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Corporate Governance

Last Updated: June 22, 2018

UACJ Corporation Representative Director & President

Miyuki Ishihara Contact: Legal Affairs Department

TEL +81-3-6202-2600 Securities Code: 5741 https://www.uacj.co.jp/

The corporate governance of UACJ Corporation (the “Company”) is described below. I. Basic Views on Corporate Governance, Capital Structure, Corporate Attributes and Other

Basic Information

1. Basic Views

The Company believes that corporate governance is the basic framework for managing a company amid relationships with shareholders, customers, suppliers, employees, local communities, and various other interested parties (stakeholders). In other words, corporate governance benefits shareholders and various other stakeholders by developing products, technologies, and services that are useful to society and incorporate abundant consideration for safety, and, by offering them to the market, wins the trust of customers and suppliers and increases our corporate value. Toward that end, the Company is committed to doing everything practical to ensure proper disclosure of financial and management information, solid corporate ethics, and the practice of painstaking compliance and risk management, by establishing sound management oversight through the strengthening of Board of Directors functions and enhancing Audit & Supervisory Board functions. (Reference) [Management Philosophy] The UACJ Group strives to offer products and services deserving of our customers’ satisfaction and trust, and believes that sound and sustainable business development is key to making broad-reaching contributions to society. [Company Principles] In order to implement our management philosophy, the UACJ Group acts according to the following principles, and promotes an organizational structure in line with these precepts. 1. We will strive for active and impartial communication with all of our stakeholders, and will always place

stakeholder trust first when acting. 2. We will act according to strict ethics, comply with laws and regulations, and proactively contribute to the

environment and society. We will avoid all connection with criminal or subversive elements, and fulfill our responsibilities as a corporate citizen.

3. In order to earn our customers’ satisfaction and trust, we will tirelessly strive to improve our quality, technical and on-site expertise.

4. We will nurture staff by creating safe and positive work environments. 5. We will consistently adopt a global and long-term outlook, and adapt flexibly to changes in the business

environment, such as globalization. We will respect the laws, cultures and customs of each country, and contribute to the development of their societies.

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[Reasons for Non-compliance with the Principles of the Japan’s Corporate Governance Code]

No item to report.

[Disclosure Based on the Principles of the Japan’s Corporate Governance Code]

[Principle 1.4] (Cross-Shareholdings) Our basic approach to shareholding is to hold shares of other companies only for reasonable purposes, such as maintaining or strengthening business ties, or advancing business collaboration. Questions regarding possible investments in shares not already held, purchases of additional shares, and divestment are addressed with appropriate research considering factors such as necessity for the growth of the Group and effective use of the Group’s capital, before referral to the Board of Directors, as required by Company standards. Voting rights for shares held are exercised based on an overall consideration of whether resolution approval would have benefits, for example, in terms of supporting the purpose for the shareholding or promoting the sound management and, ultimately, greater corporate value for the issuing company. Our basic approach to cross-shareholders under the revised Corporate Governance Code will be disclosed in this Report by the end of December 2018. [Principle 1.7] (Related Party Transactions) Any competitive transactions and conflict of interest transactions between the Company and any of its Directors or companies substantially controlled by a Director are subject to the approval of the Board of Directors. The Company discloses these transactions in accordance with the provisions of the Companies Act, the Financial Instruments and Exchange Act, and other applicable laws and regulations as well as the rules of the Tokyo Stock Exchange. [Principle 3.1] (Full Disclosure) (1) We disclose its management philosophy, company principles, mid-term management plan, etc., on the

Company’s website and elsewhere. Management Philosophy, Company Principles https://www.uacj.co.jp/company/management/policy.htm Mid-term Management Plan https://www.uacj.co.jp/ir/library/presentation.htm

(2) We disclose its basic views on corporate governance on the Company’s website, annual securities reports,

etc. https://www.uacj.co.jp/csr/management/governance.htm#ac06

(3) We disclose the policy for the determination of remuneration of Directors and Audit & Supervisory Board

Members in its annual securities reports, etc. https://www.uacj.co.jp/csr/management/governance.htm#ac05

(4) We make appropriate decisions on personnel evaluations and take into consideration a candidate’s career

(experience, positions and qualifications, etc.) and abilities. The most suitable executive appointments are then decided. Management executives are appointed appropriately by the Board of Directors.

(5) We disclose the reason for selection of all Director candidates and Audit & Supervisory Board Member

candidates in the notice of ordinary general meeting of shareholders. The reason for selection of outside Directors and outside Audit & Supervisory Board Members is also disclosed in the Company’s annual security reports, etc. Notice of Annual General Meeting of Shareholders https://www.uacj.co.jp/ir/library/annualmeeting.htm Annual Securities Reports https://www.uacj.co.jp/ir/library/sr.htm

[Supplementary Principle 4.1.1] (Outline of the scope of delegation from the Board of Directors to management) The Company has introduced an executive officer system whereby it separates the management decision-making and supervision body from the business execution function to further strengthen the functions of the Board of Directors and increase the speed of business execution. The outline of the executive officer system is

