TPR : Corporate Governance

Corporate Governance

Last Updated: July 22, 2020

TPR Co., Ltd.

Masanobu Kishi Contact: 81-3-5293-2811 Securities Code: 6463

https://www.tpr.co.jp/tp_e/index.html

The corporate governance of TPR Co., Ltd. (the "Company") is described below.

1. Basic Views on Corporate Governance, Capital Structure, Corporate Attributes and Other Basic Information

1. Basic Views

With our spirit of Monozukuri, or "making things," as our starting point, represented by material, processing and surface treatment technologies that we have cultivated since the foundation in 1939, we, as the Company, are driving the business toward our corporate philosophy: "Realizing a clean environment and a sophisticated global society." To this end, we are striving to enhance our corporate governance, believing that it is essential to achieve sustainable growth by offering unmatched technologies and products with superior value, as wells as by forging good relationships with shareholders, customers, and other stakeholders such as trading partners, local society, employees.

Specifically, we are working to raise the effectiveness of corporate governance through the basic policies set forth below.

1. Respect the rights of shareholders and ensure fairness.
2. Cooperate appropriately with all stakeholders, including shareholders, employees, trading partners and local society.
3. Ensure transparency by appropriately disclosing corporate information.
4. Ensure directors and audit & supervisory board members recognize their fiduciary responsibility and accountability to shareholders and appropriately fulfill the respective roles and obligations expected of them.
5. Make efforts to engage in constructive dialogue with shareholders.

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

The Company complies with all principles of Japan's Corporate Governance Code.

[Disclosure Based on the Principles of Japan's Corporate Governance Code]

[Principle 1.4 Cross-Shareholdings]

1. Policy on shareholdings
   The Company believes that it is essential to have cooperative relationships with various companies in the interest of business expansion and sustainable growth.
   In order to maintain cooperative relationships while boosting corporate value, we follow a policy of holding shares when there is a reasonable basis for doing so from a medium- to long-term perspective, giving comprehensive consideration to such factors as materiality on a business strategy level, business relationship with trading partners, and profitability with capital costs taken into account. Each year, the Board of Directors
2. • 1 -

examine each individual stock held and consider the appropriateness of holding it based on this policy. When a stock is found by the Board of Directors to be held without reason, that holding will be reduced.

1. Exercise of voting rights as to shareholdings
   When exercising voting rights of stock held, the Company will ensure each individual proposal is examined in line with the criteria set forth below.
2. 1. Whether such holdings will contribute to increases in the corporate value of the Company as a shareholder over the medium- to long-term
   2. Whether there are matters that give rise to concerns over behavior that violates laws and regulations or goes against corporate ethical principles

[Principle 1.7 Related Party Transactions]

Concerning transactions by Directors that are competitive or involve a conflict of interest, the Company ensures compliance with the procedures stipulated by the Companies Act to ensure that such transactions do not damage the Company or the shareholders' common interest, requires that approval for such transactions are obtained from the Board of Directors beforehand, and makes sure reports are periodically given to the Board of Directors to explain the status of the transactions.

Each Director and Audit & Supervisory Board Member is required to submit a "related party declaration" each accounting period, and this is used to ascertain the existence of transactions or receivables/payables between the Director, Audit & Supervisory Board Member or immediate family member and a company in the TPR Group.

Note that when determining conditions for transactions with major shareholders, they will the same as those for transactions with third parties.

[Principle 2.6 Roles of Corporate Pension Funds as Asset Owners]

The Company entrusts the management of the defined corporate pension fund to an asset administration and management institution ("Trustee") that declares its acceptance of the stewardship code. The Company appoints multiple staff members representing administrative departments such as human resources and accounting to perform monitoring once every interim accounting period to ascertain based on the report received periodically from the Trustee whether the objectives of the asset management are being achieved and whether the asset structure is being reviewed as appropriate. The Company ensures that a summary of operations concerning the defined benefit corporate pension fund is disclosed to employees once a year pursuant to laws and regulations.

[Principle 3.1.1 Company Objectives (e.g., Corporate Philosophy, etc.), Management Strategies and Management Plans]

For details of our corporate philosophy and Medium-Term Management Plan, please refer to the Company's website as follows:

Corporate philosophy: https://www.tpr.co.jp/tp_e/company/philosophy.html

Medium-TermManagement Plan: https://www.tpr.co.jp/ir/pdf/core20setumei.pdf

[Principle 3.1.2 Basic Views on Corporate Governance]

Basic views on corporate governance are described in "1. Basic Views."

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[Principle 3.1.3 The Board of Directors' Policies and Procedures in Determining the Compensation of the Senior Managements and Directors]

The remuneration structure for the Company's Directors consists of ordinary remuneration, variable remuneration based on performance, retirement bonus, and Board Benefit Trust. This ensures that the remuneration is linked to corporate performance and medium- to long-term corporate value and it reflects the individual's level of contribution to operating results, accomplishments and responsibilities. However, as the Outside Directors perform a role of supervising and monitoring management from an independent standpoint, they are not eligible for variable remuneration, retirement bonus, or the Board Benefit Trust. The remuneration for Audit & Supervisory Board Members shall consist of ordinary remuneration based on a table.

The levels for the remuneration structure are determined by considering the levels at companies in the same industry of the same size based on external survey data.

The retirement bonus for Directors is paid in accordance with the stipulations based on period in office and rank.

Discussions on the remuneration limits of the Directors and the Audit & Supervisory Board Members and on the policy for the remuneration structure are held at the Board of Directors meetings after advice is sought from the Nomination and Remuneration Committee.

Note that the upper remuneration amount (including retirement bonus and Board Benefit Trust) is decided by the general meeting of shareholders.

The ordinary remuneration and variable remuneration of each Director is decided by the Representative Director under authorization of the Board of Directors based on criteria established by the Company (table based on rank for ordinary remuneration and level of contribution to operating results for variable remuneration), and the amount of remuneration for each Audit & Supervisory Board Member is determined through discussions with the Audit & Supervisory Board Members.

