Sysmex : Corporate Governance Report

Corporate Governance Report

Last Update: July 26, 2021

Sysmex Corporation

Hisashi Ietsugu, Chairman, President and CEO Contact: Joji Hayashi, Vice President of IR & Corporate Communication Department Securities Code: 6869 https://www.sysmex.co.jp/en

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

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

Basic Information

1. Basic Views

The Company considers reinforcing corporate governance one of its most important management topics. We aim to maximize the overall corporate value of the Group through enhancing management robustness and transparency, as well as improving management speed and efficiency.

The Company has adopted the system of a company with an Audit and Supervisory Committee to reinforce the Managing Board's audit and supervisory functions and increase management transparency and objectivity.

In addition, the Company has introduced the executive officer system to speed up decision-making of its business execution and to respond more swiftly to changes in the business environment.

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

Sysmex complies with all Principles of the Corporate Governance Code.

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

[Principle 1.4 Cross-Shareholdings]

Our basic policy is to reinforce and stabilize the management base, as well as contribute to regional economic development, in order to ensure sustainable increases in the Group's corporate value.

When increasing or liquidating our holdings of shares in a particular company, as well as exercising voting rights, we consider the economic rationality of investees' moves from a medium- to long-term perspective and in connection with and forecasts for the regional economy and make decisions after the Managing Board verifies the purpose and rationality of holding such shares each year.

The Management Board judges that the Company's individual holdings is appropriate, as of March 31, 2021.

[Principle 1.7 Related Party Transactions]

Based on the Companies Act, competing transactions and conflict-of-interest transactions by members of the Managing Board require Managing Board approval, in accordance with the Company's Managing Board

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Regulations. Furthermore, a member of the Managing Board who engages in such transactions shall report them to the Managing Board without delay.

Transactions with major shareholders that exceed certain provisions in the Managing Board Regulations and items with a high level of importance require the approval of the Managing Board.

Also, the content of related party transactions, transaction conditions and the policy for determining transaction conditions are disclosed in the Company's securities report.

Furthermore, the Company regularly confirms with related parties that systems are in place to avoid being disadvantageous to the Company.

[Principle 2.6 Performing Functions as Asset Owner of the Corporate Pension]

The Company invests defined benefit pension assets through a pension asset investment committee composed of personnel who are suitably qualified to make pension investments. The status of investing is monitored in accordance with the Fundamental Policy on Investing Pension Assets set forth by the Company.

[Principle 3.1 Full Disclosure]

1. Corporate Philosophy, Business Strategies and Business Plans

The "Sysmex Way," the corporate philosophy for the Sysmex Group, consists of three parts: the Mission, which defines our social raison d'être and states how we hope to contribute to society; the Value, which describes the values and management style that we must abide by; and the Mind, which expresses the mindset and code of conduct that every employees within the Sysmex Group must observe. Based on this framework, we have formulated core behaviors that indicate the specific value we provide to customers, employees, business partners, shareholders and society.

In April 2021, Sysmex commenced a new mid-term management plan (from the fiscal years ending March 31, 2022 to 2024), seeking to promote transformation toward achieving robust sustainable growth for the Group and reinforcing the management base that supports it. Under this Group mid-term management plan, we have defined hemostasis, immunochemistry and life science as key fields in addition to the hematology field, which ias the Group's largest source of earnings. We will prioritize the allocation of management resources to these fields to enhance R&D efforts, create new value and expand our product lineup. We will also seek to achieve dynamic growth through the creation and ongoing cultivation of new businesses, centering on surgery support robots. Sysmex sees the realization of a sustainable society as a management priority. On a groupwide basis, we are pursuing priority issues (materiality), such as the resolution of medical issues through products and services, environmental consideration and the realization of an attractive workplace. In addition to instilling confidence among diverse stakeholders, we aim to achieve sustainability management.

Please refer to our website (https://www.sysmex.co.jp/en) for more information on our corporate philosophy and mid-term management plan.

2. Basic Views and Guidelines on Corporate Governance

Please refer to our website and the "I.1. Basic Views" section of this report.

