Riken Technos : Corporate Governance Report

This document has been translated for reference purposes only from an original document submitted to the Tokyo Stock Exchange in Japanese. The original shall prevail in the event of any discrepancy between this translation and the Japanese original. RIKEN TECHNOS CORPORATION assumes no responsibility for the translation or for any damage, direct or indirect, arising therefrom.

Corporate Governance Report

CORPORATE GOVERNANCERIKEN TECHNOS Co, Ltd.

Last Update: June, 20, 2022

RIKEN TECHNOS CORPORATION

Kazuaki Tokiwa, Representative Director, President & CEO Contact: +81-3-5297-1632

Securities code: 4220https://www.rikentechnos.co.jp/e/

The corporate governance of RIKEN TECHNOS CORPORATION (the "Company") is described below.

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

Basic Information

1. Basic Views

The Group shall establish a management organization system and structure, and implement necessary measures in order to achieve sustainable growth and improve corporate value over the medium to long term through the implementation of the "RIKEN TECHNOS WAY," its corporate philosophy. By positioning the strengthening of corporate governance as one of the most important management issues, the Group shall strive to strengthen the Group's competitiveness and ensure management transparency and fairness by establishing an effective governance system for the entire Group.

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

[Principle 1-4Strategic-Holding Shares]

< Policy on Reduction of Strategic-Holding Shares >

With regard to strategic-holding shares, the Company shall ensure that the Board of Directors annually examine specifically whether the purpose of holding of strategic-holding shares is appropriate, and otherwise whether the benefits and risks associated with holding are commensurate with the cost of capital, etc., from a medium- to long-term perspective in order to improve corporate value globally, and shall continue to hold those that it believes are contributing to the improvement of the Group's medium- to long-term corporate value, but for those that it believes are inappropriate to hold, the Company shall consider the disposal of all or part of its holdings, taking into consideration market trends and other factors, and reduce its holdings.

The fiscal 2021 review was conducted in November. The Company verified the appropriateness of the purpose of holding each stock, including shares held by consolidated subsidiaries, as well as whether the benefits and risks are commensurate with the cost of capital, after adjustment for past transaction performance and other factors. The Company also considered the disposal of some shares that it judged were not appropriate to hold.

< Standards for the Exercise of Voting Rights Related to Strategic-Holding Shares >

With regard to the exercise of voting rights for strategic-holding shares, the Company shall exercise voting rights by respecting the management policies and business strategies of the issuing company, and comprehensively taking into consideration whether

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or not there are any management concerns or the contents of the proposals contribute to the development of the issuing company's appropriate corporate governance system, whether or not such exercise contributes to the improvement of the medium- to long-term corporate value and the sustainable growth of the Company and the issuing company, etc. In exercising voting rights, the Company shall also refer to the standards for exercising voting rights of the proxy-advisory firm.

[Principle 1-7 Transactions Between Related Parties]

In the event of transactions between the Company and the related parties, the Company implements appropriate procedures according to the contents and nature of such transactions, such as approval by the Board of Directors in accordance with the Companies Act and the Regulations on the Board of Directors. In addition, the Company discloses the results thereof in the Annual Securities Report, etc. in a timely manner in accordance with relevant laws and regulations.

Furthermore, the Company implements annual surveys on related-party transactions and monitors and supervises the Directors, etc. of the Company and companies of the Group.

[Principle 2-4 Ensuring Diversity Within the Company, Including Promoting the Activities of Women] [Supplementary Principle 2-4-1]

< Views on Ensuring Diversity >

The Company recruits and promotes a diverse range of human resources, regardless of gender, nationality, or whether they are new graduates or mid-career hires. In order to accelerate the global development of our businesses and respond quickly to the rapidly changing market environment in the future, we will actively recruit and promote human resources with differing experience, skills, and careers, establish a system for developing human resources that will enable these human resources to play an active role, and promote the development of a suitable environment. In particular, taking employees in managerial positions as our core human resources, the Company will work to spread a broad awareness of ensuring diversity, and set targets for the ratios of employees in managerial positions who are women, foreign nationals, and mid-career hires.

1. Promotion of women to managerial positions
   The Company will strengthen mid-career recruitment in departments where women are particularly expected to play an active role (such as administrative and sales departments) and promote these employees to managerial positions. In addition, in departments where a high level of expertise is required (such as technical departments), the Company utilizes a specialist system (professional system) for managerial positions.
2. Promotion of foreign nationals to managerial positions
   Focusing on the ASEAN region (priority region), where the Company is expanding global operations, we will strengthen the recruitment of students studying overseas and local hires, and will develop them as candidates for managerial posts. We will also strengthen the mid-career recruitment of managers able to play an active role globally. In the future, the Company will promote these employees to senior managerial positions, such as the heads of sites of consolidated subsidiaries overseas.
3. Promotion of mid-career hires to managerial positions
   In order to respond to the increasingly diverse social environment and revitalize our organization in the future, we will strengthen mid-career recruitment beyond existing levels and thus take in new ideas and technical expertise from outside the Company.