[Principle 3.1.4 The Board of Directors' Policies and Procedures in the Appointment of the Senior Management and the Nomination of Candidates for Director and Audit & Supervisory Board Member]

When nominating candidates for Director, each individual's knowledge, experience and capability is considered and candidates are selected from the standpoint of finding the right person for the position based on criteria of being capable at accurate and swift decision making and having good discernment regarding compliance with laws and regulations.

When nominating candidates for Audit & Supervisory Board Member, candidates are selected from the standpoint of their knowledge in finance and accounting and their capability to monitor the corporate governance structure.

In accordance with the above policy, the nomination of Director candidates and Audit & Supervisory Board Member candidates is decided by the Board of Directors based on discussions held at the Nomination and Remuneration Committee, of which Outside Directors account for the majority of the members.

Note that nominations for Audit & Supervisory Board Members are determined after obtaining prior consent from the Audit & Supervisory Board.

In the event of dismissal of a Director or Audit & Supervisory Board Member, the decision for dismissal is carried out based on discussions held at the Nomination and Remuneration Committee in accordance with criteria established beforehand.

[Principle 3.1.5 Individual Explanation on Appointment, Nomination and Dismissal of Directors and Audit & Supervisory Board Members]

In the convocation notice of the general meeting of shareholders, the individual reasons for each individual's appointment or dismissal, the career summary for each individual and other information are stated.

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[Supplementary Principle 4.1.1 Overview of Scope of Matters Delegated to Management]

The Company has established in the Board of Directors Regulations, in addition to matters provided for under laws and regulations or the articles of incorporation, which matters shall be determined by the Board of Directors, or reported to the Board of Directors, such as management policies, business plans, investment plans, subsidiary establishment or investment. The other individual matters of business execution are entrusted to the decision making authority of executive officers from the Chairman and CEO down, based on the regulations for division of duties and delegation of authority.

In addition, the Company has established the Management Meeting and the Budget Committee (convening monthly, yearly, respectively) as organs of business execution made up of Executive Officers with ranks of Managing Executive Officer and higher, and while striving to enhance discussions of important management issues stipulated as targets for discussion under the regulations for delegation of authority, the Company has established various cross-sectional meetings, such as the Compliance Committee and the Risk Management Committee, and while carrying out examination and monitoring of important management issues from various perspectives, the Company strives to realize optimal decision making.

[Principle 4.9 Independence Standards and Qualification for Independent Outside Directors]

The independence standards for Outside Directors of the Company are stated in "[Independent Officers] Matters relating to Independent Officers" in this report.

[Supplementary Principle 4.11.1 Policy on Appointment of Directors]

Under the Articles of Incorporation of the Company, the number of Directors is set as ten or less, which is believed to be an appropriate size for the continuous promotion of swift decision making.

When nominating a Director candidate, we comprehensively review individuals from the perspective of assigning the right person to the right position regardless of nationality or gender, giving consideration to the knowledge, experience, capability and so forth of the candidate, such as their capability of accurate and swift decision making in the Board of Directors, their capability to conduct appropriate business management from a global standpoint, their capability to monitor the business execution of other Directors, their capability to take charge of the general operations of the business division under one's control, and so on. When appointing Directors, we plan on continuing to respect the balance and observe the existing size and rationale in the future.

[Supplementary Principle 4.11.2 Significant Concurrent Positions Outside the Company of Directors and Audit & Supervisory Board Members]

We will continue to practice annual disclosure of significant concurrent positions outside the Company of Directors and Audit & Supervisory Board Members in "Business Management Organization and Other Corporate Governance Systems regarding Decision-making, Execution of Business, and Supervision in Management" of this report and in disclosure material such as the reference materials for convocation notices of general meetings of shareholders, the business report, the annual securities report, and so forth.

[Supplementary Principle 4.11.3 Analysis and Evaluation of Effectiveness of the Board of Directors]

To analyze and evaluate the effectiveness of the Board of Directors, we implemented a survey of each individual, targeting all Directors and Audit & Supervisory Board Members. As a result of such analysis and evaluation, the evaluation results showed that effectiveness was ensured. Looking forward, we will strive to further raise the level of effectiveness.

[Supplementary Principle 4-14-2 Training of Directors and Audit & Supervisory Board Members]

New and incumbent Directors and Audit & Supervisory Board Members have deepened their understanding of their roles and responsibilities as a critical governance body at a listed company, and should endeavor to acquire and update necessary knowledge and skills. Accordingly, the Company has provided and arranged training

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opportunities suitable to each Director and Audit & Supervisory Board Member along with financial support for associated expenses. The Board of Directors has verified whether such opportunities and support are appropriately provided.

[Principle 5.1 Policy for Constructive Dialogue with Shareholders]

1. Basic view on policy for constructive dialogue with shareholders
2. 
   The Company believes that it is essential for shareholders to understand and support the Company's business in order to achieve sustainable growth and medium- to long-term improvement in corporate value for the Company, and that providing accurate information to shareholders in a timely and fair manner while conducting constructive dialogue between both parties to the extent that is reasonably possible will lead to the building of a trusting relationship over the medium to long term.
3. Approach to dialogue
4. • 
     The Corporate Planning Department is responsible for the primary management of dialogue with shareholders and investors while the responsible Officer oversees the process.
     In order to enhance dialogue, the Corporate Planning Department reviews details with the relevant senior managements prior to such dialogue and strives to provide appropriate response, which includes the selection of who will provide the explanation.
   • Effective from August 1, 2020, the newly established Investor and Shareholder Relations Department will be responsible for such matters.
5. IR system
6. 
   Results briefings are held at multiple locations each year for analysts, institutional investors and the press. Targeting general investors, we publish operating results, business activities, management policies and so forth on the Company's website in an easy-to-understand format.
7. Feedback to inside the Company
8. 
   We strive to ensure the opinions and suggestions of shareholders and investors that we learn through dialogue are reported at meetings of the Board of Directors, etc., and reflected in information sharing and management strategy.
9. Insider information
10. 
    When holding dialogue with shareholders and investors, undisclosed insider information is thoroughly managed based on the prescribed rules.

