Last update: August 2, 2024

In order to carry out appropriate corporate management that meets the expectations of all stakeholders, Nagoya Electric Works Co., Ltd. ("NEW") recognizes the enhancement of corporate governance as an important issue and is committed to improving management transparency and promoting prompt management decision-making and management efficiency in response to changes in the business environment.

[Supplementary Principle 1.2.4]
The ratio of institutional investors and overseas investors to the shareholders of NEW is relatively low at present. However, NEW will continue to consider the use of electronic voting platforms and the translation of convocation notices into English based on the opinions and requests of shareholders and investors as well as various procedures to take and costs.

[Supplementary Principle 2.4.1]
NEW believes that in order for NEW to respond to changes in the market environment and needs and to grow over the mid- to long- term, it is important to respect the individuality of each employee and to utilize the experience and expertise of each to come up with new ideas. To achieve this goal, NEW has set a target of increasing the ratio of female managers to 3.5% or more by FY2030 (1.3% in FY2023), and is promoting the systematic development of female employees into management positions and conducting in-house training programs. Although the NEW has not set measurable targets for the promotion of foreign nationals and mid-career hires to management positions, NEW has a system in place that allows them to receive fair evaluation and career advancement regardless of their attributes.

In human resource development, NEW believes it is important to foster a corporate culture that prevents organizational inertia and to create an environment in which young employees can demonstrate their abilities. To foster the development of personnel capable of managing the organization with an executive perspective, NEW conducts Junior Board Development Training and Selective Leader Training. In FY2022, NEW implemented Junior Board Development Training aimed at nurturing personnel capable of organizational management from an executive viewpoint. Moving forward, NEW will continue to provide opportunities for external training to a wide range of employees from junior staff to management levels. NEW will continue to create an environment that facilitates access to external knowledge and human networks, fostering a foundation for innovation.

[Principle 3.1 Full Disclosure]
(iv) NEW will consider for disclosure its policies and procedures for the Board of Directors' selection and dismissal of senior management and nomination of candidates for director positions.

[Supplementary Principle 3.1.2]
NEW has its website in English. NEW will continue to consider the introduction of the notice of convocation and other related materials in English based on the composition of NEW's shareholders.

[Supplementary Principle 4.1.3]
NEW has not established selection criteria for nominating a successor to the position of the President. However, all Directors including Outside Directors and Directors who are Audit and Supervisory Committee Members are to be consulted while the current President is recommended as the basis for the nomination.

In addition, in order to develop human resources to become successors to senior management who will contribute to the enhancement of NEW’s value over the mid- to long-term, NEW has them attend external training programs as appropriate to improve their abilities by accumulating knowledge and experience, educating and guiding subordinates, and is working to develop human resources to become successors.

NEW will continue to consider the Board of Directors' proactive involvement in the development and operation of the President's succession plan and appropriate oversight.

[Supplementary Principle 4.2.2]
NEW's Board of Directors has concluded that the most effective way to contribute to solving social issues is to transform NEW itself into a comprehensive equipment company and lead the industry, and that the source to strengthen and ensure this is to provide new products and services in a wide range of fields. Based on this, NEW has identified social issues to be solved and a policy for solving them.

Sustainability activities are overseen through regular reports from the Sustainability Committee, which is chaired by the Director in charge of sustainability promotion.

[Supplementary Principle 4.3.2]
NEW does not set criteria for the selection of the President. However, the Board of Directors, including the Outside Directors and the Directors who are Audit and Supervisory Committee Members, shall discuss the matter thoroughly and nominate a person with outstanding character, insight and ability based on his/her business background. NEW will continue to consider appointment of the President in accordance with more objective, timely and transparent procedures.

[Supplementary Principle 4.3.3]
NEW does not set criteria for the dismissal of the President. However, the Board of Directors, including the Outside directors and directors who are Audit and Supervisory Committee Members, shall resolve such dismissal after thorough discussions if it is deemed appropriate due to significant damage to NEW's corporate value, such as violation of laws and regulations or the articles of incorporation. NEW will continue to consider dismissal of the President in accordance with more objective, timely and transparent procedures.