(https://www.sysmex.co.jp/en/corporate/governance/corporate_governance.html)

3. Determining the Remuneration of the Senior Management and Members of the Managing Board

(1) Policy

Compensation for members of the Managing Board (excluding members of the Audit and Supervisory Committee and outside members of the Managing Board) divides broadly into three categories: fixed compensation, performance-linked compensation and non-monetary compensation. This framework allows the Company to adjust individual compensation in line with performance and vary the percentage of compensation received in each category by individual. Compensation for outside members of the Managing

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Board comes solely from the fixed-compensation portion of compensation for members of the Managing Board.

(2) Procedures

Based on the above-stated policy, compensation amounts for members of the Managing Board (excluding Audit and Supervisory Committee members) are set within the scope approved at the general meeting of shareholders. The Group has internal regulations in place for fixed compensation and medium- to long-termincentive-based compensation. In addition, based on authority for determining performance-linked compensation delegated by the Managing Board, Chairman and CEO allocates the total amount of performance-linked compensation, deciding on individual compensation amounts for individual members of the Managing Board based on evaluation factors specific to each member. As compensation amounts for individual members of the Managing Board are determined according to these procedures, the Managing Board judges the content to be in line with its decision policies.

Compensation amounts for Audit and Supervisory Committee members are deliberated and determined by the Audit and Supervisory Committee.

4. Appointment and dismissal of the Senior Management and Nomination of Member of the Managing Board Candidates

(1) Policy

The Managing Board nominates candidates for internal members of the Managing Board (excluding members of the Audit and Supervisory Committee) by considering the balance among knowledge, experience and experience that facilitates accurate and swift decision-making, appropriate risk management, the monitoring of business execution and the ability to cover the Company's various functional divisions and business divisions, as well as sufficient social credibility. In nominating outside members of the Managing Board (excluding members of the Audit and Supervisory Committee), the Managing Board's conditions are that candidates have abundant work experience and broad-based insight, and be able to offer appropriate advice on the Company's management.

If satisfying the above-stated selection criteria is problematic, the Managing Board shall decide on the dismissal of its members (excluding members of the Audit and Supervisory Committee).

In appointing member of the Audit and Supervisory Committee candidates, the Managing Board takes into overall account the candidates' knowledge of finance and accounting, understanding of the Company's fields of business and diverse perspectives on corporate management.

If satisfying the above-stated selection standards is problematic, the Managing Board shall decide on the dismissal of members of the Audit and Supervisory Committee, based on the consent of that committee.

(2) Procedures

Based on the above-stated policy, decisions on the nomination of candidates for or the dismissal of members of the Managing Board are considered by the Nominating Committee, an advisory committee to the Managing Board, and resolved by the Managing Board. Proposals on the appointment and dismissal of members of the Audit and Supervisory Committee are approved by the Audit and Supervisory Committee.

5. Explanations with Respect to the Individual Appointments and Dismissals

Career histories and reasons for appointment for each candidate nominated as a member of the Managing Committee, as well as reasons for dismissal, are included in the convocation notice of the ordinary general meeting of shareholders.

[Principle 4.1 Roles and Responsibilities of the Board (1)]

Supplementary Principle 4.1.1

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Based on laws and regulations, the Articles of Incorporation and Managing Board Regulations, the Managing Board defines matters for the board itself to handle, makes important management decisions and supervises the execution of duties. Furthermore, the Company has adopted the executive officer system, and the executive officers execute the duties for which they are responsible within the scope entrusted to them by the president.

[Principle 4.9 Independence Standards and Qualification for Independent Members of the Managing Board] The standards for determining independence are that members must satisfy the qualification for independent officers provided by the Companies Act and the Tokyo Stock Exchange and not be at risk of being in conflict with the interests of general shareholders.

[Principle 4.11 Preconditions for Managing Board Effectiveness] Supplementary Principle 4.11.1

The Managing Board is composed of members having diverse knowledge, experience and expertise. We strive to ensure appropriate diversity and scale, taking into account the overall balance of the Managing Board.

The Managing Board (excluding members of the Audit and Supervisory Committee) nominates candidates for members of the Managing Board who are capable of accurate and swift decision-making, appropriate risk management, the monitoring of business execution and the ability to cover the Company's various functional divisions and business divisions. Gender, nationality, race and origin are not considerations. Candidates nominated as members of the Audit and Supervisory Committee have appropriate experience and abilities and required levels of specialized knowledge. In particular, at least one nominated candidate has appropriate knowledge of finance and accounting.

