Kureha is committed to strengthening its internal control functions including practicing compliance, enhancing risk management and ensuring fair and highly transparent management. In addition, Kureha has adapted Corporate Governance Guidelines, which are separately established to further enhance the effectiveness of its corporate governance, through which Kureha pursues sustainable growth and improving the medium- and long-term growth of corporate value for the Kureha Group (Kureha and Group companies).

In order to strengthen corporate governance and speed up decision-making and business execution in the Group management, Kureha has clarified its supervisory and executive responsibilities in management.

The Board of Directors, which consists of a total of up to ten Directors, at least one-third of whom are Independent Outside Directors, and chaired by the Chairman of the Board of Directors (if the position is vacant, the President & Chief Executive Officer), meets once a month, in principle, to make decisions on important management matters and supervise business execution.
As of the date of submission of this report, the Company’s Board of Directors consists of the seven Directors listed under “Executives” on the Company’s website. The Board of Directors is chaired by President & Chief Executive Officer Mr. Yutaka Kobayashi.

The Executive Committee, chaired by the President & Chief Executive Officer and comprised of the President & Chief Executive Officer and other Vice Presidents, meets twice a month, in principle, to deliberate on important matters and other issues related to the management of Kureha, ensuring that management decisions are efficiently made.
As of the date of submission of this report, the Company’s Executive Committee consists of the President & Chief Executive Officer and the Vice Presidents listed under “Executives” on the Company’s website. The Executive Committee is chaired by President & Chief Executive Officer Mr. Yutaka Kobayashi.

The Audit & Supervisory Board consists of four or fewer Audit & Supervisory Board members, including two or more independent outside Audit & Supervisory Board members, and has appropriate knowledge of finance and accounting. The Audit & Supervisory Board members monitor the deliberation processes of board’s resolutions and reports and audit the execution of duties. In addition, Audit & Supervisory Board members exchange opinions with the independent auditor and the Internal Control and Auditing Department regarding audit plans and the status of audits to ensure mutual cooperation.

Kureha has appointed Ernst & Young ShinNihon LLC as its independent auditor and has been subjected to fair and impartial accounting audits by properly providing management information.

The Internal Control and Auditing Department, which acts independently of other departments, assesses and verifies the suitability and effectiveness of internal management control systems, makes suggestions and recommendations regarding improvements, and reports the results of audits to the Board of Directors and others. By doing so, we ensure a system that contributes to improving management efficiency and public trust in Kureha.

With regard to matters concerning the appointment and remuneration of the Chairman of the Board of Directors, President & Chief Executive Officer, Representative Director, Directors, Vice Presidents with Title, and Vice Presidents in order to ensure transparency in the decision-making process of the Board of Directors and strengthen accountability to stakeholders, Kureha established the Nomination Advisory Committee and the Remuneration Advisory Committee on June 26, 2018 as a non-mandatory advisory board to the Board of Directors. Each of the Committees consists of three or more Directors, the majority of whom are Outside Directors, and is chaired by an Outside Director.
As of the date of submission of this report, the Company’s Nomination Advisory Committee and Remuneration Advisory Committee consist of the President & Chief Executive Officer and the Outside Directors listed under “Executives” on the Company’s website. Both committees are chaired by Outside Director Mr. Osamu Tosaka.

To improve the functions of the Board of Directors, Kureha shall conduct an annual analysis and evaluation of the effectiveness of the Board of Directors and disclose an overview of the results. Due to the significant changes in the composition of the Board of Directors and the Audit & Supervisory Board in FY2023, the Company deemed it effective to use a 38-item questionnaire to obtain quantitative evaluation data to evaluate the effectiveness of the Board of Directors, and used a five-point scale based on the questionnaire in combination with another method in which opinions, requests, etc. could be freely expressed.
The aforementioned evaluation of the effectiveness of the Board of Directors in FY2023 confirmed that the effectiveness of the Board of Directors as a whole was adequately maintained. On the other hand, an opinion was expressed regarding the need to improve how the Board of Directors meetings are run, for example, by allocating more time to discussion rather than reporting, in order to enrich deliberations on important management issues. Considering the results of the evaluation and deliberations in FY2023, the Board of Directors will improve how it operates in FY2024 and further deepen deliberations on themes such as the progress of the mid- and long-term management plan, management that is conscious of capital cost and stock price, and the revival of technology-driven companies. We will also continue to flesh out our discussions on promoting sustainability management.

