デンカ（4061） – Notice of Convocation Annual Genaral Meeting 2022

These documents have been translated from Japanese originals for reference purposes only. In the event of any discrepancy between these translated documents and the Japanese originals, the originals shall prevail. The Company assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising from the translations. Denka Co., Ltd. (Securities Code: 4061) NOTICE OF CONVOCATION OF THE 163RD ORDINARY GENERAL MEETING OF SHAREHOLDERS Date and Time: Wednesday, June 22, 2022 at 10:00 a.m. Place: Nihonbashi Mitsui Hall, COREDO Muromachi 1 (reception desk on the 4th floor) 2-1, Nihonbashi-Muromachi 2-chome, Chuo-ku, Tokyo Proposals to be resolved: Proposal No. 1: Proposal No. 2: Proposal No. 3: Appropriation of Surplus Partial Amendments to the Articles of Incorporation Election of Five (5) Directors (Excluding Directors who are Audit & Supervisory Committee Members) Please exercise your voting rights in writing or via the Internet by 5:00 p.m. on Tuesday, June 21, 2022. This year, the Company will not distribute souvenirs or beverages at the General Meeting of Shareholders. We appreciate your understanding. 1 Message from the Management To Our Shareholders In this final year and culmination of our “Denka Value-Up” management plan, we will strive to achieve our numerical targets through the three “Value-Up” initiatives, concerning our business, the environment, and human resources, aiming to be an indispensable corporate member of society. Enclosed please find the Notice of Convocation of the 163rd Ordinary General Meeting of Shareholders. We would like to take this opportunity to express our gratitude to you for your continued support of Denka and make some observations concerning the Company’s results and current initiatives. May 2022 Manabu Yamamoto Chairman and Representative Director Toshio Imai Representative Director, President and Chief Executive Officer During the fiscal year ended March 31, 2022 (fiscal 2021), the Japanese economy lacked vigor, with personal consumption and exports continuing to seesaw due to the renewed spread of COVID-19. The global economy progressed towards recovery overall, even amid the persisting impact of the pandemic, but concerns over the outlook intensified from the start of 2022, with soaring resource prices due to the impact of Russia’s invasion of Ukraine, as well as increasingly serious logistics disruptions. Against this economic backdrop, in order to realize “The Denka Value” corporate philosophy, the Group pushed ahead with the refocusing of the “Business Portfolio Shift” and the “Introduction of Innovative Processes,” two strategies set forth in our “Denka Value-Up” five-year management plan launched in 2018, and focused its efforts on expanding businesses and enhancing profitability, under the three elements of our growth vision: become a “Specialty-Fusion Company” with “Sustained Growth” and “Sound Growth.” Moreover, we have designated the two years from fiscal 2021 as an important preparatory period for rapid growth towards the vision of the next management plan. As a first step towards being an indispensable corporate member of society, we are engaging in three “Value-Up” initiatives, concerning our business, the environment, and human resources. As a result, during the year under review, sales volumes increased, as a consequence of growth in electronics and highly advanced product lines, focus growth businesses, and COVID-19 rapid antigen test kits, in addition to an overall recovery in demand, which had been depressed due to the pandemic. We also implemented revisions to selling prices in step with rising raw material and fuel prices, and net sales increased. Turning to earnings, operating income, ordinary income, and profit attributable to owners of parent were all the highest on record, thanks to growth in specialty products. In fiscal 2021, the fourth year of “Denka Value-Up,” product groups in the healthcare field and the environment and energy field, which we had designated as our focus, both saw steady growth, enabling us to achieve our highest profit ever, as mentioned above. This was the result of the steady progress we have made in “specialization,” the core strategy of “Denka Value-Up,” over the past four years. In this fiscal year, the final year of the plan, we will continue to accelerate “specialization,” and promote the transformation of the business portfolio. From June last year, we reduced the number of Directors from twelve to nine, with the aim of further enhancing the effectiveness of discussion by the Board of Directors, expediting its decision-making, and further strengthening the degree of involvement of Outside Directors in the Board of Directors. We have certainly achieved the improvements we originally aimed for. However, the requirements placed on corporate governance are growing ever more sophisticated, including the review of market segments by the Tokyo Stock Exchange and the revisions to the Corporate Governance Code. We will continue to strive to build corporate governance to accurately respond to social requirements. Despite the persistently chaotic nature of the global situation, we will continue to promote ESG management, with the SDGs as our compass. In its fifth and final year, we will endeavor to culminate our management plan “Denka Value-Up” in the solid achievement of our numerical targets through the three “Value-Up” initiatives, concerning our business, the environment, and human resources, aiming to be an indispensable corporate member of society. We hope we can count on the continued understanding and support of our shareholders in this endeavor. 2 To Our Shareholders: (Securities Code: 4061) May 31, 2022 Toshio Imai President Denka Co., Ltd. 1-1, Nihonbashi-Muromachi 2-chome, Chuo-ku, Tokyo NOTICE OF CONVOCATION OF THE 163RD ORDINARY GENERAL MEETING OF SHAREHOLDERS The 163rd Ordinary General Meeting of Shareholders of Denka Co., Ltd. (the “Company”) will be held as described below. In order to prevent the spread of the COVID-19, the Company has decided to hold the General Meeting of Shareholders while taking appropriate measures to counter the spread of the virus with priority given to the safety of our shareholders (for details thereof, please refer to page 6). From the perspective of preventing the spread of the virus, the Company requests that shareholders refrain from attending the General Meeting of Shareholders in person, view the live broadcast of the meeting, and exercise their voting rights in writing or via the Internet, etc. The Company strongly recommends that shareholders exercise voting rights in advance. Please review the attached Reference Documents for the General Meeting of Shareholders and exercise your voting rights in writing by mail (Voting Rights Exercise Form) or via the Internet, etc., as described in the “Guide for Exercise of Voting Rights” (page 5), by no later than 5:00 p.m. on Tuesday, June 21, 2022. 