For Investors

Corporate Governance Guide

Guideline for Corporate Governance, Compliance and Risk Management

Revised: June 25, 2025

Basic Approach to Corporate Governance
Mechanisms for Decision-Making, Oversight and Supervision, and Audit
Compliance and Total Risk Management
Accountability

Basic Approach to Corporate Governance

A company is entrusted with capital by its shareholders and is expected to generate profits through its business activities while continuously enhancing corporate value over the medium- to long-term. Fulfilling this responsibility constitutes the core duty of corporate management. Building on this foundation, the company must also fulfill its respective responsibilities to a broad range of stakeholders (interested parties), including employees, business partners such as customers, consumers, and local communities. Furthermore, as a member of society, the company must operate in accordance with social norms and contribute to society through its business activities.
The importance of corporate governance lies in the requirement that corporate executives engage in outstanding business activities within this fundamental framework, contributing to the company's prosperity, fulfilling social responsibilities, and ensuring accountability (responsibility for explanation and necessary information disclosure).
Based on this approach, Teijin Limited positions corporate governance as a key management foundation for achieving its Long-term Vision through realizing its Values based on its Purpose, and is committed to managing its business with transparency, fairness, and social responsibility. Additionally, it ensures the timely disclosure of information while striving to establish organizational structures and systems that enable swift decision-making and execution to enhance its competitiveness.
Teijin Limited shall also ensure that its Group companies and their management teams are committed to the sustainable enhancement of corporate value and the execution of outstanding business activities.

Philosophical Framework

[Purpose]

Pioneering solutions together for a healthy planet

[Values]

Empowering ourselves to address challenges
Fostering growth through diversity and expertise
Safeguarding our planet and all life on it

[Long-term Vision]

To be a company that supports the society of the future

Mechanisms for Decision-Making, Oversight and Supervision, and Audit

Basic Policy

The corporate governance framework shall be designed to adopt the structure deemed most appropriate at the time for achieving the Company's objectives. Accordingly, it shall be reviewed as necessary in response to changes in the social and legal environment. Teijin Limited has adopted the structure of a Company with an Audit & Supervisory Committee and, by expanding the delegation of authority from the Board of Directors to the executive management, aims to accelerate decision-making related to business operations while further enhancing discussions at Board of Directors meetings on important management issues, such as medium- to long-term business strategies.
In addition, the Company further strengthens the supervisory function of the Board of Directors, such as by having the Audit & Supervisory Committee Members responsible for audits, etc. hold voting rights at Board of Directors meetings as Directors.

Directors and the Board of Directors

1.Roles of the Board of Directors

The Board of Directors of Teijin Limited aims to maximize corporate value for each fiscal year and in the medium- to long-term. In pursuing this objective, the Board, giving due consideration to the interests of stakeholders beyond shareholders, deliberates on, decides, and approves important matters, including those mandated by laws and regulations, as well as the overall management policies and plans of the Teijin Group. It also supervises the execution of duties by the Directors. With respect to decisions on execution of important operations, the Board of Directors delegates authority to Executive Directors and Corporate Officers, to an appropriate extent and by its own resolution, thereby accelerating decision-making and clarifying responsibilities for business execution. The Board also assumes responsibility for ensuring accountability, sets clear policies on compliance and risk management related to the Company's operations, and supervises their implementation.
2.Composition and Chair of the Board of Directors
1. (1)The Board of Directors shall consist of Directors who are not Audit & Supervisory Committee Members and Directors who are Audit & Supervisory Committee Members.
2. (2)The number of Directors shall be no more than twelve, of whom no more than five shall be Directors who are Audit & Supervisory Committee Members. In principle, the majority of the Board shall be comprised of Outside Directors.
3. (3)The Chairperson and the President shall be selected from among the Internal Directors who are not Audit & Supervisory Committee Members, with the President concurrently serving as the Chief Executive Officer (hereinafter the President referred to as the "CEO"). Other Internal Directors who are not Audit & Supervisory Committee Members shall, in principle, concurrently serve as chief officers.
4. (4) Outside Directors must satisfy the requirements for Independent Directors as separately stipulated.
5. (5)As part of the separation of supervisory and executive functions, the Chair of the Board of Directors shall, in principle, be selected from among Outside Directors who are not Audit & Supervisory Committee Members. However, in consideration of the role of the Chairperson as described in the following article, it shall also be permissible to appoint a Chairperson who does not concurrently serve as a Corporate Officer and does not have representative authority as Chair of the Board of Directors.
3.Position of Chairperson

