NH Foods : Fundamental Policy on Corporate Governance

NH Foods Group

Fundamental Policy on Corporate Governance

Enacted on November 11, 2015

Section 1

General Rules

• 1. Basic Views on Corporate Governance

  • (a) In order to establish a corporate governance system which NH Foods Group (the "Group") considers most appropriate and in order to make such system functional so that NH Foods Ltd. ("we", "us", "our" or the "Company") is able to exercise social responsibility of the Group and realize a vision of the Group as the "World Leader in Delivering the "Joy of Eating"", we present our basic views on corporate governance of the Group and continuously strive to enhance it.

  • (b) The principles of corporate governance of the Group are to enhance its management transparency and efficiency, to ensure timely and proper decision-making as well as appropriate business operations, to enable proactive and courageous business judgments and to clarify its responsibility.

• 2. The NI and the Group Brand Pledges

  Concurrently with presenting the systematic structure that the Group should take on, we also present the NI (NH Foods Group Identity), which represents the identity and uniqueness of the Group. Also, in order to realize the corporate philosophies and the vision of the Group, we set the "Group Brand Pledges" as a promise of the entire Group toward all stakeholders with whom the Group has relationships through our brand.

NI (NH Foods Group Identity)

Corporate Philosophies

• 1. Under the basic theme of "Joy of Eating", our company creates a culture that marks an epoch and contributes to society.

• 2. Our company is a place where employees can feel truly happy and fulfilled.

Management Principles

• 1. Act with noble ideals and the determination to achieve them.

• 2. Learn from others, teach others, and be willing to be taught by others.

• 3. Create the times by meeting the needs of the times.

• 4. Expand relationships through quality and service, and take responsibility for all people with whom we have relationships.

• 5. Strive for a highly functional organization.

Action guidelines

The NH Foods Group endeavors to make a contribution to society through food. We take pride in our position as members of the NH Foods Group, and are aware of all that membership entails. We will:

• 1. Always maintain a customer-oriented perspective and act accordingly.

• 2. Show our gratitude for society's trust in us by acting with integrity.

• 3. Strive to anticipate the changing times and overcome challenges proactively and with courage.

• 4. Set ourselves challenging goals, and work to achieve them with enthusiasm and ingenuity.

• 5. Endeavor to develop selves, enhance each other, and join forces to conduct the business of the company.

The Group Brand Pledges

We aspire to share the pleasures of good eating and the joys of health with people around the world.

We pledge to impart the "Joy of Eating" with the greatest of care, through products that reflect our appreciation of the bounty of nature and our uncompromising commitment to quality, and to remain at the forefront in our exploration of food's contribution to a happy and healthy life.

Section 2

Organization

1.

Organizational Structure

We choose to be a company with an Audit & Supervisory Board (kansayaku board) as an organizational structure under the Companies Act. The Board of Directors makes important management decisions and oversees business operations. The Audit & Supervisory Board Member (kansayaku) and the Audit & Supervisory Board (kansayaku board), which is independent from the Board of Directors, mainly audit the Directors' execution of duties.

We also establish optional committees as necessary in order to supplement the functions of the Board of Directors in an effort to deliver the management of the Company with higher transparency. Further, we establish the following four (4) optional committees, which consist only of Independent Officers (which refer to outside directors and/or outside Audit & Supervisory Board Members (outside kansayaku), who are qualified under the "Criteria for the Independence of Outside Officers" set forth in Attachment 1; this definition applies from hereafter) or whose majority consist of the Independent Officers. The purpose of establishing each optional committee and the members of the optional committees are set forth in "5.

Optional Committees" of this section.

• a) Executive Appointments Committee

• b) Compensation Committee

• c) Board of Independent Officers and Representative Directors

• d) Board of Independent Officers 2

2.

President and Representative Director, Directors, Board of Directors

(1) Roles and Responsibilities of the President and Representative Director

(a) The President and Representative Director is the chief executive and holds the highest authority with respect to the decision-making function and the supervisory function of the Board of Directors.

• (b) The President and Representative Director makes decisions with respect to the best execution of operation aiming for realization of the Group's corporate philosophies, improvement of the corporate value, and long-term increase of shareholder's common interests and also assumes the responsibility to supervise the execution of operation based on decision-making.

• (c) The President and Representative Director makes effort to build the business infrastructure which will support the sound and sustainable growth of the Group by methods such as fully utilizing the functions of Outside Directors and Audit & Supervisory Board.

• (2) Roles and Responsibilities of the Directors

• (a) The Directors owe duty of care of a prudent manager and duty of loyalty.

• (b) The Directors exercise their voting rights by gathering sufficient information to perform their duties, by committing to discussions with seeking explanation at the Board of Directors' meetings and by actively expressing their opinions to each other.

• (c) The Directors attempt to resolve the business challenges of the Group having regard to ESG, by timely and appropriate exercises of their rights to propose agenda to the Board of Directors' meetings and to seek convocation of the Board of Directors' meetings.

