Corporate Governance Report

Last Update: July 14, 2023

Sysmex Corporation

Kaoru Asano, President Contact: Takashi Hatakeda, Executive Vice President of Corporate Communication 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]

The Company implements all the 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 create business opportunities, and to contribute toward the building, maintenance and strengthening of relationships with collaborating partners, communities and society, 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, relevance to management policy and status of relationships with collaborating partners and local communities and society, 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 at the end of each half fiscal year.

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[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 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 2.4 Ensuring Diversity, Including Active Participation of Women Supplementary Principle 2.4.1

We have formulated the "Sysmex Way," the corporate philosophy for the Sysmex Group, and our "Shared Values*," which state the following. "We honor diversity, respect the individuality of each employee, and provide them with a workplace where they can realize their full potential. We value the spirit of independence and challenge, provide employees with opportunities for self-fulfillment and growth, and reward them for their accomplishments". Based on this, we have in place a human resource development system that develops capabilities in an ongoing and systematic manner. We promote diversity equity and inclusion, and we have introduced various systems in an effort to create a corporate culture that provides diverse employees with a sense of unity globally and the ability to maximize their skills.

We are working to increase the female managers ratio and the ratio of mid-career recruits assigned to management posts. The results of these efforts are disclosed in our integrated report.

Please refer to our website. (https://www.sysmex.co.jp/en/ir/library/annual-reports/index.html)

*This has been renamed. In previous fiscal years, this was called our "Core Behaviors."

[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 our Shared Values, which that indicate the specific value we provide to customers, employees, business partners, shareholders and society.

Based on our mission stated in the Sysmex Way, of "shaping the advancement of healthcare," we have formulated a new long-term management strategy with fiscal 2033 as its final year. We aim to instill "confidence," which lies at the core of our corporate philosophy, to all stakeholders in order to address diverse and complex healthcare needs and solve various social issues.

Additionally, Sysmex has established a new long-term vision, "Together for a better healthcare journey." We will provide new value by creating innovations in the domain of in vitro diagnostics (IVD) as well as by exploring the domains of pre-symptomatic and preventive medicine and treatment, thus improving the lifelong healthcare journey of each individual. By doing so, we aim to be a company capable of generating ¥1 trillion in net sales by fiscal 2033.

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To achieve this vision, we have begun by setting mid-term management goals for the three years beginning in fiscal 2023 and identified key priority issues to address while implementing specific measures. Please refer to our website (https://www.sysmex.co.jp/en) for more information on our corporate philosophy, long- term management strategy 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 Board comes solely from the fixed-compensation portion of compensation for members of the Managing Board.

  1. 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

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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.

Supplementary Principle 3.1.3

Symex considers initiatives on sustainability to be important management priorities. To realize a sustainable society and ensure the Company's sustainable growth, we have identified priority issues (materiality) and are pursuing specific measures. In addition, we have formulated the Sysmex Eco-Vision 2023 based on our Environmental Policy: "By shaping the advancement of healthcare, our global environmental conservation activities contribute to the creation of a fulfilling and healthy society." We are promoting environmental conservation throughout product and service lifecycles and across the value chain of our business activities. With regard to the impact of climate change on the Company, we have expressed our support for the recommendations of the TCFD and we are assessing risk and opportunities based on this framework. The Company's views are disclosed in the Sustainability Data Book.

Please refer to our website. (https://www.sysmex.co.jp/en/csr/report/index.html)

[Principle 4.1 Roles and Responsibilities of the Board (1)] Supplementary Principle 4.1.1

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 chairperson or president.

[Principle 4.9 Independence Standards and Qualification for Independent Members of the Managing Board] Sysmex has formulated the following independence standards for outside members of the Managing Board. If the outside members of the Managing Board do not fall under any of the following categories, they are considered to be independent from the Company and present no risk of conflict of interest with general shareholders.