The Chairperson shall not be involved in the internal execution of the Company's business and shall not hold representative authority unless otherwise deemed necessary.
4.Representative Directors

The Company shall, in principle, have no more than three Representative Directors, including the CEO.
5.Term of Office of Directors

The term of office of Directors who are not Audit & Supervisory Committee Members shall be one year, and the term of office of Directors who are Audit & Supervisory Committee Members shall be two years. Directors, including Outside Directors, may be reelected unless otherwise disqualified under age limits or other conditions separately stipulated.

Nomination Advisory Committee and Compensation Advisory Committee

1.Nomination Advisory Committee and Compensation Advisory Committee as Advisory Bodies
To enhance transparency in the appointment and compensation of Directors and Corporate Officers, the Company shall establish and operate the Nomination Advisory Committee and the Compensation Advisory Committee. Both committees function as advisory bodies to the Board of Directors and are responsible for making proposals and recommendations to the Board concerning the nomination, evaluation, and compensation of Directors who are not Audit & Supervisory Committee Members and of Executive Officers*, as well as the nomination of Directors who are Audit & Supervisory Committee Members. The Board of Directors shall make decisions with due consideration to such proposals and recommendations.
1. *Executive Officers: Corporate Officers of the Teijin Group who serve as core members essential for deliberating on the overall business strategies of the Teijin Group.
2.Composition and Committee Chair
1. (1)Both committees shall consist of all Outside Directors who are not Audit & Supervisory Committee Members, the Chairperson of the Board, and the CEO (in cases where the Chairperson is absent, all Outside Directors who are not Audit & Supervisory Committee Members and the CEO).
2. (2)The Chair of each committee shall be selected from among Outside Directors who are not Audit & Supervisory Committee Members and shall preside over the respective committee meetings.
3.Meeting Agenda

Both committees shall deliberate on the following matters related to nominations and compensation, based on proposals made by the CEO.

Matters for Deliberation Concerning Nominations

1.Succession of the CEO and nomination of a successor
2.Appointment, retirement, and removal of the Representative Directors
3.Election, retirement, and dismissal of Directors who are not Audit & Supervisory Committee Members (including the Chairperson of the Board)
4.Election, retirement, and dismissal of Directors who are Audit & Supervisory Committee Members
5.Matters concerning personnel changes of Executive Officers (including appointment, retirement, removal, promotion, and demotion), and appointment or removal of Senior Advisors
6.Matters concerning the criteria for independence of Outside Directors
7.Selection of candidates to succeed the CEO and review of the succession development plan formulated by the CEO and its progress
8.Matters concerning internal rules on Directors and Officers (excluding those related to compensation)

In principle, the CEO, as an interested party, shall not be included as a member of the decision-making body in deliberations under item 1 above. In the case of the removal of a Representative Director as specified in item 2 above, the Representative Director subject to removal, as an interested party, shall not be included as a member of the decision-making body. Furthermore, in matters related to the Chairperson of the Board under item 3 above, the Chairperson of the Board, as an interested party, shall, in principle, not be included as a member of the decision-making body.