• (d) The Directors perform their duties as a Director by exercising their expected abilities and spending adequate time in order to respond to confidence of the shareholders.

• (3) Roles and Responsibilities of the Board of Directors

  With the aim to realize the philosophies advocated in the NI and the Group Brand Pledges and in consideration of its fiduciary duties/accountability to our shareholders, the Board of Directors perform its duties to contribute to our sustainable growth and improvement of our corporate value in a mid-to-long term.

• (a) The Board of Directors presents how the Group can provide values that are unique to various stakeholders, sets out important corporate strategies including mid-to-long term business plan, oversees business operations, establishes an internal control system and a risk management system, which support timely and appropriate value judgments in order to assist appropriate risk-taking.

[Disclosure based on Principle 5.2 of "Japan's Corporate Governance Code" (the "Corporate Governance Code") ]

Please see our website for the Medium-Term Management Plan 2020.https://www.nipponham.co.jp/ir/policy/plan.htmlhttps://www.nipponham.co.jp/ir/library/briefing_session/pdf/20180515.pdf

(b) The Board of Directors makes decisions on matters that require approval of the Board of Directors under the laws and regulations as well as important managerial matters set forth in the rules of the Board of Directors and delegates its decision-making powers on other matters relating to business operations to the Representative Directors, the General Managers of the relevant divisions and the Chairpersons of the relevant operational bodies.

[Disclosure based on the Supplementary Principle 4.1.1 of the Corporate Governance Code] Please see Appendix 1 for the outline of the matters to be resolved by the Board of Directors.

• (c) The Board of Directors examines progress of a mid-term management plan, analyze the entire mid-term management plan during the last year of the term and provide explanations to our shareholders. Analytical results are reflected in the next mid-term management plan and are utilized for our sustainable corporate growth.

• (d) The Board of Directors recognizes the development of the next generation of executives as one of the most important issues. Therefore, the Board of Directors sets requirements (Integrity, Devotion, Deliberation, Endeavor and Empathy) for the executives who would contribute realizing the corporate value and the Group develops successors based on such requirement. Executive Appointments Committee, upon its confirmation that the development plan for selection, development and transfer is properly operated, reports successor candidates to the Board of Directors. The Board of Directors respects the report from the Executive Appointments Committee and determines successor candidates.

[Disclosure based on the Supplementary Principle 4.1.3 of the Corporate Governance Code] Please see Appendix 2. for the summary of the Company's plan for the development of the next generation executives.

(4) Size/Members of the Board of Directors

(a) The number of members of the Board of Directors may be up to twelve members,taking timely and appropriate decision-making and the scope of the Board of the Directors' responsibilities into consideration.

• (b) The Board of Directors nominates candidates for Directors of the Company while taking into consideration of a good balance among the appointed Directors with diverse knowledge, experience and skills regardless of gender, nationality, ethnicity, sexual orientation etc., in order to exercise its roles and responsibilities required as the Board of Directors and to maintain the diversity of the Board of Directors as a whole.

• (c) The Board of Directors is obligated to understand the rights and positions of stakeholders, recognize the importance of each stakeholder of the Group and reflect them to the Group's corporate strategies. In particular, because the Group strives to provide "Joy of Eating", which we define as the pleasure of good food and joy of health, to people around the world, values of people are most important to the Group.

  Therefore, the Board of Directors is consisted of the Directors who are able to reflect consumers' perspective to the Board of Directors' decision-making.

• (d) The composition of the Board of Directors includes one or more members of Outside Directors who have the following qualifications to ensure the transparency of the management:

  • (i) Have expertise or extensive experience in any of the following areas: business management, compliance, risk management, crisis management, finance and accounting, internal control, macro-economic policy (finance, industry, etc.), organizational/cultural reform, global management, etc.;

  • (ii) Have proper skills to overview and comprehend the Group's management as a whole, to understand essential tasks and risks, and to hear opinions from, express opinions to and convince the Board of Directors and the Management (which refers to the Executive Directors and the Executive Officers; this definition applies from hereafter) timely and appropriately; and

  • (iii) Be independent from our management in light of the "Criteria for the Independence of Outside Officers" provided in Attachment 1.

(e) The multiple Outside Directors and Audit & Supervisory Board Members oversee and supervise the Board of Directors from a standpoint where there is a certain distance from the business operations. The Board of Directors continuously examines the appropriate proportion of the non-Executive Directors within the Board of Directors.

(5) Operation of and Securing Effectiveness of the Board of Directors

(a) Chairperson of the Board of Directors

The Chairperson of the Board of Directors holds the Board of Directors' meetings so that the Directors are able to discuss openly and constructively and affords the Directors and the Audit & Supervisory Board Members opportunities to express their opinions in the course of decision-making at the Board of Directors' meetings.