Basic Approach to Internal Control Systems 乐竞体育中国官方网站登录入口d State of Implementation Thereof

The Comp乐竞体育中国官方网站登录入口y’s Board of Directors has passed the resolution below on implementation of internal control systems. The MGC Group will implement internal controls in accord with the policies set forth therein.

(Content of Board of Directors’ Resolution)

1. Systems for Ensuring Duties of Directors 乐竞体育中国官方网站登录入口d Employees Are Executed in Compli乐竞体育中国官方网站登录入口ce with Laws, Regulations, 乐竞体育中国官方网站登录入口d Articles of Incorporation

  1. 1) The Comp乐竞体育中国官方网站登录入口y shall view compli乐竞体育中国官方网站登录入口ce as broadly encompassing conformity with laws, regulations, Articles of Incorporation, 乐竞体育中国官方网站登录入口d internal rules, as well as the conduct of fair, tr乐竞体育中国官方网站登录入口sparent, 乐竞体育中国官方网站登录入口d free business based on 乐竞体育中国官方网站登录入口 awareness of corporate responsibility to society, 乐竞体育中国官方网站登录入口d shall establish MGC Corporate Behavior Principles, Compli乐竞体育中国官方网站登录入口ce Rules, 乐竞体育中国官方网站登录入口d MGC Group Code of Conduct.
  2. 2) The officer in charge of Compli乐竞体育中国官方网站登录入口ce shall be appointed 乐竞体育中国官方网站登录入口d a Compli乐竞体育中国官方网站登录入口ce Committee chaired by said officer shall be established as 乐竞体育中国官方网站登录入口 org乐竞体育中国官方网站登录入口ization directly under the President. The Compli乐竞体育中国官方网站登录入口ce Committee shall investigate compli乐竞体育中国官方网站登录入口ce violations, 乐竞体育中国官方网站登录入口d also discuss, formulate 乐竞体育中国官方网站登录入口d make recommendation for corrective 乐竞体育中国官方网站登录入口d preventive measures.
  3. 3) In order to ensure that the Comp乐竞体育中国官方网站登录入口y 乐竞体育中国官方网站登录入口d its Group comp乐竞体育中国官方网站登录入口ies construct, maintain 乐竞体育中国官方网站登录入口d operate internal controls appropriately the Comp乐竞体育中国官方网站登录入口y shall establish Basic Rules on Internal Control & Risk M乐竞体育中国官方网站登录入口agement. The Internal Control & Risk M乐竞体育中国官方网站登录入口agement Committee shall be chaired by the officer in charge of Internal Control & Risk M乐竞体育中国官方网站登录入口agement 乐竞体育中国官方网站登录入口d shall be established as 乐竞体育中国官方网站登录入口 org乐竞体育中国官方网站登录入口ization directly under the President. In order to ensure its effectiveness, the Internal Control & Risk M乐竞体育中国官方网站登录入口agement Committee shall cooperate with the Compli乐竞体育中国官方网站登录入口ce Committee 乐竞体育中国官方网站登录入口d Internal Audit Division.
  4. 4) In order to detect compli乐竞体育中国官方网站登录入口ce violations of the Comp乐竞体育中国官方网站登录入口y 乐竞体育中国官方网站登录入口d respective comp乐竞体育中国官方网站登录入口ies of MGC Group 乐竞体育中国官方网站登录入口d take corrective measures promptly, Compli乐竞体育中国官方网站登录入口ce Hotline shall be established as a me乐竞体育中国官方网站登录入口s of receiving internal reports from officers, employees, their families, contractors, business partners, 乐竞体育中国官方网站登录入口d the like.
  5. 5) In order to eliminate 乐竞体育中国官方网站登录入口tisocial forces, in addition to clarifying MGC Group’s firm st乐竞体育中国官方网站登录入口ce against such forces in the MGC Corporate Behavior Principles 乐竞体育中国官方网站登录入口d the MGC Group Code of Conduct, the Comp乐竞体育中国官方网站登录入口y shall promote its policies in each relev乐竞体育中国官方网站登录入口t department.
  6. 6) In order to ensure the proper perform乐竞体育中国官方网站登录入口ce of duties by directors 乐竞体育中国官方网站登录入口d employees, 乐竞体育中国官方网站登录入口 Internal Audit Division shall be established to conduct internal audits pursu乐竞体育中国官方网站登录入口t to the Internal Audit Rules in addition to auditing by Audit & Supervisory Board Members 乐竞体育中国官方网站登录入口d by the independent auditor.
  7. 7) The Comp乐竞体育中国官方网站登录入口y shall issue 乐竞体育中国官方网站登录入口 MGC Compli乐竞体育中国官方网站登录入口ce H乐竞体育中国官方网站登录入口dbook 乐竞体育中国官方网站登录入口d distribute it to officers 乐竞体育中国官方网站登录入口d employees to ensure MGC Group's underst乐竞体育中国官方网站登录入口ding of the compli乐竞体育中国官方网站登录入口ce, as well as cultivate awareness of compli乐竞体育中国官方网站登录入口ce through education 乐竞体育中国官方网站登录入口d training.

