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Corporate Governance Basic Policy

Preface

This Basic Policy sets forth the basic views of corporate governance at ASKA Pharmaceutical Holdings Co., Ltd. (hereinafter referred to as the "Company”). Based on the corporate philosophy of “Contribute toward the improvement of people's health and progress in society through the development of innovative products,” the Company aims for the sustainable growth and medium- to long-term enhancement of corporate value of the Company and its subsidiaries (hereinafter collectively referred to as the “Group”). In order to realize this corporate philosophy, the Company has established this Basic Policy based on a resolution of its Board of Directors in an effort to establish and maintain the best and most effective corporate governance system.

Chapter I General Provisions

(Purpose) 

Article 1

The purpose of this Basic Policy is, by defining basic matters related to corporate governance in the Company, to substantially secure the rights of shareholders through transparent, fair, prompt and decisive decision-making while balancing the supervision of management and the operation of business, and to make autonomous responses to achieve sustainable growth and the enhancement of corporate value over the medium to long term, thereby contributing to the development of the Group, investors, and the economy as a whole

[Preface, Basic Principles, 3-1(ii), 4-5]

(Basic Views on Corporate Governance) 

Article 2

The Company shall, in line with the following basic views, always seek the best corporate governance and continuously strives to enhance it, with the aim of achieving sustainable growth and the enhancement of corporate value of the Group over the medium to long term. 

  1. We will strive to effectively secure the rights of shareholders and will ensure shareholder equality.
  2. We will strive to cooperate fully with stakeholders and will foster a corporate culture and climate that respects the ethics of sound business practices.
  3. We will appropriately disclose the Company’s financial, management, and other information to ensure transparency.
  4.  The Board of Directors will establish an environment where bold management decisions are made based on corporate strategies and will conduct highly effective supervision of directors.
  5.  We will engage in constructive dialogue with shareholders.

[Basic Principles, 3-1(ii)]

Chapter II Corporate Governance System and Responsibilities of the Board of Directors, etc.

(Overview of Corporate Governance System)

Article 3

The Board of Directors of the Company shall make decisions on corporate strategy policies and important management matters and supervise the execution of business by directors. In the Company, which is a company with an Audit & Supervisory Board, the Audit & Supervisory Board and its members shall supervise and audit the performance of directors' duties independently of the Board of Directors.

〔4-1、4-6、4-10〕

(Roles of Board of Directors and Members thereof)

Article 4

In principle, a regular meeting of the Board of Directors shall be held once a month, and whenever necessary, an extraordinary meeting of the Board of Directors shall be held. The Board of Directors shall, in accordance with the laws and regulations, the Articles of Incorporation, and other rules and regulations of the Company, indicate the major direction of corporate strategies, etc., make decisions on important management and business matters, including management plans, and supervise the execution of business.
In addition, directors shall devote themselves to management and supervisory functions, such as determining important matters on corporate strategy policies and management of the Company, and strengthening supervisory functions.

〔4-1、4-1 (1)〕

(Composition of Board of Directors and Members thereof)

Article 5

The number of directors of the Company shall not exceed ten (10) in accordance with the provisions of the Articles of Incorporation. The Company shall appoint at least two (2) independent outside directors to strengthen its corporate governance structure and apply new external insights to the management of the Company.

〔4-8〕

(Qualifications of Directors and Nomination Procedures)

Article 6

  1. Directors shall be selected from those who have high ethical standards as well as outstanding character, insight, ability and extensive experience.
  2. Outside directors shall be appointed from among persons who are deemed to be independent from the management of the Company in light of the Independence Standards for Outside Officers set forth in Appendix 6.
  3. The Board of Directors shall consist of directors with different backgrounds in terms of expertise and experience so that the diversity of the Board as a whole is well considered.
    〔4-11(1)〕
  4.  A candidate for a new director shall be appointed by the Board of Directors after fair, transparent and rigorous deliberations by the Group Nomination Committee based on this Article.

    〔4-11 (1)〕

(Responsibilities of Outside Directors)

Article 7

  1. Outside directors shall, independent of the execution of business, give advice based on their own knowledge, taking into account the views of minority shareholders and stakeholders, in order to achieve sustainable growth and the enhancement of corporate value of the Company over the medium to long term.
  2. Outside directors shall supervise the management through the appointment and removal of senior executives and other important decisions made by the Board of Directors, as well as supervise conflicts of interest between the Company and the executive management and controlling shareholders.