[Supplementary Principle 4.10.1]
NEW does not currently have a Voluntary Nomination and Compensation Committee in place. However, since transitioning to a company with an Audit and Supervisory Committee in 2023, NEW has been working to further strengthen its governance. Additionally, the nomination and compensation of Directors are determined based on the opinions and advice of the Outside Directors, which NEW believes contributes to the independence and objectivity of the Board of Directors. Moving forward, NEW will continue to review this issue, taking into consideration the principles of the Corporate Governance Code.

[Supplementary Principle 4.11.1]
NEW's Board of Directors consists of no more than eight directors (excluding the Directors who are Audit and Supervisory Committee Members) and no more than four Audit and Supervisory Committee Members.

The Directors include executive directors who are well versed in their respective business fields, and Outside Directors with extensive experience in corporate management and a high level of expertise, such as certified public accountants and lawyers. In the process of selection, the balance of the entire Board of Directors is taken into consideration, while giving due consideration to the knowledge and experience of Outside Directors who are in a supervisory position, so that NEW can achieve sound and sustainable growth while improving the competitiveness of its business.

A skills matrix is included in the notice of convocation to disclose the combination of skills and other attributes possessed by the Directors.
NEW will continue to consider the disclosure of policies and procedures for the appointment of Directors.

[Supplementary Principle 5.2.1]
NEW does not currently determines a basic policy regarding its business portfolio, but will continue to consider to open its policy and status of business portfolio review in an easy-to-understand manner.

[Principle 1-3 Basic Policy on Capital Policy]
On June 25, 2024, NEW formulated and disclosed a policy titled "Measures to Achieve Management Conscious of Capital Costs and Stock Prices." Concurrently, NEW announced its mid-term management plan, N-PLAN2026, outlining the basic principles of its future capital policy and the management indicators it aims to achieve by the fiscal year ending March 2027.

[Principle 1-4 Policy on Cross-Shareholdings]
Regarding the significance of holding cross-shareholdings, NEW will continue to hold shares where the strategies of the investment partner align with its own strategies (such as capital alliances). However, for cross-shareholdings deemed to have limited significance, NEW has a fundamental policy of disposing of or reducing such holdings as much as possible. NEW will carefully determine the method of sale, considering the overall impact on the market, before proceeding with the disposal.

The Board of Directors regularly reviews the status of transactions with companies in which NEW holds shares, as well as the relationship with those companies. Based on criteria set internally, NEW establishes policies for dealing with each cross-shareholding and disclose the details in its securities reports.

[Principle 1.7 Related Party Transactions]
NEW requires the Board of Directors meetings to deliberate and resolve transactions with Directors, etc. that conflict with NEW's interests. Based on such procedures, NEW has put in place a system to monitor such transactions to ensure that they do not raise concerns that may harm common interests of NEW and shareholders.

[Principle 2.6 Roles of Corporate Pension Funds as Asset Owners]
NEW has adopted a defined contribution pension plan and a defined benefit corporate pension plan. The employees manage the defined contribution pension plan by themselves. For defined benefit corporate pension plans, NEW has assigned appropriate personnel for its management, and continues to develop human resources with appropriate qualifications for operations by attending training sessions to acquire knowledge and to enhance expertise.

[Principle 3.1 Full Disclosure]
(i) NEW discloses its management philosophy and management strategies on the website and in its annual securities reports.
(ii) NEW discloses its basic stance and basic policy on corporate governance in the Corporate Governance Report and in its annual securities reports, etc.
(iii) The policies and procedures of the Board of Directors Meetings in determining the remuneration of senior management and Directors are disclosed in the Annual Securities Report.
(v) NEW discloses explanations of the individual selection and dismissal of senior management and nomination of Directors by the Board of Directors in accordance with (iv) above in the Reference Document for the General Meeting of Shareholders.

[Principle 3.1.3]
The products and services that NEW provides have a high affinity for solving social issues, and NEW recognizes that addressing climate change is a high-priority issue. NEW has set targets for greenhouse gas (GHG) emissions in FY2030 and FY2050 as long-term indicators.

Regarding human capital, NEW has positioned the advancement of women and the inclusion of diverse work styles as one of its important themes, and is working to improve career development and the working environment by setting targets for the following indicators by FY2030.

　Percentage of female managers ... 3.5% or more
　Percentage of male employees taking childcare leave ... 100%
　Percentage of employees leaving within one year after taking leave ... 0%

Regarding intellectual property, NEW is actively engaged in research and development to establish new technologies and methods that lead to solutions to social issues, and NEW discloses the results of these efforts through research papers and conference presentations.
The details of these activities are disclosed in NEW's Annual Securities Report and on its website.