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disclosed on the Company’s website, corporate governance report, etc. The authority of decision, deliberation, approval, etc., for various decision-making bodies and decision-makers including the Board of Directors, management meetings, the President, and officers in charge are clearly defined based on the approval standards. [Principle 4.8] (Effective Use of Independent Outside Directors) The Company has elected four independent outside Directors who satisfy the requirements of the Company concerning the independence of independent officers. As a result, independent outside Directors account for one third of the total number of Directors. [Principle 4.9] (Independence Standards and Qualifications of Independent Outside Directors) The Company appropriately selects independent outside Director candidates from among persons who can be expected to contribute to frank, active, and constructive deliberations at Board of Directors meetings in accordance with the standards prescribed by the Tokyo Stock Exchange and the independence standards of the Company and in consideration of their personnel, capital, and commercial relationships with the Company as well as other interests. [Supplementary Principle 4.11.1] (Views on the appropriate balance, diversity and sizes of the Board of Directors) Our views on the appropriate balance between knowledge, experience and skills, and diversity, etc. of the Board of Directors as a whole are substantially the same as the views on the nomination of Director candidates and the optimal appointment of Directors is determined based on the personnel evaluation of such factors as career history (experience, position, qualification, etc.) and skills. The Company has appointed one woman as an independent outside Director at the ordinary general meeting of shareholders held in June 2015. The Company will continue to work to improve its structure in due consideration of the appropriate balance between knowledge, experience, and skills of the Board of Directors as a whole as well as its diversity and appropriate size. [Supplementary Principle 4.11.2] (Concurrent service by Directors and Audit & Supervisory Board Members)The Company annually discloses concurrent service at other companies held by its outside Directors and outside Audit & Supervisory Board Members in the notice of ordinary general meeting of shareholders, annual securities reports, and corporate governance report, etc. One out of four outside Directors concurrently serves as an outside director at another listed company and one of them concurrently serves as an outside audit & supervisory board members at another listed company. None of the other two outside Directors and Executive Directors holds any concurrent service as an officer at another listed company. One out of four outside Audit & Supervisory Board Members concurrently serves as an outside director at another listed company. None of the other three outside Audit & Supervisory Board Members and full-time Audit & Supervisory Board Members holds any concurrent service as an officer at another listed company. [Supplementary Principle 4.11.3] (Outline of the results of the analysis and evaluation of the effectiveness of the Board of Directors as a whole) The Company analyzed and evaluated the effectiveness of the Board of Directors of the Company by conducting a questionnaire with Directors and Audit & Supervisory Board Members on the composition, operation, etc., of the Board of Directors and discussing the results at a meeting of the Board of Directors. As a result, the Company confirmed that the qualifications of the members of the Board of Directors are well-balanced as a whole with an appropriate size and diversity, that the Board is operated properly and the Board has the appropriate structure to exercise its supervisory function over management, and that the Board has had open-minded and constructive discussions and exchange of opinions, including the preliminary deliberation meetings and other processes leading to the actual meeting. As future challenges, the Company recognized the need for further enhancement of discussions at Board of Directors meetings, the revision of the standards for the matters to be submitted for the decision by and reporting to the Board of Directors for the better functioning of the supervisory function, and continuing to work to ensure more lively discussion based on management strategies, etc. and enhance the prior explanation to outside officers and the explanation materials to contribute to governance. On the basis of these evaluations, initiatives were set for enhancing discussions on important issues and striving to better operate the Board of Directors in order to accelerate globalization and achieve sustainable

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growth. [Supplementary Principle 4.14.2] (Training policy for Directors and Audit & Supervisory Board Members) The Company’s training policy is to conduct the following training at the time of new appointment and during the term of office to enable Directors and Audit & Supervisory Board Members to execute their duties appropriately. At the time of new appointment, the Company provides new Directors and Audit & Supervisory Board Members with opportunities to understand their roles and responsibilities. In addition, it provides new outside officers and Audit & Supervisory Board Members with opportunities to deepen their understanding of the Company’s business, finance, organization, etc. As ongoing training opportunities during the term of office, the Company also provides Directors and Audit & Supervisory Board Members with opportunities to deepen their understanding of governance and discuss issues faced by the UACJ Group and other training opportunities that are appropriate for each individual’s knowledge, experience, and skills. [Principle 5.1] (Policy for Constructive Dialogue with Shareholders) In addition to appointing a Director in charge of Public and Investor Relations, the Company has assigned the Public and Investor Relations Department as the department responsible for investor relations. Quarterly results briefings and other opportunities, such as one-on-one meetings, small meetings and factory tours, are arranged for shareholders and investors one after another. In addition, given the shareholder composition of the Company, we have a basic policy to visit investors in the U.S.A., Europe, and Asia at least once a year. The Company also strives to improve information disclosure through, among others, the posting of information on the Company’s website and the issuance of integrated reports.

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2. Capital Structure

Foreign Shareholding Ratio From 10% to less than 20%

[Status of Major Shareholders]

Name Number of Shares Owned

(Shares) Shareholding Ratio

(%)

Furukawa Electric Co., Ltd. 12,036,500 24.95

GOLDMAN SACHS INTERNATIONAL 4,251,100 8.81

NIPPON STEEL & SUMITOMO METAL CORPORATION

3,744,609 7.76

The Master Trust Bank of Japan, Ltd. (trust account)

1,113,500 2.30

Japan Trustee Services Bank, Ltd. (trust account)

1,061,700 2.20

SUMITOMO CORPORATION 750,000 1.55

Mizuho Bank, Ltd. 733,100 1.51

Sumitomo Mitsui Banking Corporation 733,074 1.51

The UACJ Group Employee Stock Ownership Plan

731,047 1.51

Japan Trustee Services Bank, Ltd. (trust account 9)

