Japan Exchange : 〔Delayed〕 Corporate Governance Report

Corporate Governance Report

〈TRANSLATION〉

Last Update: July 10, 2019

Toyoda Gosei Co., Ltd.

President: Naoki Miyazaki

Contact: Corporate Planning Division

[phone]

Securities Code:7282

https://www.toyoda-gosei.com/

The corporate governance of Toyoda Gosei Co., Ltd. is described below.

1. Basic Philosophy on Corporate Governance, Capital Structure, Corporate Attributes and

Other Basic Information

1. Basic Philosophy

Under the Company Creed "Boundless Creativity and Social Contribution" and the Management Philosophy that embodies it, we, Toyoda Gosei Co., Ltd. (the "Company"), aims to grow as a global company that is trusted by all stakeholders, including society, shareholders, customers, suppliers, and employees, and acts flexibly and swiftly in today's dramatically changing business environment, delivering the highest levels of satisfaction to customers worldwide through safety, comfort, well-being, and the environment.

We recognize that the most important management issue to achieve this is to enhance and reinforce our corporate governance with the aim of ensuring sound and efficient corporate management, and strive to build and maintain an organizational structure that can respond appropriately to changes in the environment and fair and transparent management systems.

In addition, we support the Corporate Governance Code established by the Financial Services Agency and the Tokyo Stock Exchange, and are striving to enhance our corporate governance by autonomously implementing various measures based on the intent and spirit of its philosophy and principles.

[Reasons for Non-compliance with the Principles of the Corporate Governance Code]

The Company fully complies each principle of the Corporate Governance Code.

[Disclosure Based on the Principles of the Corporate Governance Code]

〔Principle 1-4 Strategic Shareholdings〕

・Policies on strategic shareholdings

In consideration of the economic ripple effect on the Company from a medium-to-long-term perspective, our policy is to investigate stocks comprehensively and then to hold stocks that are deemed necessary for our strategy from the perspectives of maintaining and strengthening relationships of trust and business relationships with various stakeholders and maintaining relationships with the local community.

・Verification

We carefully examine the value of holding of each stock from both the qualitative viewpoints such as maintaining and strengthening the business relationship and ensuring the stability of the supply chain, and quantitative considerations such as the transaction status and investment yield (dividend). Whether or not to hold such stock is examined at a meeting of the Board of Directors each year.

- 1 -

We intend to reduce as appropriate holdings of stocks that are deemed as lacking sufficient significance and benefits to justify the stockholding.

・Policy on the exercise of voting rights

We exercise voting rights for stocks held for strategic purposes comprehensively considering whether each proposed resolution will contribute to sustainable growth by increasing the medium-to-long-term corporate value of the issuing company. When we exercise our voting rights on (i) a resolution with regard to appointment of, or compensations for, directors and/or Audit & Supervisory Board members of a company that has major concerns in corporate governance, such as the occurrence of social scandals or whose very poor performance has continued for certain period of time, or (ii) a resolution that will have a significant impact on corporate value or interests of shareholders such as mergers or other restructuring proposals, we will make inquiries to such company about the plan for improving corporate value before exercising our voting rights.

〔Principle 1-7 Transactions with Related Parties〕

When the Company enters into a transaction with a director, the Board of Directors monitors the transactions (pre-approval and confirmation of results) in accordance with the Companies Act.

When the Company enters into a transaction with a major shareholder or the like, if such transaction has high importance in light of certain prescribed judging criteria, such transaction is subject to a prior approval that may be given after full discussion among the relevant departments in the Company. The terms and conditions of transactions with such parties shall be equal to those of arms-length transactions.

〔Principle 2-6 Effective Management of Assets owned by Our Corporate Pension Funds〕

The Company's pension funds are managed by the Toyoda Gosei Corporate Pension Fund. Given that the management of corporate pension funds affects not only the stable asset formation of employees but also the Company's own financial position, we dispatch personnel with the necessary expertise from the finance and human resources departments to the said pension funds managing entity. In addition, the said entity is monitored by the Asset Management Committee, whose meeting is held every month.

〔Principle 3-1 Effective Disclosure of Information〕

The Company is making the following efforts to enhance information disclosure in order to ensure transparency and fairness in the Company's decision-making and to achieve effective corporate governance.

〔 Principle 3-1(ⅰ) The Goal (Management Philosophy), Business Strategy and Business Plan of the

Company〕

We have formulated a Management Philosophy ((1) Good Corporate Citizenship, (2) Proper Business Operation, (3) Sustainable Growth, (4) Customer Satisfaction, (5) Conservation of Global Environment and Resources, and (6) Respect for the individual) that embodies the Company Creed "Boundless Creativity and Social Contribution," and are striving to achieve sustainable growth and increase corporate value over the medium to long term through proper collaboration with a wide range of stakeholders.

The 2025 Business Plan (released May 2018) was formulated as a medium-to-long-term business plan to respond to dramatic changes in the business environment and achieve sustainable growth in the future.

We aim to grow as a global company that responds flexibly and swiftly to major environmental changes and delivers secured environment, safety and comfort to customers worldwide. To achieve this, we established three pillars of activity: "Venture into innovation, new mobility," "Strategy for growing markets and fields," and "Innovative manufacturing at production sites." Through the development of new products that respond to the progress of autonomous driving and electrification, commercialization of new technologies and business growth of airbags and other products, we aim to achieve our business targets for FY2025: sales revenue of over 1 trillion yen, an operating margin of 8% and ROE of 10%.

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〔Principle 3-1（ⅱ） The Basic Philosophy and Policies of our Corporate Governance based on the Basic

Principles of the Corporate Governance Code〕

Such matters are described in "I-1 Basic Philosophy" above in this Report.

〔Principle 3-1（ⅲ） Policies and Procedures of the Board in determining Compensations for Senior Officers

and Directors〕

・Policies

Compensation consists of monthly remuneration and bonuses, and is at a level that ensures linkage to the Company's performance and reflects the responsibilities and results of each officer or director.

Bonuses are determined mainly based on the consolidated performance of each fiscal year, but taking into account comprehensively various other factors such as dividends, employee bonus levels, trends of compensations of other companies, medium-to-long-term performance, and compensations in the past.

Outside directors and outside audit and supervisory board members receive only a fixed monthly remuneration to ensure that they supervise and monitor management responsibilities from an independent standpoint.

・Procedures

Based on the above policy, compensations are decided by a resolution of the Board within the limit determined by a resolution of the General Shareholders' Meeting, based on a recommendation of an Executive Compensation Committee (including the president and outside directors as its members) to be formed through fair and transparent discussions in the Committee.

