Corporate Governance Report

Last Update: April 20, 2022 TAIYO YUDEN CO., LTD.

Shoichi Tosaka

President and Chief Executive Officer

Contact: 03-6757-8310

Securities Code: 6976https://www.yuden.co.jp/ut/

The corporate governance of TAIYO YUDEN CO., LTD. (the "Company") is described below.

I.

Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other Basic Information

1. Basic Views

The TAIYO YUDEN Group (the "Group") is committed to corporate social responsibilities and the mission of management to develop businesses on an ongoing basis while fulfilling sociality, public interest and public nature of the Group from a global viewpoint to put into practice and realize "Mission", "Management philosophy" and "Vision".

Based on the views, the Company has been established Basic Policy of Corporate Governance, and emphasizes transparency and fairness of corporate management, the Company is making efforts to enhance corporate governance under the supervision of the Board of Directors, including the development of structures and mechanisms that enable timely and appropriate information disclosure, thorough compliance, and speedy decision making and execution of duties.

Mission

Stronger and more socially aware through the wonders of science

Management Philosophy

Employee Well-being

Betterment of Local Communities

Responsibility to Provide Returns to Shareholders

Vision

To be an excellent company that enjoys the trust and highest regard from all stakeholders

Basic Policy for Corporate Governancehttps://www.yuden.co.jp/ut/ir/management/governance/

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

[Supplemental Principle 2-4-1: Ensuring diversity in the promotion to core human resources]

In order to realize the "employee well-being", an objective of our management philosophy, the Company recognizes the "value of being different" so that individual employees are motivated to exercise their abilities in order to perform well. As also, the Company is working to promote diversity that brings together unique individuals as an important management issue.

As for the appointment of female managerial positions, the Company has disclosed the results. However, as the ratio of candidates for managerial positions to the total number of employees is small, the Company has not yet established measurable numerical targets.

We will continue to strengthen recruitment to secure candidates for managerial positions for the population,and work to support career development and promote activities.

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

Update

==================================

The following items are updated.

[Principle 1-4: Cross-Shareholdings]

[Principle 1-7: Create appropriate procedures and frameworks for transactions between related parties] [Principle 3-1: Full disclosure]

[Supplemental Principle 3-1-3: Initiatives on sustainability] [Supplemental Principle 4-1-1: Scope of delegation to the management] [Principle 4-9: Independence Criteria and Qualification for Outside Director] [Supplemental Principle 4-11-1: Ensuring effectiveness of the Board of Directors]

[Supplemental Principle 4-11-2: Concurrent positions of Directors and Audit & Supervisory Board Members] [Supplementary Principle 4-14-2: Principles for Training of Directors and Audit & Supervisory Board Members]

==================================

[Principle 1-4: Cross-Shareholdings]

The Company shall hold shares only if the Board of Directors determines that such shareholdings are conductive to the maintenance and reinforcement of commercial and collaborative relationship with our business partners as well as medium- to long-term improvement of the corporate value and sustainable growth, which can be attained through such relationships. The Board of Directors shall annually examine all such cross-shareholdings to verify the reasonability of holding them based on comprehensive judgment from the perspective of their holding purposes. The Company shall reduce any shareholdings that are determined to be unreasonable by selling such shares.

The Company shall appropriately exercise its voting rights of the cross-shareholdings based on comprehensive judgment on several factors such as non-infringement of any laws and/or regulations, non-involvement in any antisocial actions and the fact that relevant proposal can be judged to have sound content. When cross-shareholders indicate their intention to sell their shares, the Company shall not hinder the sale of the cross-held shares by, for instance, implying a possible reduction of business transactions. Cross-shareholdings are disclosed in the Notice of Convocation of the General Meeting of Shareholders.

Notice of Convocation of the General Meeting of Shareholdershttps://www.yuden.co.jp/ut/ir/library/shm_presentation.html

[Principle 1-7: Create appropriate procedures and frameworks for transactions between related parties]

The Company shall resolve competitive transactions and conflict-of-interest transactions by Directors through the Board of Directors based on the Board of Directors Regulations. Transactions between related parties shall be disclosed in accordance with relevant laws, such as the Companies Act and the Financial Instruments and Exchange Act, as well as the rules and regulations established by stock exchanges.

The Board of Directors shall monitor the facts and situations of related party transactions appropriately.

[Principle 2-6: Roles of Corporate Pension Fund as Asset Owner]

The Company has no corporate pension system.

The Company shall implement a defined contribution corporate pension plan to build stable assets for employees, and shall provide education and training regarding asset management.

[Principle 3-1: Full disclosure]

1.Our mission, management philosophy and vision are described in "1. Basic Views" on this report (p.1). 2.Our management strategy and business plans are disclosed in the Integrated Report.