Supplementary Principle 4.11.2

In the event that members of the Managing Board concurrently hold executive positions at listed companies other than the Company, the Company strives to ensure that the numbers of such posts are reasonable. Also, important concurrent positions held by each member of the Managing Board are disclosed in the business reports and reference documents for the general shareholder meeting.

Supplementary Principle 4.11.3

To enhance the functions of the Managing Board, the Company conducting annual document-based questionnaire survey of all members of the Managing Board (including members of the Audit and Supervisory Committee) and evaluating the Managing Board's effectiveness through deliberation of the aggregate results by the Managing Board. The questionnaire survey conducted this fiscal year confirmed that the Managing Board is functioning effectively and fulfilling its role appropriately. In addition, we have recognized the need for a continued response, undertaking initiatives to further enhance effectiveness. (Composition)

The scale of the Managing Board and the ratio of outside members of the Managing Board are generally appropriate, both in nature and level of experience. To further enhance the Managing Board's effectiveness, in addition to achieving a balance between knowledge, experience and capabilities the Company will continue to consider ensuring diversity, including such facets as gender and internationality, career history, and age.

(Operation)

The provision of information necessary to discuss the Managing Board's agenda is generally appropriate. The Company is continually working to improve the Managing Board's operation through the distribution of materials and the provision of explanations, as necessary, to outside members of the Managing Board, organizing points at issue, and providing related information necessary to understand the background. Among efforts to encourage more active deliberation, we hold opinion exchange meetings attended only by

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outside members of the Managing Board and strive to promote understanding. However, the Company recognizes that the delayed provision of materials is an issue, so is reinforcing initiatives to accelerate this provision.

(Status of Agenda and Deliberation)

The time for addressing and deliberating the Managing Board's agenda is appropriate, and we strive to provide individual members of the Managing Board with an understanding of agenda items and information prior to meetings, as well as to leverage their knowledge and experience to engage in deliberation. Decision- making on items of management importance is conducted appropriately, taking into account the objective and rational opinions of outside members of the Managing Board.

[Principle 4.14 Training of Members of the Managing Board and Corporate Auditors] Supplementary Principle 4.14.2

The Company conducts lectures for members of the Managing Board according to their expected roles and responsibilities, with content appropriate to the Companies Act and the current state of affairs. In addition, we provide opportunities to attend outside training sessions, lectures and networking events. In these ways, we endeavor to help them gain the necessary knowledge and promote an understanding of their roles and responsibilities as members of the Managing Board.

At the time of their appointment, the Company holds briefings and tours of various business offices for outside members of the Managing Board to foster an understanding of the Company's businesses and functions. We also create opportunities for providing further information thereafter, as necessary.

[Principle 5.1 Policy for Constructive Dialogue with Shareholders]

1. The Company considers dialogue with shareholders to be important from the perspective of sustainable growth and long-term increases in corporate value. For this reason, we strive to engage proactively in dialogue with shareholders. The department in charge of IR conducts business results briefings and a host of other activities, centering on the chairman and CEO and the executive in charge of IR, to enhance shareholders' understanding of the Company's management policies, management plans and business strategies. Furthermore, in response to shareholder requests for dialogue (meetings), when reasonably possible and as necessary these requests are handled by members of the Managing Board and executive officers.
2. Related internal departments assisting with this dialogue actively cooperate in seeking to ensure constructive dialogue by preparing disclosure materials and sharing information.
3. In addition to individual meetings, the Company holds business results briefings for investors, as well as Company tours. We also endeavor to enhance such activities in response to investors' opinions and requests.
4. Shareholder opinions ascertained through dialogue are communicated via meeting reports. This information is provided as feedback to members of the Managing Board, executive officers and related departments, thereby sharing and utilizing this information.
5. In the period leading up to results announcements, the Company maintains a quiet period, during which it limits its dialogue with investors. In addition, to prevent insider information from leaking outside the Company, the Company manages information strictly in accordance with internal regulations (regulations on managing corporate confidentiality).

2. Capital Structure

	Foreign Shareholding Ratio				More than 30%
[Status of Major Shareholders]	Updated
	Name / Company Name			Number of Shares Owned	Percentage (%)
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