinforcing the internal control systems, etc.

The Company changed its trade name from "Nissin Food Products Co., Ltd." to "NISSIN FOODS HOLDINGS CO., LTD." on October 1, 2008, and made a transition to the holding company system effective the same date. The Company has structured a system in which the Company becomes a holding company, and instant noodle business, chilled foods business, and frozen foods business are respectively transferred to subsidiaries to be established through an incorporation-type company split to position them at the same level as other subsidiaries. The Company made this transition to the holding company system as we determined it necessary to build management structure to help further boost competitiveness of operating companies in order to lead the NISSIN FOODS Group (the "Group") to achieve significant growth going forward. We aim to maximize corporate value of the entire Group in accordance with the Medium-Term Business Plan.

[Disclosure Based on the Principles of the Japan's Corporate Governance Code] [Updated]

The Company complies with all of the principles of Japan's Corporate Governance Code revised in June 2021.

[Principle 1-4]

• Policy on Reduction of Cross-Shareholdings in Listed Companies

In addition to obtaining dividends and capital gains, from a management strategy viewpoint, the Company holds shares in listed companies as deemed necessary for forming positive relationships with business partners and enhancing corporate value over the medium to long term by promoting smooth operations through efficient and stable transactions, business alliances, etc. Among these shares, the Company adopts a basic

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policy of selling shares whose grounds for holding have weakened as soon as practicable. As stated in the Corporate Governance Report released on June 25, 2020, the Company has stated that it would "reduce equivalently 20% of the number of cross-shareholdings compared with those held at the end of fiscal year ended March 31, 2019 over the next two to three years." By the end of May 2021, the Company sold all amount of four issues and part of the amount of five issues that amounted to ¥13,765 million in total measured at the fair value as of the end of fiscal 2019, thereby reducing the cross-shareholdings by more than 20% and achieving the plan ahead of schedule.

Furthermore, at the Board of Directors meetings held annually in April, the Company comprehensively considers the economic rationality of each individual issue of shares, such as the contribution to business revenue and whether the actual returns exceed the earnings targets based on capital costs, the holding purpose, the status of transactions and other factors, and regularly verifies whether to continue holding the shares and the selling schedule. At the meeting of the Board of Directors held on April 7, 2021, the Company resolved to reduce its cross-shareholdings to approximately ¥10 billion over the next two years.

As of March 31, 2021, the Company held 59 issues of cross-shareholdings (¥87,376 million on the balance sheet) and by the end of May 2021 sold the entire amount of the one issue and part of the amount of the two issues that amounted to ¥8,155 million in total measured at the fair value as of the end of fiscal year ended March 31,2020. As a result, the ending balance of the cross-shareholdings as of the end of May 2021 that is translated at the fair value as of the end of fiscal year ended March 31, 2020 is equivalent to 18.8% of consolidated net assets of ¥421,435 million as of the end of March 2021.

• Standards for Exercising the Voting Rights as to Cross-Holdings of Shares

In exercising voting rights of shares in listed companies held, the Company appropriately exercises them by evaluating overall factors including if such exercise contributes to enhancing its corporate value over the medium to long term and if it contributes to common interests of shareholders of the companies to be invested in.

[Principle 1-7]

• Transactions with Related-Parties

In the event of transactions between a Director and the Company (self-transactions and indirect transactions) or transactions between a principal shareholder (with 10% or higher holding) and the Company, such transactions shall be discussed before their implementation at a meeting of the Board of Directors, and in addition, the Director who carried out said transaction shall be required to report said transaction at a meeting of the Board of Directors without delay after implementing said transaction. The Company has set forth these procedures in the Board of Directors Regulations and other internal company regulations.

[Supplementary Principle 2-4(1)]

(1) Basic concept on ensuring diversity

The NISSIN FOODS Group proactively recruits and appoints human resources with a variety of strengths and specialization in order to become a "food culture creator group" that adapts to changing times and also creates changes. Moreover, prohibition of discrimination and harassment based on race, ethnicity, nationality, religion, beliefs, place of birth, gender, sexual orientation, gender identity, age, disability, etc. is spelled out in the NISSIN FOODS Group Policy on Human Rights, which aims for a workplace where employees who hold various attributes and values can play an active role. In 2015, the NISSIN FOODS Group established the "Diversity Committee" with internal volunteer members, and promoted diversity & inclusion by working closely together with the Human Resources Division.

The NISSIN FOODS Group puts effort into an employment system where it is easy to work while raising children as well as the reform of awareness internally in order to promote the active participation of female employees. As a result, the Group was selected as a "Platinum Kurumin (recognized in 2019)" and one of the "Semi-Nadeshiko Brands (recognized in 2019 and 2020)."

The Group promotes the expansion and training of the human resources pool with the targets of 20% for the ratio of total female generalist employees and 10% for the ratio of female managers by the end of FY2025 in order to have a comfortable work environment and increase the number of female employees actively participating in important positions. In order to achieve targets (FY2020: 13% ratio of total female generalist employees, 5% ratio of female managers), the Group promoted various aspects, such as the establishment of

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numerical targets for each department, implementation of a sponsor system where officers commit to training employees themselves, implementation of programs where supervisors learn management methods under an environment marked by diversity and programs where female employees develop leadership skills, and formation of networking between female employees.

