DOWA : Corporate Governance Report

judgments. If it is determined that continuing to hold stock will not enhance corporate value, we will sell the shares in order,considering the impact on the market.

In fiscal 2022, the Board of Directors examined the pros and cons of continuing to hold all listed shares held by the Group at a meeting held on December 9, 2022. As a result, we have decided to sell all of the shares of one stock held by the Company andall of the shares of one stock held by DOWA Metals & Mining Co., Ltd.

【Principle 1.7 Related Party Transactions】

With respect to transactions with officers and major shareholders of the Company, and other related parties, the Board of Directors shall carefully examine the particulars of each transaction. If deemed a conflict-of-interest transaction, the Board shall, in accordance with laws and regulations and internal regulations for the Board of Directors, deliberate and determine theappropriateness of the transaction's terms and decision-makingprocess in advance.

【Supplementary Principle 2.4.1: Ensuring diversity in the promotion of core human resources】

The Company is of the view that diverse human resources are indispensable in responding to the ever-changing business environment. As such, each year it formulates targets on this front and implements measures to achieve them. At present, the Company has set the following targets related to promoting the participation and advancement of women: a ratio of eligible male employees taking childcare leave of 100%, a ratio of new hires who are women (DOWA Holdings) of 30%, and a ratio ofemployment of people with disabilities of 2.3% (Groupwide).

Moreover, based on the Group's belief that human resources are at the core of all our business activities, the Company has established the Policy for Human Resources Development and is carrying out individual measures, such as offering position-based and field-basedtraining.

Please refer to the Company website for details on our efforts to secure and develop diverse human resources. (https://www.dowa-csr.jp/en/esg/social)

【Principle 2.6 Roles of Corporate Pension Funds as Asset Owners】

The Company has adopted a defined contribution pension plan as its corporate pension. It educates employees on the plan byexplaining how the plan works and how to select investment products.

【Principle 3.1 Full Disclosure】

In accordance with laws and regulations, the Company appropriately discloses financial information, such as that regarding its financial position and financial performance, as well as non-financial information, such as that regarding management strategiesand issues, risk, and governance. It also discloses other information not mandated by laws and regulations.

1. The Company formulates and announces a medium-term plan to clarify its medium- to long-term management strategy. Pleaserefer to the Company website for details on the medium-termplan. （https://ir.dowa.co.jp/en/ir/strategy.html）
2. The Company's basic views and basic policy on corporate governance are disclosed in "Basic Views" in section I-1 of thisreport.
3. The Company's system of remuneration for directors and Audit & Supervisory Board members has been designed with input from the Remuneration Committee, comprised mainly of outside directors and outside experts, and is based on objective factors

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such as the Group's consolidated performance, dividends paid to shareholders, and remuneration levels outside the Company. For further details, please refer to "Policy on Determining Remuneration Amounts and Calculation Methods" in section II-1ofthis report.

1. Director candidates are appointed in accordance with the following basic policy, in order to ensure appropriate and agile decision-makingand supervision over the execution of the Company's business activities.
   For inside directors, the Company appoints directors with excellent character and insight, and abundant skills and knowledge based on their experience working at the DOWA Group, regardless of individual attributes such as gender and nationality. For outside directors, the Company appoints persons who are able to proactively express their opinions and raise issues with an eye to reflecting diverse values and ideas into business operations. This is done by conducting prior interviews and exchangingopinions, taking into account factors such as their expertise and background.
   In the event of misconduct, serious violation of laws and regulations, violation of the Articles of Incorporation, or any other reason that it is deemed difficult for a director to properly execute their duties, the Board of Directors shall deliberate and determine whether to dismiss the director in question, or submit a proposal for their dismissal at the General Meeting ofShareholders.
   The Company's basic policy for appointing Audit & Supervisory Board member candidates is to strengthen and expand auditing activities. In appointing Audit & Supervisory Board member candidates, the Audit & Supervisory Board deliberates and exchanges opinions based on the candidate selection(s) made by the president and representative director, and, upon selecting a candidate, requests the president and representative director to submit a proposal for election at the General Meeting ofShareholders.
   Based on the above policy, the president and representative director selects candidates for directors and Audit & Supervisory Board members, submits them to the Board of Directors, and, upon obtaining approval, submits an election proposal to theGeneral Meeting of Shareholders.
2. With regard to the nomination of candidates for directors and Audit & Supervisory Board members, the Company discloses their suitability for the position by providing information on their background and reasons for candidacy in reference documents for the General Meeting of Shareholders. Moreover, when proposing the dismissal of a director or Audit & Supervisory Board member at the General Meeting of Shareholders, the reasons for dismissal of said candidate shall be explained in the referencedocuments for the General Meeting of Shareholders.

【Supplementary Principle 3.1.3: Initiatives on sustainability, etc. 】

With the aim of achieving sustainable growth and improving corporate value, the Company formulated and announced theSustainability Basic Policy after resolution by the Board of Directors.