〔4-7〕

(Concurrent Service of Directors)

Article 8

If a director of the Company serves concurrently as an officer of another listed company, the scope of said concurrent service shall be limited to the extent that he or she can fulfill his or her role and responsibilities as a director of the Company. The Company shall confirm in writing with each director the status of important concurrent positions every year and disclose the details thereof in a timely and appropriate manner. 
〔4-11 (2)〕

(Roles of Audit & Supervisory Board and Members thereof) 

Article 9

The Audit & Supervisory Board shall, in order to contribute to the sustainable and sound management of the Company, audit the execution of duties by directors in accordance with the Rules of the Audit & Supervisory Board and the Auditing Standards for the Audit & Supervisory Board Members, including attending important meetings such as those of the Board of Directors and expressing opinions, viewing important approval documents, etc., and hearing the status of execution of duties by relevant directors and divisions. 
〔4-4〕

(Composition of Audit & Supervisory Board and Members thereof)

Article 10

The number of the Audit & Supervisory Board members of the Company shall not exceed five (5) in accordance with the provisions of the Articles of Incorporation, and more than half of the members shall be outside Audit & Supervisory Board members.

〔4-4 1)〕

(Qualifications of Audit & Supervisory Board Members and Nomination Procedures)

Article 11

  1. Audit & Supervisory Board members shall be selected from those who have appropriate experience, ability and high ethical standards as well as considerable knowledge of finance, accounting and legal affairs, and at least one of them shall be selected from those who are well versed in finance and accounting.

    〔4-11〕

  2. Outside Audit & Supervisory Board members shall be appointed from among persons who are deemed to be independent from the management of the Company in light of the Independence Standards for Outside Officers set forth in Appendix 6 and shall be selected from those with expertise in finance, accounting, laws and legal affairs, management, etc.
  3. A candidate for a new Audit & Supervisory Board member shall be appointed by the Board of Directors with the consent of the Audit & Supervisory Board after fair, transparent, and rigorous deliberations by the Group Nomination Committee based on this Article.

〔3-1（iv）〕

(Concurrent Service of Audit & Supervisory Board Members)

Article 12

If an Audit & Supervisory Board member of the Company serves concurrently as an officer of another listed company, the scope of said concurrent service shall be limited to the extent that he or she can fulfill his or her role and responsibilities as an Audit & Supervisory Board member of the Company. The Company shall confirm in writing with each Audit & Supervisory Board member the status of important concurrent positions every year and disclose the details thereof in a timely and appropriate manner.

〔4-11 (2)〕

(Roles of Group Nomination Committee)

Article 13

The Group Nomination Committee shall, as an advisory committee independent of the Board of Directors, deliberate fairly and transparently in the procedures for the appointment, dismissal and reappointment of directors and Audit & Supervisory Board members, taking into account the Group’s business performance, etc., decide on a committee draft and submit it to the Management Council and the Board of Directors.

〔3-1（iv）4-3 (1)〕

(Composition of Group Nomination Committee)

Article 14

The Group Nomination Committee shall be composed of representative directors, directors with an executive position or higher, and outside members. At least half of the members of the Group Nomination Committee shall be outside members, and the Board of Directors shall appoint them from outside officers or outside experts.〔3-1（iv）〕

(Roles of Group’s Remuneration Committee)

Article 15

The Group’s Remuneration Committee shall, as an advisory committee independent of the Board of Directors, decide on a committee draft of directors' remuneration through fair and transparent deliberation, and submit it to the Management Council and the Board of Directors.

〔3-1（iii）〕

(Composition of Group’s Remuneration Committee)

Article 16

The Group’s Remuneration Committee shall be composed of representative directors, directors with an executive position or higher, and outside members. At least half of the members of the Group’s Remuneration Committee shall be outside members, and the Board of Directors shall appoint them from outside officers or outside experts.

