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

At the 122nd Annual General Meeting of Shareholders held on June 27, 2025, the Company transitioned from a “Company with a Board of Company Auditors” to a “Company with an Audit and Supervisory Committee.” This transition aims to establish a more transparent management structure and to better respond to the expectations of domestic and international stakeholders. This is achieved by the Audit and Supervisory Committee, which is composed of a majority of Outside Directors, overseeing and auditing the legality and appropriateness of the Directors' execution of duties.
In addition, eight independent committees supervise and audit the Representative Director and President and other departments in business execution in cooperation with the CSR/ESG Promote Group Headquarters. The results are reported to the Representative Director and President and the Board of Directors on a regular basis, or as needed depending on the nature of the case, and at the same time, the Representative Director and President is given instructions on how to respond.

• *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 executive officers, as well as the selection 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) 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 President and CEO, with all inside directors and Executive Officers in attendance, and is held, in principle, once a month.

Decision making and Business Execution System

Our Board of Directors, to strengthen the monitoring and supervision of decision-making from an independent perspective from management, appoints three of its seven directors (excluding Directors who are Audit and Supervisory Committee Members) from outside the company (one of whom is a woman) for a one-year term. Additionally, two of the three Directors who are Audit and Supervisory Committee Members are appointed from outside the company for a two-year term. Matters related to the Group’s basic strategy, such as important matters identified through dialogue and information exchange with stakeholders, the formulation of medium-term management plans, progress reports, and evaluation of results, are thoroughly examined in advance by the Operating Committee of Top Management, Corporate Management Committee, and Operating Control Committee, depending on the content, prior to deliberation by the Board of Directors. Internal regulations have been established for the implementation of business operations and to clarify the scope of responsibility according to job level and appropriately delegating authority to enable prompt decision-making.

Audit System

Our Audit and Supervisory Committee is composed of a total of three members: one full-time Audit and Supervisory Committee Member and two Outside Audit and Supervisory Committee Members. The committee generally meets once a month and holds additional meetings as necessary. The Audit and Supervisory Committee establishes audit policies and plans in accordance with applicable laws and regulations, the Company's Articles of Incorporation, and its "Audit and Supervisory Committee Regulations." It supervises and audits the directors' execution of duties by attending important meetings such as the Board of Directors, reviewing important documents like meeting minutes and approval request documents, and performing other necessary tasks.

The Audit and Supervisory Committee regularly exchanges information with the accounting auditor. Additionally, to ensure the smooth performance of its duties and enhance the effectiveness of audits, the Committee has appointed an assistant Audit and Supervisory Committee from among Dainichiseika's employees. It also collaborates with the Internal Audit Department to implement organized and efficient supervisory and auditing functions.

The directors serving on the Audit and Supervisory Committee attend important internal meetings in addition to the Board of Directors, request explanations as necessary, and express their opinions. Furthermore, they audit the directors' execution of duties by reviewing important approval documents, such as meeting minutes and approval request documents, and confirm that the operations of our group are conducted in accordance with laws and regulations and are appropriate.

Nomination and Remuneration Committee

As a voluntary committee, we have established a Nomination and Remuneration Committee composed of three or more directors (excluding Directors who are Audit and Supervisory Committee Members), with a majority being outside directors (excluding Directors who are Audit and Supervisory Committee Members).

The chairperson is elected by the committee members from among the Outside Directors (excluding Directors who are Audit and Supervisory Committee Members). As of June 27, 2025, the committee is composed of three Outside Directors (excluding Directors who are Audit and Supervisory Committee Members), including at least one woman, and two inside directors (excluding Directors who are Audit and Supervisory Committee Members). Additionally, two Outside Directors who are Audit and Supervisory Committee Members and one inside director (excluding Directors who are Audit and Supervisory Committee Members) attend as observers. Further observers may be requested as necessary.

Based on the "Nomination and Remuneration Committee Regulations" established for its operation, the Committee is consulted on particularly important matters to be submitted to the Board of Directors. These matters include the appointment of directors (excluding Directors who are Audit and Supervisory Committee Members) and the determination of individual compensation amounts for directors (excluding Directors who are Audit and Supervisory Committee Members). By obtaining recommendations from diverse perspectives, including diversity and skills, we have established a fair and transparent decision-making system.