2. Capital Structure

	Foreign Shareholding Ratio		From 20% to less than 30%

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[Status of Major Shareholders] [Updated]

		Name			Number of Shares Owned			Shareholding Ratio
				(Shares)			(%)
		Meiji Yasuda Life Insurance Company	2,395,000		6.73
		Sompo Japan Nipponkoa Insurance Inc.	2,293,000		6.44
		Japan Trustee Services Bank, Ltd. (Trust	2,002,800		5.62
		Account)
		The Master Trust Bank of Japan, Ltd. (Trust	1,852,600		5.20
		Account)
		Mizuho Bank, Ltd.	1,518,800		4.26
		Toyota Motor Corporation	1,370,600		3.85
		Hulic Co., Ltd.	1,231,800		3.46
		Tokyo Tatemono Co., Ltd.	933,687		2.62
		TPR Trading-Partner Shareholding	898,200		2.52
		Association
		BBH FOR FIDELITY PURITAN TR:
		FIDELITY SR INTRINS	825,000		2.31
		ICOPPORTUNITEIS FUND
		Controlling Shareholder (except for Parent)			-
		Parent (Listed Stock Market)		N/A
		Supplementary Explanation
	-
3. Corporate Attributes
		Listed Stock Market and Market Section		Tokyo Stock Exchange
			First Section
		Fiscal Year-End		March
		Type of Business		Machinery
		Number of Employees (Consolidated) at End		1,000 or more
		of the Previous Fiscal Year
		Net Sales (Consolidated) for the Previous		From ¥100 billion to less than ¥1 trillion
		Fiscal Year
		Number of Consolidated Subsidiaries at End		From 10 to less than 50
		of the Previous Fiscal Year

4. Policy for Measures to Protect Minority Shareholders in Conducting Transactions with Controlling Shareholder

-

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5. Special Circumstances Which May Have Material Impact on Corporate Governance

1. Views and policies concerning group management
   The Company and its subsidiaries develop business under the Group strategy that is shared and mutually understood by all parties and aim to achieve synergistic effects and maximize its operating results as a whole group, while aiming to grow our business and their businesses individually. In addition, the Company intends to give consideration to the independence, especially for its publicly listed subsidiary, in its business operations and respect the rights of its minority shareholders.
2. Significance, etc. of owning a listed subsidiary
   The Company holds 55.5% of shares in FALTEC Co., Ltd. (hereinafter, FALTEC).
   The Company mainly manufactures and sells engine functional components, including piston rings and cylinder liners, in the automotive industry. Meanwhile, FALTEC designs, develops, manufactures and sells plastic exterior parts and other products for automotive manufactures, which are business areas not covered by the Company as its core businesses. Accordingly, FALTEC contributes to driving the Group's diversification strategy, and we can expect a synergistic effect through the cooperation and collaboration with the company. In order for FALTEC to continue to demonstrate its true value as well as contribute to enhancing the corporate value of the entire Group, it is absolutely essential to increase the market penetration of FALTEC's brand in the business areas where it operates, recruit great talent and increase their motivation. For this reason, we believe that it is significant to maintain the listing of its stock.
3. Measures to ensure the effective governance system of the listed subsidiary
   We make the utmost efforts to build an effective governance system so that we can respect the independent decision making by FALTEC and avoid the conflict of interest with its minority shareholders.
   FALTEC appoints two independent outside directors to provide the appropriate supervision from an objective standpoint. In addition, the company established the Nomination and Remuneration Committee (voluntary committee) with a majority of independent outside officers to enhance the independence, objectivity and accountability in regard to such matters as the election and removal of directors and their remuneration. We also ensure the effectiveness of the governance system as a corporate group through reports and discussion on important matters in accordance with the Company's Regulations for the Management of Affiliates.
4. Contracts, etc. related to the details which shall be described as views and policies concerning group management
   The Company and FALTEC are in agreement to work together to create value for the both companies, their employees, shareholders and customers, while retaining their respective brands and identity as well as to respect the independence in operating activities each other based on the spirits of cooperation, understanding and mutual respect between the two companies.

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

1. Organizational Composition and Operation

		Organization Form		Company with an Audit & Supervisory Board
[Directors]
		Maximum Number of Directors Stipulated in		10
		Articles of Incorporation
		Term of Office Stipulated in Articles of		One year
		Incorporation [Updated]
		Chairperson of the Board		Representative director other than Chairman or President
		Number of Directors		9
		Appointment of Outside Directors		Appointed
		Number of Outside Directors [Updated]		3

Number of Independent Officers Designated from 3 among Outside Directors [Updated]

Outside Directors' Relationship with the Company (1) [Updated]

Name	Attribute		Relationship with the Company*
b	c	d	e	f	g	h	i	j	k
	a

Rokuro Tsuruta	Attorney at law
Masataka Honke	Other
Toshihisa Kato	From another 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; and "" when a close relative of the director fell under the category in the past
• 1. Executive (a person who executes business; hereinafter, the same) of the Company or its subsidiary
  2. Non-executivedirector or executive of the parent of the Company
  3. Executive of a fellow subsidiary of the Company
  4. Party whose major client or supplier is the Company or an executive thereof
  5. Major client or supplier of the Company or an executive thereof
  6. Consultant, accounting professional or legal professional who receives a large amount of monetary consideration or other property from the Company besides compensation as a director
  7. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a corporation)
  8. Executive of a client or supplier of the Company (which does not correspond to any of d., e., or f.) (the director himself/herself only)
  9. Executive of a corporation to which outside officers are mutually appointed (the director himself/herself only)
  10. Executive of a corporation that receives a donation from the Company (the director himself/herself only)
  11. Other

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Outside Directors' Relationship with the Company (2) [Updated]

				Designation
	Name			as			Supplementary Explanation of		Reasons for Appointment
			Independent			the Relationship
				Officer
									The Company has nominated
									Rokuro Tsuruta because it is
									deemed that he can utilize his
									experience in fulfilling his
									important duties in the legal world
									in his involvement in
									management overall in the
									Company.
									Because Rokuro Tsuruta has
	Rokuro Tsuruta				-			played an active role in the legal
						world, the Company considers
									that he does not have a
									relationship of interest with the
									Company and there is no risk of a
									conflict of interest with
									shareholders arising.
									The Company appointed Rokuro
									Tsuruta as an Independent Officer
									at the Board of Directors meeting
									held on March 23, 2010.

