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 For details, please refer to "Nomination and Remuneration Committee" at the bottom of this page.
• *2 The Outside Director and Auditor Liaison Committee is composed of all Outside Directors and is held, in principle, once a month. Its purpose is to facilitate meaningful and active discussions at the Board of Directors by providing Outside Directors with appropriate information on the Group's management issues, primarily those to be deliberated at the Board of Directors, and to exchange opinions from an external perspective.
• *3 The Operating Committee of Top Management is convened as needed to deliberate important matters related to human resources and organizational structure, the most crucial management resources supporting the Company's sustainable growth. These matters include the nomination, assignment, and remuneration of Directors (excluding Directors who are Audit and Supervisory Committee Members) and Titled Executive Officers, as well as the selection of next-generation management executives. The Operating Committee of Top Management is convened and chaired by the Representative Director and President. It is composed of inside directors (excluding Directors who are Audit and Supervisory Committee Members) and individuals selected by inside directors (excluding Directors who are Audit and Supervisory Committee Members) from among those who play central roles in management.
• *4 The Corporate Management Committee is composed of the management team responsible for business execution. It serves as an organ for discussing important matters related to business execution, including the Group's various strategies and future plans, and is held approximately twice a month. This meeting is not limited to discussing matters submitted to the Board of Directors and performance-related matters. It also serves to accelerate the Company's ability to respond flexibly to both apparent and potential management issues by enabling the management team to engage in free and open discussion and multifaceted consideration on a wide range of topics.
• *5 The Operating Control Committee flexibly deliberates on such matters as (1) discussing capital investment and IT investment plans, (2) confirming the progress of and forecasts for expense budgets for the current fiscal year, (3) confirming the status of disposal and inventory management at our business divisions and domestic consolidated subsidiaries, and (4) deciding on the policy for compiling the next fiscal year’s budget and examining the proposed budget, by convening the relevant directors, heads of each organization, representatives of business divisions and offices, and related parties for each matter.
• *6 The Management Liaison Committee serves to ensure that the Company's decisions are thoroughly communicated to the heads of each organizational unit responsible for managing business operations. It also confirms each organizational unit's implementation policies regarding such decisions, receives reports on the status of business operations from each unit, and verifies the appropriateness of internal controls. The Management Liaison Committee is chaired by the Representative Director and President, with all inside directors and Titled Executive Officers in attendance, and is held, in principle, once a month.

Decision making and Business Execution System

Our company clearly defines the scope of decision-making authority and responsibility for significant business execution in our Authority and Responsibility Regulations. Particularly important matters are thoroughly deliberated in appropriate meeting bodies, such as the Operating Committee of Top Management, Corporate Management Committee, or Operating Control Committee, depending on their content, before being submitted to the Board of Directors for decision-making.
Matters decided by the Board of Directors are executed under the responsibility of the Director in charge of operations or the Titled Executive Officer in charge. Progress and results of execution are reported to the Board of Directors as necessary. Other matters not deliberated by the Board are decided by the decision-makers designated in the Authority and Responsibility Regulations and executed by the responsible organization. This structure enables rational and prompt decision-making and operational execution through appropriate delegation of authority.

Audit System

Our Audit & Supervisory Board enhances the effectiveness of financial audits and operational audits by regularly exchanging information and closely coordinating with the Financial Auditor and the Internal Audits Division. Furthermore, Audit & Supervisory Board Members have the right to attend Board of Directors meetings and other important meetings, request explanations as necessary, and express opinions. They also have the right to inspect important documents such as meeting minutes and approval documents. This enables them to confirm that Dainichiseika Group’s decision-making and business execution are conducted lawfully and appropriately, including the status of Directors’ execution of duties, the rationality of decision-making in business execution, and the effectiveness of internal controls.

Nomination and Remuneration Committee

The Company has established a Nomination and Remuneration Committee as a voluntary body, composed of three or more directors, a majority of whom are Outside Directors. The Committee operates under its own regulations. The Representative Director and President or other Directors consult with the Committee on important decisions and obtain its recommendations. This ensures the fairness and transparency of decisions made by the Board of Directors and Individual Directors.
Members of the Nomination and Remuneration Committee are elected by resolution of the Board of Directors, with the Chairperson selected by mutual vote from among the Outside Directors. Furthermore, considering the importance of the matters consulted, Outside Audit & Supervisory Board Members may attend as observers to confirm whether deliberations were conducted appropriately. The Committee may also request the attendance of relevant parties concerning agenda items to seek explanations.
The scope of consultation primarily covers matters related to personnel decisions for Directors and Titled Executive Officers, policies regarding the determination of compensation amounts or calculation methods, individual compensation amounts, succession planning, and evaluations of the Board’s functionality. If the Representative Director and President or any other Director requesting consultation is a party to the matter under consultation, they are prohibited from participating in that consultation. Minutes are prepared for the Nomination and Remuneration Committee’s consultations and recommendations, confirmed by all attending members, and retained for 10 years. As of March 31, 2025, the Nomination and Remuneration Committee consists of two Outside Directors and one Inside Director, with Mr. Yoshiaki Nakagawa, an Outside Director, serving as Chairperson.