〔Principle 3-1（ⅳ）Policies and Procedures for the Board of Directors to appoint and remove Senior Officers

and to nominate Candidates for Directors and Audit & Supervisory Board Members 〕

・Policies

When the Board of Directors appoints or nominates senior officers or candidates for directors or Audit & Supervisory Board members, the Board of Directors shall comprehensively consider the following factors: the balance of knowledge, experience, and capabilities of the entire management team and the Board of Directors, ability to make accurate and prompt decisions, reputations in the Company and their capability in complying with laws and corporate ethics.

Candidates for Audit & Supervisory Board members are nominated considering various factors comprehensively so as to ensure the right person in the right place, procuring the balance of the members in knowledge of finance and accounting, knowledge about the Company's business and diversity of perspectives.

If senior officers or candidates for directors are found to have committed fraudulent acts or seriously violated laws and regulations or the Articles of Incorporation, we will take procedures for their dismissal.

・Procedures

In accordance with the above-mentioned policy, the candidates are nominated by a resolution of the Board of Directors based on a recommendation of an Executive Appointment Committee (including the president and outside directors as its members) to be formed through fair and transparent discussions in the Committee, and then are finally appointed by a resolution of the General Shareholders' Meeting.

The career history and the reasons for the selection of candidates for director and of Audit & Supervisory Board member are posted on the website of the Company for the General Shareholders' Meeting.

〔Principle 4-1 Functions and Responsibilities of the Board of Directors (1)〕 〔Supplementary Principle 4-1① 〕

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The Board of Directors has established the "Board of Directors Rules" and other internal regulations, which clarifies matters that should be judged and decided by the Board of Directors and the matters that should be judged and decided by the management members of the Company.

With regard to matters other than certain the execution of important operations, authorities may be delegated to the management members of the Company depending on the amount and nature of the relevant transaction.

〔Principle 4-9 Judging Criteria and Qualifications for the Independence of Independent Outside Directors〕

In appointing independent outside directors, we place great importance on their extensive experience and high-level insight in the business management, in addition to the qualifications for outside directors required under the Companies Act. Furthermore, we require the satisfaction of the qualifications required for an independent director (or an independent Audit & Supervisory Board member) stipulated by each stock exchange at which the stock of the Company is listed and absence of risks of conflict of interests with ordinary shareholders as conditions to be appointed as independent outside directors.

〔Principle 4-11 Preconditions for Effectiveness of the Board of Directors and Audit & Supervisory Board〕 〔Supplementary Principle 4-11① 〕

・Philosophy with regard to overall balance, diversity, and scale

When selecting candidates for directors, the Board of Directors considers various factors comprehensively including the balance of expertise and the fields of specialty of the Board members so as to cover the functions and business fields of the Company, the principle of "the right person in the right place" that is required for accurate and quick decision making as well as the diversity of the Board members.

The current number of the directors (including outside directors) is nine, which we believe to be an appropriate size for accurate and quick decision-making.

・Policy and procedures for appointment of directors As described in Principle 3-1 (ⅳ).

〔Supplementary Principle 4-11②〕

Important concurrent positions held by each director and each Audit & Supervisory Board member including concurrent positions at listed companies are disclosed in the Business Report and Reference Materials for the General Shareholders' Meeting.

〔Supplementary Principle 4-11③〕

The Secretariat of the Board of Directors has interviews with all the directors and the Audit & Supervisory Board members, including outside directors and outside Audit & Supervisory Board members once a year on the effectiveness of the Board of Directors. The result of such interviews is evaluated from the viewpoint of the roles and responsibilities of the Board, status of deliberations at the Board meetings, and opportunities to improve its effectiveness, and reported to the Board of Directors.

The evaluation of the interviews for FY2018 indicated that the Board was sufficiently effective. In the evaluation process, there were valuable opinions regarding "medium-term business management (outside directors/Audit & Supervisory Board members)" and "timely deliberation of important matters," and we will continue efforts to improve the Board's effectiveness.

〔Principle 4-14② Trainings of Directors and Audit & Supervisory Board Members〕

We appoint, as directors and Audit & Supervisory Board members, persons eligible to fulfill their duties and responsibilities (including legal liabilities) and familiar with the Company's business, finance, and organization. In addition, we provide continuous training opportunities to them.

Directors attend lectures by internal and external instructors with content appropriate to the Companies Act and occasional circumstances, and are provided opportunities to participate in external seminars. By providing such opportunities, we facilitate the directors' acquisition of necessary knowledge and understanding of their roles and responsibilities.

Audit & Supervisory Board members attend lectures by instructors from inside and outside the Company and are provided opportunities to participate in external seminars. By providing such opportunities, we facilitate

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Audit & Supervisory Board members' acquisition of necessary knowledge and understanding of their roles and responsibilities.

〔Principle 5-1 Our policy for Constructive Communications with Shareholders〕

The director in charge of the accounting department oversee communications with shareholders and investors, and actively respond through various initiatives including financial results briefings.

Related departments in the Company that support such communications, establish infrastructure for such communications under close cooperation within the Company through planning of communication opportunities and sharing of relevant information in the Company in order to realize constructive communications.

As measures for communications with shareholders, we hold financial results briefings for institutional investors and small briefing sessions (small meetings) whose speakers are the President and the relevant officers, facility tours for institutional investors guided by the officer in charge, and make direct visits to institutional investors by IR staff. Based on the opinions and requests from shareholders and investors gained through these opportunities, we will further enhance opportunities for dialogue.

Opinions and requests received in such communication opportunities are shared in the Company and reported as feedback to the management and the relevant departments on an as-needed basis.

As stated in our disclosure policy, during the "silent period" before the announcement of financial results, communications with shareholders and investors are restricted, and internal information is strictly managed. When the Company has any insider information, the insider information is controlled and internal information is strictly managed.