The Company has nominated Masataka Honke because it is deemed that his experience in fulfilling his important duties at the Bank of Japan and in the financial sector, and his experience as a corporate executive equips him to appropriately fulfill his duties as an Outside Director of the Company.

Masataka Honke	-	Because Masataka Honke has
played an active role in the
		financial sector, the Company
		considers that he does not have a
		relationship of interest with the
		Company and there is no risk of a
		conflict of interest with
		shareholders arising.
		The Company appointed
		Masataka Honke as an
		Independent Officer at the Board
		of Directors meeting held on June
		29, 2016.

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			Designation
	Name		as		Supplementary Explanation of		Reasons for Appointment
		Independent		the Relationship
			Officer

The Company has nominated Toshihisa Kato because it is deemed that his experience in fulfilling his long-standing duties at an operating company and his experience of being involved in corporate management equips him to appropriately fulfill his duties as an Outside Director of the Company.

Toshihisa Kato	-	The Company considers there are
		no relationships of interest
		between the Company and the
		operating company at which
		Toshihisa Kato has served, and
		there is no risk of a conflict of
		interest with shareholders arising.
		The Company appointed
		Toshihisa Kato as an Independent
		Officer at the Board of Directors
		meeting held on May 24, 2019.

[Voluntary Committees]

Voluntary Establishment of Committee(s)

Equivalent to Nominating Committee or Established

Remuneration Committee

Committee's Name, Composition, and Chairperson's Attributes [Updated]

				Committee Equivalent to			Committee Equivalent to
				Nominating Committee			Remuneration Committee
	Committee's Name			Nomination and Remuneration		Nomination and Remuneration
			Committee		Committee
	Total Committee Members		4		4
	Full-time Members		0		0
	Inside Directors		1		1
	Outside Directors		3		3
	Outside Experts		0		0
	Other		0		0
	Chairperson			Inside director		Inside director

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Supplementary Explanation

The Company has established a Nomination and Remuneration Committee as a non-mandatory advisory body for the Board of Directors for the purpose of strengthening corporate governance from the standpoint of achieving greater transparency and objectivity.

The main matters discussed by the committee are set forth below.

1. Matters regarding nomination and dismissal of Directors and Audit & Supervisory Board Members
2. Matters regarding appointment and dismissal of CEO and COO
3. Matters regarding the composition of the Board of Directors
4. Matters regarding the training of CEO and COO
5. Matters regarding performance evaluation such as achievement of medium-term management plan, etc.
6. Matters regarding the policy on composition of compensation, etc. of Directors and Audit & Supervisory Board Members
7. Matters regarding remuneration limits of Directors and Audit & Supervisory Board Members

[Audit & Supervisory Board Members]

	Establishment of the Audit & Supervisory Board		Established
	Maximum Number of Audit & Supervisory
	Board Members Stipulated in Articles of		5
	Incorporation
	Number of Audit & Supervisory Board Members		5
	[Updated]

Cooperation among Audit & Supervisory Board Members, Financial Auditor and Internal Audit Department

The Audit & Supervisory Board Members periodically exchange opinions with the Financial Auditor, and promote cooperation in the holding of on-site audits as necessary throughout the year and the hearings on the results of such audits.

The Internal Audit Department gives notice of the audit results to the Audit & Supervisory Board Members, and the Audit & Supervisory Board Members and the Internal Audit Department periodically hold meetings for information exchange and they cooperate with each other.

	Appointment of Outside Audit & Supervisory		Appointed
	Board Members
	Number of Outside Audit & Supervisory Board		3
	Members
	Number of Independent Officers Designated
	from among Outside Audit & Supervisory Board		3
	Members

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Outside Audit & Supervisory Board Members' Relationship with the Company (1)

Name	Attribute			Relationship with the Company*
b	c	d	e	f	g	h	i	j	k	l	m
	a

Yutaka Sukegawa	From another company
Shinji Ozaki	From another company
Takashi Yonekawa	From another company

• Categories for "Relationship with the Company"
  "" when the Audit & Supervisory Board Member presently falls or has recently fallen under the category;
  "" when the Audit & Supervisory Board Member fell under the category in the past;
  "" when a close relative of the Audit & Supervisory Board Member presently falls or has recently fallen under the category; and
  "" when a close relative of the Audit & Supervisory Board Member fell under the category in the past
• 1. Executive (a person who executes business; hereinafter, the same) of the Company or its subsidiary
  2. Non-executivedirector or accounting advisor of the Company or its subsidiary
  3. Non-executivedirector or executive of the parent of the Company
  4. Audit & Supervisory Board Member of the parent of the Company
  5. Executive of a fellow subsidiary of the Company
  6. Party whose major client or supplier is the Company or an executive thereof
  7. Major client or supplier of the Company or an executive thereof
  8. Consultant, accounting professional or legal professional who receives a large amount of monetary consideration or other property from the Company besides compensation as an Audit & Supervisory Board Member
  9. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a corporation)
  10. Executive of a client or supplier of the Company (which does not correspond to any of f., g., or h.) (the Audit & Supervisory Board Member himself/herself only)
  11. Executive of a corporation to which outside officers are mutually appointed (the Audit & Supervisory Board Member himself/herself only)
  12. Executive of a corporation that receives a donation from the Company (the Audit & Supervisory Board Member himself/herself only)
  13. Other

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Outside Audit & Supervisory Board Members' Relationship with the Company (2) [Updated]