1. Date and Time: 2. Place: Wednesday, June 22, 2022 at 10:00 a.m. Nihonbashi Mitsui Hall, COREDO Muromachi 1 (reception desk on the 4th floor) 2-1, Nihonbashi-Muromachi 2-chome, Chuo-ku, Tokyo 3. Meeting Agenda: Matters to be reported: 1. The Business Report, Consolidated Financial Statements for the Company’s 163rd Term (from April 1, 2021 to March 31, 2022) and results of audits by the Accounting Auditor and the Audit & Supervisory Committee of the Consolidated Financial Statements 2. Non-consolidated Financial Statements for the Company’s 163rd Term (from April 1, 2021 to March 31, 2022) Proposals to be resolved: Proposal No. 1: Appropriation of Surplus Proposal No. 2: Partial Amendments to the Articles of Incorporation Proposal No. 3: Election of Five (5) Directors (Excluding Directors who are Audit & Supervisory Committee Members) ◎ The following are posted on the Company’s website at https://www.denka.co.jp/ in accordance with law and Article 16 of the Company’s Articles of Incorporation and thus are not included in the documents attached to this notice of convocation. •Company’s Systems and Policies (Systems to Ensure the Appropriateness of Operations, Operational Status of Systems to Ensure the Appropriateness of Operations, and Basic Policies regarding the Control of the Company) in the Business Report •Consolidated Statement of Changes in Net Assets and Notes to Consolidated Financial Statements •Non-consolidated Statement of Changes in Net Assets and Notes to Non-consolidated Financial Statements 3 The Business Report, consolidated financial statements and the non-consolidated financial statements audited by the Audit & Supervisory Committee and the Accounting Auditor include the above documents posted on the Company’s website. ◎ If any revisions are made to the Business Report, Consolidated Financial Statements, Non-consolidated Financial Statements, or Reference Documents for the General Meeting of Shareholders, they will be posted on the Company’s website at https://www.denka.co.jp/. 4 The following three methods are available for exercising voting rights pertaining to the Company’s General Meeting of Shareholders. Exercise of Voting Rights in Writing by Mail (Voting Rights Exercise Form) Please indicate your vote for or against the proposals on the enclosed Voting Rights Exercise Form and send the completed form to us so that it is received by 5:00 p.m. on Tuesday, June 21, 2022. Exercise of Voting Rights via the Internet etc. Please access the website for exercising voting rights designated by the Company (https://www.web54.net), use the “Voting Rights Exercise Code” and the “Password” indicated on the enclosed Voting Rights Exercise Form, and follow the on-screen guidance. Please vote for or against the proposals by 5:00 p.m. on Tuesday, June 21, 2022. (Inquiry about Exercise of Voting Rights via the Internet etc.) Sumitomo Mitsui Trust Bank Stock Transfer Web Support Dial Tel: 0120-652-031 (office hours: 9:00 a.m. – 9:00 p.m.) ●Exercise of Voting Rights by Attending the Meeting Please bring the enclosed Voting Rights Exercise Form with you to the meeting and submit it to the receptionist at the meeting venue. * In the case of exercising voting rights by attending the meeting as a proxy, please submit a document evidencing the authority of proxy to the receptionist at the meeting venue together with the Voting Rights Exercise Form. Please note that such proxy must be one shareholder of the Company with voting rights in accordance with Article 18 of the Company’s Articles of Incorporation. Furthermore, the Company will not distribute souvenirs or beverages at the General Meeting of Shareholders. We appreciate your understanding. *Handling of duplicated exercise of voting rights If you exercise your voting rights both by the method of exercising voting rights in writing by mail (Voting Rights Exercise Form) and by the method of exercising voting rights via the Internet etc., the exercise of voting rights by the method of exercising voting rights via the Internet etc. shall prevail regardless of the time of arrival of the votes. In addition, if you exercise your voting rights multiple times via the Internet, etc., the vote made last shall prevail. 5 Measures to Prevent the Spread of the COVID-19 at the Ordinary General Meeting of Shareholders The Company regards the safety of its shareholders as its priority. Accordingly, to prevent the spread of COVID-19, this General Meeting of Shareholders will be held in the manner described below. We request your understanding and cooperation in this matter. From the perspective of preventing the spread of the virus, the Company requests that shareholders refrain from attending the General Meeting of Shareholders in person, exercise their voting rights in advance, in writing or via the Internet, etc., and view the live broadcast of the meeting. Please refrain from attending the General Meeting of Shareholders in person. The General Meeting of Shareholders will be broadcast live via the Internet, enabling shareholders to view the meeting from their own homes or elsewhere. Please refer to the enclosed “Information on Live Broadcast via the Internet” for details, and consider making use of this service. Please exercise your voting rights before the meeting in writing (on the Voting Rights Exercise Form) by mail or via the Internet, as described on page 5. The Company’s response may change depending on factors such as the spread of the virus and the details of government announcements. Please check on the Company’s website (https://www.denka.co.jp/) for updates, as appropriate. The Company will not prepare business displays or distribute souvenirs or beverages this year. Shareholders who attend the meeting are requested to thoroughly check their state of health beforehand and cooperate with measures to prevent infection. These include the compulsory wearing of masks inside the venue. The body temperature of shareholders will be checked near the entrance to the venue, and those who appear in poor health will be addressed by administrative staff at the meeting, and may be refused entry. Shareholders who attend the meeting are requested to cooperate in the use of the liquid hand sanitizer provided at the meeting venue. Seating will be widely spaced at the venue, and only a very limited number of seats will be available as a result. Shareholders may be refused entry once all the seats are taken. The Company plans to present a simplified and abbreviated explanation of the Business Report and details of each proposal at this General Meeting of Shareholders, from the perspective of shortening the duration of the meeting as much as possible. The health condition, including body temperature, of officers and administrative staff attending this General Meeting of Shareholders will be checked prior to the meeting, and they will wear masks while attending. However, the Company plans to erect a droplet prevention partition in front of the podium used by the officer who will chair the meeting, enabling him to remove his mask. 6 Reference Documents for the General Meeting of Shareholders Proposal No. 1: Appropriation of Surplus It is proposed that the surplus be appropriated as follows: Matters concerning year-end dividends In the management plan “Denka Value-Up,” formulated in November 2017, the Company sets out its basic concepts of safety as No. 1 priority, environmental awareness, fostering and tapping human capital and contributing to the community, all of which are indispensable for continued growth of the Company. We aim to realize sustainable and sound growth as a “Specialty-Fusion Company,” through new strategies to achieve dramatic growth globally. While the Company has formulated an investment plan as we look to achieve these goals, we have also established a “Policy on Shareholder Returns,” with a 50% target total payout ratio. Committed to a 50% standard for the target total payout ratio* Regarding shareholder returns, the dividend is prioritized, with flexible purchase of treasury shares, depending on stock price movements and other factors. * Total payout ratio = (Dividends paid + treasury stock purchased) / consolidated net income Total for five years: Of which strategic investment: M&A, etc.: Process reform: Regular investment: ¥200.0 billion ¥75.0 billion (¥15.0 billion/year) ¥60.0 billion ¥15.0 billion ¥125.0 billion (¥25.0 billion/year) With respect to the year-end dividend for the 163rd term, in view of the above, the Company proposes