2. Capital Structure

		Percentage	of	Shares Held	by Foreign		10% or more, less than 20%
		Investors
[Status of Major Shareholders]
		Name / Company Name			Number of Shares			Percentage (%)
				Owned
	Toyota Motor Corporation		55,459,486			42.84
	The Master Trust Bank of Japan, Ltd.	7,089,400			5.47
	(Trust Account)
	Japan Trustee Services Bank, Ltd	5,307,800			4.10
	(Trust Account)
	Sumitomo Mitsui Banking Corporation	5,049,402			3.90
	SSBTC Client Omnibus Account		2,470,486			1.90
	Nippon Life Insurance Company		1,592,615			1.23
	Northern Trust Co. (AVFC) RE HSD00	1,544,000			1.19
	The Dai-ichi Life Insurance Company ,Ltd.	1,535,390			1.18
	Japan Trustee Services Bank, Ltd	1,273,200			0.98
	(Trust Account5)
	Toyoda Gousei Employee Stock Ownership	1,262,146			0.97
	Association
		Existence	of	Controlling	Shareholders		―
		(excluding parent company)
		Parent Company				None

Supplementary Explanation

―

3. Corporate Attributes

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	Stock Exchange and Section			Tokyo Stock Exchange (first section),
			Nagoya Stock Exchange (first section)
	Fiscal Year-End			March
	Type of Business			Transportation Equipment
	Number of Employees at the	End of the	More than 1000 persons
	Previous Fiscal Year (consolidated)
	Sales during the Previous	Fiscal	Year	JPY 100 billion or more, less than JPY 1 trillion
	(consolidated)
	Number of Consolidated Subsidiaries at the	50 companies or more, less than 100 companies
	End of the Previous Fiscal Year

1. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling Shareholders
   ―
2. Other Special Matters which may have Material Impact on Corporate Governance
   ―

II. Corporate Governance System of Business Management Organization, Etc. for Management Decision-making, Execution of Duties and Management Audit

1. Organizational Structures and Operations

		Organization Form				Company with Audit & Supervisory Board
[Directors]
		Maximum Number of Directors	Stipulated	in	15 persons
		Articles of Incorporation
		Term of Office Stipulated in	Articles	of	1 year
		Incorporation
		Chairperson of the Board of Directors			President
		Number of Directors				9 persons
		Election of Outside Directors				Elected
		Number of Outside Directors				3 persons
		Appointed Number of Independent	Outside	3 persons
		Directors

Outside Directors' Relationship with the Company (1)

Name

Attribute

Relationship with the Company*

a

b

c

d

e

f

g

h

i

j

k

Sojiro Tsuchiya

From another company

△

Kimio Yamaka

From another company

Mayumi Matsumoto

Academic

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• Categories for "Relationship with the Company"
• "○" indicates the relevant item that the person falls under as of "presently or recently". "△" indicates the relevant item that the person falls under as of "previously".
• "●" indicates the relevant item that the person's close family member falls under as of "presently or recently".
  "▲" indicates the relevant item that the person's close family member falls under as of "previously".

1. A management executive officer of the Company or its subsidiary
2. A management executive officer or non-management executive director of a parent company of the Company
3. A management executive officer of a subsidiary of a parent company of the Company
4. A party whose major client or supplier is the Company or a management executive officer thereof
5. A major client or supplier of the Company or a management executive officer thereof
6. A consultant, accountant or legal professional who receives significant compensation or other benefits from the Company other than compensation as a director or other officer of the Company
7. A major shareholder of the Company (or a management executive officer of the said major shareholder if the shareholder is a legal entity)
8. A management executive officer of a client or supplier of the Company (which does not fall under any of d, e and f) (the outside director himself/herself only)
9. A management executive officer of a company an outside director or other officer of which assumes the post on a reciprocal basis with the Company (the outside director himself/herself only)
10. A management executive officer of an entity to which the Company makes a donation (the outside director himself/herself only)
11. Others

Outside Directors' Relationship with the Company (2)

Designation as

Supplementary

Name

Independent

Explanation of

Reasons of Appointment

Director

the Relationship

Sojiro Tsuchiya

〇

He was

a management

The Company expects him to reflect his

executive

officer

of

extensive managerial

experience

and

Denso Corporation until

high-level insight on the Company's

June 2013. It has been six

management.

years

since

he retired

The Company has designated him as an

from

a

management

independent

director

because

the

executive

officer

of

Company judges that he satisfies the

Denso

Corporation

requirement to be an independent

(director

and

executive

director and there is no conflict of

vice

president).

interest between him and general

Although

the

Company

shareholders.

has

a

business

relationship

with

Denso

Corporation,

the

transaction

amount

is

less than 0.1% of our

sales.

Kimio Yamaka

〇

Director

of

the Energy

The Company expects him to reflect his

Strategy

Institute

Co.,

extensive experience and high-level

Ltd.

insight in the fields of policy finance,

environment and energy on the

Company's management.

The Company has designated him as an

independent

director

because

the

Company judges that he satisfies the

requirement

to be

an independent

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					director and there is no conflict of
					interest between him and general
					shareholders.
Mayumi Matsumoto	〇	Visiting	associate	The Company expects her to reflect her
		professor of	KOMEX,	extensive experience and high-level
		the University of Tokyo	insight as a news anchor and researcher
					in the broad fields of social issues,
					environment and energy on the
					Company's management.
					The Company has designated her as an
					independent director because the
					Company judges that she satisfies the
					requirement to be an independent
					director and there is no conflict of
					interest between her and general
					shareholders.
Establishment of an Optional Committee
which Corresponds to an Appointment	Established
Committee or Compensation Committee

Establishment of Optional Committees, Members of each Committee and Attributes of the Chairperson of

each Committee

		Name	Total Number	Number of	Number of	Number of	Number of	Number of	Chairperson of
			of Members	Full-time	Internal	Outside	Outside	Others	the Committee
				Members	Directors	Directors	Experts
Optional		Executive	4	0	1	3	0	0	Internal
Committee		Appointment							Director
corresponding	Committee
to	an
Appointment
Committee
Optional		Executive	4	0	1	3	0	0	Internal
Committee		Compensation							Director
corresponding	Committee
to
Compensation
Committee

Supplementary Explanation

[Auditors]

Establishment of an Audit & Supervisory Board	Established
Maximum Number of Audit & Supervisory
Board Members Stipulated in Articles of	8 persons
Incorporation
Number of Audit & Supervisory Board Members	5 persons

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Cooperation among Audit & Supervisory Board Members, Accounting Auditors and Internal Audit

Department

Audit & Supervisory Board members, Internal Audit Department and accounting auditors have regular meetings on their audit systems, audit policies, audit plans, implementation status, audit results, etc., and have contact, exchange opinions and share information with each other so as to promote efficient and effective audits.

Appointment of an Outside Audit & Supervisory

Appointed

Board Member

Number of Outside Audit & Supervisory Board

Members

3 persons

Appointed Number of Independent Audit &

Supervisory Board Members

2 persons

Outside Audit & Supervisory Board Member's Relationship with the Company (1)

Name

Attribute

Relationship with the Company*

a

b

c

d

e

f

g

h

i

j

k

l

m

Takeshi Uchiyamada

From another company

〇

〇

Masami Hadama

Attorney at Law

〇

Hideomi Miyake

From another company

△

• Categories for "Relationship with the Company"
• "○" indicates the relevant item that the person falls under as of "presently or recently". "△" indicates the relevant item that the person falls under as of "previously".
• "●" indicates the relevant item that the person's close family member falls under as of "presently or recently".
  "▲" indicates the relevant item that the person's close family member falls under as of "previously".