Matters Concerning Compensation

1.Matters concerning the compensation system for Directors, Executive Officers, and Senior Advisors (hereinafter collectively referred to as "Teijin Group Executives")
2.Matters concerning the compensation levels of the Teijin Group Executives
3.Matters concerning the performance evaluation and compensation amounts for Internal Directors (including the CEO) who are not Audit & Supervisory Committee Members, and for Executive Officers
4.Matters concerning internal rules on Directors and Officers (compensation-related)

Regarding items 2 and 3 above, the CEO, as an interested party, shall, in principle, not be included as a member of the decision-making body in matters concerning the CEO. Similarly, the Chairperson of the board, as an interested party, shall, in principle, not be included as a member of the decision-making body in matters concerning the Chairperson of the Board.

Audit & Supervisory Committee

1.Audit & Supervisory Committee
1. (1)Roles of the Audit & Supervisory Committee
  
  The Audit & Supervisory Committee has the function of overseeing and auditing management. The Audit & Supervisory Committee Members appointed by the Audit & Supervisory Committee shall attend important internal meetings and express opinions or provide recommendations.
2. (2) Composition of the Audit & Supervisory Committee
  1. (a)The number of Audit & Supervisory Committee Members shall be no more than five. The majority of the members shall be Outside Directors to ensure transparency. The Audit & Supervisory Committee has determined that the Chair of the Audit & Supervisory Committee shall be an Outside Director.
  2. (b) From the perspective of audit operations, the presence of a full-time Audit & Supervisory Committee Member who is well-versed in internal affairs is considered important.
  3. (c)Outside Audit & Supervisory Committee Members shall satisfy the requirements for Independent Directors as separately stipulated. In the selection of Outside Audit & Supervisory Committee Members, their expertise shall be taken into account to maintain a balanced composition.
3. (3) Election of Audit & Supervisory Committee Members
  
  The Audit & Supervisory Committee shall propose or consent to candidates for Directors who are Audit & Supervisory Committee Members.
2.Committee of Teijin Group Statutory Auditors
1. (1)Roles of the Committee of Teijin Group Statutory Auditors
  1. (a)The Committee of Teijin Group Statutory Auditors shall be responsible for overseeing and auditing the entire Teijin Group in alignment with the group-based consolidated management. Based on the Teijin Group's audit policy and plan as determined by the Audit & Supervisory Committee of Teijin Limited, the Committee of Teijin Group Statutory Auditors shall deliberate on matters such as business-specific audit policies and plans and the selection of key audit items, and shall promote thorough implementation of such matters.
  2. (b) The Committee of Teijin Group Statutory Auditors shall share information through regular meetings and work to enhance the overall quality of audits through mutual learning and development among its members.
2. (2)Composition of the Committee of Teijin Group Statutory Auditors
  
  In principle, the Committee shall consist of the Audit & Supervisory Committee Members of Teijin Limited, full-time Statutory Auditors of Group companies, staff of the Audit & Supervisory Committee Office of Teijin Limited, and the General Manager of the Corporate Audit Department of Teijin Limited.
3. (3)Overseas Teijin Group Companies
  
  Internal audits of overseas Teijin Group companies shall be primarily conducted by the Corporate Audit Department of Teijin Limited. With regard to accounting audits, audits by Accounting Auditors shall be mandatory. Members of the Audit & Supervisory Committee of Teijin Limited and staff of the Audit & Supervisory Committee Office shall conduct on-site audits in accordance with the audit plan.
3.Relationship between the Audit & Supervisory Committee/the Committee of Teijin Group Statutory Auditors, and Other Audit Bodies
1. (1)Cooperation with the Accounting Auditors of Teijin Limited and its Group companies shall be strengthened. In principle, the Audit & Supervisory Committee of Teijin Limited shall take the lead in the appointment and replacement of the Accounting Auditors.
2. (2)The Audit & Supervisory Committee and the Committee of Teijin Group Statutory Auditors shall receive reports from the Corporate Audit Department of Teijin Limited, ensuring continuous and comprehensive grasp of internal audit information. Where necessary, instructions may also be given to the Corporate Audit Department.
3. (3)Decisions regarding the audit plans, personnel and budget as well as the appointment, transfer and evaluation of the Head of the Corporate Audit Department of Teijin Limited shall be subject to the consent of the Audit & Supervisory Committee.