the following. (1) Type of dividend property Cash (2) Allocation of dividend property and total amount thereof ¥75 per share of common stock of the Company Total amount of dividends: ¥6,470,816,325 (3) Effective date of dividends from surplus June 23, 2022 7 Proposal No. 2: Partial Amendments to the Articles of Incorporation 1. Reasons for amendments The amended provisions stipulated in the proviso of Article 1 of the supplementary provisions of the “Act Partially Amending the Companies Act” (Act No. 70 of 2019) will be enforced on September 1, 2022. Accordingly, in order to prepare for the introduction of the system for electronic provision of materials for general meetings of shareholders, the Articles of Incorporation of the Company shall be amended as follows. (1) The proposed Article 16 provides that information contained in the reference documents for the general meeting of shareholders, etc. shall be provided electronically and establishes a provision to limit the scope of matters to be included in the paper copy to be sent to shareholders who have requested it. (2) The provisions related to the Internet Disclosure and Deemed Provision of the Reference Documents for the General Meeting of Shareholders, etc. (Article 16 of the current Articles of Incorporation) will become unnecessary and will therefore be deleted. In line with the above establishment and deletion of the provisions, supplementary provisions related to the effective date, etc. shall be established. (3) (Amended parts are underlined) Proposed Amendments (Deleted) 2. Details of amendments The details of the amendments are as follows. Current Articles of Incorporation Article 16. (Internet Disclosure and Deemed Provision of Reference Documents for the General Meeting of Shareholders, etc.) The Company may, when convening a general meeting of shareholders, deem that it has provided information to shareholders pertaining to matters to be described or indicated in the reference documents for the general meeting of shareholders, business report, non-consolidated financial statements, and consolidated financial statements, by disclosing such information through the Internet in accordance with the provisions provided in the Ordinance of the Ministry of Justice. (Newly established) Article 16. (Measures for Electronic Provision, etc.) The Company shall, when convening a general meeting of shareholders, provide information contained in the reference documents for the general meeting of shareholders, etc. electronically. Among the matters to be provided electronically, the Company may choose not to include all or part of the matters stipulated in the Ordinance of the Ministry of Justice in the paper copy to be sent to shareholders who have requested it by the record date for voting rights. 8 Current Articles of Incorporation Supplementary Provisions Proposed Amendments (Unchanged) Contracts concluded by the Company with corporate auditors (including those who previously served as corporate auditors) prior to the conclusion of the 160th Ordinary General Meeting of Shareholders to limit their liability for damages from their actions under Article 423, Paragraph 1 of the Companies Act shall be based on Article 37 of the Articles of Incorporation as it stood prior to amendment by resolution of the aforementioned ordinary general meeting of shareholders. (Newly established) Supplementary Provisions (Transitional Measures Concerning the Electronic Provision of Reference Documents for the General Meeting of Shareholders, etc.) Article 1. The deletion of Article 16 (Internet Article 2. Notwithstanding the provisions of the Disclosure and Deemed Provision of Reference Documents for the General Meeting of Shareholders, etc.) of the current Articles of Incorporation and the proposed Article 16 (Measures for Electronic Provision, etc.) shall come into effect on September 1, 2022 (the “Effective Date”), which is the date of enforcement of the amended provisions stipulated in the proviso of Article 1 of the supplementary provisions of the Act Partially Amending the Companies Act (Act No. 70 of 2019). preceding paragraph, Article 16 (Internet Disclosure and Deemed Provision of Reference Documents for the General Meeting of Shareholders, etc.) of the current Articles of Incorporation shall remain in force with respect to a general meeting of shareholders to be held on a date within six months from the Effective Date transitional measures concerning the electronic provision of reference documents for the general meeting of shareholders, etc. shall be deleted after the lapse of six months from the Effective Date or the lapse of three months from the date of the general meeting of shareholders set forth in the preceding paragraph, whichever is later. Article 3. These supplementary provisions on 9 Proposal No. 3: Election of Five (5) Directors (Excluding Directors who are Audit & Supervisory Committee Members) The terms of office of five (5) Directors (excluding Directors who are Audit & Supervisory Committee Members; hereinafter, the same applies in this proposal) will expire at the conclusion of this Ordinary General Meeting of Shareholders. Accordingly, the election of five (5) Directors is proposed. The candidates for Directors are as follows. No. Name Positions and responsibilities at the Company 1 Reappointed Manabu Yamamoto Chairman and Representative Director 2 Reappointed Toshio Imai Representative Director, President and Chief Executive Officer 13/13 (100%) Director, Senior Managing Executive Officer Chief Technical Officer (CTO) In charge of Purchasing Dept., Logistics Dept., Production & Process Technology Dept., Engineering Dept., Digital Strategy & Innovation Dept. Director, Managing Executive Officer Chief Compliance Officer (CCO) Chief Human Resource Officer (CHRO) In charge of HR Dept., Corporate Planning Dept., Corporate Communications Dept., Denka Corporation, Denka Chemicals GmbH 3 Reappointed Tetsuya Shinmura 4 Reappointed Kazuo Takahashi 5 Reappointed Outside Independent Director Yoshiyuki Fukuda Director Reappointed: Candidate for reappointment as Director Outside: Candidate for Outside Director Independent Director: Independent Director as notified to the Tokyo Stock Exchange Attendance at Board of Directors meetings 13/13 (100%) 10/10 (100%) (Since taking office in June 2021) 10/10 (100%) (Since taking office in June 2021) 10/10 (100%) (Since taking office in June 2021) 10 Career summary and significant concurrent positions, etc. Number of shares of the Company held April 1981 June 2004 April 2009 April 2011 April 2013 June 2013 April 2015 April 2016 June 2016 April 2017 April 2021 Joined the Company General Manager of Functional Ceramics Div. of Electronics Materials Business Group of the Company Executive Officer, General Manager of Electronics Materials Div. of Electronics Materials Business Group of the Company Senior Executive Officer of the Company Managing Executive Officer, Head of Electronics & Innovative Products of the Company Director and Managing Executive Officer of the Company General Manager of Corporate Planning Dept. of the Company Director and Senior Managing Executive Officer of the Company Outside Audit & Supervisory Board Member of Koatsu Gas Kogyo Co., Ltd. (until June 2019) Representative Director, President and Chief Executive Officer of the Company Chairman and Representative Director of the Company (present) 10,900 [Reasons for selection as a candidate for Director] Through work experience at overseas subsidiaries and many years of responsibility for the electronics materials business division, Mr. Manabu Yamamoto possesses international viewpoints and adequate operational experience. After he supervised new business strategies and