Further Strengthening of Corporate Governance
(Fiscal Year Ended March 31, 2021)

Basic Concept

The Kurita Group aims to contribute broadly to society through corporate Business Execution Structure activities in the fields of water and the environment in accordance with the Kurita corporate philosophy, "Study the properties of water, master them, and we will create an environment in which nature and humanity are in harmony." The Kurita Group will work to promote sustainable growth and enhance its corporate value in the medium and long term, deferring to the rights and position of various stakeholders such as customers, business partners, employees, shareholders, and local communities while striving to meet their expectations. To this end, the Kurita Group is striving to establish corporate governance, with the aim of realizing transparent, fair, prompt, and decisive decision-making measures and highly effective management supervision.

Investment Committee

To enhance and strengthen the screening of investments and financing of the Kurita Group, the Company established the Investment Committee in April 2017. The role of the Investment Committee is to pre-screen investment and financing projects to be discussed by the Board of Directors or the Executive Committee and report the prescreening results and major discussion points to the Board of Directors and the Executive Committee. The Investment Committee has helped enhance the quality of discussions and the speed of investment decision-making by the Board of Directors and the Executive Committee by organizing major discussion points prior to meetings.

In accordance with the policy of striving to maintain return on equity (ROE) at levels above the cost of shareholders' equity, when making an investment decision, the Kurita Group sets a hurdle rate in consideration of risks for each investment project against the cost of shareholders' equity.

Roles and Results of the Investment Committee (The fiscal year ended March 31, 2021)

Advisory Councils for the Board of Directors

Nomination & Remuneration Advisory Council

The Company has in place a Nomination & Remuneration Advisory Council, a voluntary committee to increase transparency in the decision-making process regarding remuneration for directors and nomination of directors and members of the Audit & Supervisory Board. In the fiscal year ended March 31, 2021, the Council met three times to discuss nominations (directors) and one time to discuss remuneration. The Council is chaired by an external director, with the main members being the external directors and the external members of the Audit & Supervisory Board.

The chairperson of the Board of Directors consults with the Nomination & Remuneration Advisory Council beforehand when proposals are made to the Board of Directors regarding candidates for director or member of the Audit & Supervisory Board or remuneration for directors. The Council reports on the suitability or unsuitability of the candidates to the Board of Directors, which makes decisions based on the reports.

Profile of Nomination & Remuneration Advisory Council (Fiscal year ended March 31, 2021)

Successor Planning Committee

The Company has in place the Successor Planning Committee, mainly comprising external officers, as an organization for selecting successor candidates for the president, directors, and executive officers and deciding on measures for their development. The committee references objective information such as external organization assessment results for the successor candidates and selects successor candidates for the president, directors, and the executive officers, as well as setting the development measures for the successor candidate for president and directors, and reports these to the Board of Directors.

Fulfilling the Function of the Audit & Supervisory Board Members

In the fiscal year ended March 31, 2021, the Audit & Supervisory Board held 11 meetings, which were attended by all members of the board (Mr. Toshiaki Tada attended all nine meetings of the Audit & Supervisory Board held since his appointment on June 29, 2020 at the 84th Ordinary General Meeting of Shareholders). Key matters considered and discussed by Audit & Supervisory Board members included the formulation of audit policies and plans, the preparation of audit reports, selection of the Accounting Auditor, remuneration for the Accounting Auditor and details of proposals to be presented to the Annual General Meeting of Shareholders. The Board developed and implemented audit plans targeting priority areas, such as the internal control system (including internal control over financial reporting), the development and implementation of the risk management system and audits of progress regarding priority measures in business plans.

Cooperation with the Accounting Auditor, the Internal Auditing Department and External Directors

In regular meetings between the president and all members of the Audit & Supervisory Board, the president provides details about the Company's management policy, growth strategies, business issues and other topics, while members of the Audit & Supervisory Board provide recommendations based on audit activities. The members of the Audit & Supervisory Board also hold regular meetings with the Accounting Auditor to confirm the independence of the Accounting Auditor, verify the performance of their duties and discuss and exchange opinions about accounting audits. From the fiscal year under review, key audit matters were also thoroughly discussed. Regular meetings are also held with external directors to exchange opinions about the Company's business management in general.