Sustainability

1.Sustainability Policy
Teijin Limited shall, based on its sustainability policy established by its Board of Directors, fulfill its social responsibilities and conduct its business activities in accordance with its Purpose, "Pioneering solutions together for a healthy planet," thereby realizing its Long-term Vision of "becoming a company that supports the society of the future" and achieving the sustainable enhancement of corporate value.
This sustainability policy includes "material social issues" and "material management issues" set in consideration of their significance to the Teijin Group and their impact on stakeholders.
2.Operations
The Sustainability Committee shall be established under the CEO to deliberate on and promote the sustainability policy, in order to ensure the effective implementation of sustainability initiatives.

Compliance and Total Risk Management

Compliance

1.Basic principles of Compliance

The following basic principles of compliance are established to achieve the objectives of corporate governance:

Basic Principles of Compliance

1.As responsible members of both the corporate organization and society, all directors, officers, and employees of a company are required to not only comply with laws and regulations but also to act in good faith and in line with ethical standards and shared social values. Such upstanding conduct is essential for enhancing corporate value.
2.The Teijin Group, based on this recognition, strictly complies with social norms, ethics, and applicable laws and regulations; strives to achieve fair and appropriate management in harmony with civil society; and works to establish and fully enforce its Philosophical Framework, Code of Conduct, and other internal rules.
3.Teijin Limited endeavors to ensure that the directors, officers, and employees of its Group companies fully understand the above compliance principles and likewise act with integrity, thereby pursuing the creative development of the Teijin Group.

2.Relationship between Internal Controls and Compliance

Compliance, which includes corporate ethics, is a key element of internal control. The Teijin Group aims to be a corporate group that upholds a high standard of corporate ethics.
3.Thorough Dissemination of the Code of Conduct and Related Rules and Regulations

The specific content of compliance based on the compliance principles shall be defined by the "Code of Conduct." The Board of Directors of Teijin Limited shall periodically review the Code of Conduct and other related rules and regulations with due consideration for compliance, risk management, and responsibilities toward stakeholders, and shall ensure that they are thoroughly communicated to all Group companies and their directors, officers, and employees.

Total Risk Management (TRM)

1.Basic principles of TRM
Risk management, together with compliance, serves as a cornerstone of internal control. The Teijin Group shall establish a Total Risk Management (TRM) system to provide a comprehensive framework that covers its overall business operations. The TRM shall be regarded as a preventive approach to addressing any uncertainty that the Company may face, and its fundamental principles are as follows:

Basic Principles of TRM

1.A company has a mission to continue its business activities that enhance corporate value and that satisfy the expectations of all stakeholders, including shareholders. It is therefore necessary for the company to deal with every risk (uncertainty) that may threaten the achievement of its mission. Teijin Limited comprehensively and efficiently identifies, assesses, and manages such risks that the entire Group is exposed to and takes an organizational and systematic approach for the purpose of utilizing them in group management.
2.The Board of Directors of Teijin Limited supervises risk management across the entire Teijin Group, and positions the assessment of both "Strategic Management Risks," which arise in connection with the formulation of business strategies and plans, strategic actions, and decisions on individual investment projects, and "Operational Risks," being various adverse events that could negatively affect the Company, as a critical factor in decision-making.
3.Teijin Limited endeavors to ensure that each of the Teijin Group companies and all of their directors and officers fully understand the principles of TRM and work to address all risks that may threaten corporate activities.

2.TRM Framework
1. (1)The Company shall establish the following frameworks for each type of risk to promote Total Risk Management (TRM).
  1. ⅰ）Strategic Management Risk
    The Group Strategy Committee, chaired by the CEO and tasked with deliberating on important matters related to business execution, promotes initiatives.
  2. ⅱ）Operational Risk
    The Chief Human Resources Officer/Chief Sustainability Officer shall be responsible for overseeing this risk. The Risk Management Committee established under the CEO is tasked with deliberating on policies related to the management of this risk as well as promoting and monitoring initiatives based on these policies.