Adeka : Updated "ADEKA Group Corporate Governance Guideline"

ADEKA Group Corporate Governance Guidelines

Chapter I General Provisions

Article 1 (Purpose)

These guidelines ("Guidelines") are to present the basic policy on corporate governance in ADEKA group ("ADEKA Group"). To realize ADEKA Group's business mission and management policy as defined in Article 2 below, ADEKA Corporation ("ADEKA"), an ultimate parent company of ADEKA Group, shall allocate such roles/functions as deemed necessary therefor to relevant conference bodies, including, but not limited to, the Board of Directors, and other optional committees supporting the Board of Directors, of ADEKA, and indicate action guidelines for directors and Operating Officers (collectively "Officers") as well as employees, and strive to build a corporate governance system which would enable them to organically play their roles respectively. ADEKA Group shall continue to improve, by consistently reviewing, ADEKA Group's corporate governance system in the future as well.

Article 2 (ADEKA Group's business mission and management policy)

ADEKA Group's business mission is to grow in a sustainable way and raise its mid-and-long term corporate value, through provision of material products and solutions using any advanced technologies, and thereby contribute to the creation of well-being and sustainable society. To realize said business mission, the following two management policies are established:

1. " To be a company that is progressive and dynamic with a keen attitude towards the new changing tide"
   This policy means that we aim at "making social contributions through our main lines of business". To this end, we strive to sensitively sense a change in social environment and to provide the society with a useful solution for, by proactively making full use of advanced technologies against, the emerging challenges imposed on chemical/food manufacturers in the aspect of environment and energy, health, security and safety in food, and so on.
2. " Creating a better future for the people of the world"

This policy means that we aim at "Co-existence and co-prosperity with the civil society". To this end, we strive to harmonize the soundness of our business operations with the global society by taking into consideration in our business the profit of the society surrounding us (= stakeholders)

of us, and to sustainably grow together with the society.

Article 3 (Relationship with the Corporate Governance Code)

1. ADEKA Group shall enhance a corporate governance level of whole ADEKA Group, under the recognition that it is important for us to build better corporate governance.
2. ADEKA, a corporation listed on the Prime Market of the Tokyo Stock Exchange, shall respect, and make an effort to comply with, the basic principle, rules and complement rules as stipulated in the Corporate Governance Code established by the Tokyo Stock Exchange.

Chapter II Organization

Article 4 (Organizational framework of ADEKA)

ADEKA, a Company with Board of Directors and a Company with Audit and Supervisory Committee, shall establish, in addition to its Board of Directors and its Audit and Supervisory Committee, the Management Committee, Nomination and Remuneration Committee and the Independent Committee as optional conference bodies as well as an optional Independent Advisory Committee where appropriate.

Article 5 (Role and responsibility of Board of Directors)

1. The Board of Directors, an organization to play the most important role in building the corporate governance system ADEKA strives to achieve, shall bear, in addition to those stipulated in the Article of Incorporation and the Board of Directors Regulations of ADEKA, mainly the following roles and responsibilities:

(1) To build and regularly verify a workable corporate governance/ organization of management;

(2) To build and regularly verify a workable internal control system;

(3) Formation of, and permeation into ADEKA Group's Officers and employees of, shared values and a good corporate culture to be shared between said Officers and employees, including, but not limited to, the business mission, the management policy and the mid-and-long term visions;

(4) To steer and adjust the management strategy, taking into consideration long-term problems, changes in business environment/market, and the profit of important stakeholders;

(5) To secure management resources sufficient for realizing the business mission, the management policy and the management strategy;

(6) To appoint, evaluate, and set goals for, representative directors and Operating Officers (collectively "Managements");

(7) To secure such work environments as can fully exhibit the ability of Managements and

employees;

1. To train successors of Managements;
2. To set key performance indicator (KPI) for each department/strategic business unit (SBU);
3. To promote compliance and risk management, by maintaining and improving the training programs and thewhistle-blowing System for compliance and risk management;
4. To supervise subsidiaries;
5. To secure opportunity for constructive communication with shareholders;
6. Analysis of cause for, and review countermeasures against, proposals offered by ADEKA for which a considerable number of negative votes have been casted; and
7. Improvement in or relating to the Board of Directors, in order for the Board of Directors to effectively play any of the roles listed above.

2. The outline of the authorities of the Board of Directors, and the scope of the delegation of authorities to Managements or other business executors from the Board of Directors shall be set forth in Exhibit 1.

Article 6 (Composition of the Board of Directors)

The number of Directors shall be less than eighteen (18) as stipulated in the Article of Incorporation but should be limited to the necessary minimum number in order for the Board of Directors to make decisions speedily in a mobile manner. In order for Directors to effectively fulfill their roles and responsibilities, the composition of Directors shall be as follows, in principle:

1. At least one third (1/3) of the Directors shall be External Directors ("Independent External Directors") who meet the "Criteria for determining independence of External Directors" set forth in Exhibit 2 (Functions/roles expected to be fulfilled by External Directors ; and Criteria for determining independence of External Directors). The Head Independent External Directors shall be appointed among the Independent External Directors by mutual election, as appropriate.
2. Since embracing various values helps us to fulfill our business mission and management policy in this global society where types of business have diversified and global business development is accelerating, ADEKA shall, in nominating candidates for Directors, make an effort to secure diversity of members of the Board of Directors, with fairness and a wide field of vision.

Article 7 (Management of the Board of Directors)

In order for Directors to effectively fulfill their roles and responsibilities, the Board of Directors shall be managed as follows: Matters concerning management of the Board of Directors shall be