〔3-1（iii）〕

(Policy and Procedures for Directors’ Remuneration)

Article 17

  1. Remuneration for directors of the Company shall be deliberated by the Group’s Remuneration Committee upon ensuring transparency, fairness, and objectivity. Design of the remuneration system and specific remuneration amounts shall be determined by the Board of Directors.
  2. Remuneration for directors (excluding outside directors) of the Company shall be designed to contribute to the sustainable enhancement of corporate value. Specifically, it shall consist of a performance-based bonus, which provides a short-term incentive, and a share-based remuneration system, which provides a medium- to long-term incentive, in addition to fixed remuneration.
  3. Remuneration for outside directors of the Company shall consist of only fixed remuneration, without short- and medium- to long-term incentives, in order that their function to supervise the management of the Company will work adequately.

〔3-1（iii）、4-2 (1)〕

(Policy on Lecture and Support for Officers, etc.)

Article 18

  1. The Company shall collect and provide information on economic conditions, industry trends, legal compliance, corporate governance, financial accounting and other matters necessary for executives and Corporate Officers to fulfill their roles and responsibilities, and support them in the execution of their duties.

    〔4-13 (i), 4-14 (1)〕

  2. The Company shall smoothly provide all of its officers, including outside directors, with information on the business environment, management issues and management strategies of the Group in a timely manner after their appointment, in order to support their roles and responsibilities as officers.

    〔4-13, 4-14 (1)〕

  3. When necessary, the Company shall provide its officers with opportunities to receive advice from outside experts and to participate in lecture sessions, etc. and bear the costs thereof.

〔4-13 (ii), 4-14〕

Chapter III Securing Rights and Equal Treatment of Shareholders, and Dialogue with Shareholders

(Securing Rights and Equal Treatment of Shareholders)

Article 19

The Company shall, in order to secure the shareholder rights and the equal treatment, treat its shareholders equally according to the class and number of shares they hold, work to create an environment to ensure appropriate exercise of their rights, and disclose information in a timely and appropriate manner. 〔1-1、1-1 (3), 3-1、5-1〕

(General Shareholders Meeting)

Article 20

  1. The Company shall, recognizing that the general shareholders meetings are an opportunity for constructive dialogue with shareholders, develop an appropriate environment so that the intentions of shareholders are reflected in the management of the Group, taking into account the attributes and structure of shareholders.
    [1 -2, 1 -2 (1)]
  2. The Company shall strive to send a notice of convocation for general shareholders meetings early enough to give shareholders sufficient time to consider the agenda so that they can exercise their voting rights appropriately, as well as post the notice of convocation on the Company’s website no later than the date of dispatch of a written notice thereof.
    〔1-2(2)〕
  3. The Company shall set appropriate dates of the general shareholders meetings so that it can provide shareholders with accurate information in consideration of facilitating constructive dialogue with shareholders.
    〔1-2(3)〕

     

(Dialogue with Shareholders)

Article 21

The Company shall, in order to contribute to sustainable growth and the enhancement of corporate value over the medium to long term, engage in constructive dialogue with shareholders even outside the general shareholders meetings in accordance with the Policy on System Development and Initiatives to Promote Constructive Dialogue with Shareholders set forth in Appendix 7.

[1 -2 (1), 3 -1, 4 -1 (2), 4 -5, 5 -1 (1), 5 -1 (2) (iii), 5 -2]

(Cross-Shareholdings)

Article 22

  1. The Company shall, in accordance with the Policy on Cross-Shareholdings of Listed Stocks set forth in Appendix 4, hold shares of other listed companies that are deemed important for strategic purposes, such as maintaining and strengthening business relationships, as cross-shareholdings.
  2. The Company shall properly exercise the voting rights pertaining to cross-shareholdings in accordance with the Standards for Exercising Voting Rights concerning Cross Shareholdings set forth in Appendix 5.
    〔1-4〕

(Related Party Transactions)

Article 23

  1. The Company must, whenever it engages in transactions with its directors that may fall under the scope of the competitive or conflict-of-interest transactions restricted by relevant laws and regulations, or transactions with major shareholders, obtain the approval of the Board of Directors. The Company shall properly disclose any transactions that are legally required to be disclosed.
    〔1-7〕
  2. The Company shall comply with internal standards regarding the material fact control and the purchase and sale of the Company’s shares, etc. by officers and employees of the Company, and prevent related parties from engaging in insider trading of the Company’s shares.
    〔1-7、4-3〕