1. A management executive officer of the Company or its subsidiary
2. A non-management executive officer or accounting advisor of the Company or its subsidiary
3. A management executive officer or non-management executive director of a parent company of the Company
4. An Audit & Supervisory Board member of a parent company of the Company
5. A management executive officer of a subsidiary of a parent company of the Company
6. A party whose major client or supplier is the Company or a management executive officer thereof
7. A major client or supplier of the Company or a management executive officer thereof
8. A consultant, accountant or legal professional who receives significant compensation or other benefits from the Company other than compensation as a director or other officer of the Company
9. A major shareholder of the Company (or a management executive officer of the said major shareholder if the shareholder is a legal entity)
10. An executive officer of a client or supplier of the Company (which does not fall under any of f, g and h) (the outside Audit & Supervisory Board member himself/herself only)
11. An executive officer of a company whose outside director or other officer of which assumes the post on a reciprocal basis with the Company (the outside Audit & Supervisory Board member himself/herself only)
12. An executive officer of an entity to which the Company makes a donation (the outside Audit & Supervisory Board member himself/herself only)
13. Others
14. • 9 -

Outside Audit & Supervisory Board Member's Relationship with the Company (2)

Designation

as

Supplementary

Independent Audit &

Name

Explanation of

Reasons of Appointment

Supervisory

Board

the Relationship

Member

Takeshi

-

The Company expects him to reflect his

Uchiyamada

extensive managerial experience and

high-level insight on the audit of the

Company.

Masami

〇

Although he is a partner

The Company expects him to reflect his

Hadama

attorney

at

TMI

extensive experience and high-level

Associates

which

has

insight in the legal community on the

transactions

with

the

audit of the Company.

Company, the Company

The Company has designated him as an

has NOT entered into a

independent Audit & Supervisory Board

regular

legal

advisory

member because the Company judges

contract

with

TMI

that he satisfies the requirement to be an

Associates.

independent Audit & Supervisory Board

In

addition,

the

member and there is no conflict of

transaction

amount

interest between him and general

between

the

Company

shareholders.

and the TMI Associates

have been very small (an

average

of

about

3

million yen per year over

the past five years).

Hideomi

〇

Until June 2016, he was

The Company expects him to reflect his

Miyake

a management executive

extensive managerial experience and

officer

of Toyoda

Iron

high-level insight on the audit of the

Works

Co.,

Ltd. Three

Company.

years have passed since

The Company has designated him as an

he retired

from

a

independent Audit & Supervisory Board

management

member because the Company judges

executive

officer

of

that he satisfies the requirement to be an

Toyoda Iron Works Co.,

independent Audit & Supervisory Board

Ltd.

(director

and

member and there is no conflict of

chairman). Although the

interest between him and general

company has a business

shareholders.

relationship with Toyoda

Iron Works Co., Ltd., the

transaction

amount

is

less than 0.1% of our

sales.

[Independent Directors and Independent Audit & Supervisory Board Members]

Number of Independent Directors and

Independent Audit & Supervisory Board

5

Members

Other Matters relating to Independent Directors and Independent Audit & Supervisory Board Members

- 10 -

―

[Incentives]

Implementation of Measures on Incentive

Allotment to Directors

Supplementary Explanation

Not implemented

The policy of compensations for directors is as described in Chapter I-1【Disclosure based on the principles of the Corporate Governance Code】 〔Principle 3-1 Effective Disclosure of Information〕 〔Principle 3-

1（ⅲ）Policies and Procedures of the Board in determining Compensations for Senior Officers and Directors〕 of this Report, and the Company has no intention to grant any special incentives at present.

Recipients of Stock Options

Supplementary Explanation

―

[Compensation for Directors]

	Disclosure	of	Individual	Directors'	No Individual Disclosure
	Compensation

Supplementary Explanation

The total amount of compensations for directors is disclosed in the securities report.

Existence of Policy on Determining the Amounts

of Compensations and Calculation MethodsYes thereof

Disclosure of Policy on Determining the Amounts of Compensations and Calculation Methods thereof

The policy of compensations for directors is as described in Chapter I-1【Disclosure based on the principles of the Corporate Governance Code】 〔Principle 3-1 Effective Disclosure of Information〕 〔Principle 3-

1（ⅲ）Policies and Procedures of the Board in determining Compensations for Senior Officers and Directors〕 of this Report

[Support System for Outside Directors and/or Outside Audit & Supervisory Board Members]

Explanations are given in advance to outside directors and outside Audit & Supervisory Board members regarding important matters in the Board of Directors.

Audit & Supervisory Board Department has been established as a dedicated organization to assist the execution of duties by Audit & Supervisory Board members.

- 11 -

2. Matters pertaining to Functions relating to the Execution of Duties, Auditing and Supervision, Appointment and Decisions regarding Compensation, etc. (Overview of Current Corporate Governance System)

〔Overview of the Current Corporate Governance System and Reasons for Adopting the System〕

We have adopted Audit & Supervisory Board member System and have established General Shareholders' Meeting, Board of Directors, Audit & Supervisory Board, and accounting auditors as statutory bodies. We have also established and operated an internal control system including internal audits.

The Board of Directors consists of nine Directors, and reports, deliberations and resolutions are made on matters stipulated by law and important management matters at monthly meetings of the Board of Directors (or extraordinary meetings of the Board of Directors when necessary).

A corporate officer system has also been introduced to speed up decision-making and business execution. For important management matters, a management meeting is held each month, and functional meetings and various committees on key functions including technology, cost, and personnel are held as needed to make accurate management decisions.

The Audit & Supervisory Board consists of five Audit & Supervisory Board members. It holds regular meetings and performs management monitoring functions through attendance at important meetings, including the meetings of the Board of Directors and audits of each department and subsidiary of the Company, which, together with the accounting audit by outside independent accounting auditors, enables the Company to secure an independent and fair audit system.

The legality and efficiency of the decision-making and execution of duties of the Company is sufficiently secured based on these institutional designs under which audit, supervision and business execution of the Company is efficiently coordinated and functioning so that the Company has adopted the current system.

〔Strengthening the Functions of Audit & Supervisory Board〕

In order to enhance the effectiveness of audits by Audit & Supervisory Board members, we have established auditing standards for Audit & Supervisory Board members that stipulate basic matters related to audits, and audits are conducted based on those standards. Each Audit & Supervisory Board member conducts surveys and interviews with the Company and its subsidiaries in accordance with the audit policy and audit plan established by Audit & Supervisory Board members, and actively participates in important meetings and various committees such as the meetings of the Board of Directors and management meetings, and performs audits on the execution of duties of directors including audits of business reports from directors, inspection of important documents such as approval documents, inspection of offices and subsidiaries of the Company from the perspective of ensuring legality, ensuring appropriateness, protecting property and rights and prevention of loss.