• Figures and measures are presented for core companies (NISSIN FOODS HOLDINGS CO., LTD., Nissin Food Products Co., Ltd., NISSIN CHILLED FOODS CO., LTD., NISSIN FROZEN FOODS CO., LTD.)

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The NISSIN FOODS Group proactively recruits mid-career employees who have a variety of experience, wisdom and specialization for promoting challenges in new fields, such as globalization, DX, etc. Currently, there is active participation by many mid-career employees, with a recruitment ratio of full-timemid-career employees of 75%, employment ratio of 49% and ratio of mid-career employees in management positions of 32%. The Group works on initiatives, such as the implementation of a start-up program and internal network support, so that mid-career employees can quickly demonstrate their abilities.

Going forward, the Group intends to maintain the current employment ratio and create an organization conducive to innovation through the combination of "knowledge" from new graduates and mid-career employees.

• Figures and measures are presented for core companies (NISSIN FOODS HOLDINGS CO., LTD., Nissin Food Products Co., Ltd., NISSIN CHILLED FOODS CO., LTD., NISSIN FROZEN FOODS CO., LTD.)

The NISSIN FOODS Group continuously recruits and appoints human resources regardless of nationality with the policy of utilizing a various human resources to achieve the mid- to long-term growth strategy. Therefore, there are no numerical targets for foreign employees.

In particular, there are 33 foreign employees at core companies, and four of these employees are playing an active role in management. Moreover, out of the 11 overseas subsidiaries, three companies have Presidents from different countries playing active roles.

• Core companies: NISSIN FOODS HOLDINGS CO., LTD., Nissin Food Products Co., Ltd., NISSIN CHILLED FOODS CO., LTD., NISSIN FROZEN FOODS CO., LTD.

1. Human resources development policy to ensure diversity, establishment of internal environment and the situation of such

The Group has implemented implement programs that teach awareness of diversity & inclusion as well as knowledge and skills for management by launching the "DIVERSITY ACADEMY" in "NISSIN ACADEMY," which is a human resources development group. Furthermore, the Diversity Committee, which was established in 2015, has launched multiple projects for different types of people, such as projects for female employees, members of the LGBTQ community, employees raising children and junior employees, and made internal proposals for the creation of an environment where it is easy for diverse human resources to demonstrate their abilities.

Moreover, the Group elicits a variety of individual initiatives, and creates a system even in the on-site work, which makes it is easy to realize growth through the implementation of the "challenge target system," "1-on- 1 meetings" and "growth realization meetings (human resource review meetings)" in order for on-site managers to support the growth of each and every member.

[Principle 2-6]

• Roles of Corporate Pension Funds as Asset Owners

To ensure that beneficiaries continue to receive stable pension benefits in the future, the Group formulated the composition ratio for plan assets, keeping in mind risks and returns. The management status of plan assets is regularly monitored and the composition ratio for plan assets is reviewed as necessary by the Asset Management Committee, which is composed of members including the Company's finance and accounting department. The pension plan management institution is comprehensively evaluated and monitored taking into consideration information such as their management performance, management policy, management structure, and management process.

Nissin Food's Corporate Pension Fund declared that it accepted the Stewardship Code in September 2020. From the standpoint of institutional investors as asset holders, the pension plan management institution

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requires the fulfillment of stewardship responsibilities, the increase of corporate value for investee companies through dialogue with investee companies, and the stimulation of sustainable growth.

[Principle 3-1 (1)]

• Nissin Foods Group's CSV management

We will achieve sustainable growth while solving environmental and social issues by becoming a "EARTH FOOD CREATOR (food culture creator group)," which keeps creating new food culture on a continuous basis.

• Mission : The spirit of our founder ("食足世平 Shoku-sokuSe-hei,""食創為世 Shoku-so Isei," "美健賢食 Bi-kenKen-shoku," and "食為聖職 Shoku-iSei-shoku.")
• Vision : EARTH FOOD CREATOR
• Value : 4 important thoughts (Creative Unique Happy Global)
• NISSIN FOODS Group Growth Story for the Mid- to Long-Term

The Company has formulated the "NISSIN FOODS Group Mid- to Long-Term Growth Strategy," a business plan that defines medium- to long-term growth strategies for FY2021 and beyond and growth targets over the next 10 years. Through the execution of this strategy, we will pursue the Company's CSV management.

(1) Strengthen the Cash-Generating Capacity of Existing Businesses

Pursue sustainable growth while making a significant shift of profit portfolios through aggressive growth of overseas business and non-instant noodles business.

(2) EARTH FOOD CHALLENGE 2030

Aim to extend the lifecycle of existing businesses significantly by working to utilize finite resources effectively and reduce the impact of climate change

(3) Pursue New Businesses

Aim to co-create foods of the future with food science and become a company that provides food and health solutions through technology

Specific details are posted on the Company's official website.