655,200 1.35

Controlling Shareholder –

Parent N/A

Supplementary Explanation

–

3. Corporate Attributes

Listed Stock Market and Market Section Tokyo Stock Exchange First Section

Fiscal Year-End March

Type of Business Nonferrous Metals

Number of Employees (Consolidated) at End of the Previous Fiscal Year

1,000 or more

Net Sales (Consolidated) for the Previous Fiscal Year

From ¥100.0 billion to less than ¥1 trillion

Number of Consolidated Subsidiaries at End of the Previous Fiscal Year

From 10 to less than 50

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4. Policy for Measures to Protect Minority Shareholders in Conducting Transactions with Controlling Shareholder

–

5. Special Circumstances Which May Have Material Impact on Corporate Governance

–

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II. Business Management Organization and Other Corporate Governance Systems regarding Decision-making, Execution of Business, and Supervision in Management

1. Organizational Composition and Operation

Organization Form Company with Audit & Supervisory Board Members

[Directors]

Maximum Number of Directors Stipulated in Articles of Incorporation

12

Term of Office Stipulated in Articles of Incorporation

1 year

Chairperson of the Board of Directors President

Number of Directors 12

Appointment of Outside Directors Appointed

Number of Outside Directors 4

Number of Independent Officers Designated from among Outside Directors

4

Outside Directors’ Relationship with the Company (1)

Name Attribute Relationship with the Company*

a b c d e f g h i j k

Toshio Suzuki Academic

Ryoko Sugiyama From another company

Takahiro Ikeda From another company △

Akio Sakumiya From another company

* Categories for “Relationship with the Company” * “” when the director presently falls or has recently fallen under the category;

“” when the director fell under the category in the past; * “” when a close relative of the director presently falls or has recently fallen under the category; and

“” when a close relative of the director fell under the category in the past a. Executive (a person who executes business; hereinafter, the same) of the Company or its subsidiary b. Non-executive director or executive of the parent of the Company c. Executive of a fellow subsidiary of the Company d. Party whose major client or supplier is the Company or an executive thereof e. Major client or supplier of the Company or an executive thereof f. Consultant, accounting professional or legal professional who receives a large amount of monetary

consideration or other property from the Company besides remuneration as an officer g. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a

corporation) h. Executive of a client or supplier of the Company (which does not correspond to any of d., e., or f.) (the

director himself/herself only) i. Executive of a corporation to which outside officers are mutually appointed (the director himself/herself

only) j. Executive of a corporation that receives a donation from the Company (the director himself/herself only) k. Other

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Outside Directors’ Relationship with the Company (2)

Name Designation as Independent

Officer

Supplementary Explanation of

the Relationship Reasons for Appointment

Toshio Suzuki ○ –

Toshio Suzuki is a Professor Emeritus at the University. He was asked to join the Board of Directors based on the judgment that his objective perspective stemming from his wealth of academic experience would enable him to properly perform the duties of an outside member. Judging also that Professor Suzuki is not in a position that would give rise to a conflict of interest with general shareholders, the Company has designated him an independent officer. None of the descriptions provided in Rule 211.4.6 of the Enforcement Rules for Securities Listing Regulations of the Tokyo Stock Exchange apply to Professor Suzuki.

Ryoko Sugiyama ○ –

Ryoko Sugiyama is a Professor at the University. She was asked to join the Board of Directors based on the judgment that her wealth of academic experience, and management experience as a company director, would allow her to properly perform the duties of an outside member. Judging also that Professor Sugiyama is not in a position that would give rise to a conflict of interest with general shareholders, the Company has designated her an independent officer. None of the descriptions provided in Rule 211.4.6 of the Enforcement Rules for Securities Listing Regulations of the Tokyo Stock Exchange apply to Professor Sugiyama.

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Name Designation as Independent

Officer

Supplementary Explanation of

the Relationship Reasons for Appointment

Takahiro Ikeda ○

Takahiro Ikeda used to work for Mitsubishi Chemical Corporation, which is a customer of the products of the Company. As the amount of transactions with Mitsubishi Chemical Corporation accounts for less than 0.2% of the Company’s consolidated sales, the company does not have any special business relationship with the Company.

Takahiro Ikeda previously served as a director of a major chemical manufacturer and was involved in the management of the company as well as its group companies. He was asked to join the Board of Directors based on the judgment that his extensive experience would enable him to properly perform the duties of an outside member. Judging also that Mr. Ikeda is not in a position that would give rise to a conflict of interest with general shareholders, the Company has designated him an independent officer. Mr. Ikeda used to work for Mitsubishi Chemical Corporation, which is a customer of the products of the Company. However, as the amount of transactions with Mitsubishi Chemical Corporation accounts for less than 0.2% of the Company’s consolidated sales, the company does not have any special business relationship with the Company.

Akio Sakumiya ○ –

Akio Sakumiya previously served as a director and executive vice president of a major electronic components manufacturer and was involved in the management of the company as well as its group companies. He also served as a committee member and vice chairman of various advisory committees relating to human resources and remuneration for directors. He was asked to join the Board of Directors based on the judgment that his extensive experience would enable him to properly perform the duties of an outside member. Judging also that Mr. Sakumiya is not in a position that would give rise to a conflict of interest with general shareholders, the Company has designated him an independent officer. None of the descriptions provided in Rule 211.4.6 of the Enforcement Rules for Securities Listing Regulations of the Tokyo Stock Exchange apply to Mr. Sakumiya.