In addition, a dedicated department that assists Audit & Supervisory Board members has been established so as to enables Audit & Supervisory Board members to perform audits more effectively.

〔Internal Audits〕

We have established an internal audit department and conducted, from the perspective of legality and rationality, internal audits for all operations of the Company with the aim to achieve management goals and prevent fraud and errors based on internal audit plans approved by management executive officers of the Company at the beginning of the fiscal year. In addition, each functional department has established internal controls in accordance with their respective functions, and internal audits by the internal audit department include audits of maintenance and operation of internal controls of each functional department.

The results of internal audits are reported to executive officers via the head of the internal audit department, the recommendations for improvements based on the results of internal audits are provided to each audited department, and improvement plans and results are reviewed. In these ways, we are trying to improve the effectiveness of internal audits. Internal audit plans are created through the exchange of opinions with Audit & Supervisory Board Members, and the status of internal audits and audit results are reported to Audit & Supervisory Board members so as to share information as needed.

- 12 -

〔Limited Liability Agreement〕

So that directors and Audit & Supervisory Board members can perform their essential duties more smoothly, pursuant to the provisions of Article 426, Paragraph 1 of the Companies Act, it is stipulated in the Articles of Incorporation that liability of directors (including past directors) and Audit & Supervisory Board members (including past Audit & Supervisory Board members) for damages of the Company under Article 423, Paragraph 1 of the Companies Act can be exempted within legal limits.

In addition, the Company, outside directors and outside Audit & Supervisory Board members have entered into a respective contract that limits liability for damages under Article 423, Paragraph 1 of the Companies Act, pursuant to Article 427, Paragraph 1 of the Companies Act. The maximum amount of liability for damages under such contract is the amount specified in Article 425, Paragraph 1 of the same law.

The liability of a certain director or Audit & Supervisory Board member who has entered into a contract that limits the amount of liability for damages can be limited only in cases where there were no willful misconduct and gross negligence in the course of performance of the execution of duties of such director or Audit & Supervisory Board member and it is deemed particularly necessary to limit the amount of liability for damages in consideration of the factual content that was the cause of the liability, the circumstances of the execution of duties by such director or Audit & Supervisory Board member in question, and other circumstances.

3. Reasons for Adoption of Current Corporate Governance System

As mentioned above, the Company has adopted the current system based on the recognition that the management supervision system is fully prepared and functioning.

III. Implementation of Measures for Shareholders and Other Stakeholders

1. Measures to Vitalize the General Shareholders' Meetings and Smooth Exercise of Voting Rights Supplementary Explanations

Early	Distribution	of	Notice	In connection with the Ordinary General Shareholders' Meeting, a "Notice
of the	General	Shareholders'	of the Ordinary General Shareholders' Meeting" is sent out before the legal
Meeting								deadline and, the information posted in the "Notice of the Ordinary General
									Shareholders' Meeting" has been published electronically on TDnet and the
									website of the Company during the period after the resolution of the Board of
									Directors with regards to convocation of the Ordinary General Shareholders'
									Meeting and before the distribution of Notice of the Ordinary General
									Shareholders' Meeting.
Scheduling	of	the	General	The Company holds a General Shareholders' Meeting avoiding the date on
Shareholders'			Meeting	which General Shareholders' Meetings of companies are either most
Avoiding the date on which the	concentrated on or second most concentrated on.
General				Shareholders'
Meetings	of	Companies	are
Concentrated
Exercise	of	Voting	Rights	The Company enables the exercise of voting rights through the Internet.
through Electronic Means
Measures				Aimed		at	The Company participates in an electronic voting platform operated by ICJ,
Participation		in	Electronic	Inc.
Voting Platforms
and Other	Improvements	in
Voting	Environments	Geared
towards Institutional Investors
Provision		of		Convocation	The Company prepares English-language convocation notices and posts them
Notice (Summary) in English	on the electronic voting platform and the website of the Company.

- 13 -

2. IR Activities

				Supplementary Explanations
	Preparation and Publication of	"The Disclosure Policy for Investors" are prepared and posted on the website
	Disclosure Policy	of the Company
	Regular Investor Briefings for	Briefing for individual investors are hold six times a year.
	Individual Investors
	Regular Investor Briefings for	The following activities are implemented as regular briefings and similar
	Analysts	and	Institutional	activities:
	Investors
				-Holding financial results briefings for institutional investors in which the
				president and related officers provide explanations four times a year;
				-Holding small briefings (small meetings) in which the president and related
				officers provide explanations as needed;
				-Visiting institutional investors directly by IR personnel;
				-Holding annual facility tours for institutional investors organized by the
				Company;
				-Enabling IR interviews at overseas bases twice a year;
				-Participating in IR events for overseas investors three times a year;
				-Holding briefings for individual investors six times a year;
				-Holding IR interviews at the headquarters of the Company on the request of
				institutional investors.
	Regular Investor Briefings for	The Company participates in IR events for overseas investors three times a
	Overseas Investors	year.
	Posting of IR Materials on	On the website of the Company, financial results briefing materials, financial
	Website			results and other performance information of the Company are posted and
				operation, products and CSR activities of the Company are explained clearly.
				On the website of the Company, movies of presentations at financial results
				briefings are distributed and applications for registration for the latest IR
				information mail delivery service are received.
				As a message from the officers in charge of finance, the policy for capital
				costs and financial policy of the Company are described.
	Establishment	of Department	Financial Reporting Department which consists of 2 managers (concurrent
	and/or Manager in Charge of	position) and 2 staff (full-time position) is established. The Company has
	IR			established the system under which other related departments participates in
				IR activities as needed.
3. Measures to Ensure Due Respect for Stakeholders
				Supplementary Explanations
	Stipulation	of	Internal Rules	We have formulated a Management Philosophy ((1) Good Corporate
	for Respecting the Position of	Citizenship, (2) Proper Business Operation, (3) Sustainable Growth, (4)
	Stakeholders		Customer Satisfaction, (5) Conservation of Global Environment and
				Resources, and (6) Respect for the individual) that embodies the Company
				Creed "Boundless Creativity and Social Contribution," and are striving to
				achieve sustainable growth and increase corporate value over the medium to
				long term through proper collaboration with a wide range of stakeholders.
				We have formulated the "Toyoda Gosei Guidelines for Business Ethics" as a
				supplement to the Management Philosophy, and we make efforts to
				appropriately collaborate with stakeholders and respect their interests through
				providing a guide on (a) ethical standards and values that should be shared
				and (b) specific action, from the five perspectives of "Corporate Social
				Responsibility, Company-Employee Relationships, Company Business
				Activity, Relationship with Society and Private Activity" and having all
				- 14 -

