TPR : Corporate Governance

Corporate Governance

Last Updated: July 16, 2021

TPR Co., Ltd.

Masanobu Kishi Contact: 81-3-5293-2811 Securities Code: 6463

https://www.tpr.co.jp/tp_e/index.html

The corporate governance of TPR Co., Ltd. (the "Company") is described below.

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

1. Basic Views

With our spirit of Monozukuri, or "making things," as our starting point, represented by material, processing and surface treatment technologies that we have cultivated since the foundation in 1939, we, as the Company, are driving the business toward our corporate philosophy: "Realizing a clean environment and a sophisticated global society." To this end, we are striving to enhance our corporate governance, believing that it is essential to achieve sustainable growth by offering unmatched technologies and products with superior value, as wells as by forging good relationships with shareholders, customers, and other stakeholders such as trading partners, local society, employees.

Specifically, we are working to raise the effectiveness of corporate governance through the basic policies set forth below.

1. Respect the rights of shareholders and ensure fairness.
2. Cooperate appropriately with all stakeholders, including shareholders, employees, trading partners and local society.
3. Ensure transparency by appropriately disclosing corporate information.
4. Ensure directors and audit & supervisory board members recognize their fiduciary responsibility and accountability to shareholders and appropriately fulfill the respective roles and obligations expected of them.
5. Make efforts to engage in constructive dialogue with shareholders.

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

The Company complies with all principles of Japan's Corporate Governance Code.

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

[Principle 1.4 Cross-Shareholdings]

1. Policy on shareholdings
   The Company believes that it is essential to have cooperative relationships with various companies in the interest of business expansion and sustainable growth.
   In order to maintain cooperative relationships while boosting corporate value, we follow a policy of holding shares when there is a reasonable basis for doing so from a medium- to long-term perspective, giving comprehensive consideration to such factors as materiality on a business strategy level, business relationship with trading partners, and profitability with capital costs taken into account. Each year, the Board of Directors

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examine each individual stock held and consider the appropriateness of holding it based on this policy. When a stock is found by the Board of Directors to be held without reason, that holding will be reduced.

1. Exercise of voting rights as to shareholdings
   When exercising voting rights of stock held, the Company will ensure each individual proposal is examined in line with the criteria set forth below.
2. 1. Whether such holdings will contribute to increases in the corporate value of the Company as a shareholder over the medium- to long-term
   2. Whether there are matters that give rise to concerns over behavior that violates laws and regulations or goes against corporate ethical principles

[Principle 1.7 Related Party Transactions]

Concerning transactions by Directors that are competitive or involve a conflict of interest, the Company ensures compliance with the procedures stipulated by the Companies Act to ensure that such transactions do not damage the Company or the shareholders' common interest, requires that approval for such transactions are obtained from the Board of Directors beforehand, and makes sure reports are periodically given to the Board of Directors to explain the status of the transactions.

Each Director and Audit & Supervisory Board Member is required to submit a "related party declaration" each accounting period, and this is used to ascertain the existence of transactions or receivables/payables between the Director, Audit & Supervisory Board Member or immediate family member and a company in the TPR Group.

Note that when determining conditions for transactions with major shareholders, they will the same as those for transactions with third parties.

[Principle 2.6 Roles of Corporate Pension Funds as Asset Owners]

The Company entrusts the management of the defined corporate pension fund to an asset administration and management institution ("Trustee") that declares its acceptance of the stewardship code. The Company appoints multiple staff members representing administrative departments such as human resources and accounting to perform monitoring once every interim accounting period to ascertain based on the report received periodically from the Trustee whether the objectives of the asset management are being achieved and whether the asset structure is being reviewed as appropriate. The Company ensures that a summary of operations concerning the defined benefit corporate pension fund is disclosed to employees once a year pursuant to laws and regulations.