〕

Chapter IV Other

(Collaboration with Stakeholders)

Article 24

The Company shall strive to build good relationships and engage in appropriate collaboration not only with shareholders and investors, but also with stakeholders such as customers and employees, and with communities.
〔2-1、4-5〕

(Sustainability)

Article 25

The Company shall, recognizing that addressing sustainability challenges, including social and environmental issues, is an important part of risk management, take active steps to address these issues and report regularly to the Board of Directors on the status of its response to these issues.
[2 -3, 2 -3 (1)]

(Ensuring Diversity in Human Resources)

Article 26

The Company shall strive to promote diversity of human resources internally, including the active participation of women, recognizing that the existence of diverse experiences, attributes, and skills at the Group will contribute to the Group's sustainable growth and medium- to long-term enhancement of corporate value.
〔2-4〕

(Whistleblowing System)

Article 27

The Company shall, in order to ensure compliance within the corporate management, establish a whistleblowing system, including a contact point independent of the management, and develop regulations to protect whistleblowers and to prohibit any disadvantageous treatment.

〔2-5〕

(Establishment and Amendment of this Basic Policy)

Article 28

This Basic Policy shall be established by the Board of Directors and reviewed by it from time to time in light of the situation in the Company and changes in the environment, etc. If the Basic Policy is revised, the Board of Directors shall publish the revised content thereof in a timely manner.

(Appendix 1)

Corporate Philosophy

Contribute toward the improvement of people's health and progress in society through the development of innovative products
〔2-1、3-1（i）〕

(Appendix 2)

ASKA Pharmaceutical Charter of Corporate Behavior

We, ASKA Pharmaceutical Group, comply with all laws, regulations, international rules, codes of conduct and the spirit thereof, both inside and outside Japan, and in order to achieve a prosperous society in all of our business areas including pharmaceuticals, we fulfill our social responsibilities with a high sense of ethics as follows:

  1. Sustainable Economic Growth and Solving Social Challenges
    We will actively engage in the research and development of innovative drugs that contribute to the advancement of medicine and provide a stable supply of high-quality pharmaceuticals with excellent efficacy and safety. At the same time, by creating real value in pharmaceuticals and solving medical needs as a company needed by society, we will contribute to efficient use of medical expenses and saving of medical resources.
  2. Scientific and Rigorous Research and Development
    We will conduct clinical trials with scientific rigor with the cooperation of medical institutions, while ensuring respect for the human rights of the subjects as well as safety. We will conduct animal experiments that are required as non-clinical studies with due consideration for animal welfare. When applying for marketing approval for drugs, we will use and handle appropriate data in accordance with relevant laws and regulations, internal rules, and scientific validity.
  3. Promotion of Proper Use
    To promote the proper use of pharmaceuticals, we will accurately provide scientificallysupported information on quality, efficacy, and safety of pharmaceuticals both inside and outside Japan, and will promptly collect, analyze, and evaluate post-marketing information thereof and transmit it.
  4. Trust with Healthcare Professionals and Patients
    We will promote honest communication with healthcare professionals and patients to attain their satisfaction and obtain their trust.
  5. Fair Business Practice
    We will conduct fair, transparent, and free competition in all of our business activities, and maintain healthy and normal relationships with healthcare professionals, business partners, administrative agencies, political organizations (individuals), etc.
  6. Thorough Information Management
    We will take every possible measure for the information management fully considering the proper protection of personal and customer information, as required with the advent of advanced IT.
  7. Fair Information Disclosure and Constructive Dialogue We will disclose corporate information in a timely, appropriate, and fair manner, and engage in constructive dialogue with stakeholders to enhance corporate value.
  8. Addressing Environmental Issues We recognize that environmental issues should be tackled globally and that solving them is an essential requirement for companies to continue their activities and survive. We will therefore not only comply with relevant laws and regulations but also promote our efforts addressing environmental issues voluntarily and proactively.
  9. Reform of Working Style and Improvement of Working Environments
    We will promote a working style that respects the diversity, personality, and individuality of every employee to ensure a rewarding working environment considering the health and safety of employees.
  10. Community Participation and Contribution to its Development
    We will not only make a social contribution through all of our business activities but also actively participate in the community and contribute to its development as a good corporate citizen.
  11. Thorough Crisis Management
    We will conduct thorough and systematic crisis management against the actions of antisocial forces that pose a threat to the lives of citizens and corporate activities, as well as terrorism, cyber attacks, natural disasters, pandemics, etc.
  12. Respect for Human Rights
    We respect the human rights of all people. In our overseas business activities, we will respect local culture and customs and actively promote international exchanges.
  13. Role of Top Management and Fulfilment of this Charter
    Top management and other officers of the Company shall recognize that their roles are to fulfill and realize this Charter, take the lead in taking actions therefor and disseminate this Charter to all the employees of the Company. In addition, they shall seek to understand the voices of people inside and outside the Company, build effective governance, and ensure thorough corporate ethics.
    If any event occurs that violates this Charter, the top management shall, at their own responsibility, resolve the problem, investigate the causes and prevent a recurrence, and disclose information promptly and accurately to the public. Additionally, the top management shall perform the corporate responsibilities, restore the credibility and take strict action, including against its executives.
    〔2-2〕