(Relationships with the Company)

  1. An executive1 or previous executive the Company or its subsidiaries (the "Sysmex Group") (Major clients or suppliers)
  2. A party whose major client is the Sysmex Group2 or an executive thereof
  3. A major client of the Sysmex Group³ or an executive thereof

(Specialized service providers)

  1. A consultant, accountant or legal professional who receives a large amount of monetary consideration or other property4 from the Company besides executive compensation (if the party that has obtained the property is a corporation, partnership, or other organization, a person who belongs to the organization)
  2. A person who belongs to an auditing firm that performs statutory audits for the Sysmex Group (Donations or grants)
  3. A person who receives donations or grants exceeding a certain amount⁵ from the Sysmex Group (If the recipient of the donations or grants is a corporation, partnership, or other organization, the executive of that organization)
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(Lenders)

  1. Major financial insitution6 from which the Sysmex Group borrows or executives of such institutions' parent companies or subsidiaries
    (Principal shareholders)
  2. A principal shareholder7 of the Sysmex Group or if the principal shareholder is a corporation, an executive of that corporation
  3. An executive of a company whose principal shareholder is the Sysmex Group

(Mutual dispatch of executives)

  1. An executive of a company whose relationship with the Sysmex Group involves the mutual dispatch of outside directors (an executive who is a member of the Sysmex Group who is an outside director of another company, and an executive of another company who is an outside director of Sysmex)
  2. A person who has been in the above categories (2) through (10) within the past three years
  3. A close relative to a person8 (limited to people in important positions9) who falls into the above categories (1) through (11)

*¹ The term "executive" refers to an executive as defined in Article 2, Paragraph 3, Item 6 of the Enforcement Regulations of the Companies Act, and includes not only executive directors but also employees.

*² A party with Sysmex Group as a major client is a business partner that provides products or services to Sysmex Group and whose transaction amount in the most recent fiscal year exceeds 2% of the annual consolidated sales of the said business partner.

*³ A major client of the Sysmex Group means a business partner to whom the Sysmex Group provides products or services and whose transaction amount in the most recent fiscal year exceeds 2% of the Sysmex Group's annual consolidated sales.

*⁴ Large amount of monetary consideration or other property refers to monetary or other property benefits in excess of ¥10 million per year for the most recent fiscal year, other than executive compensation. (If the party that has obtained the said property is a corporation, partnership, or other organization, this refers to money or other property benefit that exceeds 2% of the consolidated net sales of the organization in the most recent business year.)

*⁵ Donations or grants exceeding a certain amount refers to donations or grants that exceed the higher of an average of ¥10 million per year for the past three fiscal years or 2% of the person's gross income for the most recent fiscal year.

*⁶ Major financial institution means a financial institution or other major creditor that is essential to the financing of Sysmex Group at the present time or has been over the past three years and for which there is no substitute.

*⁷ A principal shareholder is a shareholder who holds 10% or more of the voting rights (including both direct and indirect holdings).

*8 A close relative means a spouse or relative within the second degree of kinship.

*9 A person in an important position is a director (excluding outside directors), an executive officer or employee in a senior management position as a general manager or higher, a certified public accountant belonging to an audit corporation or accounting firm, an attorney belonging to a law firm, an officer such as trustee, director or auditor belong to a foundation, incorporated association, school corporation, or other corporation, or other person objectively and reasonably judged to be of equal importance.

[Supplementary Principle 4.10 Use of an Optional Approach] Supplementary Principle 4.10.1

The Company's Managing Board has established the Nominating Committee and Compensation Committee as optional organizations to ensure the independence, objectivity, and accountability of the Managing Board with respect to the consideration of particularly important matters, such as the nomination and compensation of members of the Managing Board and the management team. The majority of members of these committees are independent outside members of the Managing Board, which enhances the soundness and transparency of management.

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

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Sysmex Corporation published this content on 14 July 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 July 2023 06:29:27 UTC.