V Technology : Corporate Governance Report(Updated in July 9,2021)

CORPORATE GOVERNANCE

Last Update: July 9, 2021

Company Name: V Technology Co., Ltd.

Representative: Shigeto Sugimoto, President, and CEO

Person to Contact: Jin Iino, Manager, General Affairs Dept

Securities Code: 7717

Stock Exchange Listing: TSE 1st Section

Phone: [phone]

【Corporate Governance Report】

The Status of the Company's corporate governance is as follows.

• Basic Approach to Corporate Governance

1. Basic Approach

We pursue the expansion of profits over the medium to long term through strategic initiatives and proactive management activities and contribute to society by creating innovation through our business. We aim to continue the enterprise and increase the corporate value, and we believe that it is essential to establish an organizational system by enhancing corporate governance and building good relationships by sharing cooperation, trust, and expectations with stakeholders such as shareholders, investors, customers, and our employees.

1. Establishment of a flat and flexible management organization system that enables prompt decision-making
2. Rapid and accurate information gathering ability, creative technology development ability, and aggressive boldness of cost competitiveness
3. Compliance with laws and regulations, articles of incorporation and company rules
4. Promote dialogue and timely, appropriate information disclosure

We strive to have more transparent company management, full of ambition, and a sense of speed.

【Reason for not implementing the Principles of the Corporate Governance Code】

• Supplementary Principle: 1-2-4

Regarding convocation notices, the convocation notices and reference documents in a narrow sense are translated into English and reported to the company's English website and the Tokyo Stock Exchange.

We are not currently implementing for the exercise of rights by introducing the Voting Rights Electronic Exercise Platform in terms of cost-effectiveness. In the future, we will strive to improve the environment by observing trends in the number of overseas investors.

【Disclosure Based on the Principles of the Corporate Governance Code】

• Principle 1-4:Cross-held Shares

Our company has a basic policy of not owning Cross-held Shares and, we do not own any of them.

• Principle 1-7: Related Party Transactions

In the case where the Company transacts with related parties, the relevant directors report in advance to the board of directors in writing, and the relevant directors are excluded from the quorum of the resolution as interested persons, we decide to resolve the pros and cons of trading. Besides, when a transaction is carried out, the relevant director regularly reports on the status of the transaction to the Board of Directors and audits the Board of Corporate Auditors as necessary.

• Principle 2-6: Asset Owner

We have introduced a defined contribution individual pension plan (401K), have employees know the necessary information, and hold briefings on the investment plan regularly.

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• Principle 3-1: Enhancement of Information Disclosure

1. We have the following management principles.

Contributing to society with fervor and great ambition, through our world-class innovative manufacturing solutions.

The management philosophy is also disclosed on our website.

https://www.vtec.co.jp/en/corporate/philosophy.html

We appropriately disclose Our Company's management plan (outlook for business performance) for the current fiscal year in the Summary of Financial Results.

We are also working to enhance information disclosure, such as disclosing information on financial results briefings for institutional investors and presentation materials at the general shareholders' meeting on our website immediately after the event.

(ii) The following is the basic policy regarding corporate governance.

We are committed to creating innovation, strategic initiatives for businesses contributing to society, and aggressive management activities. We pursue sustainable profit growth over the medium to long term and continue to grow and increase corporate value.

We will maintain and operate an appropriate management organization system and give management discipline. We also believe that it is essential to enhance corporate governance by cooperating with stakeholders such as

shareholders, investors, customers, and employees, sharing trust and expectations, and developing good relationships.

Based on this idea, We will strive for more transparent corporate management with full motivation and speed from these points.

1. Build a lean and flat management organization that enables swift decision making
2. Focusing on the fast-paced technological development trends centered on the FPD and semiconductor industries, to respond to the various demands of global customers centered on East Asia, we promote technological development in cooperation with our company also external partners. Established the world's best innovation technology and built with constant efforts, under the global supply chain centered on East Asia, always provide new products and services at competitive prices
3. Comply with laws and regulations and sustainably and sustainably grow in the medium term with society
4. Active dialogue with shareholders based on timely and appropriate information disclosure

The basic concept of corporate governance that We disclose is on our website (http://www.vtec.co.jp/ir/about3.html), corporate governance report, and securities report.

（iii）Regarding the policies and procedures for determining the compensation of executives and directors of our company,We will consider the balance with our profit, capital policy, and measures such as shareholder return.

If necessary, an appropriate voluntary committee consisting of one representative director and two outside directors will be appropriately established.

A voluntary committee discusses the compensation of directors and determines the total amount.