 

(Appendix 3) 

Basic Capital Policy

The Company believes that continuous and sustainable growth is important for the future in order to increase shareholder value over the medium-to long-term and sets its basic policy as maintaining a level of shareholders’ equity that accepts investment and risk.

  1. With respect to retained earnings, the Company shall make investments to expand its business and strengthen its management structure in the future after accurately assessing its capital costs.
  2. The Company shall perform proper management by setting return on equity (ROE) and earnings per share (EPS) as important management indicators in order to maintain and improve shareholder value.
  3. The basic policy of the Company is to pay stable and continuous dividends.
    〔1-3〕

(Appendix 4)

Policy on Cross-Shareholdings of Listed Stocks

The Company shall maintain long-term ownership of listed shares that it deems will contribute to the maintenance and enhancement of the Group's corporate value from the perspective of business expansion and maintaining and strengthening business relationships.
However, for each of such shares, the Board of Directors shall scrutinize and verify the corporate performance and financial condition, management indicators of profitability and growth potential of the companies issuing such shares (“issuing companies”), and the comparison between the benefits of holding and the cost of capital, etc. With respect to the shares that are judged to have no justifiable reasons to hold, the Company shall reduce the number of shares held through dialogue with the issuing companies and based on the results thereof. 
〔1-4〕

 

(Appendix 5) 

Standards for Exercising Voting Rights concerning Cross-Shareholdings 

The voting rights of shares held by the Company as cross-shareholdings shall be executed in accordance with the following policies.

  1. The Company shall, considering the business relationships with the companies whose shares are held by the Company as cross-holdings (“issuing companies”), comprehensively determine whether holding of their shares will contribute to the maintenance and enhancement of the Group's corporate value by examining their business performance and financial condition, as well as their policies on returning profits to shareholders.
  2. 2. If any proposal of the general shareholder meetings of the issuing companies is deemed to have a problem with the Company's efforts to the enhancement of corporate value or shareholder profits, the Company shall exercise its voting rights in a manner that will contribute to solving such problem, through dialogue with the issuing companies and based on the results thereof. 
    〔1-4〕

(Appendix 6)

Independence Standards for Outside Officers

  1. An independent outside officer under these Standards means a person who meets the requirements for an outside officer required by laws and regulations and who does not fall under any of the following:
    • （1）A person who is or was an executive (*1) of the Company or any of its subsidiaries (hereinafter collectively referred to as the "Group") during ten (10) years prior to his/her appointment;
    • (2) A major shareholder of the Company (including a person who was a major shareholder of the Company within the past three (3) years)(*2), in case where the shareholder is a corporation or organization, an executive of such corporation or organization; or an executive of a corporation or organization of which the Group is a major shareholder (including the case where the Group was a major shareholder of such corporation or organization within the past three (3) years); (3) An executive of a company that has a significant business relationship with the Group (*3) or its parent company or its significant subsidiaries;
    • (4) A lawyer, accountant or consultant, or an executive of a corporation or organization, etc., who/which receives a large amount of remuneration or other property benefit (*4) from the Group in addition to officers’ remuneration;
    • (5) An executive of a corporation or organization that receives from the Group a donation, etc. exceeding a certain amount (*5);
    • (6) A person who is or was an employee, partner or staff of a certified public accountant firm or an auditing firm which serves as accounting auditor or accounting advisor of the Group in the past three (3) years;
    • (7) An executive of a company or its parent or subsidiary company that accepts directors from the Group or accepted directors from the Group in the past three (3) years
    • (8) A spouse, a relative within the second degree of kinship of a person who falls under any of the categories from (1) to (7) above; or
    • (9) Any other person who may perpetually have a substantial conflict of interest with the general shareholders of the Company for reasons other than those listed in (1) through (8) above.

