Shiseido : Corporate Governance Report_20220207

Corporate Governance Report

Last Update: February 7, 2022

Shiseido Company, Limited

President and CEO, Representative Director: Masahiko Uotani Contact: [phone] Securities Code: 4911 https://corp.shiseido.com /en

The corporate governance of Shiseido Company, Limited (the "Company") is described below.

1. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and

Other Basic Information

1. Basic Views

The Shiseido Group including the Company has established BEAUTY INNOVATIONS FOR A BETTER WORLD as OUR MISSION in its Corporate Philosophy THE SHISEIDO PHILOSOPHY, and defines the corporate governance as our "platform to realize sustainable growth through fulfilling OUR MISSION".

The Company is committed to maintaining and improving management transparency, fairness and speed, by putting into practice and reinforcing the corporate governance, and strives to maximize medium- and long-

term corporate and shareholder value through dialogues with all stakeholders, "consumers", "business

partners", "employees", "shareholders", and "society and the Earth". In addition, while fulfilling social responsibilities, the Company aims to achieve optimized distribution of values to respective stakeholders.

[Reasons for Non-compliance with the Principles of the Corporate Governance Code]

This report is written based on the revised Corporate Governance Code from June 2021. Shiseido implements all principles in accordance with those established in the Corporate Governance Code.

[Disclosure Based on the Principles of the Corporate Governance Code]

All of the General Principles, Principles, and Supplementary Principles (83 in total), including items to be disclosed in line with all principles of the Corporate Governance Code, are listed at the end of this report as "Principles of the Corporate Governance Code (CG Code) and Shiseido's Response".

2. Capital Structure

Foreign Shareholding Ratio	More than 30%

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Internal

[Status of Major Shareholders] Updated

	Name / Company Name		Number of Shares Owned	Percentage (%)
The Master Trust Bank of Japan, Ltd. (Trust Account)	77,672,300	19.44
Custody Bank of Japan, Ltd. (Trust Account)		23,531,000	5.89
THE BANK OF NEW YORK 134104		7,905,591	1.97
Mizuho Trust & Banking Co., Ltd.		7,000,000	1.75
Employees Pension Trust for Mizuho Bank
re-trusted to Custody Bank of Japan, Ltd.
JP MORGAN CHASE BANK 385632		6,928,155	1.73
BNYM TREATY DTT 15		6,777,513	1.69
SSBTC CLIENT OMNIBUS ACCOUNT		6,715,392	1.68
STATE STREET BANK WEST CLIENT - TREATY	6,576,478	1.64
505234
Nippon Life Insurance Company		5,615,653	1.40
JP MORGAN CHASE BANK 385781		5,134,647	1.28
	Controlling Shareholder (except for Parent		―
	Company)
	Parent Company		None

Supplementary Explanation Updated

1． All shares held by The Master Trust Bank of Japan, Ltd. (Trust Account) and Custody Bank of Japan, Ltd. (Trust Account) are in connection with the respective bank's trust business.

2． A report of amendment to large shareholdings from BlackRock Japan Co., Ltd., that on November 21, 2018, it held 24,051 thousand shares through joint holdings (Percentage of shareholding: 6.02%), of which 8,130 thousand shares (2.03%) are held by BlackRock Japan Co., Ltd., and 5,962 thousand shares (1.49%) are held by BlackRock Fund Advisors and 5,791 thousand shares (1.44%) are held by BlackRock Institutional Trust Company, N.A., has been filed with the Director-General of the Kanto Finance Bureau. However, BlackRock Japan Co., Ltd., BlackRock Fund Advisors and BlackRock Institutional Trust Company, N.A. have been excluded from the above major shareholders, as the actual number of shares held by the said company has not been confirmed by the Company as of the end of the fiscal year.

3． A report of amendment to large shareholdings from Nomura Asset Management Co., Ltd., that on October 22, 2020, it held 23,411 thousand shares through joint holdings (Percentage of shareholding: 5.86%), has been filed with the Director-General of the Kanto Finance Bureau. However, Nomura Asset Management Co., Ltd. has been excluded from the above major shareholders, as the actual number of shares held by the said company has not been confirmed by the Company as of the end of the fiscal year.

4． A report of amendment to large shareholdings from Mitsubishi UFJ Financial Group, Inc., that on July 8, 2021, it held 33,076 thousand shares through joint holdings (Percentage of shareholding: 8.27%), of which 22,332 thousand shares (5.59%) are held by Mitsubishi UFJ Trust and Banking Corporation and 5,720 thousand shares (1.43%) are held by Mitsubishi UFJ Kokusai Asset Management Co., Ltd., has been filed with the Director-General of the Kanto Finance Bureau. However, Mitsubishi UFJ Trust and Banking Corporation and Mitsubishi UFJ Kokusai Asset Management Co., Ltd. have been excluded from the above major shareholders, as the actual number of shares held by the said company has not been confirmed by the Company as of the end of the fiscal year.

5． A report of amendment to large shareholdings from Mizuho Bank, Ltd., that on November 8, 2021, it held 23,155 thousand shares through joint holdings (Percentage of shareholding: 5.79%), of which 13,140

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Internal

thousand shares (3.28%) are held by Asset Management One Co., Ltd., has been filed with the Director- General of the Kanto Finance Bureau. However, Asset Management One Co., Ltd. has been excluded from the above major shareholders, as the actual number of shares held by the said company has not been confirmed by the Company as of the end of the fiscal year.