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Voluntary Establishment of Committee(s) Equivalent to Nominating Committee or Remuneration Committee

Established

Committee’s Name, Composition, and Chairperson’s Attributes

Committee Equivalent to Nominating Committee

Committee Equivalent to Remuneration Committee

Committee’s Name Nomination and Remuneration Advisory Committee

Nomination and Remuneration Advisory Committee

Total Committee Members 7 7

Full-time Members 0 0

Inside Directors 2 2

Outside Directors 4 4

Outside Experts 1 1

Other 0 0

Chairperson Outside director Outside director

Supplementary Explanation

The Company has established a Nomination and Remuneration Advisory Committee as a voluntary advisory body to the Board of Directors to increase the objectivity and transparency of the processes for the nomination of Directors and Executive Officers and for the determination of their remuneration and thereby to strengthen corporate governance. Upon request of the Board of Directors, the Committee deliberates the matters concerning the nomination and remuneration of Directors and Executive Officers and reports the results of the deliberation. The Committee is chaired by an independent outside Director and has of six members (Chairperson, other three independent outside Directors, two inside Directors, and an independent outside Audit & Supervisory Board Member) for a total of seven members.

[Audit & Supervisory Board Members]

Establishment of Audit & Supervisory Board Established

Maximum Number of Audit & Supervisory Board Members Stipulated in Articles of Incorporation

6

Number of Audit & Supervisory Board Members 6

Cooperation among Audit & Supervisory Board Members, Financial Auditor and Internal Audit Department

As for the coordination between the audits by Audit & Supervisory Board Members and internal audits, information is freely shared through the exchange of information, such as prior reviews of on-site audit plans based on the annual policy and plan implementation of both parties and reporting of on-site audit results to each other, and the exchange of opinions on them. Their audit results are also freely shared and opinions are exchanged with the accounting auditor for information sharing and follow-up of audit findings.

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Appointment of Outside Audit & Supervisory Board Members

Appointed

Number of Outside Audit & Supervisory Board Members

4

Number of Independent Officers Designated from among Outside Audit & Supervisory Board Members

3

Outside Audit & Supervisory Board Members’ Relationship with the Company (1)

Name Attribute Relationship with the Company*

a b c d e f g h i j k l m

Akari Asano From another company

Yuki Iriyama From another company △

Hiroyuki Yamasaki CPA

Yoshiro Motoyama From another company

* Categories for “Relationship with the Company” * “” when the Audit & Supervisory Board Members presently falls or has recently fallen under the category;

“” when the Audit & Supervisory Board Members fell under the category in the past; * “” when a close relative of the Audit & Supervisory Board Members presently falls or has recently fallen

under the category; and “” when a close relative of the Audit & Supervisory Board Members fell under the category in the past a. Executive (a person who executes business; hereinafter, the same) of the Company or its subsidiary b. Non-executive director or accounting advisor of the Company or its subsidiary c. Non-executive director or executive of the parent of the Company d. Audit & Supervisory Board Members of the parent of the Company e. Executive of a fellow subsidiary of the Company f. Party whose major client or supplier is the Company or an executive thereof g. Major client or supplier of the Company or an executive thereof h. Consultant, accounting professional or legal professional who receives a large amount of monetary

consideration or other property from the Company besides remuneration as an Audit & Supervisory Board Member

i. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a corporation)

j. Executive of a client or supplier of the Company (which does not correspond to any of f., g., or h.) (the Audit & Supervisory Board Member himself/herself only)

k. Executive of a corporation to which outside officers are mutually appointed (the Audit & Supervisory Board Member himself/herself only)

l. Executive of a corporation that receives a donation from the Company (the Audit & Supervisory Board Members himself/herself only)

m. Other

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Outside Audit & Supervisory Board Members’ Relationship with the Company (2)

Name Designation as Independent

Officer

Supplementary Explanation of

the Relationship Reasons for Appointment

Akari Asano ○ –

Akari Asano has been a senior executive in charge of general affairs and performed other management roles at a manufacturing firm and within that firm’s corporate group. He was asked to join the Audit & Supervisory Board based on the judgment that the knowledge and experience he has acquired throughout his career would enable him to properly perform the duties of an outside member. Judging also that Mr. Asano is not in a position that would give rise to a conflict of interest with general shareholders, the Company has designated him an independent officer. None of the descriptions provided in Rule 211.4.6 of the Enforcement Rules for Securities Listing Regulations of the Tokyo Stock Exchange apply to Mr. Asano.

Yuki Iriyama

Yuki Iriyama used to work for Nippon Steel & Sumitomo Metal Corporation, which is a customer of the products of the Company. As the amount of transactions with Mitsubishi Chemical Corporation accounts for less than 0.1% of the Company’s consolidated sales, the company does not have any special business relationship with the Company. In addition, Nippon Steel & Sumitomo Metal Corporation is the third largest shareholder of the Company, which holds 7.76% of the shares of the Company (after deducting treasury shares).

Yuki Iriyama previously served as a managing director of a major steelmaker and has extensive experience in corporate management. He was asked to join the Audit & Supervisory Board based on the judgment that the advanced expert knowledge of the law that he has accumulated through his work as an attorney deeply involved in corporate legal affairs would enable him to properly perform the duties of an outside member.

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Name Designation as Independent

Officer

Supplementary Explanation of

the Relationship Reasons for Appointment

Hiroyuki Yamasaki ○ –

Hiroyuki Yamasaki has extensive experience in finance and accounting as a certified public accountant with a thorough knowledge of business accounting. He was asked to join the Audit & Supervisory Board based on the judgment that the advanced accounting expertise developed through his work would enable him to properly perform the duties of an outside member. Judging also that Mr. Yamasaki is not in a position that would give rise to a conflict of interest with general shareholders, the Company has designated him an independent officer. None of the descriptions provided in Rule 211.4.6 of the Enforcement Rules for Securities Listing Regulations of the Tokyo Stock Exchange apply to Mr. Yamasaki.

