The Company has established and disclosed the Sekisui Corporate Governance Principles for the purpose of further evolving its corporate governance initiatives and communicating our corporate governance approach and initiatives to our stakeholders.
In addition to the above Principles, the status of the Company’s initiatives and its approach with respect to the Corporate Governance Code, consisting of the General Principles, Principles, and Supplementary Principles, are summarized and disclosed in the form of the Initiatives to Each of Principles of the Corporate Governance Code.

As an organizational structure under the Companies Act, the Company has chosen to be a company with Audit and Supervisory Board. Under the Divisional Company Organization System, the Company has adopted the Executive Officer System in order to clearly distinguish the business execution function from the decision-making function in management.

Initiatives Taken to Enhance Corporate Governance

Corporate Governance System Chart (As of April 1, 2024)

The Company has established an optional advisory committee concerning nomination and remuneration to further enhance the fairness and transparency of management.
The Nomination and Remuneration Advisory Committee deliberates on matters related to enhancing the effectiveness of the Board of Directors, including the nomination and non-reappointment of senior executives, including representative directors, the nomination of candidates for director, and the system of remuneration and levels of remuneration for directors. The Committee also discusses the commissioning of and dealings with advisors or executive advisors, including former representative directors and presidents, and submits recommendations and advice to the Board of Directors. The Nomination and Remuneration Advisory Committee comprises seven members, the majority of whom are independent outside directors. The Chairperson is elected from the independent outside directors.

To maximize corporate value, the Company has built its management structure based on the Divisional Company Organization System. Together with assigning to each divisional company Executive Officers specializing in business execution, an Executive Committee has been established to serve as the top decision-making body in each divisional company. Executive Committee members, whose term of office is deemed to be for one year, are appointed by resolution of the Board of Directors.
By transferring authority to the divisional companies, the Board of Directors strives to achieve continual improvements in corporate value as an organization responsible for decisions on basic policies of SEKISUI CHEMICAL Group's management as well as high-level management decision-making and supervision of business execution.

In order to ensure the internal control system for the Company and Group companies is properly maintained and operated, our Corporate Audit Department carried out operation and accounting audits of the Company and Group companies based on a yearly auditing plan, investigating whether execution of operations is being performed appropriately and efficiently.

The Board of Directors deliberates and decides on fundamental policies regarding compliance. Also, as the operational arm of the Sustainability Committee, we operate a Compliance Sub-committee with the Legal Department serving as the secretariat. In addition to divisional company and headquarters heads of administrative departments, the head of the Corporate Audit Department are also serving as members on this sub-committee, and this organization is reporting compliance activity results and matters for Compliance Advisory Board deliberation, as well as discussing future activity policy.

In order to ensure that Directors carry out their duties efficiently, the Board of Directors met 17 times in fiscal 2023. In addition, discussions of important matters related to our management policies and strategies were carried out at meetings of the Policy Committee, which is made up of inside (execution) Director members. Policy decisions were made by the Board of Directions following these discussions.

Audit and Supervisory Board Members attended not only the Board of Directors meetings but also other important meetings, carrying out confirmation of the maintenance and operating conditions of the internal control system through operations such as investigation of related departments, including at Group companies, and confirmation of approval documents for major projects. In addition to personally visiting various sites for audits, they also receive reports from the Internal Auditing Department and each headquarters department that has jurisdiction over internalcontrol. The Audit and Supervisory Board met 14 times in fiscal 2023 for the purpose of sharing the information from these reports. Audit and Supervisory Board Members regularly exchanged opinions with corporate auditors, cooperating closely to improve the effectiveness of auditing efforts. Liaison meetings were held with related corporate auditors to improve coordination with auditors and enhance the quality of auditing. In addition, regular meetings were held with the Representative Director, and Audit and Supervisory Board Members also exchanged opinions with Outside Directors.

The SEKISUI CHEMICAL Group has established a risk management structure for integrated management of measures to prevent risk events from occurring (risk management) and to respond when risk events occur (crisis management).
In our risk management activities, we comprehensively identify risks related to our corporate value based on the SEKISUI CHEMICAL Group Risk Management guidelines as the business environment becomes increasingly uncertain and complex. Each of these risks is quantitatively evaluated in terms of the likelihood of occurrence and impact, risks to be addressed on a priority basis are identified, and an ERM (enterprise risk management) system has been constructed for sharing and managing risks within the Group. Company-wide risks and specific risks identified for each organization are analyzed and evaluated. We then determine countermeasures for these risks and carry out repeated periodicreview and revision, which will be run through the PDCA management cycle every year.
In the event of a major incident, crisis management activities are carried out based on the SEKISUI CHEMICAL Group Crisis Management Guidelines. Crisis Manageme nt Liaison Meetings are held regularly with each specialized department of headquarters and divisional company representatives in attendance to ensure appropriate handling measures are implemented rapidly, and we also continually carry out cash studies and training sessions.
Furthermore, since fiscal 2021, the Group has been revising and developing documents for an emergency response plan (ERP) that places the protection of human life as the highest priority at all organizations as a Group- wide initiative. In addition, major business organizations have been advancing the establishment of a resource- based business continuity plan (BCP) as “All Hazard BCP” to respond when any crisis events occur.