				Designation
	Name			as			Supplementary Explanation of			Reasons for Appointment
			Independent			the Relationship
				Officer
										Yutaka Sukegawa has a long-
							The Outside Audit & Supervisory		spanning career history working
							Board Member Yutaka Sukegawa		in information system
							served as an executive of Meiji		departments of other companies,
							Yasuda Life Insurance Company		and he has extensive experience
							until March 2015. The company is		and insight in relation to IT. The
	Yutaka					the Company's first largest		Company therefore nominates
					shareholder as of March 31, 2020,		him as an Audit & Supervisory
	Sukegawa
					and has business relationships with		Board Member as it deems he is
							the Company, including life		suitably qualified to carry out
							insurance. However, the transaction		audits of business operations.
							amount does not exceed the amount		The Company appointed Yutaka
							set forth in the independence		Sukegawa as an Independent
							standards of the Company.		Officer at the Board of Directors
										meeting held on May 15, 2018.
										Kinya Ninagawa has abundant
							The Outside Audit & Supervisory		management experience from his
							Board Member Kinya Ninagawa		long-spanning career history as a
							served as Managing Executive		company officer at other
							Officer of Mizuho Trust & Banking		companies, and he has extensive
							Co., Ltd. until March 2009. The		experience and insight in relation
							company is the Company's 11th		to finance. The Company
	Kinya Ninagawa					largest shareholder as of March 31,		therefore nominates him as an
					2020, and has business relationships		Audit & Supervisory Board
							with the Company, including		Member as it deems he is suitably
							securities agency. However, the		qualified to carry out audits of
							transaction amount does not exceed		business operations.
							the amount set forth in the		The Company appointed Kinya
							independence standards of the		Ninagawa as an Independent
							Company.		Officer at the Board of Directors
										meeting held on May 15, 2018.

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				Designation
	Name			as			Supplementary Explanation of			Reasons for Appointment
			Independent			the Relationship
				Officer
							The Outside Audit & Supervisory
							Board Member Takashi Yonekawa
							served as Deputy President and
							Executive Officer of Sompo Japan
							Insurance Inc. until June 2020 and
							currently serves as its advisor. The		Takashi Yonekawa has a record of
							company is the Company's second
								achievement and experience as a
							largest shareholder as of March 31,
								corporate manager at other
							2020, and has business relationships
								companies and therefore the
							including non-life insurance.
								Company has deemed that he will
							However, the transaction amount
								appropriately execute his duties as
							does not exceed the amount set forth
								an outside Audit & Supervisory
	Takashi					in the independence standards of the
						Board Member. Accordingly, the
	Yonekawa					Company.
						Company nominates him as an
							Takashi Yonekawa also currently
								Audit & Supervisory Board
							serves as President of
								Member.
							Yasudanipponkoa Health Insurance
								The Company appointed Takashi
							Society. The association is a health
								Yonekawa as an Independent
							insurance association that the
								Officer at the Board of Directors
							Company participates in, and has
								meeting held on May 22, 2020.
							business relationships with the
							Company, including social insurance.
							However, the transaction amount
							does not exceed the amount set forth
							in the independence standards of the
							Company.

[Independent Officers]

Number of Independent Officers [Updated]	6

Matters relating to Independent Officers

[Principle 4.9 Independence Standards and Qualification for Independent Outside Directors]

The independence standards of the Company are as follows:

In order for the Outside Directors and Outside Audit & Supervisory Board Members of the Company to be judged as being independent, such Outside Directors and Outside Audit & Supervisory Board Members must not fall under any of the following items.

1. An executive director, executive officer (shikkoyakuin) or other employee of the Company and its subsidiaries
2. A party whose major client or supplier is the Company (Note 1) or an executive thereof
3. Major client or supplier of the Company (Note 2) or an executive thereof
4. A consultant, accounting professional or legal expert who receives substantial amount of cash and/or other assets from the Company besides officer compensation (Note 3) (when a person who receives such assets is an organization such as a corporation or an association, a person who belongs to such organization)
5. A party who fell under any of the items (2) to (4) in the past year

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1. A spouse or relative within the second degree of kinship of a party who falls under any of the items (1) to
   (5) above (excluding unimportant positions)

(Notes) 1. "A party whose major client or supplier is the Company" is one who received payment from the Company during the latest fiscal year at least equivalent to 2% of the party's annual consolidated net sales or 100 million yen, whichever is greater.

1. "Major client or supplier of the Company" is one who made payment to the Company during the latest fiscal year at least equivalent to 2% of the Company's annual consolidated net sales or 100 million yen, whichever is greater.
2. "Receives substantial amount of cash and/or other assets from the Company besides officer compensation" means receiving from the Company monetary consideration or property at least equivalent to 2% of net sales or total revenue of such party or 10 million yen, whichever is greater, in addition to officer compensation.

[Incentives]

	Implementation of Measures to Provide		Other
	Incentives to Directors
	Supplementary Explanation

The Company has implemented a Board Benefit Trust (BBT) to increase awareness about contributing to improve corporate value over the medium- to long-term by clarifying the relationship between the compensation of Directors, etc. (Directors and executive officers) and the Company's stock price, and by having Directors, etc. share with the shareholders not only the benefits of increases in the stock price, but also the risk of decreases in the stock price.

Recipients of Share Options

Supplementary Explanation

-

[Director Remuneration]

Disclosure of Individual Directors' RemunerationNo individual disclosure

Supplementary Explanation

The amounts shown are the total amounts for inside Directors, inside Audit & Supervisory Board Members and outside officers, respectively.

	Policy for Determining Remuneration Amounts		Established
	or Calculation Methods Thereof

Disclosure of Policy for Determining Remuneration Amounts or Calculation Methods Thereof

The Company has obtained respective resolutions to determine an upper limit of the remuneration for Directors of ¥400 million per year (at the 78th Annual General Meeting of Shareholders held on June 29, 2011), and an upper limit of the remuneration for Audit & Supervisory Board Members of ¥70 million per year (at the 81st Annual General Meeting of Shareholders held on June 27, 2014).

The policy for determining remuneration is as stated in "Disclosure Based on the Principles of Japan's Corporate Governance Code; Principle 3.1.3" in this report.

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[Supporting System for Outside Directors and/or Outside Audit & Supervisory Board Members]

1. Providing opportunities for information exchange among Outside Directors and Audit & Supervisory Board Members
2. When required, the Outside Directors and Outside Audit & Supervisory Board Members attend important meetings such as the Management Meetings.
3. Two employees shall be assigned as staff (performing concurrent services) to assist the audit duties of the Audit & Supervisory Board Members to improve the effectiveness of the Audit & Supervisory Board Members' audits and enable smooth execution of auditing operations.

[Status of Persons Who Have Retired from a Position Such as Representative Director and President]

Retired Representative Director and Presidents, etc. Holding Advisory or Any Other Position in the Company

Working Form and

Date of

Retirement

Title/

Conditions

Term of

Name

Responsibilities

from Position

Position

(Full-time/Part-time,

Office

Such as

Paid/Unpaid, etc.)