The Audit & Supervisory Board discusses internal audit plans with the Internal Auditing Department in charge of internal audits of the Company and exchanges opinions with them about audit results and evaluations of internal control over financial reporting, risk management, etc.

The Internal Auditing Department conducts internal audits of the Company and Group companies to identify any issues related to business execution or other problems and submits reports to the president about areas that require improvement.

Participation in Key Meetings and Audit of Group Companies

Full-time members of the Audit & Supervisory Board attend meetings of the Board of Directors, Executive Committee, the E&S Committee and other important meetings, and audit business execution by the directors and oversight duties of the Board of Directors. In addition, they conduct audits of key management departments and carry out field audits of business sites and Group companies to verify the asset position of the entire Kurita Group and the development and operation of the internal control system by directors at Group companies. Full-time members of the Audit & Supervisory Board share information from meetings of the Executive Committee and other key meetings and the details and results of audits and field audits with the part-time member of the Board on a timely basis. In addition, the part-time member of the Audit & Supervisory Board proactively provides opinions during meetings of the Board of Directors and during regular meetings with the president, drawing on their legal expertise and background.

Onsite audits of overseas affiliated companies scheduled for the start of the fiscal year were cancelled due to the COVID-19 pandemic. However, as an alternative, appropriate audits of the sites were conducted through online meetings and other methods. Business reports, financial documents and other materials were also appropriately audited through wider use of online meetings and electronic files.

Experience, Capability, and Knowledge of the Audit & Supervisory Board Members

Remuneration for Directors and Members of the Audit & Supervisory Board

The Company's remuneration system for directors excluding external directors is composed of fixed remuneration as base remuneration, and incentive remuneration linked to business results. External directors and members of the Audit & Supervisory Board, who perform oversight functions, receive only fixed remuneration.

Amounts of fixed remuneration are decided for each job title in the case of directors and for each work arrangement in the case of members of the Audit & Supervisory Board. A portion of the remuneration is appropriated for the directors' and Audit & Supervisory Board members' Shareholding Scheme to purchase the Company's shares so that directors and members of the Audit & Supervisory Board share the risk of stock price fluctuation with shareholders.

To provide an incentive to directors (excluding external directors) to continuously increase corporate value, the Company provides short-term and long-term incentive remuneration. Short-term incentive remuneration consists of remuneration linked to consolidated performance, remuneration linked to the results of operations overseen by each director, and remuneration related to other contributions. The amount of short-term incentive remuneration is calculated by multiplying an amount equivalent to 1/12 of fixed remuneration by a predetermined coefficient that fluctuates depending on the level of achievement of performance indicators for each type of remuneration. The performance indicator for remuneration linked to consolidated performance uses four levels based on 10% increments in the level of attainment of the consolidated operating profit target, above and below a level of attainment of 100%. For remuneration linked to the results of operations overseen by each director, the applied performance indicators are the differences between actual results and plan targets for consolidated return on equity (ROE) and for consolidated business profit margin. For remuneration related to other contributions, the applied performance indicators include the implementation of large investment projects and other developments not reflected in performance for the relevant fiscal year, such as enhancing the quality of the corporate structure and M&A deals. For the long-term incentive remuneration, the Company has introduced a performancelinked stock compensation program under which points are awarded according to business performance and job title during the term of office, and shares of the Company are granted at the time of retirement in an amount corresponding to the number of accumulated points. Profit attributable to owners of parent is used as the performance indicator for long-term incentive remuneration.