Yoshiro Motoyama ○ –

Yoshiro Motoyama previously served as a director and senior vice president of a major automobile manufacturer and has extensive experience in corporate management. He was asked to join the Audit & Supervisory Board based on the judgment that the broad perspective on management developed through his work would enable him to properly perform the duties of an outside member. Judging also that Mr. Motoyama is not in a position that would give rise to a conflict of interest with general shareholders, the Company has designated him an independent officer. None of the descriptions provided in Rule 211.4.6 of the Enforcement Rules for Securities Listing Regulations of the Tokyo Stock Exchange apply to Mr. Motoyama.

[Independent Officers]

Number of Independent Officers 7

Matters relating to Independent Officers

The Company appropriately appoints independent outside Directors and independent outside Audit & Supervisory Board Members from among persons who can be expected to contribute to frank, active, and constructive deliberations at Board of Directors meetings in accordance with the standards prescribed by the

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Tokyo Stock Exchange and the independence standards of the Company and in consideration of their personnel, capital, and commercial relationships with the Company as well as other interests and notifies them as independent officers.

[Incentives]

Implementation of Measures to Provide Incentives to Directors

Performance-linked remuneration

Supplementary Explanation

The remuneration for officers comprises of basic remuneration in the form of fixed remuneration, short term performance-linked remuneration tied to the level of achievement of the Company’s performance in a single fiscal term, and medium to long term performance-linked remuneration that is tied to the level of achievement of the Company’s medium to long term performance.

Recipients of Share Options

Supplementary Explanation

–

[Director Remuneration]

Disclosure of Individual Directors’ Remuneration No individual disclosure

Supplementary Explanation

Regarding the “remuneration based on the Articles of Incorporation or the resolution of the general meeting of shareholders,” the Company discloses the total number of Directors to which remuneration is paid and the total amount of remuneration paid.

Policy for Determining Remuneration Amounts or Calculation Methods Thereof

Established

Disclosure of Policy for Determining Remuneration Amounts or Calculation Methods Thereof

Policy for determining the amount of remuneration of officers or its calculation method and the determination method The maximum amount of remuneration of Directors was revised to no more than ¥650 million per year (not including employee salaries; including the maximum amount of remuneration of outside Directors of no more than ¥80 million per year) at the fifth ordinary general meeting of shareholders held on June 21, 2018. The maximum amount of remuneration of Audit & Supervisory Board Members was also revised to no more than ¥100 million per year at the same general meeting of shareholders. The purpose of the remuneration system for officers of the Company is to encourage Directors to help the Company to continue to meet the expectations of various stakeholders and to create profit that is sufficient to enable the Company to contribute to the society through stable and sound business evolution and to raise their motivation to contribute to the enhancement of corporate value and performance improvements over the medium- to long-term. To ensure that the remuneration system of the Company for officers functions correctly from this perspective and to increase its objectivity and transparency, judgments on the specific

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design and operation of the system are made by the Board of Directors based on the advice of the Nomination and Remuneration Advisory Committee, which consists of three or more members selected by a resolution of the Board of Directors (a majority of which shall consist of independent outside Directors or independent outside Audit & Supervisory Board Members). The basic policy for the remuneration of officers is as follows, as revised pursuant to a resolution passed at the fifth ordinary general meeting of shareholders held on June 21, 2018: a. Concepts on remuneration for officers

・ A remuneration system that adds motivations towards achieving the performance targets (short term and medium to long term) based on the Company’s business strategy

・ A remuneration level that provides competitive remuneration levels to secure talented personnel who can lead the Company’s growth and to enhance the personnel’s motivation to contribute

・ The process of deciding the remuneration system that is highly objective and transparent ・ A remuneration system in which interests are shared with shareholders, and that leads to increased

shareholder value b. Remuneration system

・ The officer remuneration for Directors of the Company comprises of basic remuneration in the form of fixed remuneration, short term performance-linked remuneration tied to the level of achievement of the Company’s performance in a single fiscal term, and medium to long term performance-linked remuneration that is tied to the level of achievement of the Company’s medium to long term performance. The remuneration for outside Directors shall consist solely of the basic remuneration, as the main responsibility of outside Directors is to monitor from an objective and independent perspective.

・ The amount of short term performance-linked remuneration (standard amount: refers to the amount for which the payment rate is 100%; the same shall apply hereinafter) is approximately 25% of basic remuneration for each position.

・ The amount of medium to long term performance-linked remuneration (standard amount) for a single fiscal term is equivalent to approximately 25% of basic remuneration for each position.

c. Structure of the performance-linked remuneration 1) Short term performance-linked remuneration comprises of (i) portion based on company-wide

performance evaluation, (ii) portion based on divisional performance evaluation, and (iii) portion based on personal evaluation. The payment amount will vary based on performance in each fiscal term, and payment shall be made once per year. ・ For the portion based on company-wide performance evaluation, consolidated net income,

consolidated ROIC, and consolidated ordinary income before inventory evaluation shall be used as performance evaluation indicators. The amount of the portion shall be subject to change within the range from 0% to 200% in accordance with the level of achievement, on the basis that the payment rate is 100% if the achievement rate against the targets is 100%.