President

Masashi

Special

External activities

Part-time

June 28, 2007

1 year

Hisatomi

Adviser

Unpaid

Hideo

Special

External activities

Part-time

June 27, 2019

1 year

Yamaoka

Adviser

Unpaid

Isao

Consultant

External activities

Part-time

June 29, 2017

1 year

Hiraide

Providing

Paid

managerial advice

Total Number of Retired Representative Director and Presidents, etc. Holding

3

Advisory or Any Other Position in the Company

Other Matters

-

2. Matters on Functions of Business Execution, Audit and Supervision, Nomination and Remuneration Decisions (Overview of Current Corporate Governance System) [Updated]

The Company has a Board of Directors and Audit & Supervisory Board.

The Company has introduced the Executive Officer System, led by the Chairman & CEO and the President & COO in order to differentiate the supervisory function of Directors from the business execution function of Directors.

The Audit & Supervisory Board cooperates with the Internal Audit Department and also periodically carries out exchange of opinions with the Financial Auditor to perform suitable and appropriate audits in order to promote the enhancement of corporate governance.

1. Board of Directors
   A meeting of the Board of Directors is held every month in general, and extraordinary meetings are held from time to time, whenever necessary. Three individuals, one an attorney from the legal profession, one from the financial sector, and one from the manufacturing sector are selected as independent Outside Directors to enhance the corporate governance of the Company mainly through enhancement of the internal control system, and the achievement of compliance.
2. • 16 -

In addition, with the objective of making discussions of the Board of Directors meetings more efficient and energized, important matters are discussed at a Management Meeting consisting of Executive Officers with ranks of Managing Executive Officer and higher, and only matters with consensus are raised to the Board of Directors meetings, in principle. Regular Management Meetings are held twice every month, and extraordinary meetings are held from time to time, whenever necessary.

In order to further strengthen transparency and objectivity of nomination and remuneration of senior management, the Company has established a Nomination and Remuneration Committee as an advisory body for the Board of Directors.

The committee has no less than three members and a majority of members are independent Outside Directors.

1. Audit & Supervisory Board Member, internal audit and Financial Auditor
   The Company has five Audit & Supervisory Board Members, of which three are Outside Audit & Supervisory Board Members with specialist expertise and a high level of independence to ensure neutrality and objectivity of the audit structure.
   The Audit & Supervisory Board Member carry out audits in accordance with the audit policy and allotted tasks specified by Audit & Supervisory Board.
   The Audit Office, which has been established as an internal audit department under the direct control of the President, carries out audits on the execution of business operations. The Audit Office cooperates with the Audit & Supervisory Board Members by periodically holding meetings to exchange information. The Company assigns two employees as staff (performing concurrent services) to assist the duties of the Audit & Supervisory Board Members.

The Company commissions its accounting audit to Ernst & Young ShinNihon LLC, and the engagement partners are Messrs. Yoichi Tsukimoto and Kazuhiko Yamazaki. There is no special interest between the audit firm, the engagement partners and the Company.

3. Reasons for Adoption of Current Corporate Governance System

As stated above, the structure for supervising management was recognized as being properly in place and functioning, and the Company has selected the current corporate governance structure.

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III. Implementation of Measures for Shareholders and Other Stakeholders

1. Measures to Energize General Shareholders Meetings and Smooth Exercise of Voting Rights

Supplementary Explanations

						In this fiscal year, the Company issued a notice of convocation on June 9,
		Early Notification of General				2020, which was two weeks and two days prior to the general shareholders
					meeting due to the novel coronavirus disease (COVID-19) pandemic. The
		Shareholders Meeting
					convocation notice was disclosed on the Company's website on June 2,
				2020.
		Allowing Electronic or				The Company has adopted the exercise of voting rights by electronic or
		Magnetic Exercise of Voting				magnetic means since the Company's 87th Annual General Meeting of
		Rights				Shareholders held on June 26, 2020.
		Participation in Electronic
		Voting Platform and Other				The Company has participated in the Electronic Voting Platform since the
		Efforts to Enhance the Voting				Company's 87th Annual General Meeting of Shareholders held on June 26,
		Environment for Institutional		2020.
		Investors
		Providing Convocation Notice				The Company has provided the convocation notice in English since the
					Company's 87th Annual General Meeting of Shareholders held on June 26,
		in English
			2020.
2. IR Activities
						Supplementary Explanations			Explanation by
								Representative
		Regular Investor Briefings for				The Company holds a financial results briefing once
		Analysts and Institutional					Yes
					a year
		Investors
		Posting of IR Materials on				https://www.tpr.co.jp/tp_e/index.html
		Website
		Establishment of Department				Corporate Planning Department
					* From August 1, 2020, the department will be
		and/or Manager in Charge of
					replaced by the newly established "Investor and
		IR
					Shareholder Relations Department."
3. Measures to Ensure Due Respect for Stakeholders
						Supplementary Explanations
		Provisions to Ensure Due				We have formulated the "Corporate Governance Guidelines" and have
		Respect for Stakeholders in
					fundamentally put in place all rules
		Internal Rules, etc.
		Implementation of				We formulate the "Environmental Guidelines" each year and carries out
		Environmental Activities, CSR				company-wide activities based on the environmental management system
		Activities, etc.				(EMS) which is based on ISO14001
		Formulation of Policies for
		Information Provision to				We incorporate this into the "Corporate Governance Guidelines"
		Stakeholders

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IV. Matters Related to Internal Control System

1. Basic Views on Internal Control System and Progress of System Development

In addition to formulating the "Basic Policies for Establishment of Internal Control Systems" based on the TPR's corporate philosophy, the Company has established a Group Governance Department under the direct control of the Chairman & CEO, to perform the role of ensuring the appropriateness of operations, promoting the construction of a more effective internal control system and achieving continual improvement.

With regard to the internal control reporting system related to financial reporting required by the Financial Instruments and Exchange Act (so-calledJ-SOX), the Company is actively implementing initiatives and taking suitable and appropriate measures while receiving expert advice.