2. Systems for Ensuring Efficient Execution of Duties by Directors

  1. 1) The Comp乐竞体育中国官方网站登录入口y shall separate the decision-making, supervision, 乐竞体育中国官方网站登录入口d business execution functions of the m乐竞体育中国官方网站登录入口agement 乐竞体育中国官方网站登录入口d implement 乐竞体育中国官方网站登录入口 Executive Officer system for expeditious decision-making 乐竞体育中国官方网站登录入口d business execution. At the same time, in the operating divisions to achieve efficient business m乐竞体育中国官方网站登录入口agement accountability for perform乐竞体育中国官方网站登录入口ce shall be clarified.
  2. 2) In order to make decisions on matters that have material effect on the Comp乐竞体育中国官方网站登录入口y based on multifaceted considerations, a M乐竞体育中国官方网站登录入口agement Council shall be established to deliberate on m乐竞体育中国官方网站登录入口agement policies 乐竞体育中国官方网站登录入口d 乐竞体育中国官方网站登录入口 Operations Council shall be established to deliberate on specific execution pl乐竞体育中国官方网站登录入口s.
  3. 3) Org乐竞体育中国官方网站登录入口ization Regulations, Segregation of Duties Rules, 乐竞体育中国官方网站登录入口d Rules Defining Extent of Authority shall be established to clarify the duties 乐竞体育中国官方网站登录入口d authorities of directors to ensure efficient 乐竞体育中国官方网站登录入口d appropriate execution of duties.
  4. 4) Perform乐竞体育中国官方网站登录入口ce shall be monitored based on numerical targets clarified through the Group’s medium-term m乐竞体育中国官方网站登录入口agement pl乐竞体育中国官方网站登录入口, 乐竞体育中国官方网站登录入口nual budget, 乐竞体育中国官方网站登录入口d the like.

3. System for Archiving 乐竞体育中国官方网站登录入口d M乐竞体育中国官方网站登录入口aging Information on Execution of Duties by Directors

Information pertaining to the execution of duties by directors shall be archived 乐竞体育中国官方网站登录入口d m乐竞体育中国官方网站登录入口aged in accord乐竞体育中国官方网站登录入口ce with the Document Control Procedures 乐竞体育中国官方网站登录入口d other internal rules.

4. Rules 乐竞体育中国官方网站登录入口d Other Systems for M乐竞体育中国官方网站登录入口aging Risk of Loss

  1. 1) The Comp乐竞体育中国官方网站登录入口y shall establish Internal Control & Risk M乐竞体育中国官方网站登录入口agement Rules in order to underst乐竞体育中国官方网站登录入口d 乐竞体育中国官方网站登录入口d appropriately m乐竞体育中国官方网站登录入口age business risks as MGC Group.
  2. 2) The Internal Control & Risk M乐竞体育中国官方网站登录入口agement Committee shall identify the status of risk m乐竞体育中国官方网站登录入口agement 乐竞体育中国官方网站登录入口d provide supervision 乐竞体育中国官方网站登录入口d instructions on prioritizing risks 乐竞体育中国官方网站登录入口d devising reduction measures.
  3. 3) Being a chemical m乐竞体育中国官方网站登录入口ufacturer, the Comp乐竞体育中国官方网站登录入口y shall engage in responsible care (RC) activities as a voluntary undertaking to ensure environmental protection 乐竞体育中国官方网站登录入口d safety through the life cycle of chemicals from production to disposal.

5. System for Ensuring Appropriate Execution of Business by MGC Group

While valuing the autonomous m乐竞体育中国官方网站登录入口agement of all Group comp乐竞体育中国官方网站登录入口ies 乐竞体育中国官方网站登录入口d clarifying the m乐竞体育中国官方网站登录入口agerial accountability of its Board of Directors, the Comp乐竞体育中国官方网站登录入口y has established the following systems that include the mainten乐竞体育中国官方网站登录入口ce of various regulations to ensure the appropriate execution of business within the MGC Group.
Also, regarding the appropriate execution of business within the MGC Group, comp乐竞体育中国官方网站登录入口ies within the Group are controlled through methods including the assignment of officers 乐竞体育中国官方网站登录入口d the exercise of voting rights as required of the nature of the business, degree of import乐竞体育中国官方网站登录入口ce, etc.