[Principle 3.1.1 Company Objectives (e.g., Corporate Philosophy, etc.), Management Strategies and Management Plans]

For details of our corporate philosophy and Medium-Term Management Plan, please refer to the Company's website as follows:

Corporate philosophy: https://www.tpr.co.jp/tp_e/company/philosophy.html

Medium-TermManagement Plan*: https://www.tpr.co.jp/ir/pdf/core20setumei.pdf

[Principle 3.1.2 Basic Views on Corporate Governance]

Basic views on corporate governance are described in "1. Basic Views."

[Principle 3.1.3 The Board of Directors' Policies and Procedures in Determining the Compensation of the Senior Managements and Directors]

The policies and procedures in determining the compensation of the senior managements and Directors are stated in "II-1. [Director Remuneration] Disclosure of Policy for Determining Remuneration Amounts or Calculation Methods Thereof" in this report.

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[Principle 3.1.4 The Board of Directors' Policies and Procedures in the Appointment of the Senior Management and the Nomination of Candidates for Director and Audit & Supervisory Board Member]

• When nominating candidates for Director, each individual's knowledge, experience and capability is considered and candidates are selected from the standpoint of finding the right person for the position based on criteria of being capable at accurate and swift decision making and having good discernment regarding compliance with laws and regulations.
• When nominating candidates for Audit & Supervisory Board Member, candidates are selected from the standpoint of their knowledge in finance and accounting and their capability to monitor the corporate governance structure.
• In accordance with the above policy, the nomination of Director candidates and Audit & Supervisory Board Member candidates is decided by the Board of Directors based on discussions held at the Nomination and Remuneration Committee, of which Outside Directors account for the majority of the members.
  Note that nominations for Audit & Supervisory Board Members are determined after obtaining prior consent from the Audit & Supervisory Board.
• In the event of dismissal of a Director or Audit & Supervisory Board Member, the decision for dismissal is carried out based on discussions held at the Nomination and Remuneration Committee in accordance with criteria established beforehand.

[Principle 3.1.5 Individual Explanation on Appointment, Nomination and Dismissal of Directors and Audit & Supervisory Board Members]

• In the convocation notice of the general meeting of shareholders, the individual reasons for each individual's appointment or dismissal, the career summary for each individual and other information are stated.

[Supplementary Principle 4.1.1 Overview of Scope of Matters Delegated to Management]

The Company has established in the Board of Directors Regulations, in addition to matters provided for under laws and regulations or the articles of incorporation, which matters shall be determined by the Board of Directors, or reported to the Board of Directors, such as management policies, business plans, investment plans, subsidiary establishment or investment. The other individual matters of business execution are entrusted to the decision making authority of executive officers from the Chairman and CEO down, based on the regulations for division of duties and delegation of authority.

In addition, the Company has established the Management Meeting and the Budget Committee (convening monthly, yearly, respectively) as organs of business execution made up of Executive Officers with ranks of Managing Executive Officer and higher, and while striving to enhance discussions of important management issues stipulated as targets for discussion under the regulations for delegation of authority, the Company has established various cross-sectional meetings, such as the Compliance Committee and the Risk Management Committee, and while carrying out examination and monitoring of important management issues from various perspectives, the Company strives to realize optimal decision making.

[Principle 4.9 Independence Standards and Qualification for Independent Outside Directors]

The independence standards for Outside Directors of the Company are stated in "II-1. [Independent Officers] Matters relating to Independent Officers" in this report.

[Supplementary Principle 4.11.1 Policy on Appointment of Directors]

Under the Articles of Incorporation of the Company, the number of Directors is set as ten or less, which is believed to be an appropriate size for the continuous promotion of swift decision making.

When nominating a Director candidate, we comprehensively review individuals from the perspective of assigning the right person to the right position regardless of nationality or gender, giving consideration to the knowledge,

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experience, capability and so forth of the candidate, such as their capability of accurate and swift decision making in the Board of Directors, their capability to conduct appropriate business management from a global standpoint, their capability to monitor the business execution of other Directors, their capability to take charge of the general operations of the business division under one's control, and so on. When appointing Directors, we plan on continuing to respect the balance and observe the existing size and rationale in the future.