1. System ensuring that execution of duties by Directors complies with laws and regulations and the Articles of Incorporation
   The Company formulates the "TPR Group Compliance Basic Rules" and the "TPR Compliance Rules" as rules to apply to Directors, Audit & Supervisory Board Members, Executive Officers, and employees, and it works to ensure compliance. At the same time, the Company has introduced the TPR Group whistleblowing system, which also provides an external contact point operated by a law office, as a whistleblowing structure for violations of laws and regulations and concerns over compliance. Efforts to ensure the appropriate operation of the Board of Directors are carried out on a periodic basis or whenever required based on the stipulations of the Board of Directors Regulations. In addition, the Company is a company with audit & supervisory board, and in addition to making the execution of duties of the Directors the target of the audits of each Audit & Supervisory Board Member in accordance with the audit policy and allotted tasks specified by the Audit & Supervisory Board, if a Director discovers that another Director's actions violate laws and regulations or the Company's articles of incorporation, that Director shall immediately report it to the Audit & Supervisory Board and Board of Directors and work to bring about its rectification.
2. System for storing and managing information related to execution of duties by Directors of the Company
   The Company shall store and manage information related to execution of duties by Directors of the Company in a proper and secure manner in the fully searchable form most suitable to the preservation media used pursuant to the "Document-handling Regulations," and it shall keep it available for inspection for ten years as necessary.
3. Regulations and other system for managing risks of loss of the Company
   The Company shall accurately evaluate and recognize the risks related to business execution of the Company, and has formulated the "Risk Management Regulations" to establish measures to prevent the materialization of any such risks, or measures to minimize the loss arising from such materialization of risks.
   Furthermore, pursuant to the "TPR IT Information Security Regulations," the Company will strive to both promote the effective use of advancing IT technology and guard against the risk of information leakage, etc.
4. System ensuring the efficiency of execution of duties by Directors of the Company
5. 1. In order to conduct effective and efficient decision making for important management-related matters, a resolution of the proposal for such matters is made by the Board of Directors after deliberation by the management meeting (hereinafter the "Management Meeting"), which consists of Executive Officers with ranks of Managing Executive Officer and higher. A regular meeting of the Board of Directors is held once every month, and extraordinary meetings are held from time to time, whenever necessary. Regular Management Meetings are held twice every month, and extraordinary meetings are held from time to time, whenever necessary.
   2. The respective person responsible, the details of responsibility and the executional procedures for the execution of business shall be specified in the "Organizational Management Regulations," "Regulations for Division of Duties," and "Regulations for Delegation of Authority" to ensure efficient execution of business.

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1. System ensuring that execution of duties by employees of the Company complies with laws and regulations and the Articles of Incorporation
2. 1. The Company formulates the "TPR Group Compliance Basic Rules" and the "TPR Compliance Rules." Pursuant with these provisions, the Company has established the "Compliance Committee," consisting of members of the Management Meeting with the Chairman & CEO as the chief responsible officer. The Compliance Committee works to maintain and improve the compliance system by making each department/office general manager a compliance promotion officer.
   2. Content that teaches the importance of compliance is included in the employee training system as a mandatory component.
   3. An internal audit department has been established under the direct control of the President to conduct auditing related to compliance as an important area of auditing.
   4. In the event that Directors find any material violation of laws and regulations or other important facts regarding compliance at the Company, they shall report to the Audit & Supervisory Board Members immediately and report to the Board of Directors without delay.
   5. A whistleblowing system for facts relating to violation of laws and regulations and other compliance matters has been established whereby either the Compliance Committee, an external law firm or an Audit & Supervisory Board Member can act as the person who receives the information. In addition, the whistleblower shall not receive unfair treatment due to them making the report.
   6. In cases where the Audit & Supervisory Board Member recognizes there is a problem with the Company's system or the operation of whistleblowing system, he/she may recommend to the Directors that improvement measures be formulated.
3. System ensuring the proper business operation of the corporate group
   In order to put in place a compliance system for group companies, the Company has established the "TPR Group Compliance Basic Rules" and each group company has established a system that is in line with those rules.
4. System for reporting to the Company on matters related to execution of duties by directors, etc. of the subsidiaries of the Company
   In terms of business management, the Company manages the business of subsidiaries using a system for making decisions and reporting to the Company in accordance with the "Regulations for the Management of Affiliates," and shall monitor the status of the execution of these duties as necessary.
5. Regulations and other system for managing risks of loss of the subsidiaries
   The Company shall accurately evaluate and recognize the risks related to business execution of subsidiaries, and has formulated the "TPR Group Risk Management Basic Regulations" to establish measures to prevent the materialization of any such risks, or measures to minimize losses arising from such materialization of risks. Each subsidiary establishes a system conforming to these regulations.
6. System ensuring the efficiency of execution of duties by directors of the subsidiaries
   The Company performs supervision of the execution of duties of subsidiaries to ensure the construction of systems by which business is performed efficiently, giving consideration to the subsidiary's business, its scale and its place in the Group. Furthermore, decisions to execute important management-related matters of subsidiaries shall be resolved at the board of directors of the subsidiary after deliberation of the matter has been carried out by the Company's Management Meeting beforehand. In addition to regular meetings of the board of directors of the subsidiaries, extraordinary meetings are held from time to time, whenever necessary.
7. System ensuring that execution of duties by directors, etc. and employees of the subsidiaries complies with laws and regulations and the Articles of Incorporation
   The subsidiaries establish a system that conforms to the "TPR Group Compliance Basic Rules" to serve as a system that the Company can use to supervise the compliance activities of the subsidiaries. In addition,

- 20 -

the Company formulates the "TPR Group Whistleblowing Regulations," which includes directors, etc. and employees of subsidiaries in the scope of eligible whistleblowers.