The system and level of remuneration and the performance evaluation of directors are adopted by resolution of the Board of Directors after consulting in advance with the Nomination & Remuneration Advisory Council. Based on reports provided by the Nomination & Remuneration Advisory Council, the Board of Directors decides the allocation of remuneration of the directors within the total amount determined by the Annual General Meeting of Shareholders. The allocation of remuneration for each member of the Audit & Supervisory Board is adopted by resolution of the Audit & Supervisory Board.

Remuneration System for Directors and Members of the Audit & Supervisory Board

Payment Ratio of Base Remuneration and Incentive Remuneration (Average)

Remuneration for Directors and Members of the Audit & Supervisory Board

Total amount of remuneration, etc., for each officer classification, total amount by type of remuneration, etc., and number of eligible officers (Fiscal year ended March 31, 2021)

Independent External Directors

The Company's external directors are appointed for a term of one year and may concurrently hold positions at up to three listed companies including the Company. The external directors use their knowledge and specialist insight accumulated through management experience to evaluate business management and provide opinions from the perspectives of the Kurita Group's sustainable growth and increasing corporate value over the medium to long term, helping to enhance the rationality and transparency of decision-making by the Board of Directors.

The activities of the independent external directors include making proactive statements and proposals in Board of Director meetings, as well as attending as observers in internal committees such as the E&S Committee, the Solutions Business Committee, and the Health and Safety Committee. They also make onsite visits to gain a deeper understanding of operations for evaluating management. In the fiscal year ended March 31, 2021, external directors were unable to visit business sites due to the COVID-19 pandemic. Instead, they conducted dialogue with relevant departments to gather information on topics likely to be of use.

As members of the Nomination & Remuneration Advisory Council and the Successor Planning Committee, external directors also help to enhance the suitability and transparency of discussions in both bodies and work to ensure appropriate evaluations of executive candidates through individual interviews with candidates.

Status of External Directors (As of June 29, 2021)

Dialogue with Shareholders and Investors

The Kurita Group respects the interests of shareholders in management and strives to listen to its shareholders and investors and promote constructive dialogue with them in order to contribute to increasing medium- to long-term corporate value. In communicating information, the Company emphasizes fairness and transparency. The materials and summary of the Q&A sessions of the Company's presentation meetings are posted on Kurita's investor relations website to ensure fair information disclosure.

IR Activities

The Group strives to secure opportunities for dialogue with institutional investors in Japan and overseas and individual investors in Japan through various presentations, conferences, and individual meetings. The president is the main speaker at the financial results briefings. The executive general manager of the Corporate Control and Administration Division is responsible for routine dialogue, except during silent periods, and works with personnel responsible for IR and CSR activities. In the fiscal year ended March 31, 2021, the Kurita Group held its first-ever ESG Briefing. Amid the pandemic, the Company was able to conduct dialogue with investors by switching from face-to-face meetings to phone and online meetings. However, the Company cancelled overseas IR roadshows and briefings for shareholders held after the Ordinary General Meeting of Shareholders.

IR Activities in the Fiscal Year Ended March 31, 2021

Communication with People Responsible for Exercising Voting Rights

The Company is working to increase opportunities for dialogue with institutional investors responsible for exercising voting rights to listen to their opinions and use them to improve management. In the fiscal year ended March 31, 2021, the Company expanded its dialogue with major shareholders overseas. Personnel responsible for investor and shareholder relations had online meetings with major investors in Japan and overseas 17 times to hear the voting policies of institutional investors and to exchange opinions on improving the Group's management and corporate governance. The opinions and requests of institutional investors were swiftly relayed back to management.

Initiatives to Continuously Improve Convenience for Exercising Voting Rights

Shareholdings of Other Listed Companies

The Company holds shares of other listed companies to strengthen business relationships. We verify the economic rationale for mutual shareholdings by comparing expected gains based on capital cost and gains from holding the shares. We also examine the relationships with companies whose shares the Company holds by carefully examining our transaction histories with them. Based on the results of this examination, the Board of Directors reviews the appropriateness of holdings periodically and at other times as necessary, and reduces the number of shares held. Funds gained from the sale of the shares are allocated to capital investment and M&As.