Corporate Governance

Basic policy regarding the Corporate Governance

We aspire to have a compliant management staff capable of establishing a corporate governance structure that will remain as a strong fundamental asset in EXEDY's personel.
Specifically, our system of board directors and corporate auditors supervise and confirm the executions of the director's task.
By making our organization flexible to adopt to variations in business , transparency in EXEDY management will be improved and enabled to strengthen the strong management and corporate governance within our company.

Basic policy regarding the Corporate Governance

Organizational structures and organizational operations

Organizational form Company with a Board of Corporate Auditors
Details of Directors
Chairman of Board of directors President
Number of directors 9
Outside directors Yes
Number of outside directors 1
Details of Corporate Auditors
Board of Corporate Auditors Yes
Number of Corporate Auditors 4
Outside Corporate Auditors Yes
Number of Outside Corporate Auditors 3

Matters pertaining to functions relating to the execution of duties, audit and supervision, appointment and decisions regarding remuneration, etc.

The board of directors consists of nine directors, including one outside director.
Held once a month, board of directors meetings consists of the discussion of matters related to the company's operation. Additional meetings are permitted and are held when deemed necessary. Four auditors, including three outside auditors, inspect and review the execution of decision making and also are present in board of directors meetings.

Separate from the Board of Director meetings, open communication of corporate matters is discussed twice a month in a meeting of six members consisting of the company president and directing managers.

Furthermore, in order to respond to changes in business operations promptly, the small group of board directors has been appointed through performance observations. Employees who stand-out and show the possessive skills to become a future managing director are selected upon review and provided with training so they can fulfill their promotional positions.

KPMG AZSA LLC and its employees Yoshinari Umeda, Hiroshi Enomoto, and Yoshitaka Yamaguchi, contribute outside auditing, tax and advisory assistance in order to better the operation of EXEDY. Two additional teams from KPMG AZSA LLC, one of seven members and one of eight, provide further assistance to the aid of the main advisors.

Advising attorneys provide support and advice of business operations as external experts specializing in agreements and tax-related operations.

The operation of the internal auditing department consists of the coordination and checking of designated compliances. This department is under the direct control of the president.

Reason for adopting the current system

This company has introduced the operating officer system and total of 6 directors double as the operating officer, so the prompt decision making and effective business operation possible. On the contrary, 4 out of 9 directors and 4 corporate auditors to attend the Board of Directors are outside directors for securing the transparency in operation. By this reason, current auditing system as the board of corporate auditors is thought to be the best system.

Implementation of measures for shareholders and other stakeholders

1. Approach toward the vitalization of general shareholders' meetings and the facilitation of exercise of voting rights

Early distribution of notice of convocation of general shareholders' meetings We distribute the notice of convocation of general shareholders' meetings approximately 1 weeks prior to the date on which such general shareholders' meeting convenes.
Others For further understanding to the company in General Shareholders Meeting, the sales report is visualized with slides and other tools.

2. IR activities

Convene periodic briefing for analysts and institutional investors Briefings on the financial result is held semi annually in Tokyo.
Disclosure of IR documents on the website Preliminary financial result, information for I.R briefings, convocation notice and appended documents to convocation notice are uploaded to the company website ( Annual report and variation of financial result are disclosed in English as well.

3. Activities concerning respect for stakeholders

Setting forth provisions in the internal regulations concerning respect for the stakeholders’position Our business philosophy, "Contribution to society", "Useful for our customers" and "the happiness of employees" must be step up further.
By continuous growth and improvement, our management policy aims at accommodating the request and expectation from the shareholders and all others widely related to the company.
For the achievement, the EXEDY Activity Guidelines is established and this is completely prevailed and understood by all employees and directors.
Promotion of environmental preservation activities and CSR activities We as a global company recognize the responsibility to pay attention of the impact caused from business activity to the nature and environment in society.
We promote the environmental activity and the result in each fiscal year is reported in our Home Page.

Matters related to the Internal Control System.

Basic Approach to Internal Control System and its Development

Fulfillment of the social responsibility such ascompliance, corporate ethics and environmental issues, and improving social reputation isone of management policy.
In line with this policy, the Board of Directors resolve following basic policy of the internal control system legally provided by law and regulations and, the status is reported to the board of directors meeting from time to time.

1. System to obtain and manage information relating to performance of duties by Directors

The company must keep and manage information related to the performance on duties, based on the regulation for archiving and retaining text, and the regulation for confidential documents.

2. Rules and systems related to the management of risk of loss

The company designate the General Affair H.Q is a responsible department and necessary action to protect from the loss or damage must be taken.

3. System to ensure that Directors exercise their duties efficiently

Regular Board of directors meeting is held monthly and the management meeting formed with full time director and executive officers is held twice a month, in which the management problems are discussed, and the establish the system if necessary.

4. A system ensuring that the director's and their employees perform their duties in accordance with laws, regulations and the articles of incorporation.

The company has formulated the EXEDY Activity Guidelines, strives to make the directors, the executive directors, and their employees aware of complying with laws, regulations, articles of incorporation, and internal regulations and informants.
In addition, the Internal Auditing Department is a unit for auditing business activities not under the direct control of the president. It audits the status of the operation of organizations and systems within the company, and the compliance with all regulations.

5. System to ensure the appropriateness of business operations of the corporation and the business group consisting of the parent company and subsidiaries

Based on the Affiliate Company Management Regulations, this company handles all of the work related to the management of affiliated companies in the management division. It uses the monthly reports submitted by each of the affiliated companies to monitor and verify the affiliated companies' performance of their duties. Important matters related to the affiliated companies' performance of their duties is reported to and deliberated by the Board of Directors and the management council.

6. System concerning employees who assist the Corporate Auditors when required

When the corporate auditors seek to have employees installed to supplement their work, this company will install those employees as required.

7. Independence of the employees described in the preceding item from Directors

When there are employees for supplementing the corporate auditors' work, the company shall report to the statutory corporate auditors in advance the personnel movements, evaluations, and disciplinary action for those employees, and seek their opinions.

8. System for Directors and employees to report to Corporate Auditors, and other relative systems

The Board of Directors and executive directors of the company shall immediately submit reports when facts regarding significant damages to the company or its affiliated companies are discovered, or there are concerns of such damages.

9. Other systems to ensure that the Corporate Auditors conducted audits effectively

The company shall maintain asystem in which it can always apprehend the circumstances regarding the performance of duties by having the statutory corporate auditors attend the business council and all other conferences.

10. Basic Policy for Elimination of Anti social Forces

In the EXEDY Activity Guidelines, the company provides for the firm confrontation with anti social groups and forces that would threaten the order and safety of civil society, and have these guidelines known to all employees.

Basic policy for anti-social forces

Clearly stated in the EXEDY Activity Guidelines, the company provides the firm confirmation to be against any participation with anti-social groups, forces and or activities including illegal acts that would threaten the order and safety of civil society. EXEDY has established a response protocol system to deal with anti-social activities and exposes the EXEDY Activity Guidelines to all employees making sure of their awareness to the set rules of the company.

Items Related to Corporate governance System.

Items Related to Corporate governance System

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