In April 2022, the Company established the Sustainability Committee, which supervises and gives instructions regarding policies and measures concerning climate change, digital transformation, and sustainability-related issues while also tracking the progressof these measures. Important matters are reported to the Board of Directors for supervision.

Under Midterm Plan 2024 (spanning fiscal 2022 to 2024), announced in May 2022, the Company has identified social issues that the DOWA Group must address (The DOWA Group's Materiality), and is focusing on measures to solve them. Measures toresolve these issues include investing in human capital and intellectual property.

With regard to "responding to climate change," in February 2022 the Company set greenhouse gas (GHG) emission reduction

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targets for fiscal 2030 and endorsed the TCFD recommendations. In May 2022, the Company published the DOWA Group TCFD Report, which evaluates the impact of climate change in accordance with the TCFD recommendations and summarizes the results. In May 2023, the Company also announced Initiatives for FY2030 and Roadmap for the Achievement of Carbon Neutrality by2050.

Details and progress regarding the above measures are disclosed on the Company website.

・Sustainability Basic Policy https://www.dowa-csr.jp/en/about/sustainability-policy

・Midterm plan https://ir.dowa.co.jp/en/ir/strategy.html

・Integrated Report (DOWA REPORT) https://ir.dowa.co.jp/en/ir/library/annual.html

・TCFD REPORT https://www.dowa-csr.jp/content/files/DOWA_TCFD_report_2205_en.pdf

・Initiatives for the Achievement of Carbon Neutral Society - Initiatives for FY2030 and Roadmap for the Achievement of CarbonNeutrality by 2050 -

https://www.dowa-csr.jp/content/files/DOWA_2050CN_roadmap_en.pdf

【Supplementary Principle 4.1.1: Outline of scope of matters delegated to the management by the board】

The Company has established regulations for the Board of Directors and administrative authority, which serve to clarify the matters to be handled exclusively by the Board of Directors and the matters to be delegated to upper management. The Company has introduced an executive officer system for the purpose of expediting decision-making and improving management efficiency. In accordance with laws, regulations and internal regulations, the Company grants authority to executive officers for matters not related to important business execution that should be settled by the Board of Directors, taking into consideration the scope ofthe matter and other factors.

【Principle 4.9: Independence standards for independent directors】

The Company bases the independence of independent outside directors on the requirements for outside directors stipulated in the Companies Act, the independence criteria set by financial instruments exchanges, and whether the individual has no special interests in the Company and is thus able to maintain independence in the decision-making process. Specifically, the Company considers an outside director to maintain independence if the value of transactions with and/or donation revenue from the Company of the organization to which they belong(ed) accounts for less than 5% of the consolidated net sales of said organization. Outside directors are also expected to have a good sense of balance and impressive achievements, and offer extensive knowledgeand expertise that the Company lacks.

【Supplementary Principle 4.10.1: Appropriate involvement and advice regarding consideration of nomination and compensation

by the Nomination Committee and Remuneration Committee】

The Company has established a Nominating Committee and a Remuneration Committee, both of which are voluntary committees. The executive remuneration system is designed with the advice of the Remuneration Committee. It incorporates objective

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perspectives such as the Group's consolidated performance, the Company's stock price, and external compensation levels. In addition, the Nominating Committee has been established to obtain objective advice on particularly important matters, such asthe selection and dismissal of senior management.

In principle, both committees are composed of at least five members. Majority of them are outside directors, and the Board ofDirectors appoints the chairpersons of the committees. The committees meet several times a year.

【Supplementary Principle 4.11.1: View on the appropriate balance between knowledge, experience, and skills of the board as a

whole, and also on diversity and appropriate board size】

The Board of Directors consists of nine directors (including three outside directors), with eight male directors and one female director (outside director). When appointing Board of Director candidates, emphasis is placed on individuals with excellent character and insight who are either well-accomplished in their work, are well versed in corporate management, or have a highlevel of expertise in their field. The appointment of candidates is determined upon deliberation by the Board of Directors.

As each director has their own primary duties, in order to be elected, not only must candidates possess the wide-ranging knowledge and skills needed as a director, but they must also possess the knowledge and experience needed to fulfill these primary duties. As such, directors are elected in a manner that ensures the Board of Directors is well balanced, without bias or overlaps in particular work or business experience. The Company has formulated and published a skills matrix that serves to outline these different areas of expertise. Also, one of the three independent outside directors has experience as a representativedirector of a company outside the Group.

【Supplementary Principle 4.11.2: Holding of concurrent positions by directors and auditors】

Regarding concurrent positions as officers of other companies, the Company believes that as concurrently serving as officers of other listed companies helps expand their knowledge, holding concurrent positions does not pose a problem as long as it does not interfere with their duties at the Company. The number of concurrent positions depends largely on the current status of the individual's work performance. The Company intends to respect their wishes, and also believes that they are currently appropriately fulfilling their roles and responsibilities as officers of the Company. Information on the concurrent positions held by individual officers is appropriately disclosed in business reports, reference documents for the General Meeting ofShareholders, and other documents.