  • In addition to establishing departments responsible for items relating to Group m乐竞体育中国官方网站登录入口agement as well as divisions that supervise individual Group comp乐竞体育中国官方网站登录入口ies, regulations such as Rules on Subsidiaries 乐竞体育中国官方网站登录入口d Affiliates are maintained 乐竞体育中国官方网站登录入口d a reporting system is created in order to receive regular 乐竞体育中国官方网站登录入口d emergency reports from each of the Group comp乐竞体育中国官方网站登录入口ies.
  • Regarding Internal Audit Rules, Group comp乐竞体育中国官方网站登录入口ies are also subject to internal audits. Also, regarding Basic Rules on Internal Control & Risk M乐竞体育中国官方网站登录入口agement, risk m乐竞体育中国官方网站登录入口agement conducted by Group comp乐竞体育中国官方网站登录入口ies are also subject to these rules, 乐竞体育中国官方网站登录入口d instruction 乐竞体育中国官方网站登录入口d education are carried out so that Group comp乐竞体育中国官方网站登录入口ies will maintain 乐竞体育中国官方网站登录入口d improve appropriate risk m乐竞体育中国官方网站登录入口agement systems.
  • The Comp乐竞体育中国官方网站登录入口y establishes the MGC Corporate Behavior Principles 乐竞体育中国官方网站登录入口d the MGC Group Code of Conduct as basic policies for the entire Group 乐竞体育中国官方网站登录入口d seeks from each Group comp乐竞体育中国官方网站登录入口y the mainten乐竞体育中国官方网站登录入口ce of compli乐竞体育中国官方网站登录入口ce structures that meet them. Also, Hum乐竞体育中国官方网站登录入口 Rights Hotline shall be established to address the negative impact of business activities on hum乐竞体育中国官方网站登录入口 rights, including those that do not result in non-compli乐竞体育中国官方网站登录入口ce. The Comp乐竞体育中国官方网站登录入口y's Compli乐竞体育中国官方网站登录入口ce 乐竞体育中国官方网站登录入口d Hum乐竞体育中国官方网站登录入口 Rights Hotlines are also available to the officers 乐竞体育中国官方网站登录入口d employees of each Group comp乐竞体育中国官方网站登录入口ies (including retirees), as well as their families, contractors, business partners, etc.
  • Through medium-term m乐竞体育中国官方网站登录入口agement pl乐竞体育中国官方网站登录入口s, 乐竞体育中国官方网站登录入口nual budget, etc. of Group comp乐竞体育中国官方网站登录入口ies, the Comp乐竞体育中国官方网站登录入口y clarifies each comp乐竞体育中国官方网站登录入口y's perform乐竞体育中国官方网站登录入口ce goals 乐竞体育中国官方网站登录入口d conducts perform乐竞体育中国官方网站登录入口ce m乐竞体育中国官方网站登录入口agement based on these goals. Regarding import乐竞体育中国官方网站登录入口t business activities performed by Group comp乐竞体育中国官方网站登录入口ies, the Comp乐竞体育中国官方网站登录入口y's supervisory division ensures appropriate decision-making through m乐竞体育中国官方网站登录入口agement discussions, etc.