accounting and finance strategies across the entire Denka Group as the executive responsible for management strategy, accounting and finance, and investor relations and corporate communications divisions, Mr. Yamamoto promoted “Denka Value-Up” as Representative Director, President. As Chairman and Representative Director, he currently serves in the position of the Chairman of the Board of Directors, based on his deep knowledge and understanding of the Group. The Company has judged that he can appropriately fulfill the role of supervising the business execution of Directors and Executive Officers, and requests his election as Director. [Message to shareholders] I will strive for more sophisticated corporate governance that accurately reflects social expectations, by promoting a stronger management advisory and supervisory function and swifter decision-making through the further revitalization of the Board of Directors, in order to achieve “Denka Value-Up.” Name (Date of birth) [Director since] [Director’s term of office] No. (Reappointed) Manabu Yamamoto (March 31, 1956) Age: 66 [June 2013] [9 years * at the conclusion of this Ordinary General Meeting of Shareholders] Attendance at Board of Directors meetings 13/13 (100%) 1 Notes:1. No material relationship of interest exists between the Company and the above candidate. 2. The Company has entered into a directors and officers liability insurance contract with an insurance company as stipulated in Article 430-3, Paragraph 1 of the Companies Act to cover legal damages, litigation expenses and others in the event that a claim for damages is made against the insured persons, including Directors of the Company. If the appointment of the candidate above is approved, then he will become an insured person under the contract. The Company intends to renew this insurance contract with the same contents at the time of the renewal. 11 No. Name (Date of birth) [Director since] [Director’s term of office] Career summary and significant concurrent positions, etc. Number of shares of the Company held 2 April 1982 October 2006 General Manager, Styrene Div. of the Company June 2011 Joined the Company 9,700 April 2013 April 2021 April 2015 June 2019 April 2020 April 2017 April 2019 (Reappointed) Toshio Imai (January 25 1959) Age: 63 [June 2019] [3 years * at the conclusion of this Ordinary General Meeting of Shareholders] General Manager, Corporate Planning Dept. of the Company Executive Officer, Assistant to General Manager, Elastomers & Performance Plastics of the Company General Manager, Elastomers & Performance Plastics of the Company Managing Executive Officer of the Company General Manager, Denka Value-Up Promotion Dept. of the Company Director and Managing Executive Officer of the Company Director and Senior Managing Executive Officer of the Company Representative Director, President and Chief Executive Officer of the Company (present) [Reasons for selection as a candidate for Director] Mr. Toshio Imai possesses an international perspective and adequate operational experience, including work experience at overseas subsidiaries, and taking responsibility for the styrene and elastomer businesses over many years. After taking charge of business strategy for the Denka Group as a whole, including overseas businesses, as the executive responsible for management strategy and investor relations and corporate communications divisions, he currently serves as Representative Director, President. Based on his rich experience and impressive track record in Company administration, it is hence judged by the Company that he can appropriately fulfil the role of determining important business execution and supervising the business execution of Directors and Executive Officers, and requests his election as Director. [Message to shareholders] In this final fiscal year of the Denka Value-Up plan, I will promote further business specialization, aiming to be an “indispensable corporate member of society, creating a better world by focusing on the jobs that we do best.” Notes:1. No material relationship of interest exists between the Company and the above candidate. Attendance at Board of Directors meetings 13/13 (100%) 2. The Company has entered into a directors and officers liability insurance contract with an insurance company as stipulated in Article 430-3, Paragraph 1 of the Companies Act to cover legal damages, litigation expenses and others in the event that a claim for damages is made against the insured persons, including Directors of the Company. If the appointment of the candidate above is approved, then he will become an insured person under the contract. The Company intends to renew this insurance contract with the same contents at the time of the renewal. 12 No. Name (Date of birth) [Director since] [Director’s term of office] Career summary and significant concurrent positions, etc. Number of shares of the Company held April 1980 January 2007 General Manager, Polymers Center, Chiba Plant of the Joined the Company (Reappointed) Tetsuya Shinmura (January 28, 1958) Age: 64 [June 2021] [1 year * at the conclusion of this Ordinary General Meeting of Shareholders] April 2009 April 2011 April 2013 April 2015 April 2017 April 2019 April 2021 June 2021 3 Company Deputy General Manager, Central Research Institute of theCompany Deputy General Manager, Omi Plant of the Company Executive Officer, General Manager, Omi Plant of the Company General Manager, Technology Dept. of the Company Managing Executive Officer of the Company General Manager, Omi Plant of the Company Senior Managing Executive Officer of the Company Director and Senior Managing Executive Officer of the Company (present) 5,300 Attendance at Board of Directors meetings 10/10 (100%) [Reasons for selection as a candidate for Director] Mr. Tetsuya Shinmura has adequate operational experience, including research and development and plant manufacturing. Currently, Mr. Shinmura directs the technical division overall as Chief Technical Officer, while also taking responsibility for the Digital Strategy & Innovation Dept., a department created to strategically build and operate general information systems for the Group. It is hence judged by the Company that he can appropriately fulfil the role of determining important business execution and supervising the business execution of Directors and Executive Officers, and requests his election as Director. [Message to shareholders] I will endeavor to enhance corporate value by developing technologies to challenge the possibilities of chemistry and contributing to the resolution of social issues, to make this a company genuinely needed by society into the future. Notes:1. No material relationship of interest exists between the Company and the above candidate. 2. The Company has entered into a directors and officers liability insurance contract with an insurance company as stipulated in Article 430-3, Paragraph 1 of the Companies Act to cover legal damages, litigation expenses and others in the event that a claim for damages is made against the insured persons, including Directors of the Company. If the appointment of the candidate above is approved, then he will become an insured person under the contract. The Company intends to renew this insurance contract with the same contents at the time of the renewal. 