Considering its importance to the Company, the remuneration of management executives will be decided by the Board of Directors based on the Representative Director's initiative, if necessary.

（iv） We set the policies and procedures for the appointment and dismissal of executives of the Company and the appointment of candidates for Directors and Audit & Supervisory Board Members forth below.

We can perform appropriate audit and supervision while the business develops globally and achieves medium-term growth by appointing knowledge, experience, and ability and those with diverse perspectives.

Appropriately establish a voluntary committee consisting of one representative director and two outside directors. At that time, they will be assisted by external consultants as needed.

Then, they will select nomination candidates from the listed candidates and decide for the Board of Directors.

Regarding candidates for internal directors whom the Board of Directors decide,

At that time, they will attach great importance to whether the candidate has sufficient ability over management, such as leadership to vigorously promote our business, business environment surrounding our company, strengths, deep understanding of issues, among other things.

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Appropriately establish a voluntary committee consisting of one representative director and two outside auditors. At that time, they will be assisted by external consultants as needed. Then, they will select nomination candidates from the listed candidates and decide for the Board of Directors with the consent of the audit and supervisory board.

For internal auditors, a voluntary committee nominate candidates based on a balance of knowledge, etc. based on business experience, understanding of accounting and finance, etc., of the Company and other companies, and the ability to ensure independence from business executives.

The candidates will be decided by the Board of Directors with the consent of the Audit & Supervisory Board Members.

We recognize that the board of directors' current composition is such that it is possible to conduct substantive discussions compactly and that it is of an appropriate size that generally secures diversity.

Regarding the management executive's dismissal, when any of the following deem to be applicable, the Board of Directors will make a decision based on the initiative of the representative director, if necessary, in consideration of the importance of the management executive to the Company.

1. When an act that violates public order and morals
2. When it is difficult to continue working due to health reasons
3. When the corporate value is significantly damaged by neglecting the duties
4. When it becomes clear that the qualifications specified in the requirements referred to at the time of appointment are not recognized

（v）Regarding the appointment and dismissal of our company's management, In light of the importance of the management team to the company and the personal circumstances of the management team, we will explain to the appropriate extent, if necessary. The reasons for nominating candidates for Directors and Audit & Supervisory Board Members are disclosed in the notice of convocation of the General Meeting of Shareholders.

• Supplementary Principle: 4-1-1

The Board of Directors deliberates and makes decisions on important matters related to business management following the rules of the Board of Directors and Job authorization regulation, and receives reports on essential issues.

(Board of Directors Rules) Rules that define the roles and responsibilities that directors should fulfill and the matters to report to directors.

(Work authority rules) Rules define matters the board of directors discusses.

(Critical management matters) Business plans and strategies, among other things. The management team, such as executive officers assigned to the business headquarters, design these items.

• Principle 4-9: Independence Judgment Criteria and Qualifications of Independent Outside Directors
  The Company sets standards for the independence of outside directors and outside corporate auditors with reference

to the Companies Act and the standards established by the Tokyo Stock Exchange.

Independent outside directors are selected based on the above criteria from candidates for independent outside directors who have been selected and deliberated at the Board of Directors.

Outside Audit & Supervisory Board Members will be selected after the candidates are chosen for deliberation at the Board of Directors and with the Audit & Supervisory Board's consent..

• Supplementary Principle: 4-11-1

The Board of Directors deliberates on the adequacy of business plans and strategies, the risks involved in their realization, and the like in an objective and multi-faceted manner, to appropriately supervise and audit the execution status of those business plans and strategies. Opinions are exchanged and scrutinized from a viewpoint.

Therefore, the directors and corporate auditors who are attendants must have diverse experience, knowledge, expertise and insight.

For the board of directors to function in this way, we ensure a balance and diversity of knowledge, experience, and capabilities in a board of directors.

The board of directors will be the size necessary and appropriate for simplifying the Board of Directors, efficient deliberation, supervision of execution, and swift decision making.

To maintain an appropriate scale in the phase of rapid business growth, the Board of Directors delegate authority to executive officers and other management teams appropriately assigned to each business division.

Based on the following three points, a voluntary committee will nominate internal director candidates.

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1. Leadership to strongly promote our business.
2. Business environment surrounding the Company
3. Comprehensive management capabilities based on a deep understanding of our strengths and issues

A voluntary committee will nominate outside director candidates in consideration of the following points.

1. Diverse experiences that cannot be gained only by in-house directors
2. Management experience of a company that provides products and services in fields different from ours, experience as a consultant
3. Academic experience with specialized knowledge and high level of insight
4. Independence

Regarding skill requirements for directors

We have a skill matrix as a reference criterion from the perspectives of experience/skills and competency. However, the selection of candidates for directors does not involve scoring the matrix items.