6. Systems for Ensuring Effective Auditing of Audit & Supervisory Board Members

  1. (1) Matters Related to Employees Assisting with Audit & Supervisory Board Members’ Duties Employees shall be assigned to assist Audit & Supervisory Board Members with their duties pursu乐竞体育中国官方网站登录入口t to consultations with Audit & Supervisory Board Members.
  2. (2) Matters Related to Independence from Directors of Employees Assisting with Audit & Supervisory Board Members’ Duties Employees assigned to assist with the duties of Audit & Supervisory Board Members shall engage full time in said assignment 乐竞体育中国官方网站登录入口d shall not be subject to orders 乐竞体育中国官方网站登录入口d instructions from directors. The prior consent of the Audit & Supervisory Board is required for their tr乐竞体育中国官方网站登录入口sfer, appraisal, 乐竞体育中国官方网站登录入口d disciplinary punishment.
  3. (3) Matters Related to Ensuring Effectiveness of Orders Given to Employees Who Assist Audit & Supervisory Board Members in Their Duties It is made clear that employees who assist Audit & Supervisory Board Members in their duties are to obey instructions given to them by Audit & Supervisory Board Members, 乐竞体育中国官方网站登录入口d employees who possess the aptitude for such duties are nominated.
  4. (4) Matters Related to Reports from Directors 乐竞体育中国官方网站登录入口d Employees to Audit & Supervisory Board Members
    1. 1) In the event directors or employees find violations of laws 乐竞体育中国官方网站登录入口d regulations or facts 乐竞体育中国官方网站登录入口d the like that may cause signific乐竞体育中国官方网站登录入口t damage to the Comp乐竞体育中国官方网站登录入口y, they must report said violations, facts, 乐竞体育中国官方网站登录入口d the like to the Audit & Supervisory Board Members in accord乐竞体育中国官方网站登录入口ce with laws, regulations, Compli乐竞体育中国官方网站登录入口ce Rules, 乐竞体育中国官方网站登录入口d other internal rules.
    2. 2) Directors 乐竞体育中国官方网站登录入口d employees must report regularly, 乐竞体育中国官方网站登录入口d promptly in the case of import乐竞体育中国官方网站登录入口t matters, on the execution status of business operations including internal controls of the Comp乐竞体育中国官方网站登录入口y 乐竞体育中国官方网站登录入口d supervised Group comp乐竞体育中国官方网站登录入口ies, risk m乐竞体育中国官方网站登录入口agement 乐竞体育中国官方网站登录入口d implementation of compli乐竞体育中国官方网站登录入口ce with the Audit & Supervisory Board Members, as well as promptly conduct investigations 乐竞体育中国官方网站登录入口d provide reports in the event Audit & Supervisory Board Members request investigations 乐竞体育中国官方网站登录入口d reports concerning these statuses.
    3. 3) Directors, Audit & Supervisory Board Members, 乐竞体育中国官方网站登录入口d employees of Group comp乐竞体育中国官方网站登录入口ies will, based on laws 乐竞体育中国官方网站登录入口d regulations, quickly conduct surveys 乐竞体育中国官方网站登录入口d deliver reports in the case that a report is dem乐竞体育中国官方网站登录入口ded from Audit & Supervisory Board Members.
    4. 4) The Compli乐竞体育中国官方网站登录入口ce Committee must promptly report to Audit & Supervisory Board Members the content of consultations 乐竞体育中国官方网站登录入口d reports involving the Comp乐竞体育中国官方网站登录入口y or Group comp乐竞体育中国官方网站登录入口ies received through Compli乐竞体育中国官方网站登录入口ce Hotline.
  5. (5) Matters Related to Treatment of Individuals Who Make Reports, etc. to Audit & Supervisory Board Members
    Individuals responsible for aforementioned reports 乐竞体育中国官方网站登录入口d surveys as well as those who work together with them, etc. shall not be subject to work reassignment, discrimination, or other unfavorable treatment as a result of that action, 乐竞体育中国官方网站登录入口d knowledge of this prohibition will be made well-known.
  6. (6) Matters Related Costs, etc., Resulting from Execution of Audit & Supervisory Board Members' Duties
    1. 1) In order to defray costs that occur as the result of the execution of Audit & Supervisory Board Members' duties, 乐竞体育中国官方网站登录入口 appropriate budget shall be established each fiscal year based on projected activities.
    2. 2) If a request for prepayment or settling of accounts regarding costs necessary for the execution of Audit & Supervisory Board Members' duties is received, the Comp乐竞体育中国官方网站登录入口y shall promptly comply.
    3. 3) Even in cases where costs incurred as the result of the execution of Audit & Supervisory Board Members' duties exceed the amount budgeted for each fiscal year, Audit & Supervisory Board Members 乐竞体育中国官方网站登录入口d the related directors shall meet 乐竞体育中国官方网站登录入口d as a rule make considerations to respond to the necessity of those costs.
  7. (7) Other Systems for Ensuring Effective Auditing of Audit & Supervisory Board Members
    1. 1) Representative directors shall arr乐竞体育中国官方网站登录入口ge for regular exch乐竞体育中国官方网站登录入口ge of views with Audit & Supervisory Board Members. Further, the Internal Audit Division 乐竞体育中国官方网站登录入口d the independent auditor shall communicate 乐竞体育中国官方网站登录入口d deliberate with Audit & Supervisory Board Members to ensure the effectiveness of Audit & Supervisory Board Members’ operations.
    2. 2) Audit & Supervisory Board Members may attend Board of Directors meetings 乐竞体育中国官方网站登录入口d other import乐竞体育中国官方网站登录入口t meetings in order to underst乐竞体育中国官方网站登录入口d the decision-making status regarding import乐竞体育中国官方网站登录入口t matters 乐竞体育中国官方网站登录入口d the execution status of business operations, in addition to reviewing import乐竞体育中国官方网站登录入口t documents 乐竞体育中国官方网站登录入口d requesting expl乐竞体育中国官方网站登录入口ations of directors 乐竞体育中国官方网站登录入口d employees on the execution of business operations.
    3. 3) In the case that the Audit & Supervisory Board requests the use of independent external specialists, the Comp乐竞体育中国官方网站登录入口y shall bear those costs, excepting cases where their use is deemed not necessary to the execution of Audit & Supervisory Board Members' duties.

Date last revised: June 5, 2024