13 No. Career summary and significant concurrent positions, etc. Number of shares of the Company held Joined the Company April 1983 October 2013 Deputy General Manager, Chiba Plant of the Company April 2015 April 2017 General Manager, Ofuna Plant of the Company Executive Officer, General Manager, Omuta Plant of the Company President of Denka Performance Elastomer LLC Managing Executive Officer of the Company Director and Managing Executive Officer of the Company (present) April 2019 April 2021 June 2021 5,000 Name (Date of birth) [Director since] [Director’s term of office] (Reappointed) Kazuo Takahashi (March 30, 1960) Age: 62 [June 2021] [1 year * at the conclusion of this Ordinary General Meeting of Shareholders] 4 Attendance at Board of Directors meetings 10/10 (100%) [Reasons for selection as a candidate for Director] Mr. Kazuo Takahashi possesses adequate operational experience, including work experience in plant manufacturing and overseas subsidiaries. Currently, Mr. Takahashi is in charge of business strategy for the Denka Group as a whole, including overseas businesses, as the executive responsible for management strategy, human resources strategy, and investor relations and corporate communications divisions, and he is promoting the management plan, “Denka Value-Up.” It is hence judged by the Company that he can appropriately fulfil the role of determining important business execution and supervising the business execution of Directors and Executive Officers, and requests his election as Director. [Message to shareholders] As a Director, I will do my very best to consistently ensure rational and appropriate decision-making that is faithful to our stakeholders. Notes:1. No material relationship of interest exists between the Company and the above candidate. 2. The Company has entered into a directors and officers liability insurance contract with an insurance company as stipulated in Article 430-3, Paragraph 1 of the Companies Act to cover legal damages, litigation expenses and others in the event that a claim for damages is made against the insured persons, including Directors of the Company. If the appointment of the candidate above is approved, then he will become an insured person under the contract. The Company intends to renew this insurance contract with the same contents at the time of the renewal. 14 No. Name (Date of birth) [Director since] [Director’s term of office] (Reappointed) (Candidate for Outside Director) (Independent Director) Yoshiyuki Fukuda (September 8, 1956) Age: 65 [June 2021] [1 year * at the conclusion of this Ordinary General Meeting of Shareholders] 5 Attendance at Board of Directors meetings 10/10 (100%) Career summary and significant concurrent positions, etc. Number of shares of the Company held April 1979 April 2004 March 2006 April 2007 April 2008 April 2010 April 2011 April 2012 April 2013 April 2014 Joined The Industrial Bank of Japan, Limited General Manager, Business Division No.7 of Mizuho Corporate Bank, Limited Executive Officer, General Manager, Corporate Banking Division No.15 of Mizuho Corporate Bank, Limited Executive Officer, General Manager, Securities Division of Mizuho Corporate Bank, Limited Managing Executive Officer in charge of Corporate Banking of Mizuho Corporate Bank, Limited Managing Executive Officer, Chief Compliance Officer and Chief Credit Officer of Mizuho Corporate Bank, Limited Managing Executive Officer, Head of Corporate Banking Unit of Mizuho Corporate Bank, Limited Managing Executive Officer, Head of Corporate Banking Unit (Large Corporations) and Corporate Banking Unit of Mizuho Corporate Bank, Limited (until March 2013) Deputy President and Deputy President-Executive Officer, Head of Investment Banking Division, Head of Public & Financial Institutions Group of Mizuho Securities Co., Ltd. (until March 2014) Chairman of Shinko Asset Management Co., Ltd. (until November 2015) – November 2015 President & CEO of Fund Corporation for the Overseas Development of Japan’s ICT and Postal Services Inc. (until June 2021) Outside Director of the Company (present) June 2021 [Reasons, etc. for selection as a candidate for Director, and summary of expected roles] Having worked in corporate management at financial institutions for many years, Mr. Yoshiyuki Fukuda has rich experience and broad insight as a manager and possesses advanced insights regarding corporate finance, and to utilize these insights and receive recommendations toward the Company’s overall management, his election as Outside Director is requested. Additionally, although he used to work at a financial institution that has transactions with the Company, the Company considers that there is no risk that conflict of interest with other general shareholders will arise because 1) he is not a current or a recent operating officer of the said financial institution; 2) a significant number of years have passed since he retired from the said financial institution (9 years have passed since his retirement as of the day of this Ordinary General Meeting of Shareholders); 3) the composition of borrowings relative to net assets of the Company is low at approximately 30%, and the Company’s dependency on the said financial institution is low as it accounts for less than 10% of overall borrowings; and 4) he satisfies the Company’s “Standards of Independence for Outside Directors” and thus, the Company considers that the said financial institution has no special impact on the Company’s decision-making by the Board of Directors, etc. [Message to shareholders] I will calmly assess the turbulent global conditions, and use this insight to enhance the Company’s risk management. Notes:1. No material relationship of interest exists between the Company and the above candidate. 2. Based on Article 427, Paragraph 1 of the Companies Act, the Company currently has a liability limitation contract with the candidate that limits his liability for damages of Article 423, Paragraph 1 of said Act to a predefined amount of ¥5 million or more or the amount stipulated by laws and regulations, whichever is higher. If the election of Mr. Fukuda is approved, the Company plans to continue the same contract. 15 3. The Company has entered into a directors and officers liability insurance contract with an insurance company as stipulated in Article 430-3, Paragraph 1 of the Companies Act to cover legal damages, litigation expenses and others in the event that a claim for damages is made against the insured persons, including Directors of the Company. If the appointment of the candidate above is approved, then he will become an insured person under the contract. The Company intends to renew this insurance contract with the same contents at the time of the renewal. 16 (Reference) 1. The Company’s views regarding the election of Directors In order to promote the management plan, “Denka Value-Up” aimed at realizing “The Denka Value,” the Company’s corporate philosophy, the Company aims to strengthen the management structure with Directors and Executive Officers, while enriching the governance structure and supervisory functions. In electing Directors, internal Directors are chosen from persons who possess a wealth of experience and achievements in various divisions within the Company, while also possessing insights and adequate specialized knowledge as Director, and Outside Directors are chosen from persons who possess specialization required for continuous growth and improvement in corporate value of the Company and wide insights based on a wealth of business experience and management experience at other companies. The Company believes that it is important for the Board of Directors as a whole to elect a good balance of personnel with a variety of knowledge, experience, and abilities, and ensure that the composition of the Board of Directors is diverse in terms of gender, international background, work history, and other factors. Additionally, the Company believes that Independent Outside Directors should comprise at least one-third of Directors. The present ratio is approximately 44%. 