			employees and group companies in Japan and overseas comply with the said
			guide.
Implementation	of	Through our business activities, we contribute to the creation of a better
Environmental Activities, CSR	society and the realization of a sustainable world, and meet the expectations
Activities, etc.			of our customers, shareholders, employees, local communities and other
			stakeholders. The results of these efforts are published in the "Toyoda Gosei
			Report."
			In the field of environmental conservation, we deem activities to leave a
			prosperous planet for the future as our mission, and set the "TG2050
			Environmental Challenge" so as to minimize CO2 emissions and strengthen
			environmental conservation activities. In fiscal 2018, we installed a liquefied
			natural gas (LNG) facility at the Seto Plant, which led to a reduction of 800
			tons of CO2 emissions at the factory. In addition, "Afforestation Project" was
			newly conducted by subsidiaries in the Tohoku region. So far, we have
			planted more than 300,000 trees in 28 locations in Japan and overseas. Based
			on these activities, we were ranked third in the manufacturing industry in the
			2019 Environmental Management Ranking of Nihon Keizai Shimbun.
			In the field of social activities, we are working to create people and
			workplaces that support our business. In February 2019, we held a "skill
			competition" in which employees competed in mold processing skills and are
			striving to develop highly skilled human resources who support our
			production sites. We, through promoting interactive communication between
			supervisors and subordinates and using IT to improve efficiency, make efforts
			to create a work environment where each employee can focus on higher-
			value-added work. In the field of social contribution, we are actively engaged
			in activities for employees all over the world, and as a part of our ongoing
			support for reconstruction of East Japan, we have donated LED crime
			prevention lights, etc. every year since 2012 to Iwate and Miyagi prefectures
			where our subsidiaries are located.
			We are also striving to create a workplace culture where employees can be
			proud and happy. Since 2015, we have held a "company-wide Ekiden Race"
			with the aim of fostering a sense of unity in the workplace, and in FY2018,
			approximately 1,200 people from Toyoda Gosei and 34 affiliated companies
			and business partners participated as athletes, while approximately 1,500
			employees and their families from each workplace cheered them on. This
			event contributed greatly to unity and communication in the workplace. The
			"TG Festival" and "Morimachi Noryo" Festival are also held as events to
			deepen family bonds and community ties.
			In the field of governance, in order to build a fair and transparent corporate
			governance system, we strengthen the efficiency of audit and supervision on
			the management of the Company by outside directors and outside Audit &
			Supervisory Board members and establish an internal control system to
			ensure that work is done properly and efficiently. Also, in addition to
			complying with laws and regulations, we are also engaged in awareness-
			raising activities such as compliance training and a questionnaire to check the
			degree of retention so that each employee can act with high ethical standards.
Development	of Policies	on	As a company that is trusted by society, we have formulated a policy of
Provision of	Information	to	proactive and fair information disclosure and dialogue. (Shown in the
Stakeholders			"Toyoda Gosei Action Ethics Guide" and "Toyoda Gosei Report" mentioned
			previously.)
			- 15 -

Other	〔Promotion of Diversity〕
	We are striving to improve corporate value through creating a corporate
	culture that enables diverse human resources to fully demonstrate their
	individuality and capabilities based on the concept of accepting the diverse
	individuality of each employee and leading to the growth of the Company and
	each employee. Regardless of race, nationality, gender, age or disability, we
	are actively promoting the creation of a corporate culture that accepts the
	diversity of employees and enables a wide range of human resources to play
	active roles.
	We actively employ people with disabilities. Our "Employment Promotion
	Committee for Persons with Disabilities" plays a central role in employment,
	assignment, training, workplace retention and education. By clarifying the
	jobs that persons with disabilities can engage in and hiring and assigning them
	in a planned manner, 125 persons with disabilities were hired in FY2017 (as
	of January 1, 2018), and we have achieved a hiring rate of 2.37%, exceeding
	the target (statutory employment rate) of 2.0% (revised upward to 2.2% in
	April 2018).
	The "re-employment system after retirement" provides an environment where
	employees can work with peace of mind even after retirement. Many people
	continue to play an active role even after re-employment, taking advantage of
	their high technical skills and experience. In addition, we are expanding our
	shorter working hours so that employees can achieve a work-life balance.
	〔Policies and Initiatives for Women's Success〕
	In order to promote the active participation of women, we are working in
	three main areas: (1) supporting the development and active participation of
	women, (2) reforming supervisors' awareness and behavior and (3) creating
	workplace cultures. For example, as part of efforts to reform supervisors'
	awareness and behaviors, we hold a "Women's Activity Promotion
	Conference" and "Study Group of Volunteer Members" where measures
	related to management issues are introduced and troubles in each workplace
	are shared and discussed, and we striving to create the workplace environment
	in which women can work more actively.
	We will continue to promote these activities, aiming to (1) having more than
	triple the number of female managers (compared to FY2014) and (2)
	increasing the ratio of female graduates (regular position with the prospect of
	promotion) to over 20% by 2020.
	〔Support for Balancing Work and Family〕
	In order to balance work and childcare, our workplace environment and
	childcare leave system have been improved. This includes "Childcare Day"
	and "In-house Day Care for Holidays." We also hold career building seminars
	for employees who have taken or plan to take childcare leave and spouses. In
	addition, we are working to enhance systems such as short working hours and
	nursing care leave to support nursing care.
	As a result of these efforts, we have certified as a "Childcare Support
	Company" by the Ministry of Health, Labor and Welfare. Going forward, we
	will continue to raise awareness in order to create work environments where
	childcare and nursing care support systems are easy to use, and will continue
	to enhance support and measures.
	- 16 -

IV. Matters Related to the Internal Control System, etc.

1. Basic Philosophy on Internal Control System and the Its Development

The Company is striving to establish and operate a system which ensures the propriety of business activities of the Company through formulating a "Basic Policy on Development of Internal Controls System" in accordance with the provisions of the Companies Act and deliberating important matters at meetings, checking the status of business execution, managing risks, ensuring compliance and establishing an internal control system including internal audits in compliance with the said basic policy.

The status of the operation and development of the internal control system is reviewed annually in the meetings of the Board of Directors, and the internal control system is further improved and strengthened based on the status of operation.