3.Our fundamental concepts of corporate governance as well as basic policies are described in "1. Basic Views" on this report (p.1).

4.Policies and procedures for the Board to determine director remuneration are disclosed in the Notice of Convocation of the General Meeting of Shareholders.

5.Policies and procedures for the nomination of candidates for Director and Audit & Supervisory Board Member are disclosed in the Notice of Convocation of the General Meeting of Shareholders.

6.Individual reasons regarding the selection of candidates for Director and Audit & Supervisory Board Member are disclosed in the Notice of Convocation of the General Meeting of Shareholders.

Integrated Reporthttps://www.yuden.co.jp/ut/ir/library/annual_reports.html Notice of Convocation of the General Meeting of Shareholdershttps://www.yuden.co.jp/ut/ir/library/shm_presentation.html

[Supplemental Principle 3-1-3: Initiatives on sustainability]

The Company has formulated the "Medium-term Management Plan 2025," which is scheduled to start in Fiscal 2021. The Company aim to increase corporate value by increasing both economic and social value, and set KPI (numerical targets) related to economic and social value after clarifying the Materiality (important issues). The initiatives to achieve the targets are disclosed in the Integrated Report and on the Company's website.

Integrated Reporthttps://www.yuden.co.jp/ut/ir/library/annual_reports.html Sustainability (website)https://www.yuden.co.jp/ut/company/sustainability/

[Supplemental Principle 4-1-1: Scope of delegation to the management]

A synopsis of the scope of delegation to the management are described in "2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination and Remuneration Decisions (Overview of Current Corporate Governance System)" of "II. Business Management Organization and Other Corporate Governance Systems regarding Decision-making, Execution of Business, and Oversight in Management" on this report (p.16).

[Principle 4-9: Independence Criteria and Qualification for Outside Director]

The Board of Directors shall select candidates for Independent Outside Director based on the "Officer Appointment and Dismissal Standards" and the "Standards for the Independence of Outside Directors/Outside Audit & Supervisory Board Members," and shall clearly state the reasons for their appointment in a Notice of Convocation of the General Meeting of Shareholders when proposing candidates at a General Meeting of Shareholders. The "Standards for the Independence of Outside Directors/Outside Audit & Supervisory Board Members" shall be disclosed on the Company's website.

Standards for the Independence of Outside Directors/Outside Audit & Supervisory Board Membershttps://www.yuden.co.jp/ut/ir/management/governance/criteriaofindependence.html

[Supplemental Principle 4-10-1: The mandates and roles of the Nomination Committee and the Remuneration Committee]

To strengthen the independence and objectivity of the functions of the Board of Directors concerning the nomination and remuneration for Directors and Operating Officers and to fulfill its accountability, the Company has established two voluntary advisory panels: Nomination Committee and Remuneration Committee.

Each committee is composed of the President and Chief Executive Officer, all Independent Outside Directors, and an Audit & Supervisory Board Member, with the majority of Independent Outside Directors. In addition, each committee is chaired by an Independent Outside Director to ensure the objectivity of deliberation. The mandates and roles of each committee are described in "Supplementary Explanation" of "Voluntary Establishment of Committee(s) Corresponding to Nomination Committee or Remuneration Committee" on this report (p.10).

[Supplemental Principle 4-11-1: Ensuring effectiveness of the Board of Directors]

The concepts regarding the balance of knowledge, experience and skills of the Board (as a whole) as well as its size are described in "2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination and Remuneration Decisions (Overview of Current Corporate Governance System)" of "II. Business Management Organization and Other Corporate Governance Systems regarding Decision-making, Execution of Business, and Oversight in Management" on this report (p.16). The skills matrix of the Board of Directorsof the Company is disclosed in the Notice of Convocation of the General Meeting of Shareholders and the Integrated Report.

Notice of Convocation of the General Meeting of Shareholdershttps://www.yuden.co.jp/ut/ir/library/shm_presentation.html Integrated Reporthttps://www.yuden.co.jp/ut/ir/library/annual_reports.html

[Supplemental Principle 4-11-2: Concurrent positions of Directors and Audit & Supervisory Board Members] Directors and the Audit & Supervisory Board members (excluding Outside Directors) shall not concurrently serve as Directors of other companies unless the Board of Directors deems this to be in the best interests of the Company.

If Outside Directors concurrently serve as corporate officers of other companies, the Board of Directors shall confirm the amount of time required for them to fulfill their duties as outside Directors of the Company, before approving their appointment.

Significant concurrent positions of Outside Directors are disclosed in the Notice of Convocation of the General Meeting of Shareholders.