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[Principle 2-6 Fulfilling the Role as Asset Owner of Corporate Pension]

In order to enable the corporate pension fund to fulfill its function as asset owner, the Company appoints and allocates appropriately qualified personnel, such as those with experience in accounting and finance divisions, etc. The corporate pension fund has established the asset management committee, which consults on important matters relating to the investment of pension assets, such as the formulation and revision of the basic policy and the basic portfolio, and periodically monitors the investment status, etc., and reports the results to the Management Committee.

Comprehensive evaluations are also implemented for the investment trustee by adding qualitative assessment to quantitative assessment.

[Principle 3-1 Enhancement of Information Disclosure]

1. Company objectives (management philosophy, etc.), management strategies, and business plans
   The Company has established the "RIKEN TECHNOS WAY" as its management philosophy and an overview is published on the Company's website.
   https://www.rikentechnos.co.jp/e/company/philosophy/
   In addition, as part of the management strategy and business plan, the Company has formulated a three-yearMedium-Term Business Plan (April 2022 to March 2025), which is published on the Company's website.
   https://www.rikentechnos.co.jp/e/company/management_policy/
2. Basic views and policies on corporate governance
   This information is as stated in "I. 1. Basic Views" of this report.
3. Policies and procedures for determining compensation for Directors and Executive Officers
   Compensation for Directors (excluding Directors who are Audit & Supervisory Committee Members) is set at an appropriate level of compensation in accordance with the positions and responsibilities of Directors, based on a compensation plan that motivates Directors to improve business performance in each fiscal year and improve corporate value over the medium to long term, while also enabling them to share value with shareholders.
   Compensation for Directors (excluding Directors who are Audit & Supervisory Committee Members) consists of executive compensation and supervisory compensation. Executive compensation consists of a fixed amount of basic compensation (cash) and bonuses as performance-linked compensation (cash and stock benefits). Supervisory compensation consists of a fixed amount of basic compensation (cash) and a fixed amount of stock benefits.
   Compensation for Executive Officers consists of executive compensation, which consists of a fixed amount of basic compensation (cash) and bonuses as performance-linked compensation (cash and stock benefits).
   Compensation for Directors who are Audit & Supervisory Committee Members consists of supervisory compensation, which consists of a fixed amount of basic compensation (cash) that is not linked to performance and a fixed amount of stock benefits.
   When determining the compensation of Directors (excluding Directors who are Audit & Supervisory Committee Members) and Executive Officers, the Board of Directors consults in advance with the Compensation Committee, a majority of which is composed of Independent Outside Directors, and makes decisions with respect for the results of such reports. In addition,

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the compensation for Directors who are Audit & Supervisory Committee Members is determined by deliberation among Directors who are Audit & Supervisory Committee Members within the limit amount determined by resolution of the General Meeting of Shareholders.

Furthermore, policies for determining the content of compensation, etc., for individual Directors are described in "II. 1. Organizational Composition and Operation [Director Remuneration] Disclosure of Policy on Determining Remuneration Amounts and the Calculation Methods Thereof" of this report.

1. Policies and procedures for the nomination of candidates for Directors and selection and dismissal of Executive Officers When nominating candidates for Directors and selecting Executive Officers, the Company takes into consideration the knowledge, experience, and abilities of each individual, and takes care to ensure it maintains a well-balanced and diverse mix of human resources as a whole.
   Specifically, regardless of gender, age, or nationality, on the assumption that the candidate is outstanding in character and has a high sense of ethics and legal compliance, the Company comprehensively reviews and makes a decision concerning whether the candidate is well versed in various management issues with superior management senses, whether inside or outside the Company, and is excellent in terms of initiative, leadership, activity, and planning, and other factors.
   In addition, when nominating a candidate for Director for reelection or reselecting Executive Officers, the Company comprehensively reviews and makes a decision concerning matters such as the possibility of the candidate contributing to frank, active, and constructive discussions even after reappointment, taking into consideration continuously meeting the above appointment standards as well as the statements made at the meetings of the Board of Directors and the Management Committee during the term of office and the status of attendance at such meetings, and other factors.
   In addition to the above standards, when nominating candidates for Directors who are Audit & Supervisory Committee Members, the Company makes decisions such that one (1) or more persons with considerable knowledge of finance and accounting are elected.
   When nominating candidates for Directors and selecting Executive Officers, the Board of Directors consults in advance with the Nomination Committee, a majority of which is composed of Independent Outside Directors, and makes decisions with respect for the results of such reports.
   In addition, in the event that a Director or Executive Officer falls under any of the reasons for dismissal set forth by the Company, such as significantly poor performance in the course of business, the Board of Directors consults in advance with the Nomination Committee, a majority of which is composed of Independent Outside Directors, and makes decisions with respect for the results of such reports. With regard to the dismissal of the President, the Board of Directors may hesitate to propose the dismissal of the President, which may hinder prompt decision-making. Therefore, if certain reasons are met, the Nomination Committee may recommend and propose the dismissal of the President to the Board of Directors.
2. Explanation of individual selections, dismissals, and nominations when nominating Director candidates
   Reasons for the nomination of each candidate for Director are provided in the Reference Documents for the General Meeting of Shareholders. Furthermore, in the event of dismissal, the Company will disclose related information in the Reference Documents for the General Meeting of Shareholders or via other appropriate methods.

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