・Basic Policy on Development of Internal Control System

1. Systems to ensure that the execution of duties by members of the Board of Directors complies with any relevant laws and regulations and the Articles of Incorporation
   (1) The Company thoroughly ensures that members of the Board of Directors take actions in compliance with any relevant laws and regulations and the Articles of Incorporation through training on legal knowledge required for members of the Board of Directors.
   (2) In the execution of duties by members of the Board of Directors, decisions are made through comprehensive considerations at the meetings of the Board of Directors and cross-organizational meetings and committees. The items to be discussed at those meetings and committees are properly submitted as prescribed by relevant company rules.
   (3) The Company establishes a committee regarding corporate ethics to discuss and determine actions for compliance to any relevant laws and regulations and corporate ethics. In addition, decisions are properly made concerning how risks are grasped and dealt with by each function at cross-organizational meetings and committees.
2. Systems to retain and manage information relating to the execution of the duties by members of the Board of Directors
   Information relating to the execution of duties by members of the Board of Directors is properly retained and managed by each responsible department in accordance with the applicable laws and regulations as well as applicable company rules.
3. Rules and other systems related to the management of risk of loss at the Company and its subsidiaries

1. Risks relating to safety, quality, environment, etc. are properly managed by each responsible department through establishing company rules and manuals, reviewing the status of operation and implementing countermeasures if needed.
2. The Company distributes guidelines regarding risk management related safety, quality, environment, etc. to its subsidiaries and provide advice when needed.
3. The Company works on ensuring the accuracy of financial reporting by the Company and its subsidiaries through such as documenting a flow of funds and a system of management, and disclose information timely and properly.
4. In preparation for the occurrence of disasters, the Company establishes business continuity plans and conduct disaster drills. In addition, the Company attempts to diversify risks by such as effecting insurance if necessary.

4. Systems to ensure that members of the Board of Directors at the Company and its subsidiaries perform their duties efficiently

(1) The Company manages consistent policies by specifying the policies at each level of the organization in accordance with the medium and long term management policies and corporate policies of each fiscal term.

(2) Members of the Board of Directors, in accordance with corporate policies, direct and supervise corporate officers and conduct swift and flexible decision making. Corporate officers perform their duties with swiftness and flexibility based on the direction and supervision by members of the Board of Directors.

(3) The Company and its subsidiaries clarify authorities and responsibilities in performing duties pursuant to company rules, and perform duties and execute budgets pursuant to such company rules. Important matters are properly submitted to the Board of Directors or relevant meetings or committees in accordance with the applicable standards for submission.

• 17 -

1. The Company establishes departments in charge of managing its subsidiaries, and develop and operate prior approval and report system in order to ensure consistency of business between the Company and its subsidiaries and efficient implementation of business, while respecting management autonomy of its subsidiaries.

1. Systems to ensure that the execution of the duties by the Company's employees and by its subsidiaries' directors and employees complies with the applicable laws and regulations and the Articles of Incorporation
   (1) The Company and its subsidiaries shall clarify the responsibility and authority of each organization, establish compliance action guidelines such as charter for business ethics and guide for business ethics, and ensure dissemination to all employees through stratified education programs.
   (2) Departments in charge of each function at the Company and its subsidiaries establish and expand company rules and manuals for responsible functions, and ensure effectiveness by such as inspection. In addition, internal audit departments at the Company and its subsidiaries check the status of implementation on a regular basis.
   (3) The Company and its subsidiaries establish organizations responsible for compliance, provide information with regards to legal compliance and attempt to foster compliance awareness among the Company.
   (4) The Company and its subsidiaries establish compliance consultation desks inside and outside the Company and strive to find problems and solutions promptly.
2. Systems to enable the Company to receive reports of matters regarding the execution of duties by its subsidiaries' directors and others.
   (1) The Company receives business reports from its subsidiaries on a regular basis or whenever necessary.
   (2) The Company arranges opportunities to convene representatives of the Company and its subsidiaries on a regular basis, receive reports directly from its subsidiaries, and enhance sharing of various information.
3. Systems to ensure the propriety of business activities in the company group consisting of the Company and its subsidiaries
   (1) The Company attempts to create a sound internal control environment at the Company and its subsidiaries through sharing the management philosophy with its subsidiaries and establishing common charter for business ethics and expanding it to its subsidiaries.
   (2) The Company dispatches part-time directors and part-time Audit & Supervisory Board members to important subsidiaries of the Company and monitor and restrain the business execution of such subsidiaries.
4. Matters regarding employees who assist the duties of Audit & Supervisory Board members in case where Audit & Supervisory Board members request assignment of such employees
   (1) The Company appoints employees who assist the duties of Audit & Supervisory Board members at the necessary number through discussion with full-time Audit & Supervisory Board members. In addition, the employees who assist the duties of Audit & Supervisory Board members support necessary investigations by following the instructions from Audit & Supervisory Board members.
   (2) The internal audit department and departments in charge of each function of the Company conduct a functional audit of the Company and its subsidiaries by collaborating with Audit & Supervisory Board members if necessary, and report the results to Audit & Supervisory Board members. In addition, those departments support investigations by Audit & Supervisory Board members when necessary.
5. Matters regarding the independence of the employees described in Item 8 from Members of the Board of Directors

Employees who assist the duties of Audit & Supervisory Board members belong to a dedicated department established under Audit & Supervisory Board members. Personnel affairs (such as reassignment, evaluation, and other treatments) of those employees are determined through discussion with full-time Audit & Supervisory Board members.

10. Matters related to ensuring the effectiveness of instructions by Audit & Supervisory Board members to the employees described in Item 8

Employees who assist the duties of Audit & Supervisory Board members shall not be ordered by members of the Board of Directors, corporate officers, and other employees.

• 18 -

1. Systems regarding reports from members of the Board of Directors of the Company and its subsidiaries to Audit & Supervisory Board members, and systems regarding other reports to Audit & Supervisory Board members
   (1) Members of the Board of Directors timely and properly report to Audit & Supervisory Board members regarding the execution of major duties through responsible departments, and immediately report to Audit & Supervisory Board members when detecting any facts likely to cause substantial detriment to the Company and its subsidiaries.
   (2) Directors and employees at the Company and its subsidiaries report on business operations when requested by Audit & Supervisory Board members, on a regular basis or whenever necessary.
2. Systems to ensure that a person who has made a report to Audit & Supervisory Board Members will not receive unfair treatment due to making the said report
   (1) The Company ensures that members of the Board of Directors, corporate officers, employees who have made a report to Audit & Supervisory Board members will not receive unfair treatment due to making the said report.
   (2) The Company ensures that directors and employees of its subsidiaries who have made a report to Audit & Supervisory Board members will not receive unfair treatment due to making the said report, and shall disseminate to that effect to directors and employees of its subsidiaries.
3. Matters regarding policies on processing prepayment or redemption of expenses arising from executing the duties by Audit & Supervisory Board members, and on processing other expenses or debt arising from executing the duties
   (1) The Company bears expenses arising from executing the duties of Audit & Supervisory Board members at their request.
   (2) The Company enables Audit & Supervisory Board members to consult certified public accountants, lawyers, and others, and bears the consulting expenses.
4. Other systems to ensure that audits by Audit & Supervisory Board members are conducted effectively
   (1) The Company ensures the attendance of Audit & Supervisory Board members to major meetings and committees, and secure opportunities for accessing to important documents.
   (2) The Company secures a system under which Audit & Supervisory Board members exchange opinions with representative directors, accounting auditors, and internal audit departments on a regular basis.