17 2. Skills Matrix of the Company’s Board of Directors Manabu Yamamoto Attributes Management experience/ Management strategy HR strategy International Finance/ Legal/ Sustainability/ experience Accounting Compliance ESG Business Research/ strategy/ Intellectual Marketing property Production technology DX Skills Years of service: 9 〇 〇 〇 〇 〇 Toshio Imai Years of service: 3 〇 〇 〇 〇 〇 Chairman and Representative Director Representative Director, President and Chief Executive Officer Director Senior Managing Executive Officer Director Managing Executive Officer Age: 66 Male Age: 63 Male Age: 64 Male Age: 62 Male Independent Outside Age: 65 Years of service: 1 Male Age: 66 Male Independent Outside Age: 73 Male Independent Outside Age: 70 Male Independent Outside Age: 48 Years of service: 7 Years of service: 7 Years of service: 1 Female Director Full-time Audit & Supervisory Committee Member Director Audit & Supervisory Committee Member Director Audit & Supervisory Committee Member Director Audit & Supervisory Committee Member Tetsuya Shinmura Kazuo Takahashi Masaharu Suzuki Toshio Kinoshita Akio Yamamoto Miyuki Matoba Years of service: 1 〇 〇 〇 〇 〇 Years of service: 1 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 Yoshiyuki Fukuda Director 〇 〇 〇 〇 〇 Years of service: 3 〇 〇 〇 〇 〇 〇 *The matrix above shows the main skills expected of each Director and does represent all of their knowledge. *Age and years of service are shown as of the conclusion of this General Meeting of Shareholders. 18 3. Necessary skills for the Company’s Directors and the reason they were selected The skills considered necessary for the Company’s Board of Directors to make important decisions and supervise management to reach the goals of the “Denka Value-Up” management plan aimed at realizing “The Denka Value” and to promote ESG management through the priority management materiality issues are as follows. Skills Management experience/ Management strategy HR strategy International experience Finance/ Accounting Legal/ Compliance Sustainability/ ESG Business strategy/ Marketing Research/ Intellectual property Production technology DX Reason for the selection of the skills Directors are needed who have extensive management experience and achievements to establish management plans aimed at realizing the corporate philosophy of “The Denka Value” and supervise the execution of duties to achieve these plans. The Company has identified HR strategy, including securing human resources with specialized skills, diversity promotion, work style reforms and health and safety management, as a priority management issue. Directors are needed who have extensive knowledge and experience related to HR strategy, to be a company where employees can gain satisfaction and experience personal growth through work. Directors are needed who have extensive international experience, for the Company to grow its global presence and aspire to be a company with outstanding competitive strength in the global market. Directors are needed who have extensive knowledge and experience in finance and accounting, not only to ensure the accurate disclosure of financial information, but also to achieve sound, sustainable growth through strategic investment while maintaining a sound financial base, and formulate finance policies for shareholder returns, etc. Directors are needed who have robust knowledge and experience in the legal and compliance fields to ensure fair and trustworthy corporate activities through the dissemination of the corporate philosophy, the reform of corporate culture, legal and regulatory compliance, and thorough corporate ethics. Directors are needed who have robust knowledge and experience related to ESG, as set forth in the Denka Group ESG Basic Policy and priority management materiality issues, to promote ESG management across the Group, realize the corporate philosophy of “The Denka Value,” and aim for sound and sustainable growth. Directors are needed who have market insight based on a broad perspective, as well as extensive business experience, to promote the transformation of the business portfolio, by further focusing on businesses with a top-class share, that are consistent with ESG initiatives, that are both unique and high value-added, and that are not easily shaken by the external environment (specialty businesses), and rebuilding the commodity business. Directors are needed who have extensive experience in research and development, who have achievements in promoting innovation, a detailed knowledge of the science and technology fields, and are closely familiar with the Company’s unique technologies and intellectual property, in order to promote reform of the research and development process while creating new products and technologies that will contribute to sustainable social development, to accelerate the growth of the Group’s specialty business. Directors are needed who are deeply familiar with production technology, including those unique to the Group, and who have extensive practical experience and robust insight into manufacturing, to achieve rapid improvements in productivity through production process reform, maintain and enhance equipment safety, disaster prevention, safety and health, and continue to reduce the Group’s environmental burden as a manufacturer, including through climate change response. Directors are needed with a profound knowledge and extensive experience related to digital technologies and data utilization, as well as the ability to understand and analyze the nature of the Group’s business, and use this insight to transform it, in order to integrate processes of production, research and development, and operations through DX and bring about the transformation of business models and organization in innovative processes. 19 4. Standards of Independence for Denka Outside Directors The Company selects candidates for Outside Directors based mainly on practical considerations, such as whether we can expect the candidate to contribute to an increase in the corporate value of the Company as an independent officer. Specifically, the Company has defined the following standards, in accordance with the requirements for independence stipulated in the Companies Act, in addition to the standards for independence defined by the Tokyo Stock Exchange and other factors. Standards of Independence for Outside Directors The standard of independence for an Outside Director of the Company shall be persons that do not fall under any of the categories defined in items (1) through (5) below. (1) An executor of business (*4) at a main customer (*1), main supplier (*2), or main lender (*3) that is a main trading partner of the Company; (2) A consultant, accountant, lawyer, or other such person that has received money or other property exceeding ¥10 million in value per year from the Company, excluding officer compensation, in the most recent fiscal year; (3) A person belonging to a group for whom the amount paid by the Company makes up 2% or more of the group’s revenues or total income in the most recent fiscal year, in cases where the entity receiving property under item (2) above is a group; (4) A person that has fallen under any of the above categories (1) through (3) within the past year; (5) A spouse or relation within the second degree of a person falling under any of the categories below (excluding an insignificant person): i. A person that falls under any of the above categories (1) through (4); ii. A person that is or was an executor of business at the Company or a subsidiary of the Company now or within the past year. (*1) Main customer: A customer from whom the amount paid has made up 2% or more of the Company’s revenues in the most recent fiscal year (*2) Main supplier: A supplier to whom the amount paid from the Company has made up 