Mitsubishi Tanabe Pharma : Corporate Governance Report

Mitsubishi Tanabe Pharma Corporation has created by a merger of Tanabe Seiyaku Co., Ltd. and Mitsubishi Pharma Corporation as of October 1, 2007.
Although the Company is a consolidated subsidiary of Mitsubishi Chemical Holdings Corporation (MCHC), the Company will continue its listing status and maintain independence in its management.

Corporate Governance

The Mitsubishi Tanabe Pharma Group (hereinafter the 'Group') has formulated a corporate philosophy of 'contributing to the healthier lives of people around the world through the creation of pharmaceuticals' and its vision of 'becoming a global research-driven pharmaceutical company that is trusted by communities.'

To that end, the Group places the highest priority on fulfilling its responsibilities to all of its stakeholders, including shareholders, and working to achieve the sustainable growth of the Group and enhancement of its corporate value over the medium- to long-term, by ensuring efficiency and promptness of decision-making of management, and enhancing the monitoring and supervising functions of Outside Board Directors and auditing structure of Corporate Auditors to ensure the transparency and objectivity of management.

Based on these basic views, the Group sets forth the 'Corporate Governance Policy of Mitsubishi Tanabe Pharma Corporation' and continuously works to realize an optimal corporate governance system in accordance with it.

Corporate Governance System

The Board of Directors comprise ten members (10 males and 0 females), three of whom are Outside Board Directors so as to secure transparency and objectivity in its decision-making and supervising functions. The Company holds regular meetings of the Board of Directors once a month and additional meetings as needed and flexibly makes decisions on execution of important matters. In addition, the Company conducts business management in a prompt and efficient manner by adopting the executive officer system and clarifying duties function of the decision-making and supervising and function of the execution of the business. For function of the execution of business, the Executive Committee, which consists of the Managing Executive Officers including the President and CEO, and other officers, meets two or more times per month as a general rule to discuss in advance the agenda of the meetings of the Board of Directors and deliberates on matters to assist in the President and CEO's decision making.

The Board of Corporate Auditors has four members (4 males and 0 females, two of whom are Outside Corporate Auditors). The Company has selected an attorney at law and a certified public accountant. The Board of Corporate Auditors, as an organ independent from the Board of Directors, makes appropriate decisions from an objective standpoint in fulfilling its roles and responsibilities, which include the auditing of business execution of Board Directors, accounting audits, and exercising its authority with respect to the selection and dismissal of Accounting Auditors and audit compensation.

Corporate Auditors attend important meetings, such as meetings of the Board of Directors. In addition, they conduct interviews on the execution of duties with Board Directors, Executive Officers, and members of each division, review documents relating to major decisions, and investigate the operations and assets of principal worksites and subsidiaries (including internal control systems such as those for compliance and risk management). In these ways, the Corporate Auditors audit the execution of Company business. In addition, the Board of Corporate Auditors is strengthening the audit function through cooperation with the Accounting Auditors and the Internal Audit Department. Furthermore, to provide support for the Corporate Auditors in the execution of their duties, the Company has the Corporate Auditors Office, which is independent from business execution. The Corporate Auditors Office has three full-time staff.

For internal auditing, the Company has the Internal Audit Office, which operates independently of the executive divisions and audit the internal control systems in each of the executive divisions.

Furthermore, in an effort to strengthen appropriate management decision and accountability of the Board of Directors with respect to the nomination and compensation of its executives, the Company has established and operates voluntary committees chaired by an Independent Outside Board Director, and comprised in the majority of Independent Outside Officers (Board Directors and Corporate Auditors).

With respect to the President succession plan, the Company identifies and develops future executives who have enough knowledge, experience and capabilities for management of the Company, including without limitation, through job rotation and key position appointment aiming capacity-building as well as internal executive development program.

＜Corporate Governance Diagram＞

*1 An advisory committee for nomination of executives which is voluntarily established by the Board Meeting
*2 An advisory committee on executive compensation which is voluntarily established by the Board Meeting

Corporate Governance Policy of Mitsubishi Tanabe Pharma Corporation
－ Criteria for Independence of Outside Board Directors and Outside Corporate Auditors
－ Policy for Constructive Dialogue with Shareholders

Corporate Governance Report [June 25, 2018]