・ For the portion based on divisional performance evaluation, divisional ordinary income, division ROIC, and division ordinary income before inventory evaluation shall be used as performance evaluation indicators. The amount of the portion shall be subject to change within the range from 0% to 200% in accordance with the level of achievement, on the basis that the payment rate is 100% if the achievement rate against the targets is 100%.

・ The portion based on personal evaluation mainly involves the qualitative evaluation of important efforts, etc. not reflected in the company-wide and divisional performance for a single fiscal term. The weight of the portion based on personal evaluation is around 10% of overall short term performance-linked remuneration.

2) Medium to long term performance-linked remuneration is a mechanism where performance share units (PSU) using shares in kind is employed to issue shares and provide money in accordance with the level of achievement of the entire Company’s medium to long term performance targets. The amount will vary based on performance during the evaluation period (three (3) years), and payment shall be made once every three (3) years. ・ In regard to performance evaluation indicators, average consolidated ROIC over the three (3) year

period and cumulative consolidated adjusted EBITDA over the three (3) year period are used, and based on the payment rate being 100% if the achievement rate against the targets initially set for

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the three (3) year period is 100%, the amount shall vary within the range from 0% to 200%, in accordance with the level of achievement.

・ After the completion of the evaluation period, half of the confirmed number of units shall be issued in the form of shares, and the remaining half shall be paid in cash.

d. Remuneration levels, remuneration determination procedures ・ The remuneration level is determined through comparisons with companies of similar size and

business, etc., to the Company, in reference to officer remuneration survey data from external specialist agencies.

・ The policies and specific contents of the Company’s director & officer remuneration shall be deliberated by the Nomination and Remuneration Advisory Committee, and determined by the Board of Directors in response to the Committee’s report.

・ Over half of the Nomination and Remuneration Advisory Committee is comprised of independent outside Directors and independent outside Audit & Supervisory Board Members, and in addition, sufficient information is provided to the Committee members by obtaining advice from external specialist agencies as necessary.

・ The specific amount of remuneration of Directors is determined by a resolution of the Board of Directors within the limit approved by the general meeting of shareholders.

・ The specific amount of remuneration of Audit & Supervisory Board Members is determined by consultation among Audit & Supervisory Board Members within the limit approved by the general meeting of shareholders.

[Supporting System for Outside Directors and/or Audit & Supervisory Board Members]

Board of Directors meeting materials are distributed to the attendees in advance. Prior briefing sessions on important agenda are provided as necessary to support the attendees.

[Status of Persons Who Have Retired from a Position Such as Representative Director and President]

Retired Representative Director and Presidents, etc. Holding Advisory or Any Other Position in the Company

Name Title/

Position Responsibilities

Working Form and Conditions(Full-time/Part-time,

Paid/Unpaid, etc.)

Date of Retirement

from Position Such as

President

Term of Office

Shigenori Yamauchi

Advisor States his opinion upon request of management. Also holds a position at certain external organizations. [Main official post] Chairman, Japan Light Metal Welding Association

Part-time, Paid 2018/6/21 1 year

Mitsuru Okada

Advisor States his opinion upon request of management.

Part-time, Paid 2018/6/21 1 year

Total Number of Retired Representative Director and Presidents, etc. Holding Advisory or Any Other Position in the Company

2

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Other Matters

–

2. Matters on Functions of Business Execution, Audit and Supervision, Nomination and

Remuneration Decisions (Overview of Current Corporate Governance System)

The Company has introduced an executive officer system whereby it separates the management decision-making and supervision functions from the business execution function to further strengthen the functions of the Board of Directors and increase the speed of business execution. The Company’s Board of Directors meetings are held monthly, at which time 12 Directors and six Audit & Supervisory Board Members, including four outside Directors and four outside Audit & Supervisory Board Members, respectively, attend. The meeting agenda includes deliberating important management issues and reporting the status of business operations in compliance with the laws and regulations of the Articles of Incorporation and other internal rules. In addition, a monthly management meeting attended by eight Directors, two full-time Audit & Supervisory Board Members and 18 Executive Officers is also held, where members deliberate and review important management issues and try to ensure further communication among executives in order to better control business operations. Director terms have been set at one year in an effort to clarify responsibility. We have four outside Directors. One of them has an objective perspective based on his ample learning and experience as a professor emeritus of a university; one of them has ample learning and experience as a professor of a university and management experience as a direct of a company; and two of them have extensive management experience as directors of a company. Together they play a role to ensure the appropriateness of decisions by the Board of Directors. It is also prescribed in the Articles of Incorporation that the number of Directors of the Company shall be 12 or less. Internal audit structure: the Company has established the Audit Department (full-time: 9 employees, part-time 3 employees) directly reporting to the President. The Department develops the annual audit policy and plan in accordance with the internal audit regulations, objectively examines and evaluates whether various management activities of the Company and the Group companies are carried out in legal and rational manner and whether they are executed appropriately in accordance with the business purpose of the Company, and reports the results to the President together with the recommendation of remedial measures. Audit & Supervisory Board Member audit structure: the Company has adopted an Audit & Supervisory Board system and has established an independent Audit & Supervisory Board consisting of six members including four outside members, among which three members have knowledge of finance and accounting and audit the execution of duties by Directors. More specifically, the Audit & Supervisory Board annually develops the annual audit policy and plan based on the Audit & Supervisory Board standards and regulations and audits whether the duties of Directors are properly performed, mainly focusing on the design and operation status of the internal control system, risk prevention, and how management issues are being addressed. To enhance the functions of the Audit & Supervisory Board, the Company has assigned two employees to duties to assist Audit & Supervisory Board Members with their duties. The Company has appointed Deloitte Touche Tohmatsu LLC as the financial auditor and accounting audits are conducted by auditors Masahiko Tezuka, Kazuki Iwashita, and Takahiro Ikeda from the audit firm. They have engaged in the audit of the Company for three, six, and four consecutive years, respectively, and their audits are conducted based on the annual policy and plan. Their accounting audits are assisted by the staff of 10 certified public accountants, five persons who have passed the CPA exam, and 14 other persons. Their division of labor is determined when the audit plan is prepared.