Kureha aims to further improve internal control with the corporate philosophy system as the basic concept for internal control. In accordance with the Kureha Group Charter of Corporate Behavior, each Group company establishes its own Compliance Rules and strives to comply with domestic and international laws, as well as social norms and their underlying principles. Kureha establishes a Sustainability Coordination Committee, chaired by the President & Chief Executive Officer or a Director or Vice President appointed by the President & Chief Executive Officer. Under this committee, the Compliance Subcommittee is established as a subordinate body responsible for developing, maintaining, and operating a cross-departmental compliance system. Kureha ensures thorough compliance within the company through measures such as the Kureha Compliance Code of Conduct, which is based on the Kureha Group Charter of Corporate Behavior. Additionally, Kureha provides support to the Group companies in ensuring their own thorough compliance.
Kureha's annual internal audit plan is resolved by the Board of Directors. The Internal Auditing Department, operating independently of other departments, assesses and verifies the appropriateness and effectiveness of the internal control systems of Kureha and its Group companies, including compliance and risk management systems. It provides recommendations for improvement and reports audit results to the Executive Committee, the Board of Directors, and the Audit & Supervisory Board. This system contributes to enhancing management efficiency and strengthening public trust in Kureha.
Kureha has established Basic Rules for Internal Control over Financial Reporting and conducts Management’s Assessment and Certified Public Accountant’s Audit on the Effectiveness of Internal Control over Financial Reporting in accordance with the Financial Instruments and Exchange Act to ensure the reliability of its financial reporting. Under the responsibility of the Representative Director, Internal Control Reports are prepared and submitted.

- When determining remuneration, etc. for Directors and Vice Presidents, the Board of Directors reflects corporate performance and medium- and long-term growth of corporate value, and also considers securing and retaining appropriate human resources, and sets the remuneration structure and level that are appropriate to the required roles and responsibilities.
- Remuneration for Directors consists of 1) basic remuneration and 2) bonuses as performance-linked remuneration, etc. as monetary remuneration, as well as 3) pre-delivery type restricted stock remuneration and 4) performance-linked restricted stock remuneration as performance-linked remuneration, etc. as nonmonetary remuneration; provided, however, remuneration for Outside Directors is limited to basic remuneration, considering their roles.
- Remuneration for Vice Presidents consists of 1) basic remuneration and 2) bonuses as performance-linked remuneration, etc. as monetary remuneration, as well as 3) pre-delivery type restricted stock remuneration as non-monetary remuneration.
- Changes to the remuneration system for Directors and Vice Presidents shall be decided by the Board of Directors based on comprehensive consideration of trends at other companies, and after deliberation by the Remuneration Advisory Committee, a non-mandatory advisory board to the Board of Directors.

Kureha holds shares either for the purpose of pure investment or for purposes other than pure investment and classifies them according to this difference. The shares classified as shares for pure investment are held for the purpose of receiving profits from fluctuations in the value of shares or dividends from the shares. The shares classified as shares for purposes other than pure investment are held based on the assumption that they will contribute to current business as well as the sustainable and medium to long-term enhancement of corporate value. Kureha does not hold shares for the purpose of pure investment.

Policy on shareholdings, method for verifying the reasonableness of shareholdings, and details of verification of appropriateness of shareholdings for each stock conducted by the Board of Directors

Kureha holds the shares of its business partners if it is judged that doing so will contribute to current business as well as the sustainable and medium and long-term enhancement of corporate value. The Board of Directors verifies the significance of holding shares for purposes other than pure investment by examining whether the purpose of shareholdings is appropriate and whether the benefits and risks of holding the stock are commensurate with the cost of capital.
At the Board of Directors meeting held on May 17, 2024, keeping to the standard that the amount held (in total) should be less than 10% of consolidated net assets, Kureha will gradually reduce the number of shares that are no longer significant for Kureha to hold or whose holdings are excessive based on a comprehensive consideration of factors such as dialogue with companies in business relationships, the impact on the market, and availability of effective use of funds.