2% or more of the supplier’s revenues in the most recent fiscal year (*3) Main lender: A lender that was essential for the Company’s funding, and that the Company relied on to the extent the lender was irreplaceable, as of the end of the most recent fiscal year (*4) Executor of business: An executive director, executive, executive officer, or other employee, etc. 20 (Reference) Denka’s Corporate Governance Initiatives Basic Approach to Corporate Governance In order to fulfill the expectations and trust of its many stakeholders, including shareholders, customers, local society, and employees, based on “The Denka Value” (corporate philosophy), which forms the basis for the activities of the Denka Group, the Company strives to strengthen its business foundation by improving its earnings power and expanding the scope of operations, while also working to improve corporate value by making every effort to continue being a company that can win the trust and sympathy of society. The Company considers corporate governance as the foundation for the above, and so we have striven to strengthen governance, in order to fulfill the responsibilities we owe to all our stakeholders, and ensure the transparency and soundness of our management. The Denka Value (Corporate Philosophy) “The Denka Value” (corporate philosophy) consists of the “Denka Mission,” which represents our uppermost mission statement, and the “Denka Principles,” a set of precepts guiding actions taken by every Group employee. “The Denka Value” lies at the pinnacle of all corporate activities, including management plans, and through implementing “The Denka Value,” the Company will work to respond to the expectations and trust of society. “The Denka Value” (Corporate Philosophy) The Denka Mission Taking on the challenge of expanding the possibilities of chemistry to create new value and contribute to sound social development. Note: Based on the corporate slogan “Possibility of chemistry.” The Denka Principles We: Boldly confront challenges with determination and sincerity. Think and take action today with the future in mind. Deliver new values, and inspire customers through innovative monozukuri.* Respect the environment and create a cheerful workplace that prioritizes safety. Contribute to a better society, whilst taking pride in being a trusted corporate citizen. *Japanese-style craftsmanship 21 Current Corporate Governance System Board of Directors and optional committees ■Board of Directors (Met 13 times in fiscal 2021) To realize the Company’s corporate philosophy, “The Denka Value,” the Board of Directors monitors and supervises major operational decision-making and execution of business duties by executive officers, based on strategic and management planning. The Board of Directors as a whole appoints candidates to be Directors in line with the standards for the appointment of both internal and Outside Directors, based on the belief that it is important to appoint a good balance of people with a variety of expertise, experiences, and skills. For further details of our approach in appointing members of the Board of Directors, please see page 17. In addition, in principle, the Company has discontinued the use of executive titles, (such as Senior Managing Director, Managing Director) for Directors, such that all Directors may focus on monitoring and supervising the execution of business duties from an equal standpoint. Also, the Company has set the length of Directors’ (excluding Audit & Supervisory Committee Members) terms to one year, in order to facilitate flexible checks on them at the General Meeting of Shareholders. Additionally, the Nomination & Remuneration Advisory Committee has been established as an advisory organ of the Board of Directors, to strengthen the roles of the Board of Directors and foster higher standards of objectivity and transparency. It also organizes the D&A Round Table, aimed at enriching deliberations on major matters of particular management concern. ■Nomination & Remuneration Advisory Committee (Met 2 times in fiscal 2021) For major management matters such as nomination, remuneration and other elements of governance, the Board of Directors has set up the Nomination & Remuneration Advisory Committee, comprising all Outside Directors, the Chairman and the President, to foster transparency and objectivity in management decision-making, informed by a wide range of opinion and advice from Outside Directors. 22 In fiscal 2021, this Committee received inquiries from the Board of Directors regarding the executive and governance structure, the formulation of a skills matrix, succession planning, and remuneration for Executive Officers, and made recommendations and proposals regarding the results of these inquiries after deliberations at the Committee. ■D&A Round Table (Met 4 times in fiscal 2021) In order to facilitate in-depth discussions regarding management matters that are of particular importance, the D&A Round Table is organized as a forum for free, open-minded, constructive discussions, exchange of opinions and information, and strengthening of cooperation between internal and Outside Directors. ■Evaluation of the Effectiveness of the Board of Directors At Denka, the effectiveness of the Board of Directors is analyzed and evaluated annually. As a result of measures taken in fiscal 2020, we reaffirmed that the frequency and duration of meetings of the Board of Directors and the method of meeting during the COVID-19 pandemic were appropriate, and that the Board size and composition (in terms of achieving the right balance of expertise, experience, ability and diversity) was becoming more appropriate. In addition, we affirmed that the monitoring and supervision of the management were being appropriately implemented by the Board of Directors, 42% of the members of which are Outside Directors. Furthermore, as the result of a review of the criteria for forming a resolution of the Board of Directors, one of last year’s issues, we shared an awareness that more time had been secured for discussing priority matters. We also affirmed that the Company, reaching its second year after the transition to a company with an Audit & Supervisory Committee, was operating stably under the new structure. Meanwhile, a view was expressed that measures were needed to utilize the time created through the rigorous selection of matters for resolution by the Board of Directors to monitor whether long-term business strategy and strategies for individual businesses were progressing steadily on the implementation side, and to discuss any amendments necessary. Moreover, we shared an awareness that an operational structure should be established for the Board of Directors, now in a compact form within the new governance structure, to enable it to place even greater focus on monitoring, advising and supervising the execution of duties, and that the Nomination & Remuneration Advisory Committee should be further utilized to enable more autonomous involvement and appropriate supervision of the formulation and implementation of succession plans. Looking ahead, in light of these constructive opinions, we will take steps to further improve the effectiveness of the Board of Directors, aiming to improve medium-to-long-term corporate value, and respond to the expectations and trust placed in us by our shareholders and numerous other stakeholders. Audit & Supervisory Committee (Met 14 times in fiscal 2021) In accordance with their fiduciary responsibilities to shareholders, Audit & Supervisory Committee Members and the Audit & Supervisory Committee work with the support of the full-time staff of the Audit Committee Dept., whose independence from management is ensured, to conduct audits of the