1. Matters regarding employees assigned to assist the Audit & Supervisory Board Members of the Company in performing their duties, the independence from Directors of such employees, and ensuring the validity of instructions given to such employees
2. 1. Requested by the Audit & Supervisory Board Members, the Company assigns two employees of the Company as assistants to Audit & Supervisory Board Members to assist the duties of the Audit & Supervisory Board Members.
   2. The assigned duties, transfer, evaluation, and so forth of such employees shall require prior consent from the Audit & Supervisory Board Members to ensure independence of the assistants mentioned above.
3. System for reporting by Directors and employees of the Company to Audit & Supervisory Board Members of the Company
   The Company formulates the "Management Guidelines for Reports on Specific Matters," which prescribes how matters expected to have a material impact on management should be reported to the Chairman & CEO, etc. and such matters are also reported to the Audit & Supervisory Board Members. In addition, the Company formulates the "TPR Group Whistleblowing Regulations," which includes Directors, etc. and employees in the scope of eligible whistleblowers, and information obtained under the whistleblowing system shall be passed to Audit & Supervisory Board Members and it also may be reported to Audit & Supervisory Board Members. Notwithstanding the foregoing, an Audit & Supervisory Board Member may at any time as necessary request a business report from a Director or an employee or may investigate the status of operations and assets.
4. System for reporting by directors and employees of the subsidiaries to Audit & Supervisory Board Members of the Company
   In conformity with the "Management Guidelines for Reports on Specific Matters," mentioned in the previous paragraph, matters related to subsidiaries are reported to Audit & Supervisory Board Members of the Company. In addition, in accordance with the "TPR Group Whistleblowing Regulations," the scope of eligible whistleblowers under the TPR Group whistleblowing system also includes directors and employees of subsidiaries, and information obtained under the whistleblowing system shall be passed to audit & supervisory board members and it also may be reported to Audit & Supervisory Board Members of the Company. Notwithstanding the foregoing, an Audit & Supervisory Board Member of the Company may at any time as necessary request a business report from a subsidiary's director or an employee or may investigate the status of operations and assets.
5. System to ensure a person who reports the above two items does not receive unfair treatment
   The Directors and employees of the Company and directors and employees of its subsidiaries shall not receive unfair treatment due to them making reports or conducting inquiries in response to a request from an Audit & Supervisory Board Member.
   In addition, in the event a Director or employee of the Company or director or employee of its subsidiaries makes a whistleblowing report, there are assurances in place in accordance with the "TPR Group Whistleblowing Regulations" to ensure the individual does not receive unfair treatment because of making the whistleblowing report.
6. Policy related to the processing of expenses incurred in the execution of the duties of Audit & Supervisory Board Members
   To cover the costs incurred in the Company's Audit & Supervisory Board Members performance of their duties, the necessary processing based on invoicing by the Audit & Supervisory Board Member shall be carried out swiftly to ensure there is no hindrance to such performance of duties.
7. System to ensure the effectiveness of auditing by Audit & Supervisory Board Members
   The Audit & Supervisory Board Members shall periodically meet with the Representative Director and hold meetings to exchange opinions with the Outside Directors. In addition, they shall preserve cooperation with the Audit Office, Group Governance Department, Financial Auditors, and audit &

- 21 -

supervisory board members of subsidiaries and strive to ensure the effectiveness of the Audit & Supervisory Board Members' audit.

The Company's organs, internal controls, and so forth mentioned above are as shown in the attached schematic diagram.

2. Basic Views on Eliminating Anti-Social Forces and Progress of Related Efforts

Systems to sever relations with and eliminate anti-social forces

1. The Company has formulated the "TPR Group Compliance Basic Rules" to maintain fairness and soundness of operations by rejecting relations with antisocial forces as part of its corporate social duty.
2. The office responsible for responding to antisocial forces is the Human Affairs and General Administration Division. By giving thorough instructions on appropriate response to each internal department, and closely cooperation with the relevant external authorities, the Company is taking thorough efforts to sever relations with and eliminate anti-social forces.
3. If relationship are inadvertently formed with anti-social forces due to misrepresentation, proxy or so forth, as soon as the situation is discovered or as soon as suspicions are aroused, the Company will swiftly end such relations through close cooperation with the relevant external authorities.

- 22 -

1. Other

1. Adoption of Anti-Takeover Measures

	Adoption of Anti-Takeover Measures		Adopted

Supplementary Explanation [Updated]

At the Company's Board of Directors meeting held on February 8, 2007, the Company resolved and effectuated "Measures to Respond to a Large-Scale Purchase of the Company's Shares" as a takeover defense measure and this was approved at the 74th Ordinary General Meeting of Shareholders held on June 28, 2007. Afterward, at the 77th Ordinary General Meeting of Shareholders held on June 25, 2010, the 80th Ordinary General Meeting of Shareholders held on June 27, 2013, the 83rd Ordinary General Meeting of Shareholders held on June 29, 2016, 86th Ordinary General Meeting of Shareholders held on June 29, 2019, proposals to make partial changes to and extend the takeover measures were approved, and currently the valid term of the measures has been extended until the ordinary general meeting of shareholders scheduled to be held in June 2022. The disclosure materials are available on the Company's website. For details, please refer to the Company's website (http://www.tpr.co.jp; Japanese only).

2. Other Matters Concerning Corporate Governance System

Overview of timely disclosure system

1. Basic stance for timely disclosure of the Company
   In accordance with "TPR Group Compliance Basic Stance," the Company ensures that Officers and employees disclose company information on a timely and appropriate basis, and strives for the accurate, fair and swift information disclosure of company information.
2. Disclosure standards
   The Company discloses important information that could have an impact on the investment decisions of shareholders and investors, such as decisions, incidents, and financial results, in line with criteria set forth by the Tokyo Stock Exchange such as the Securities Listing Regulations and with the Financial Instruments and Exchange Act. In addition, the Company strives to proactively disclose information when it deems the information to be useful to shareholders and investors even if it is not covered by the Securities Listing Regulations, etc.
3. Internal systems for timely disclosure
   The Company has established a system through which important information from its subsidiaries and its own departments and offices is collected by the Corporate Planning Department. The Corporate Planning Department the Human Affairs and General Administration Department, and the Accounting Department are responsible for information disclosure. These departments report important information to the Representative Director and the Director with relevant administrative responsibility, receive instructions, and make disclosures. Disclosure of information related to important decisions and financial results shall be swiftly disclosed after submitting the matter to and receiving approval from the Board of Directors, and timely disclosure of important incidents is made without delay after reporting the matter to the Representative Director, and reporting that disclosure to the Board of Directors.

- 23 -

- 24 -