【Supplementary Principle 4.11.3 Evaluation of the Effectiveness of the Board of Directors】

The Company conducts self-assessments and analyses of the effectiveness of its Board of Directors every year to improve its functioning and, ultimately, its corporate value. For self-assessment and analysis, the following methods were used with theadvice of external organizations.

・Overview of Effectiveness Assessment

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The Board of Directors will continue to work toward enhancing its functionality by giving thorough consideration and executinga response to the issues brought forth by this evaluation of its effectiveness.

【Supplementary Principle 4.14.2: Training policy for directors and auditors】

When outside directors and outside Audit & Supervisory Board members are newly elected, the Company provides tours of major business sites, etc., and also offers various business briefings, such as on its management strategy, business details, and operating structure. Similar opportunities are also provided as necessary during their terms of office. Moreover, the Company actively provides information about its business to directors and Audit & Supervisory Board members, and encourages officers to attendexternal training courses at the Company's expense.

【Principle 5.1 Policy for Constructive Dialogue with Shareholders】

The president and representative director, directors in charge of overseeing dialogue, and each department of DOWA Holdingswork together to implement various measures aimed at promoting constructive dialogue with shareholders.

Officers and related departments shall, to a reasonable degree, respond to requests for interviews from shareholders aimed at carrying out constructive dialogue that contributes to sustainable growth and medium- to long-term enhancement of corporatevalue.

In order to promote constructive dialogue with shareholders, the Company strives to disclose information fairly through various forms of media, such as publishing its information disclosure system in the Corporate Governance Report and including messagesfrom representative directors and outside directors in its Integrated Report (DOWA Report).

■ Action to Implement Management That Is Conscious of Cost of Capital and Stock Price

The information is posted in the corporate strategy briefings materials on the Company's website. https://ir.dowa.co.jp/en/ir/library/materials/main/01/teaserItems1/0/linkList/01/link/presentation_fy2022_2Q-e.pdf

■ Constructive Dialogue with Shareholders

The information is posted in the Integrated Report on the Company's website.

https://ir.dowa.co.jp/ja/ir/library/annual.html

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2. Capital Structure

Foreign Shareholding Ratio30% or more

Status of Major Shareholders

Supplementary Explanation

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3. Corporate Attributes

4. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling Shareholder

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5. Other Special Circumstances which May have a Material Impact on Corporate Governance

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1. Business Management Organization and Other Corporate Governance Systems regarding

Decision-making, Execution of Business, and Oversight

1. Organizational Composition and Operation

Directors

Outside Directors' Relationship with the Company (1)

*Categories for "Relationship with the Company".

(Use "○" when the director presently falls or has recently fallen under the category; "△" when the director fell under the category in the past; "●" when a close relative of the director presently falls or has recently fallen under the category; and "▲" when a close relative of the director fell under the category in the past.)

1. Person who executes business for the Company or its subsidiary
2. Person who executes business for or a non-executive director of the Company's parent company
3. Person who executes business for a fellow subsidiary
4. Person/entity for which the Company is a major client or a person who executes business for said person/entity
5. Major client of the Company or a person who executes business for said client
6. Consultant, accounting expert, or legal expert who receives large amounts of cash or other assets from the Company in addition to remuneration as a director/Audit and Supervisory Board Member
7. Major shareholder of the Company (in cases where the shareholder is a corporation, a person who executes business for the corporation)

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1. Person who executes business for a client of the Company (excluding persons categorized as any of d, e, or f above) (applies to director him/herself only)
2. Person who executes business for another company that holds cross-directorships/cross-auditorships with the Company (applies to director him/herself only)
3. Person who executes business for an entity receiving donations from the Company (applies to director him/herself only)
4. Other

Outside Directors' Relationship with the Company (2)

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including onsite study of local research laboratories andmines/smelters in resource-richcountries.

We judge that he can be expected to make a significant contribution to the management of the Company by providing opinions and advice on the entire business of the Company, both domestic or overseas, including recyclingand smelting, based on his career as described above.

As he is considered devoid of risk of conflict of interest with general shareholders, and he supervises management from an independent standpoint, he is designated an IndependentDirector.

Voluntary Establishment of Committee(s) equivalent to

Established

Nomination Committee or Remuneration Committee

Status of Voluntarily Established Committee(s), Attributes of Members Constituting the Committee and the Committee

Chairperson

Supplementary Explanation

The Company has established a Nominating Committee and a Remuneration Committee, both of which are voluntary committees. The executive remuneration system is designed with the advice of the Remuneration Committee. It incorporates objective perspectives such as the Group's consolidated performance, the Company's stock price, and external compensation levels. In addition, the Nominating Committee has been established to obtain objective advice on particularly important matters, such asthe selection and dismissal of senior management.

In principle, both committees are composed of at least five members. Majority of them are outside directors, and the Board ofDirectors appoints the chairpersons of the committees. The committees meet several times a year.

The following shows the meetings of both committees and the attendance of each member in fiscal 2022.

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