execution of directors’ duties, internal control, business duties, and accounting, by exercising statutory rights that include requesting reports on the businesses of the Company, investigations pertaining to business duties and accounting, and the appointment, dismissal, non-reappointment, and remuneration of an auditing firm. In addition, the Audit & Supervisory Committee forms views on matters related to the election, etc. and compensation, etc. of Directors (excluding Directors who are Audit & Supervisory Committee Members), including matters to be put forward at the General Meeting of Shareholders. Furthermore, the Company appoints candidates for Directors who are Audit & Supervisory Committee Members based on its judgment that, in order for the Audit & Supervisory Committee to fulfill its roles and responsibilities, Audit & Supervisory Committee Members should possess appropriate experience and ability as required for their duties, and that in particular, there should be at least one person with expertise in finance and accounting. Messages from the Directors who are Audit & Supervisory Committee Members “I will focus on auditing the implementation of growth strategy and the response to internal and external risks, aimed at the sustainable enhancement of corporate value.” Masaharu Suzuki, Director (Audit & Supervisory Committee Member) 23 “As the business environment becomes more challenging globally, I am committed to carrying out the accurate corporate governance required of the Company as a global corporation.” Toshio Kinoshita, Outside Director (Audit & Supervisory Committee Member) “With the coordinate axes that define the world shifting dramatically, I intend to firmly maintain a medium-to-long-term perspective and a sincere, fair and upright attitude, to contribute to the Company’s sound growth and the enhancement of its corporate value.” Akio Yamamoto, Outside Director (Audit & Supervisory Committee Member) “I will contribute to enhancing the Company’s corporate value by focusing on the further strengthening of corporate governance and thorough compliance.” Miyuki Matoba, Outside Director (Audit & Supervisory Committee Member) Outside Directors Regarding Outside Directors, the Company selects candidates based mainly on practical considerations, such as whether we can expect the candidate to contribute to an increase in the corporate value of the Company as an independent officer, and has also defined its own standards of independence (please see page 20, in accordance with the requirements for independence stipulated in the Companies Act, in addition to the standards for independence defined by the Tokyo Stock Exchange and other factors. In addition, by enhancing their understanding of the Company, the Company strives to create an environment that allows those appointed as Outside Directors to perform their roles for the sake of the sustainable growth of the Company and the increase of its corporate value. Specifically, in addition to tours of offices, plants, and other facilities, the Company has been implementing the following initiatives: ■Objective briefings (Met twice in fiscal 2021) Briefings are held in order to have Outside Directors understand the Company’s medium- to long-term and short-term business and research policies. ■Outside Officer Liaison Committee (Met 4 times in fiscal 2021) The Company holds “Outside Officer Liaison Committee” meetings to facilitate the exchange of information and mutual awareness among outside officers concerning matters related to Denka’s corporate governance and business. 24 Initiatives to Corporate Governance Thus Far 2007 Purpose To speed up decision-making Ensure that Directors monitor and supervise the execution of business on an equal footing Clear separation of monitoring and supervisory functions from the execution of business Flexibly perform checks on directors Step up checks on management from an external perspective Create system enabling appropriate advice-giving even outside of meetings of the Board of Directors, by arranging ample exchange of opinions Speed up decision-making by deepening discussions of important management matters Improve the governance framework and raise standards of transparency and soundness of management Create venues for free, vigorous and constructive deliberations, exchange of opinions and information and alliance-strengthening for internal and Outside Directors and Audit & Supervisory Board Members Achieve optimum standards of corporate governance to ensure sustainable growth and improve medium to long-term corporate value Deepen understanding of the Company’s business, and stimulate debate at meetings of the Board of Directors Enable exchange of information and formation of consensus among outside officers Promote understanding of the Company’s medium- to long-term and short-term business and research objectives Ensure adequate auditing and supervision of business execution by executive officers Step up the effectiveness of the Board of Directors Foster greater transparency and objectivity in business decision-making, with the Board of Directors accepting diverse opinions and advice from the outside officers with regard to major business topics including appointments, remuneration and other governance matters 2008 2015 2016 2017 Measures Cut the number of directors by half and introduce an executive officer system Abolition of executive titles (such as Senior Managing Director, Managing Director) Reassigning the authority of business execution and executive titles from directors to executive officers Shortening the length of directors’ appointments to one year By appointing two Outside Directors, the number of appointments of outside officers rises to four, including two Outside Audit & Supervisory Board Members (per statutory requirements) Implement regular opportunities for outside officers to exchange opinions with top management Establishment of a Management Committee comprising Directors, Audit & Supervisory Board Members (internal), and some executive officers Increasing the number of Outside Directors (from two to three) and reducing the number of members of the Board of Directors (by two) To step up round-table meetings of Outside Directors and Audit & Supervisory Board Members formerly held twice per year, hold a round-table conference of Directors and Audit & Supervisory Board Members Compilation of the Denka Corporate Governance Guidelines Enhance the provision of advance explanation for outside officers regarding specific agenda items that require adequate explanation Holding “Outside Officer Liaison Committee” four times per year Holding business and research objective briefings (currently referred to as objective briefings) for outside officers twice a year Clarification of the details of agenda and report materials at the Board of Directors meetings Arrangement for all Directors and all Audit & Supervisory Board Members to annually analyze and evaluate the effectiveness of the Board of Directors, and disclose the results in the Corporate Governance Report Establishment of the Management Advisory Committee comprising all Outside Directors, all Outside Audit and Supervisory Board Members, the Chairman and the President Renaming the “round-table conference of Directors and Audit & Supervisory Board Members” the “D&A Round Table” 25 2019 2021 Purpose Further strengthen corporate governance and improve corporate value by further strengthening the supervisory role of the Board of Directors, by enabling more rapid decision-making and vesting directors who are members of the Audit & Supervisory Committee with voting rights at the Board of Directors meeting Review of regulations regarding the appointment of retirees from the office