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3. Reasons for Adoption of Current Corporate Governance System

The Company has adopted an Audit & Supervisory Board system and has established an Audit & Supervisory Board consisting of six members including four outside members, among which three members have knowledge of finance and accounting, to audit the execution of duties by Directors as an independent body to take a part in corporate governance, for example, through the attendance of its members at Board of Directors meetings and other important internal meetings of the Company, in compliance with Audit & Supervisory Board Member Audit Standards and in accordance with the audit policy and plan. The Audit & Supervisory Board holds monthly meetings and ensures information sharing and sufficient exchange of opinions with external Audit & Supervisory Board Members through regular audit reporting from the full-time Audit & Supervisory Board Members.

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III. Implementation of Measures for Shareholders and Other Stakeholders

1. Measures to Energize General Shareholders Meetings and Smooth Exercise of Voting Rights

Supplementary Explanations

Early Notification of General Shareholders Meeting

Notice is sent five days before the statutory deadline (19 days before the date of the general meeting of shareholders) and is also disclosed on the websites of the Tokyo Stock Exchange and the Company one day before it is sent.

Scheduling AGMs Avoiding the Peak Day

The ordinary general meeting of shareholders was held on June 21, 2018.

Allowing Electronic or Magnetic Exercise of Voting Rights

The Company has introduced the exercise of voting rights through the website of the share transfer agent (Mizuho Trust & Banking Co., Ltd.).

Providing Convocation Notice in English (Translated Fully or Partially)

The English translation of the “Reference Documents for the General Meeting of Shareholders” of the convening notice is disclosed on the websites of the Tokyo Stock Exchange and the Company for the ordinary general meetings of shareholders held in or after June 2017.

Other Notice of general meeting of shareholders and other relevant information is published on the Company’s website.

2. IR Activities

Supplementary Explanations Explanation by Representative

Preparation and Publication of Disclosure Policy

Published on the Company’s website.

Regular Investor Briefings for Individual Investors

Factory tours are arranged for individual shareholders.

No

Regular Investor Briefings for Analysts and Institutional Investors

Quarterly results briefings and other opportunities, such as one-on-one meetings and small meetings, are arranged.

Yes

Regular Investor Briefings for Overseas Investors

Given the shareholder composition of the Company, we have a basic policy to visit investors in the U.S.A., Europe, and Asia at least once a year.

No

Posting of IR Materials on Website

Publishes, among others, financial information, other timely disclosure materials, annual and quarterly securities reports, results briefing materials, the status of corporate governance, and notice of general meeting of shareholders on the Company’s website.

Establishment of Department and/or Manager in Charge of IR

Has established the Public and Investor Relations Department.

3. Measures to Ensure Due Respect for Stakeholders

Supplementary Explanations

Provisions to Ensure Due Respect for Stakeholders in Internal Rules, etc.

Prescribed as part of the management philosophy and the company principles.

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Implementation of Environmental Activities, CSR Activities, etc.

Prepares CSR-related information and publishes it on the Company’s website.

Formulation of Policies for Information Provision to Stakeholders

The basic policy on information disclosure, etc. is prescribed as part of the disclosure policy and is published on the Company’s website.

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IV. Matters Related to Internal Control System

1. Basic Views on Internal Control System and Progress of System Development

The Company and the Group have established the following internal control system in accordance with the Companies Act and Ordinance for Enforcement of the Companies Act. (1) Systems for ensuring execution of duties by Directors and employees of the Company and the Group is in

compliance with the laws and regulations and the Articles of Incorporation ・ The Company and the Group aim to be a corporate group that acts in accordance with the

management philosophy and company principles, and complies with laws and regulations, and the Articles of Incorporation.

・ As centered on the CSR Committee, education is implemented through such means as holding seminars and distributing manuals, and compliance activities are promoted through such mean such as performing checks for violations of laws and regulations.

・ An internal reporting system has been put in place to promote the early detection and correction of compliance violations.

・ The Internal Auditing Department, as the internal audit unit, monitors the performance of duties in individual units, conducts audits to determine whether internal control systems are functioning effectively, and reports findings to the Board of Directors.

(2) Systems for the preservation and management of information on the execution of duties by Directors

・ Board of Directors meeting minutes, approval documentation, and other information on the execution of duties by Directors is prepared and retained in accordance with internal rules.

・ Information is kept in a state that permits viewing by Directors and Audit & Supervisory Board Members whenever necessary.

(3) Provisions and other systems addressing management of the risk of loss for the Company and the Group

・ The Company and the Group, in accordance with internal rules, properly address environmental, safety and health, quality, information security, export management, and other Company or Group risks. Risks unique to particular units are managed by those units. The CSR Committee advances horizontal risk management.

(4) Systems for ensuring efficient execution of duties by Directors of the Company and the Group

・ The Company and the Group ensure that effective execution of duties is carried out by such means as stipulating the scope of responsibilities and authorities in accordance with regulations.

・ Mid-term management plans and fiscal year budgets are prepared, and specific targets are established and their achievement is managed by individual units or groups.

