Corporate Governance

In order to continuously obtain the trust of our customers, investors, and other stakeholders, we believe it is necessary not only to comply with laws and regulations, but also to establish and continuously improve corporate governance that can achieve both higher levels of checks and balances and “Open discussion” from both internal and external perspectives. Recognizing that ESG activities are an active part of our CSR activities, we will continue to develop steady, down-to-earth activities such as information security initiatives and training for employees, not to mention the prompt and effective decision-making and business execution, through the constant and accurate operation of our ESG promotion system.

Basic Policy on Corporate Governance

Dainichiseika Color & Chemicals Mfg. Co., Ltd. (hereinafter, “Dainichiseika”) has established this Basic Policy on Corporate Governance based on a resolution of its Board of Directors. This policy aims to promote Dainichiseika's sustainable growth and long-term corporate value enhancement. We recognize that ensuring transparency and fairness in decision-making, effectively utilizing management resources, and enhancing management vitality through swift and decisive decision-making are the fundamental principles of sound corporate governance. Based on this understanding, Dainichiseika is committed to enhancing its corporate governance in accordance with the following basic principles.

Corporate Governance System

As the Company with a Board of Company Auditors, we appropriately supervised and audited the execution of duties by Directors. Furthermore, by electing an appropriate number of Outside Directors, we enabled transparent and rational decision-making within the Board of Directors, facilitated by the active expression of opinions from these Outside Directors from a neutral standpoint.
Pursuant to a resolution at the 122nd Annual General Meeting of Shareholders held in June 2025, we transitioned from a Company with a Board of Company Auditors to a Company with an Audit and Supervisory Committee. By incorporating the perspectives of Director who is an Audit and Supervisory Committee Member into Board decisions, we will strive to further strengthen our corporate governance.

• *1 The Group has established the Nomination and Remuneration Committee as a voluntary advisory body to the Board of Directors. The Committee consists of three or more Directors (excluding Directors who are Audit and Supervisory Committee Members), with Outside Directors making up the majority. Members of the Committee are appointed by resolution of the Board of Directors. As of June 26, 2026, the Committee is composed of three Outside Directors (including a female member) and two Inside Directors, none of whom are Directors who are Audit and Supervisory Committee Members. The Chairperson of the Committee is elected from among the Outside Directors by mutual vote of the members. Furthermore, Directors who are Audit and Supervisory Committee Members and Inside Directors (excluding Directors who are Audit and Supervisory Committee Members) may attend meetings as observers as necessary, and the Committee may also request the attendance of other individuals related to the agenda items. In accordance with the "Regulations of the Nomination and Remuneration Committee," which govern its operations, the Group has established a fair and transparent decision-making framework by referring particularly important matters—including the nomination and the determination of individual compensation of Directors (excluding Directors who are Audit and Supervisory Committee Members)—to the Committee for consultation before they are submitted to the Board of Directors, thereby obtaining recommendations from diverse perspectives, such as diversity and skills.
• *2 The Outside Director and Auditor Liaison Committee, composed of all Outside Directors, meets in principle once a month and additionally on an as-needed basis to enable meaningful and active discussions at the Board of Directors. By summarizing key points such as the Group's management issues and critical operational matters, with a focus on items to be deliberated by the Board of Directors, and by providing timely and appropriate information, the committee serves as an opportunity for Outside Directors to deepen their understanding of the Group. This minimizes the information gap between Outside Directors and Inside Officers, creating an environment where Outside Directors can speak freely and openly from a fair, neutral standpoint based on their external perspectives. Consequently, this enhances the quality of decision-making and supervisory functions of the Board of Directors.
• *3 The Operating Committee of Top Management meets on an as-needed basis as a forum to intensively deliberate critical matters concerning human assets and organizational structures—the most vital management resources supporting the Group's sustainable growth. These matters include the nomination, areas of responsibility, and compensation of Directors (excluding Directors who are Audit and Supervisory Committee Members) and Titled Executive Officers, as well as the appointment of next-generation management executives. The Operating Committee of Top Management is convened and chaired by the President. It is composed of Inside Directors (excluding Directors who are Audit and Supervisory Committee Members), Titled Executive Officers, and other individuals selected by the convener from among those who play a central role in management. Among the items deliberated, matters related to officer nomination and remuneration are referred to the Nomination and Remuneration Committee for consultation, and upon receiving its report, are submitted to the Board of Directors for final approval. All other matters are approved in accordance with internal regulations.
• *4 The Corporate Management Committee consists of the executive management team. Meeting approximately twice a month, it serves as a body to discuss important operational matters, including the Group’s various strategies and future visions. Beyond reviewing proposals for the Board of Directors and financial performance, this committee enables the management team to engage in free, open, and multifaceted discussions on a wide range of topics, thereby accelerating agile efforts to address both current and potential management issues.
• *5 The Operating Control Committee conducts agile deliberations on a case-by-case basis by convening relevant Executive Officers, organizational heads, representatives of business divisions and offices, and other related parties. These deliberations cover matters such as: (1) reviewing capital expenditure and IT investment plans; (2) monitoring the progress and projected spending of the expense budget for the current fiscal year; (3) reviewing disposal schedules and inventory management status for the Group's business divisions and domestic consolidated subsidiaries; and (4) determining guidelines for compiling the next fiscal year's budget and scrutinizing proposed budgets.
• *6 The Management Liaison Committee clarifies and disseminates corporate decisions to the heads of each organizational unit responsible for managing business operations. It also confirms the execution policies of each unit regarding these decisions. Furthermore, the Committee receives business execution reports from each unit and verifies the appropriateness of internal controls. The Management Liaison Committee is chaired by the President, and meets, in principle, once a month.

Decision making and Business Execution System

At the Group, the scope of authority and responsibility for decision-making in key business operations is defined and clarified in the "Authority and Responsibility Regulations." For particularly important matters, depending on their nature, decisions are made by the Board of Directors after sufficient deliberation by appropriate committees, such as the Operating Committee of Top Management, Corporate Management Committee, and the Operating Control Committee. Matters resolved by the Board of Directors are executed under the responsibility of Executive Officers and Chief Officers (CxOs) in charge of business execution, and the progress and results are reported to the Board of Directors as necessary. For other matters not deliberated by the Board of Directors, decisions are made by the authorized decision-makers specified in the Authority and Responsibility Regulations and executed by the relevant organizations. This framework allows for rational and swift decision-making and business execution through appropriate delegation of authority.

Audit System

Our Audit and Supervisory Committee consists of three members: one Director who is a Full-time Audit and Supervisory Committee Member and two Outside Directors who are Audit and Supervisory Committee Members. In principle, the Committee meets once a month and holds extra meetings as necessary. Based on laws and regulations, the Group's Articles of Incorporation, and the "Regulations of the Audit and Supervisory Committee," the Audit and Supervisory Committee determines audit policies and plans. It audits and supervises the execution of duties by Directors (excluding Directors who are Audit and Supervisory Committee Members) by attending important meetings such as Board of Directors meetings and reviewing critical documents such as minutes and approval requests. The Audit and Supervisory Committee regularly exchanges information with the internal audit department and the accounting auditor to conduct systematic and efficient audits. Additionally, the Committee holds regular meetings with the Representative Director, President, to confirm management policies and exchange opinions on key audit issues.