Toshiba : Notice Regarding Recurrence Prevention Measures Based on Suggestions in Investigation Report of Governance Enhancement Committee (PDF)

December 16, 2021

Toshiba Corporation

FOR IMMEDIATE RELEASE

Notice Regarding Recurrence Prevention Measures Based on

Suggestions in Investigation Report of Governance Enhancement Committee

As announced in "Notice Regarding Receipt of the Report from the Governance Enhancement Committee" dated November 12, 2021, Toshiba Corporation ("Toshiba") received from the Governance Enhancement Committee a report ("Committee Report") regarding the so-called "Pressure Issue." In response to this, Toshiba's Board of Directors and executive officers held discussions based on the suggestions of the Committee Report, and formulated recurrence prevention measures. Toshiba hereby announces the content of the said measures, as attached.

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English Translation

Recurrence Prevention Measures

Based on Suggestions in Investigation Report of

Governance Enhancement Committee

December 16, 2021

Toshiba Corporation

1. Introduction

As announced in the "Notice Regarding Receipt of the Report from the Governance Enhancement Committee" dated November 12, 2021, Toshiba Corporation (hereinafter referred to as "Toshiba") received from the Governance Enhancement Committee a report (hereinafter referred to as "Committee Report") regarding "issues concerning acts of executive officers and directors of Toshiba," "root cause analysis," "clarification of responsibilities" and "suggestions for developing recurrence prevention measures" with respect to the so-called "pressure issue" (hereinafter referred to as "Issue"). In response to this, the board of directors (hereinafter referred to as "Board of Directors") and the executive officers of Toshiba had discussions by taking into account the suggestions in the Committee Report and developed recurrence prevention measures. We hereby announce the details of these recurrence prevention measures.

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2. Issues Pointed Out in Committee Report

With regard to the issue of whether any of Toshiba executive officers' and/or directors' acts was in breach of duty of care, the Committee Report concluded that the acts of relevant executive officers concerning the Issue were not illegal, and therefore, the relevant executive officers and directors did not breach duty of care. On the other hand, the Committee Report also concluded that the "Series of Acts1" conducted by the relevant executive officers as a whole violated business ethics required by relevant market (hereinafter referred to as "Ethical Standards"), and the Committee could not deny the fact that the Series of Acts raised doubts as to its appropriateness in light of the spirit of first sentence of 1.1.3 of the Supplementary Principles of the Japan's Corporate Governance Code. In addition, the following three points were indicated as the root causes: (i) "excessive cautiousness towards foreign investment funds and lack of willingness to develop sound relationship"; (ii) "problem of being overdependent on the Ministry of Economy, Trade and Industry (hereinafter referred to as "METI")"; and (iii) "corporate governance-related issues." Lastly, the Committee Report made the following four suggestions for developing the recurrence preventive measures: (i) "development of sound trust relationships with shareholders"; (ii) "rectification on Toshiba's tendency to be overly dependent on administrative authorities"; (iii) "redevelopment of corporate governance"; and (iv) "tone at the top."

Toshiba takes seriously the points and the suggestions for developing recurrence prevention measures made in the Committee Report. By taking into account these points and suggestions, Toshiba has developed the recurrence prevention measures as described in 3 below. Toshiba will make every effort to restore the trust of stakeholders including shareholders, which has been undermined by the Issue, as soon as possible by promptly materializing and implementing these recurrence prevention measures.

1 Definition provided in the Committee Report (A series of acts which Toshiba's executive officers and METI engaged in for the 181st Annual General Meeting of Shareholders, including exchange of information, in connection with matters such as how to deal with shareholder proposal of Effissimo Capital Management Pte. Ltd.).

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(2) Rectification on Toshiba's Tendency to be Overly Dependent on Administrative Authorities

(i) Toshiba will establish action guidelines for all directors, officers and employees of Toshiba Group companies which will become applicable whenever they come in contact with administrative authorities (hereinafter referred to as "Guidelines"). The details of Guidelines are as follows:

A) To engage in acts by keeping in mind at all times whether one's own acts would gain the understanding of shareholders, stock market and society in

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3. Recurrence Prevention Measures

As recurrence prevention measures against the Issue, Toshiba will take the following measures based on the "suggestions for developing recurrence prevention measures" provided in the Committee Report.

(1) Development of Sound Trust Relationship with Shareholders

Since the 2021 Annual General Meeting of Shareholders, Toshiba, through the newly-established Strategic Review Committee and each director and executive officer, has worked hard to have discussions with shareholders and to take into account the opinions of shareholders. However, upon receiving the suggestions provided in the Committee Report, Toshiba has reaffirmed the importance of the following measures, and decided to further promote them:

1. To continue to make efforts to gain the understanding of shareholders, including foreign investment funds, on the developed management policies, by having directors and executive officers hold discussions with shareholders, without solidifying a one-sided view on foreign investment funds and without being bound by prejudice or preconception;
2. To continue to regularly conduct surveys such as surveys on shareholders' intentions on an anonymous basis, in order to obtain comprehensive and objective information on shareholders' opinions; and
3. To have constructive discussions with shareholders and take shareholder opinions (including criticisms) seriously and to develop Toshiba's management policies from the standpoint of enhancing corporate value and achieving growth over the medium to long term, by taking into full consideration (i) the maintenance or development of appropriate relationship with all stakeholders such as customers, business partners, employees and local community and (ii) the interests of such stakeholders.