[Principle 3-1 (2)]

• Basic Concept and Policies on Corporate Governance

While providing worry-free and safe foods, and promoting businesses to maximize benefits to all stakeholders including shareholders, consumers, employees, business partners, local communities, and local residents, the Company recognizes enhanced and strengthened corporate governance as one of the top priorities for management and strives for highly objective and transparent management. To achieve this objective, the Company has already appointed more than one Outside Director and Outside Audit & Supervisory Board Member, and has proactively incorporated the opinions of outside experts in management, thereby endeavoring to invigorate management and make it transparent. In particular, with regard to Directors, based on a resolution at the 68th Ordinary General Meeting of Shareholders held on June 28, 2016, we have reduced the number of Internal Directors by six, to three, and increased the number of Outside Directors by one, to five. By making Outside Directors the majority, the Company is further strengthening supervisory functions and promoting swifter decision-making.

As a company with an Audit & Supervisory Board, the Company has a system for monitoring the Directors' execution of duties with three Audit & Supervisory Board Members (of which, two are Independent Outside Audit & Supervisory Board Members). Furthermore, the Company is striving to further enhance corporate governance by placing several staff specializing in assisting the operations of Audit & Supervisory Board Members, enhancing the Internal Auditing Office, which improves the efficiency of audits by cooperating with Audit & Supervisory Board Members, and reinforcing the internal control systems, etc.

[Principle 3-1(3)]

• Policies and Procedures in Determining the Remuneration

For details, please refer to II.1 【 Director Remuneration 】「 Disclosure of Policy for Determining Remuneration Amounts or Calculation Methods Thereof」

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[Principle 3-1(4)]

• Policies and Procedures for Selection of Candidates for Directors and Audit & Supervisory Board Members
  (Composition of the Board of Directors and Criteria for Selection of Candidates for Directors)
  In order to develop the Group's operations in Japan and overseas under its philosophy, "EARTH FOOD CREATOR," the Group selects candidates who possess extensive experience, deep insight, and advanced specialization, while comprehensively taking into account the balance of knowledge, experience, and capabilities; diversity in fields of specialization , gender and age, as well as race, ethnicity, nationality and country of birth; appropriateness of scale of the Board of Directors as a whole and other factors.
  Candidates for Internal Directors are selected from among those people who are involved in Group management, such as Executive Officers, Chief Officers, Presidents of operating companies, and Chief Representatives in each area, in addition to President & Representative Director, CEO, Executive Vice President & Representative Director, COO.
  Candidates for Outside Directors are selected from those who, as well as satisfy the standards of the Companies Act, are management executives, academic experts and the like, based on their deep insight and advanced specialization with extensive experience in domestic and overseas economics, finance, industry trends, corporate strategy, marketing, advanced research, etc., and who are capable of not only checking in the Board of Directors meetings from an objective standpoint the legality of management and the appropriateness of decision-making in the execution of duties, but also, the Group expects, providing advice leading to business activities that will enhance corporate value in the Board of Directors meetings, etc.
  As for the procedures for the above, candidates are decided by the Board of Directors after the appropriateness of them is deliberated and verified by the Management Advisory Committee.

Candidates for the management team (hereinafter refers to Directors with special titles and Executive Officers with special titles) are selected from among persons selected as Director as above and from among the Executive Officers in principle who have past achievements, a strong sense of purpose toward the realization of the Group's philosophy, strong leadership, popularity inside and outside the Company, and high capabilities in management judgment from such factors as experience, knowledge and expertise, and after these selected individuals are subjected to the deliberation and verification by the Management Advisory Committee, the Board of Directors judges whether these selected individuals are suitable persons as members of the management team.

Concerning dismissal of members of the management team, in addition to the annual examination carried out by the Management Advisory Committee based on performance results, in the event of circumstances arising suggestive of the individual meeting the criteria for dismissal (through (1) an action that violates the laws and regulations, the Articles of Incorporation, or internal rules such as the Code of Conduct and that has caused or has the risk of causing a significant loss or a hindrance of business in the Group, (2) a significant difficulty in execution of duties, and (3) revelation that the individual is lacking the various requirements stated in the criteria for selecting), the grounds for the dismissal shall be examined and verified at the Management Advisory Committee and the decision of dismissal will be made by the Board of Directors.

(Composition of the Audit & Supervisory Board and Criteria for Selection of Candidates for Audit & Supervisory Board Members)

Based on the Companies Act and other laws and regulations, as well as the Articles of Incorporation and other regulations, the Audit & Supervisory Board audits the process of decision-making by the Directors and the status of their execution of duties.

The number of the Audit & Supervisory Board Members is four or fewer, the majority of whom are Outside Audit & Supervisory Board Members.

The criteria for selecting candidates for Audit & Supervisory Board Members (internal) is to select people who can perform auditing and ensure management soundness from a perspective based on extensive operational experience in the Group.

The criteria for selecting candidates for Outside Audit & Supervisory Board Members is to select people who satisfy the standards of the Companies Act, and who have extensive experience and advanced specialization, which are necessary for audit.

As for the procedures for the above, candidates are decided by the Board of Directors after the appropriateness of them is deliberated and verified by the Management Advisory Committee and after obtaining the approval of the Audit & Supervisory Board.

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