6． A report of amendment to large shareholdings from Sumitomo Mitsui Trust Bank, Ltd., that on November 19, 2021, it held 26,920 thousand shares through joint holdings (Percentage of shareholding: 6.73%), of which 16,006 thousand shares (4.00%) are held by Sumitomo Mitsui Trust Asset Management Co., Ltd. and 10,914 thousand shares (2.73%) are held by Nikko Asset Management Co., Ltd., has been filed with the Director-General of the Kanto Finance Bureau. However, Sumitomo Mitsui Trust Asset Management Co., Ltd. and Nikko Asset Management Co., Ltd. have been excluded from the above major shareholders, as the actual number of shares held by the said companies has not been confirmed by the Company as of the end of the fiscal year.

3. Corporate Attributes

	Listed Stock Market and Market Section		Tokyo Stock Exchange
		First Section
	Fiscal Year-End		December
	Type of Business		Chemicals
	Number of Employees (consolidated) as of the		More than 1000
	End of the Previous Fiscal Year
	Sales (consolidated) as of the End of the		From ¥100 billion to less than ¥1 trillion
	Previous Fiscal Year
	Number of Consolidated Subsidiaries as of the		From 50 to less than 100
	End of the Previous Fiscal Year

1. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling Shareholder
   N/A
2. Other Special Circumstances which may have Material Impact on Corporate Governance

None.

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Internal

II. Business Management Organization and Other Corporate Governance Systems regarding Decision-making, Execution of Business, and Oversight in Management

1. Organizational Composition and Operation

		Organization Form				Company with Kansayaku Board
[Directors]
		Maximum Number	of Directors	Stipulated in	12
		Articles of Incorporation
		Term of Office	Stipulated in	Articles	of	1 year
		Incorporation
		Chairperson of the Board			President
		Number of Directors			7
		Appointment of External Director			Appointed
		Number of External Directors			3
		Number of Independent Directors			3

External Directors' Relationship with the Company (1)

Name

Attribute

Relationship with the Company*

a

b

c

d

e

f

g

h

i

j

k

Yoshiaki Fujimori

Originally

from

other

company

Shinsaku Iwahara

Scholar

Kanoko Oishi

Originally

from

other

company

• Categories for "Relationship with the Company"
• "○" when the director presently falls or has recently fallen under the category; "△" when the director fell under the category in the past
• "●" when a close relative of the director presently falls or has recently fallen under the category; "▲"when a close relative of the director fell under the category in the past

1. Executive of the Company or its subsidiaries
2. Non-executivedirector or executive of a parent company of the Company
3. Executive of a fellow subsidiary company of the Company
4. A party whose major client or supplier is the Company or an executive thereof
5. Major client or supplier of the listed company or an executive thereof
6. Consultant, accountant or legal professional who receives a large amount of monetary consideration or other property from the Company besides compensation as a director/kansayaku
7. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a legal entity)
8. Executive of a client or supplier company of the Company (which does not correspond to any of d, e, or f) (the director himself/herself only)
9. Executive of a company, between which and the Company outside directors/kansayaku are mutually appointed (the director himself/herself only)
10. • 4 -

Internal

j. Executive of a company or organization that receives a donation from the Company (the director himself/herself only)

k. Others

External Directors' Relationship with the Company (2)

Designation

Name

as

Supplementary Explanation of

Reasons of Appointment

Independent

the Relationship

Director

Yoshiaki

○

With

regard to

Mr.

Yoshiaki

<>

for

appointing

as

an

Fujimori, none of the relationship

external

director and roles

and

Fujimori

classifications

stated

above

functions in the Company>

(classification "a" - classification

Mr. Fujimori has a wealth of practical

"k") applies to him.

knowledge about the globalization of

a Japanese company based on his

Mr. Fujimori's "Important Position

accumulated

experience

and

of

Other

Organizations

achievements as a business manager

Concurrently Assumed" stated in

and a global leader, and would be able

the Companies Act are as follows:

to

contribute

toward

further

• External Director, Takeda improving the effectiveness of the

Board of Directors by fully utilizingPharmaceutical Company

	Limited			his knowledge.
			Further, as	a	member	of	the
•	External	Director,	Boston
Company's		Nomination	&
	Scientific Corporation
	Remuneration Advisory Committee,
•	Senior	Executive	Advisor,
he attended	the	meetings	of	these
	CVC Asia Pacific	(Japan)	committees	and	actively	expressed
	Ltd.			opinions.

• External Director and Chair,

Oracle Corporation Japan

•

Outside

Director,

Toshiba

the independent directors and reason

for

appointing

as

independent

Corporation

director>

*In February 2021, the Company

Mr.

Fujimori

maintains

full

independence as none of the items (1)

has

concluded a

legally

binding

through

(5) stated below

applies.

agreement

pertaining

to

the

Furthermore, the Company sets forth

transfer

of

the

Company's

the Criteria for Independence of

Personal Care business to an entity

"External

Directors."

Mr.

Fujimori

financed by funds advised by CVC

has fulfilled the Criteria in full. Hence

Asia Pacific Limited, which is a

Mr. Fujimori has been determined

group company

of

CVC Asia

capable of sufficiently protecting the

Pacific (Japan) Kabushiki Kaisha

interests of the general shareholder

("CVC"), at which he serves as a

and has been appointed independent

Senior Executive Advisor, and its

director.

affiliates. The agreement stipulates

(1) Corporate officer, etc. of a parent

that

the

Company

will

provide

company or sister company;

cooperation

aimed

at

further

(2) A person whose main business

growth

and

development

of

the

partner is the Company, or a corporate

business

as

a shareholder

of

the

officer, etc. thereof; a major business

company which will operate the

partner of the Company, or a corporate

said

business after

the

transfer.

officer, etc. thereof;

While Mr. Fujimori is not involved

(3) A consultant, an accountant or a

in the business execution of CVC,

legal

specialist receiving significant

to ensure fairness

of

the said

sums of money from the Company

transaction, he did not participate

other than executive remunerations;

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Internal