[Supplementary Principle 4.1.1]
Any matters stipulated by laws and regulations, described in the articles of incorporation and the regulations of the Board of Directors are resolved by The Board of Directors Meetings, while other key issues are decided by the Management Meetings to ensure the systematic and efficient management of business operations.

[Principle 4.9 Independence Standards and Qualification for Independent Directors]
NEW has adopted the independence standards set forth by the Tokyo Stock Exchange and the Nagoya Stock Exchange in selecting Independent Outside Directors. In making the selection, NEW has made a judgment based on the premise that sufficient independence can be secured to enable the Outside Directors to perform their duties as Outside Directors independent of NEW's management, based on their career and relationship with NEW.

[Supplementary Principle 4.11.2]
The status of concurrent positions held by the Outside Directors at other companies is disclosed annually through the Notice of Convocation of the General Meeting of Shareholders, the Annual Securities Report, and the Corporate Governance Report.

Managing directors do not hold concurrent posts as executives at other listed companies and are able to concentrate on their duties as Directors.

The full-time Director who is Audit and Supervisory Committee Member does not hold concurrent post as executive at other companies and is able to concentrate on his duty as an Audit and Supervisory Committee Member at all times.

[Supplementary Principle 4.11.3]
NEW conducted questionnaires on the evaluation of the effectiveness of the Board of Directors for all Directors, and the results were analyzed and evaluated to be generally appropriate. In pursuing the improvement of the effectiveness of the Board of Directors as a whole, NEW has realized the early distribution of Board of Directors Meetings materials. NEW will continue to conduct periodic evaluations of the effectiveness of the Board of Directors in order to further enhance its effectiveness and to make continuous improvements.

[Supplementary Principle 4.14.2]
NEW provides trainings for Directors, with particular emphasis on compliance as opportunities to acquire necessary knowledge and to understand their roles and responsibilities.

For the purpose of deepening the understanding of outside directors regarding NEW Group's management philosophy, management policies, business activities, organization, etc., NEW provides them with information on these matters at the time of inauguration and continuously thereafter. In addition, NEW provides opportunities, mediates, and supports expenses necessary for directors and corporate auditors, including Outside Directors, to acquire knowledge of business, finance, organization, and other matters necessary to fulfill their roles and responsibilities.

[Principle 5.1 Policy on Constructive Dialogue with Shareholders]
NEW has designated the Management Administration Division and the Corporate Development Office as the divisions in charge of investor relations. The executives, Corporate Administration Division and the Corporate Development Office respond to requests for dialogue from shareholders and investors as necessary.

In order to promote dialogue with shareholders and other stakeholders, the executives in charge of the IR department supervises dialogue with shareholders and other stakeholders, and collaborates with other departments, including related departments that assist in dialogue, to share information as appropriate.

In order to promote constructive dialogue with shareholders, IR activities such as briefings by directors and financial results briefings shall be conducted as appropriate, and opinions and concerns from shareholders shall be shared and fed back to directors, management and related departments through reports at meetings or distribution of reports, as necessary.

In addition, when engaging in dialogue with shareholders, etc., NEW will work to prevent the leakage of insider information and to manage information.

Measures to Achieve Management Conscious of Capital Costs and Stock Prices:
In this regard, NEW has disclosed its measures to achieve management conscious of capital costs and stock prices on its website (https://www.nagoya-denki.co.jp).

[Principle 5-2 Formulation and Disclosure of Management Strategies and Plans]
On May 28, 2024, NEW held a financial results and mid-term management plan briefing for investors and analysts, where NEW explained its financial situation and mid-term management plan, N-PLAN2026. Additionally, on June 25, 2024, NEW formulated and disclosed its policy on "Measures to Achieve Management Conscious of Capital Costs and Stock Prices." In the mid-term management plan N-PLAN2026, NEW set target indicators including sales of 22 billion yen, an operating profit margin of over 10%, ROE of over 10%, a dividend payout ratio of over 30%, and a PBR of over 1. NEW will enhance its IR activities more than ever to gain a better understanding from its shareholders, local communities, employees, and other stakeholders, and NEW will continue to further enhance corporate value.