[Supplementary Principle 4.11.2 Significant Concurrent Positions Outside the Company of Directors and Audit & Supervisory Board Members]

We will continue to practice annual disclosure of significant concurrent positions outside the Company of Directors and Audit & Supervisory Board Members in "II. Business Management Organization and Other Corporate Governance Systems regarding Decision-making, Execution of Business, and Supervision in Management" of this report and in disclosure material such as the reference materials for convocation notices of general meetings of shareholders, the business report, the annual securities report, and so forth.

[Supplementary Principle 4.11.3 Analysis and Evaluation of Effectiveness of the Board of Directors]

To analyze and evaluate the effectiveness of the Board of Directors, we implemented a survey of each individual, targeting all Directors and Audit & Supervisory Board Members. As a result of such analysis and evaluation, the evaluation results showed that effectiveness was ensured. Looking forward, we will strive to further raise the level of effectiveness.

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

New and incumbent Directors and Audit & Supervisory Board Members have deepened their understanding of their roles and responsibilities as a critical governance body at a listed company, and should endeavor to acquire and update necessary knowledge and skills. Accordingly, the Company has provided and arranged training opportunities suitable to each Director and Audit & Supervisory Board Member along with financial support for associated expenses. The Board of Directors has verified whether such opportunities and support are appropriately provided.

[Principle 5.1 Policy for Constructive Dialogue with Shareholders]

1. Basic view on policy for constructive dialogue with shareholders
   The Company believes that it is essential for shareholders to understand and support the Company's business in order to achieve sustainable growth and medium- to long-term improvement in corporate value for the Company, and that providing accurate information to shareholders in a timely and fair manner while conducting constructive dialogue between both parties to the extent that is reasonably possible will lead to the building of a trusting relationship over the medium to long term.
2. Approach to dialogue
   The Investor and Shareholder Relations Department is responsible for the primary management of dialogue with shareholders and investors while the responsible Officer oversees the process.
   In order to enhance dialogue, the Investor and Shareholder Relations Department reviews details with the relevant senior managements prior to such dialogue and strives to provide appropriate response, which includes the selection of who will provide the explanation.
3. IR system
   The Company holds financial results briefings for analysts, institutional investors and the press semi-annually. Targeting general investors, we publish operating results, business activities, management policies and so forth on the Company's website in an easy-to-understand format.
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1. Feedback to inside the Company
   We strive to ensure the opinions and suggestions of shareholders and investors that we learn through dialogue are reported at meetings of the Board of Directors, etc., and reflected in information sharing and management strategy.
2. Insider information
   When holding dialogue with shareholders and investors, undisclosed insider information is thoroughly managed based on the prescribed rules.

2. Capital Structure

		Foreign Shareholding Ratio [Updated]		From 20% to less than 30%
[Status of Major Shareholders] [Updated]
		Name			Number of Shares Owned			Shareholding Ratio
				(Shares)			(%)
		Meiji Yasuda Life Insurance Company	2,395,000		6.92
		Sompo Japan Nipponkoa Insurance Inc.	2,293,000		6.63
		Custody Bank of Japan, Ltd. (Trust account)	1,991,100		5.76
		The Master Trust Bank of Japan, Ltd. (Trust	1,795,100		5.19
		Account)
		Mizuho Bank, Ltd.	1,518,800		4.39
		Hulic Co., Ltd.	1,231,800		3.56
		Tokyo Tatemono Co., Ltd.	933,687		2.70
		TPR Trading-Partner Shareholding	891,500		2.57
		Association
		BBH FOR FIDELITY PURITAN TR:
		FIDELITY SR INTRINS	883,400		2.55
		ICOPPORTUNITEIS FUND
		Mizuho Trust & Banking Co., Ltd.	766,000		2.21
		Controlling Shareholder (except for Parent)			-
		Parent (Listed Stock Market)		N/A
		Supplementary Explanation
	-

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