Notice of Convocation of the General Meeting of Shareholdershttps://www.yuden.co.jp/ut/ir/library/shm_presentation.html

[Supplemental Principle 4-11-3: Analysis and assessment regarding the effectiveness of the Board as a whole] 1.Questionnaire

Method of Evaluation

Self-evaluation by questionnaire survey

The Company conducts the deeper identification of issues by a multiple-choice method (to choose issues on which sufficient discussion has not been conducted at Board of Directors meetings) and a questionnaire on strengths and weaknesses of the Board of Directors.

Implementation period

February 2021 Subjects

Directors and Audit & Supervisory Board Members (including Outside Officers) Evaluation items

1) The operation (7 questions) and composition (1 question) of the Board of Directors, 2) Management strategies (3 questions) and sustainable growth initiatives (2 questions), 3) Corporate ethics and risk management (2 questions), monitoring (1 question), and dialogue with shareholders (1 question), 4) Nomination Committee and Remuneration Committee (3 questions), 5) Provision of information (1 question) 2. Analysis/Evaluation

Analysis and evaluation meetings were conducted first separately by Operating Officers and Non-operating Officers based on the results of the questionnaire with Directors and Audit & Supervisory Board Members, and then a discussion is conducted at a Board of Directors meeting based on the results of those meetings. We employed an external organization and received advice on the question design, analysis, possible response measure, etc. to improve the objectivity and the transparency of evaluation.

3. Evaluation results

The external organization commented favorably that the Company is working seriously on the evaluation of the effectiveness of the Board of Directors and is striving to improve its corporate value further by steadily identifying issues and implementing measures to address them. In particular, the external organization's evaluation improved significantly on items on which the Company implemented measures based on issues identified in the previous year, and the external organization commented that the measures have been effective. Regarding "Medium-term plan and long-term management strategies (what we should become in 10 years)" and "Human resource development and strategies," which were among the issues identified in the previous year, the Company held discussion forums of Directors including Outside Directors separately from Board of Directors meetings and has formulated a new medium-term management plan based on the discussion there. Regarding "Revision of the risk map," the Company modified the corporate governance structure to establish the Risk Management Subcommittee, which is responsible for the management of riskmap, under the Internal Control Committee in order to revamp and strengthen the risk management structure itself.

The effectiveness of the Board of Directors has generally been ensured. 4. For Further Improvement of Effectiveness

The following three issues were identified as a result of the effectiveness evaluation of the Board of Directors in the current fiscal year. The Board of Directors will endeavor to enhance the effectiveness of the Board of Directors and further strengthen corporate governance by continuing to address these matters systematically.

  • "Enhancement of opportunities for corporate officers to acquire knowledge and skills"

  • "Effective use of digital technologies"

  • "Initiatives on sustainability"

[Supplementary Principle 4-14-2: Principles for Training of Directors and Audit & Supervisory Board Members]

The Company shall provide Directors and Audit & Supervisory Board members with opportunities to attend in-house training courses such as external seminars and related laws and regulations to help them acquire knowledge and information outside their fields of expertise, and the Company shall bear the necessary expenses. Plans for provision and mediation of training opportunities shall be created and implemented at the beginning of each year.

To raise the effectiveness of audits, Audit & Supervisory Board members discuss valuable skills at the Audit & Supervisory Board meeting and provide training.

[Principle 5-1: Policies for Constructive Dialogue with Shareholders]

The Company shall designate a Director in charge of IR and conduct IR activities to promote a constructive dialogue with shareholders and investors.

The Company shall also report to the Board of Directors any opinions and requests from shareholders and investors collected through IR activities.

Specifically, the following activities are to be included in the Company's organizational structure.

(1) Strengthening collaboration between the management of the IR department and other departments through the Director responsible for IR.

  • (2) Results briefings with securities analysts and institutional investors (quarterly).

  • (3) Handling group meetings and individual meetings with major foreign and domestic individual investors.

  • (4) Explanations to major investors regarding General Meeting of Shareholders proposals.

  • (5) Publishing consolidated reports to enhance the understanding of the Company's mid- and long-term value creation.

(6) Conducting investigations of shareholder findings through external survey organizations.

For fairness in the disclosure of information and to prevent leaks of inside information, the information disclosed in dialogues with major shareholders and investors shall be within the bounds previously determined for disclosure.

2. Capital Structure

Foreign Shareholding Ratio

Update

From 20% to less than 30%

[Status of Major Shareholders]

Update

Name / Company Name

Number of Shares

Owned

Percentage (%)

The Master Trust Bank of Japan, Ltd. (Trust Account)

37,146,100

29.81

Custody Bank of Japan, Ltd. (Trust Account)

15,105,400

12.12

Custody Bank of Japan, Ltd. (Securities Investment Trust Account)

3,617,100

2.90

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Taiyo Yuden Co. Ltd. published this content on 20 April 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 April 2022 02:04:06 UTC.