A voluntary committee should nominate internal and external persons as candidates for directors based on their character.

And they should nominate the internal and external persons are capable of objective and multi-faceted deliberation as candidates for directors, considering the balance of skills with other directors.

About full-time auditors

A voluntary committee nominates candidates based on their experience and expertise in the fields of accounting and finance, their understanding and knowledge of the overall business, and their independence from business executives. A voluntary committee nominates candidates with a focus on their high level of expertise and insight in accounting, finance, and the law required for auditing, their extensive experience, high professional ethics, and independence.

As the business expands globally and achieves medium-term growth, we believe that appropriate auditing and supervision can be carried out by appointed not only knowledge, experience, and ability but also those with diverse perspectives based on the requirements listed above.

Appropriately establish a voluntary committee consisting of one representative director and two outside directors. At that time, they will be assisted by external consultants as needed. Then, they will select nomination candidates from the listed candidates and decide for the Board of Directors.

For internal directors, candidates for internal directors are decided by the Board of Directors.

At that time, they will attach great importance whether the candidate has sufficient capability over management, such as leadership to vigorously promote our business, business environment surrounding our company, company's strengths, deep understanding of issues, among other things.

Appropriately establish a voluntary committee consisting of one representative director and two outside auditors.

At that time, they will be assisted by external consultants as needed. Then, they will select nomination candidates from the listed candidates and decide for the Board of Directors with the consent of the audit and supervisory board.

For internal auditors, a voluntary committee nominates candidates based on a balance of knowledge, among other things based on business experience, understanding of accounting and finance of the Company and other companies, and the ability to ensure independence from business executives.

And the Board of Directors will decide the candidates with the consent of the Audit & Supervisory Board Members.

We recognize that the current composition of the Board of Directors is such that it is possible to conduct substantive discussions compactly and that it is of an appropriate size that generally secures diversity.

• Supplementary Principle: 4-11-2

If a director or corporate auditor of the Company wishes to serve as an officer of another listed company concurrently, the relevant director or corporate auditor will explain the role of the listed Company and his business contents at the board of directors meeting.

The Board of Directors will confirm and deliberate whether or not it is possible to adequately fulfill the role and responsibility of the Company as a director or corporate auditor.

When resolving the Board of Directors, applicable directors, applicable corporate auditors are excluded from the quorum of resolutions.

Besides, the status of concurrent posts will be disclosed annually in the notice of the convocation of the general meeting of shareholders and the securities report.

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• Supplementary Principle: 4-11-3

The Board of Directors of the Company has made it clear that its primary role is to decide essential management matters and policies and to supervise business execution.

In recent years, the business environment surrounding our company has undergone significant changes, and we recognize that our strategy is at the beginning of a significant turning point. Besides, as the board of directors, we have vigorously deliberated on the transformation of our essential strategies.

Based on these points, we report the outline of the effectiveness of the Board of Directors as follows.

1. Development of a business portfolio

We appreciate the fact that we are expanding the business portfolio and expanding our internal system in response to changes in the business environment.

2. Shift to headquarters (reduction of internal directors)

Based on the concept of separation of execution and supervision, we promoted the transition to a headquarters system and evaluated the role of the Board of Directors for further clarification.

3. Regarding the expected revision of the personnel incentive system in the future.

It is expected that the personnel incentive system will be reviewed to reflect the medium- to long-term business performance and potential risks and to provide incentives that contribute to the sound entrepreneurship.

• Supplementary Principle: 4-14-2

The Company proactively supports the acquisition of knowledge (such as participation in seminars and study sessions) and training that the directors and corporate auditors consider necessary to fulfill their responsibilities.

Besides, as a general rule, we have established rules to participate in external seminars and study sessions at least once a year, and the Company will bear the costs in that case.

• Principle: 5-1 Policy on Constructive Dialogue with Shareholders

To improve corporate value, we believe that it is essential to deepen the understanding of both ways of thinking and positions through dialogue with shareholders and other stakeholders and to search for appropriate responses based on that understanding.

We believe that [Principle 3-1: Enhancing information disclosure] is a major premise, and that [Principle 5-1: Constructive dialogue with shareholders] is part of that.

The Company has placed a system for promoting active dialogue with shareholders and provides opportunities for conversations with shareholders such as institutional investors.

The policy for the timely disclosure system and initiatives is a prerequisite for conversations with the relevant shareholders and occupies a prominent position. The Company discloses this policy in V-2 of the "Corporate Governance Report" submitted to the Tokyo Stock Exchange.

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