・Summary of the status of operation

(1) Overall internal control system

The Company is striving to establish and operate a system which ensures the propriety of business activities of the Company and the entire group companies through formulating a "Basic Policy on Development of Internal Controls System" in accordance with the provisions of the Companies Act and deliberating important matters at various meetings, establishing and operating related rules and procedures ensuring thorough compliance, managing risks and establishing an internal control system including internal audits in compliance with the said basic policy.

The status of the operation and development of the internal control system is reviewed annually in the meetings of the Board of Directors, and the internal control system is further improved and strengthened based on the status of operation.

(2) Compliance system

Compliance is ensured throughout the Company and its group companies in accordance with the "Toyoda Gosei Group Charter for Business Ethics", which is a common code of conduct for the entire group companies, and each company's own action guidelines.

The Company's specific policies and activity plans are deliberated and decided by the "Compliance and Risk Management Committee", chaired by the president, and distributed to all internal departments and domestic and overseas subsidiaries. We strive to ensure full legal compliance and establish corporate ethics. In addition, we have set up compliance consultation desks inside and outside the Company to find problems and solution promptly.

- 19 -

(3) Risk management system

In order to prevent an accident that have a significant impact on management, and to minimize damage in the event of occurrence of the accident, the Company monitors risks in each function at various meetings across the organization and makes decision about how to respond.

For various risks related to safety, quality, and the environment, each department in charge establishes rules and procedures, and conducts appropriate management such as implementing measures after evaluating the status of operation as necessary. In addition, we have established a "Crisis Management Response Guide" that summarizes basic matters related to risks, clearly describes what to do to prevent possible risks and take appropriate and prompt actions in the event of an emergency.

(4) Management of the entire group companies

In order to create a sound internal control environment for group companies, we share the "Toyoda Gosei Management Philosophy" with group companies and have established a common code of conduct, the "Toyoda Gosei Group Charter for Business Ethics".

While respecting the management autonomy of subsidiaries, we regularly receive business reports and confirm the appropriateness and legality of the operations of subsidiaries through pre-approval and reporting systems. In addition, part-time directors and part-time Audit & Supervisory Board members are dispatched to important subsidiaries of the Company to monitor and check the business execution of such subsidiaries.

(5) Performance of duties by directors

Based on the "Rules of Board of Directors", a meeting of the Board of Directors is held every month and on an ad hoc basis. The Board of Directors is composed of nine directors, including three outside directors, making decisions flexibly with a small number of people. Audit & Supervisory Board members also attend meetings of the Board of Directors. In addition, we have adopted a corporate officer system, and corporate officers flexibly execute their duties by providing resolutions of the Board of Directors to corporate officers at monthly management meetings.

(6) Performance of duties by Audit & Supervisory Board member

The Audit & Supervisory Board is composed of five Audit & Supervisory Board members, including three outside Audit & Supervisory Board members. The Audit & Supervisory Board members attend major board meetings in addition to meetings of the Board of Directors, and audit and supervise the execution of duties by directors. In addition, the internal audit department (Audit Division) and accounting auditors exchange information closely and cooperate. To improve the independence and effectiveness of audits by Audit & Supervisory Board members and to facilitate audit work, an Audit & Supervisory Board Department has been established directly under the Audit & Supervisory Board to assist in the execution of duties by Audit & Supervisory Board members.

2. Basic Policy on and Preparation for Eliminating Anti-Social Forces

The Company has established the "Toyoda Gosei Guidelines for Business Ethics" as a guideline for all people working at the Company in which "Elimination of Anti-Social Force" is stipulated and the Company implement policies on eliminating anti-social force.

・Basic policy on eliminating anti-social forces

We draw a sharp and resolute line with respect to the anti-social forces that pose a threat to the order and safety of civil society, and we will never involve ourselves with such forces for any motivation or reasons.

・Status of developments to eliminate anti-social forces

1. Establishment of a general response department and a person responsible for preventing illicit requests A general response department has been established in the headquarters of the Company. At the same time, we are developing a company-wide system to decide on a person who is responsible for dealing with such anti-social forces at each location.
2. Cooperation with external specialized institutions

We exchange information on a regular basis with the police headquarters and the relevant police stations, and participate in liaison meetings organized by the authorities.

1. Status of collecting and managing information on anti-social forces
2. • 20 -

In cooperation with external specialist organizations and experts, the latest information on anti-social forces is collected and managed by the corresponding department, and used for alerting the Company as necessary.

(4) Preparation of Manual

A collection of case studies on how to deal with unreasonable requests and behaviors is prepared and distributed to each department in the Company.

1. 1. Implementation status of training activities
   1. Information on anti-social forces is provided through the intranet of the Company.
   2. We are promoting various educational activities to prevent damages, such as having employees attend classes and seminars on eliminating anti-social forces offered by external specialized organizations.
2. Other

1. Adoption of Anti-Takeover Measures

Adoption of Anti-Takeover Measures	None
Supplementary Explanation

―

2. Other Matters Concerning Corporate Governance System

The Company has established the "Toyoda Gosei Guidelines for Business Ethics" as a guideline for all people working at the Company. "Providing of corporate information to a wide range of stakeholders" is clearly stated in the said guideline and practiced.

・Overview of the Timely Disclosure System

1. The Company has established the "Rules for Timely Disclosure of Company Information" that provide for (a) the management of information concerning the Company and its subsidiaries and (b) the internal rules for organization and procedures for timely disclosure.
2. In accordance with internal rules, the department in charge of timely disclosure (General Affairs Department) collects information through reports from departments in charge of the management of information subject to timely disclosure or by checking the materials of management meetings and the Board of Directors.
3. The department in charge of timely disclosure and the person responsible for timely disclosure (Chief of General Administration and Human Resources Headquarters) determines, based on the applicable laws and regulations, guidelines, etc. including Stock Exchange Rules and Financial Instruments and Exchange Act, whether disclosure of information is necessary.
4. When disclosure of information is determined by the said department and person, information is disclosed in a timely manner after report to the president and full-time Audit & Supervisory Board members.

- 21 -

- 22 -