(5) Systems for ensuring the propriety of operations by the subject corporation and the corporate group

consisting of it and its parent company and/or subsidiaries ・ The Group has constructed and put in place an internal control system. ・ The Internal Auditing Department conducts audits of operations. It then reports results to the Audit &

Supervisory Board Members and Representative Director as a measure for promoting compliance throughout the Group. In addition, subsidiaries are obligated by their own internal rules to discuss important management matters with the Company. If necessary, rules concerning the management of subsidiaries will be revised to ensure the propriety of business activities carried out by the Group.

(6) Matters concerning employees to be assigned to assist Audit & Supervisory Board Members at their

request ・ An employee has been assigned to assist the Audit & Supervisory Board Members. This employee

supports the work of the Audit & Supervisory Board Members in accordance with their instructions. (7) Matters concerning the independence of the employee referred to in the previous item and the validity of

instructions issued to the employee, from Directors ・ The employee referred to above is an employee designated to be outside the direction and supervision

of Directors, and personnel decisions concerning that employee require the prior agreement of the

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Audit & Supervisory Board. (8) Systems enabling Directors and employees of the Company and the Group to report concerns to Audit &

Supervisory Board Members, and systems for other reports to Audit & Supervisory Board Members ・ In connection with the execution of their duties, Directors of the Company and the Group, Executive

Officers, and employees of the Company and the Group report to the Company’s Audit & Supervisory Board Members without delay instances of significant violations of laws and ordinances, and the Articles of Incorporation; improprieties; and developments that could result in significant damage to the Company or Group.

・ Directors, Executive Officers, and employees, based on the Board of Directors meeting rules and other internal rules, report or settle matters in Board of Directors meetings or other meetings at which Audit & Supervisory Board Members are in attendance.

・ Subjecting Directors, Executive Officers, and employees of the Company and the Group, who have reported a matter, such as those described above, to the Company’s Audit & Supervisory Board Members, to disadvantageous treatment on account of their having reported the matter is prohibited.

(9) Other systems for ensuring that audits by Audit & Supervisory Board Members can be performed

effectively ・ The Board of Directors ensures Audit & Supervisory Board Member attendance at Board of Directors

meetings, and management and other important meetings. ・ The Audit & Supervisory Board Members and representative Director periodically hold meetings to

exchange views. ・ When the Audit & Supervisory Board Members make a request concerning the effectiveness of audits

performed by the Audit & Supervisory Board Members, the Directors, Executive Officers, and heads of relevant units respond in good faith.

・ Expenses covered by Article 388 of the Companies Act are handled in accordance with rules.

2. Basic Views on Eliminating Antisocial Forces and Progress of Related Efforts

(1) Basic views to ensure no relationship with antisocial forces ・ The Company and the Group have established the management philosophy and company principles

and clearly stipulates it in Article 2 of the company principles that “shall ensure that the UACJ Group has no relationship with antisocial forces and groups” and ensure that all employees are aware of it.

(2) Status of efforts to ensure no relationship with antisocial forces ・ The General Affairs Department and other divisions in charge of general affairs are specifically

assigned to handle any approach from antisocial forces. To ensure that they do not yield to any unjust demands and to help them to handle such demands resolutely to refuse any relationship with antisocial forces, a handling manual has been developed and made available to them.

・ The General Affairs Department plays a central role in collecting and managing information on antisocial forces and in maintaining close communication and relationship with external expert organizations, the police, and the legal counsel of the Company.

・ The Company conducts compliance training, including no relationship with antisocial forces, every year for all employees.

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V. Other

1. Adoption of Anti-Takeover Measures

Adoption of Anti-Takeover Measures Not adopted

Supplementary Explanation

–

2. Other Matters Concerning Corporate Governance System

(1) Other matters concerning the corporate governance system The Company recognizes full-compliance and the enhancement of risk management as key issues of corporate governance and the CSR Committee oversees the entire UACJ Group in these areas.

(2) Outline of the timely disclosure system The Company discloses the following corporate information on a timely basis to ensure the timely and appropriate disclosure of corporate information of the Company and its subsidiaries. ・ The Director in charge of public and investor relations shall be the responsible person for disclosure

and the General Manager of the Public and Investor Relations Department shall be the person in charge of administration.

・ Any information that potentially falls under matters required to be disclosure shall be immediately reported to the General Manager of the Public and Investor Relations Department by the head of the department in charge of the matter in accordance with the rules and regulations on timely disclosure prescribed by financial instruments exchanges. Information of each subsidiary shall be immediately reported to the department of the Company in charge of the subsidiary by the representative of the subsidiary and, in turn, immediately to the General Manager of the Public and Investor Relations Department by the head of the department.

・ Upon receipt of the report above, the General Manager of the Public and Investor Relations Department shall determine whether it is necessary to disclose the reported information in light of the rules and regulations on timely disclosure through consultation with the General Manager of the Legal Affairs Department as necessary, and if it is determined necessary, shall disclose it in accordance with the rules and regulations on timely disclosure after obtaining the approval of the heads of the departments concerned and the President.

The timely disclosure flow described above is as depicted in the “Structure diagram (Timely Disclosure System).”

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General Shareholders Meeting

Board of Auditors

Auditors Board of Directors

Decision-making/monitoring

Auditing Department

President

Management Meetings

DepartmentsGroup Companies

CSR Committee HR Development

Committee Health and Safety

Committee Environmental Committee

Quality Committee R&D Committee

Executive duties

Liaison

Audit

Liaison

Monitoring

Audit

Audit

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