Daio Paper works toward strengthening its corporate governance based on the Corporate Governance Basic Policy established in October 2015, with the aim of becoming a company that is trusted by our shareholders and other stakeholders.

Basic Policy on Corporate Governance

The Group promotes sustainability management based on its management philosophy　“Shaping an Abundant and Affable Future for the World” to realize sustainable creation of　values for all stakeholders and society as a whole.
In this context, the Group considers corporate governance as a mechanism to realize sustainable growth and the enhancement of corporate value over medium- to long-term and as ensuring the functioning of the mechanism, by clarifying the role and responsibility of “the decision making and supervisory functions” and “the business execution function” of the management and promoting swift and flexible decision-making and implementation.
Amid the rapidly changing business environment, the Group has been working on reforms for achieving medium- to long-term sustainable growth such as business portfolio reform and speeding up global expansion by constantly adapting to the changing times and with foresight.At the same time, the Group will further enhance governance of management by striking the right balance between offense and defense through initiatives such as improvement of organizational structure to handle risks that are becoming more complex and diverse along with the expansion of overseas business and changes in the society

Corporate Governance Structure

Roles of the Board of Directors

1. The Board of Directors supervises the overall management, including the performance of duties by the management team, in order to ensure the fairness and transparency of management. The Board of Directors makes decisions for the Company by etermining the execution of critical business operations specified in laws and regulations or the Articles of Incorporation.

2.vThe Board of Directors delegates the authority over the execution of and decision-making on other business operations than the critical operations mentioned in the preceding paragraph to lowerlevel meeting bodies, including the Management Meeting, and to the officers in charge of those operations. The Board of Directors supervises the performance of duties by those meeting bodies and officers.

3.Outside Directors supervise business execution by the Board of Directors and the management team and watch for any conflict of interest between the Company and the management team,among others, from stakeholders’ perspective in order to realize the Group’s sustainable growth and the enhancement of corporate value over its medium- to long-term.

4.Given the importance of issues related to sustainability, the Board of Directors sets out the “DAIO Global Environment Charter,” which is the basic policy on social responsibility that the companies across the Group should fulfill to protect the global environment, thereby raising officers’ and employees’ awareness. The Board of Directors works to help with the sustainable development of society and continue increasing the Group’s corporate value by actively launching initiatives, with giving due consideration to stakeholders, to resolve the issues, based on the discussions at the Sustainability Committee.

Evaluation of the Effectiveness of the Board of Directors

We have been evaluating the effectiveness of the Board of Directors annually, in order to regularly examine whether the Board of Directors is functioning properly, and continue to identify issues and implement measures for improvement.

1. Method of implementation

The Company carried out a self-evaluation anonymous questionnaire survey regarding composition and operation of the Board of Directors targeting all Directors and Audit and Supervisory Board Members with cooperation from an external institution. The survey results collected and aggregated by the external organization were analyzed and evaluated. At the same time, the Company conducted interviews with the executives.

2.Overview of the evaluation result

The Board of Directors of the Company was evaluated from 10 standpoints: ideal state; composition; operation; discussion; business performance monitoring function; support system for Directors and Audit & Supervisory Board Members; training for Officers; dialogue with shareholders (investors); Directors’ self-initiated execution of business; and operation of the Committees. As a result, it was confirmed that the Company’s Board of Directors is appropriately functioning in general and that its effectiveness is sufficiently ensured.

3.Initiatives regarding issues identified by the effectiveness evaluation of the Board of Directors in the fiscal year 2022

“For the issues: “review of the relevance between the Board of Directors and the Subcommittees” and “delegation of authority to the Management Meeting” identified as issues in the effectiveness evaluation of the Board of Directors in the fiscal year 2022, the Company reviewed the Detailed Rules for Matters to Be Submitted to the Board of Directors’ Meeting to clearly define the duty of the Subcommittees to report to the Board of Directors, thereby reinforcing the Board of Directors’ function of monitoring the execution of operations, and to newly add the “Matters to be deliberated,” thereby developing the environment for deepening the discussions of medium- to long-term management issues at the Board of Directors meetings.

4.Issues for the coming years

In order for the Company to grow in a sustainable manner over a long term in the middle of very rapid changes in the environment surrounding the business, the Company will continue to discuss various issues concerning sustainability, IT, DX (Digital transformation), etc. at the Board of Directors meetings and will also provide opportunities to acquire knowledge as necessary to further deepen the discussions.

Roles of the Audit & Supervisory Board (Members)

The Audit & Supervisory Board comprises five members, including three Outside Audit & Supervisory Board Members. It investigates the condition of the internal control system through business audits and accounting audits, in close cooperation with the internal audit division and Accounting Auditor, based on an audit plan determined by the Audit & Supervisory Board, in order to strengthen and enhance its management check function.

Audit Framework

1. Audit by Audit & Supervisory Board Members

Audit & Supervisory Board Members attend Board of Directors meetings and other major meetings, and investigate the status of the Company’s operations and financial standing, in order to audit the legality and appropriateness of the performance of duties by Directors. Outside Audit & Supervisory Board Members are appointed from among certified public accountants and lawyers who have expertise in corporate accounting and corporate laws as well as high-level insights and experience of corporate management, and they audit decision-making by the Board of Directors and the performance of duties by Directors from an objective and fair position.

2. Internal Audit

To ensure that the corporate governance framework of the entire Group is in order, the Internal Audit Department conducts on-site field audits and paper audits, etc. for each of the Company’s operating departments, as well as domestic and overseas Group companies. These are conducted from the viewpoint of operational execution process, compliance, and risk management, etc., based on the annual audit plan approved by the Board of Directors.