      (Note 1) An executive refers to an executive director, executive officer, Corporate Officer, or other similar official.
      (Note 2) A major shareholder refers to a shareholder who holds 10% or more of the total voting rights directly or indirectly.
      (Note 3) A company with which the Company has a significant business relationship is any of the following:
      • (i) a significant supplier of the Group.
        Any person or entity who has received payment from the Group in excess of 2% of its consolidated net sales in any of the immediately preceding three (3) fiscal years.
        (ii) a significant business partner of the Group
        A person or entity who has made payments to the Group in excess of 2% of its consolidated net sales in any of the immediately preceding three (3) fiscal years, or a person or entity who has made loans to the Group in excess of 2% of the Group’s consolidated total assets with respect to the amount borrowed by the Group at the end of the immediately preceding fiscal year.

    (Note 4) A large amount of remuneration or other property benefit means remuneration and other property benefits that exceed an average of 10 million yen per year for the immediately preceding three (3) fiscal years and, in the case where such person is a corporation or organization, it means the remuneration or other property benefits the average of which during the immediately preceding three (3) years exceeds 2% of the total annual income of the corporation or organization in the immediately preceding business year, respectively.
    (Note 5) A donation, etc. exceeding a certain amount refers to a donation or grant made by the Company that exceeds the larger of 10 million yen per year on average for the immediately preceding three (3) fiscal years or 2% of the total annual income of the corporation or organization in the immediately preceding fiscal year.
  2. Even if a candidate for officer infringes any of the items from (1) to (9) above, if the Group Nomination Committee has comprehensively judged that the candidate is independent and found him/her suitable as an independent outside officer, the candidate may be selected as an independent outside officer, provided, however, that it shall be conditioned that the candidate satisfies the requirements under the Companies Act and that the Company is able to give a justifiable explanation externally of the reasons for determining that the candidate is suitable as an independent outside officer.
    〔4-9〕

 

(Appendix 7)

Policy on System Development and Initiatives to Promote Constructive Dialogue with Shareholders

　The Company believes that it is essential to obtain the appropriate evaluation and trust of shareholders and investors to achieve sustainable growth and the enhancement of corporate value over the medium to long term and will conduct dialogue with shareholders and investors on a rational and continuous basis. In addition, the Company will strive to deepen shareholders' and investors' understanding on its management strategy and other matters by appropriately disclosing and explaining the Company's management strategy, business performance, financial condition and capital policy to them through investor relations activities.
　For this, the Company shall appoint a director in charge from among its directors to promote constructive dialogue with shareholders and investors, including investor relations activities. The director in charge shall oversee the overall dialogue with shareholders and investors and shall strive to achieve constructive dialogue.
　The actual dialogue will be conducted by the director in charge and persons designated taking into account the wishes of shareholders and investors and their main concerns. The department in charge will also support them in coordination with other divisions by providing them with accurate information.
　The Company will continuously work to disseminate appropriate information and enhance the content of disclosures and means of dialogue to ensure that the dialogue is more constructive and meaningful. The content of the dialogue shall be fed back to the Board of Directors through the director in charge as necessary.
　In addition, at the dialogue, the Company shall strive to properly manage the insider information, such as by not selectively disclosing undisclosed material information to specific persons in accordance with the separately stipulated Public Relations Regulations.
〔5-1、5-2〕 

Established on April 1, 2021 

Note: Assigned numbers in a parenthesis, subsequently following the end of each article/paragraph, are intended to show the relevant Section/Principle numbers stipulated in “Japan’s Corporate Governance Code”.