Press Kogyo : Corporate Governance Report 2021/06/30

	Note:	This document is a translation from the Japanese original for reference purposes only. In the event of any discrepancy
		between this translation and the Japanese original, the Japanese original shall prevail.
		Press Kogyo Co., Ltd. assumes no responsibility for this translation or for direct, indirect or any other forms of damages
		arising from the translation.

Corporate Governance Report

Last Update: June 30, 2021

PRESS KOGYO CO., LTD.

President & CEO, Tetsushi Mino Contact: General Manager, Takanori Sasaoka Securities Code: 7246 https://www.presskogyo.co.jp/en/

The corporate governance of PRESS KOGYO CO., LTD. (the "Company") is described below.

1. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and

Other Basic Information

1. Basic Views

The Company is committed to enhancing corporate governance on an ongoing basis for the purpose of seeking sustainable growth and increased corporate value over the mid- to long-term, based on the Press Kogyo Group's "Vision / Mission / Values".

Press Kogyo Group "Vision / Mission / Values"

• Vision (What we strive to be)

With pride and self-belief, we will continue to grow together with our stakeholders as a positive presence in our society.

For development of automotive and construction/industrial machinery parts, Press Kogyo Group has the full range of capabilities as follows:

• Development/design
• Analysis
• Experiments
• Manufacturing
• Quality assurance
• Design/manufacturing of tools, jigs and equipment

We continue to look toward the future and will grow with confidence and pride. This spirit comes from our history of overcoming challenges and from the refinement of our expertise to better serve society.

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■ Mission（Promise to society and reason for being)

Through empathy and harmony with society, our "Monozukuri" (manufacturing) will continue to be a force that better serves people, automobiles and machines.

■ Values - Codes of conduct for realizing our vision and mission -

• Safety, Security and Compliance

Safety, security and compliance form the basis of our actions. We uphold these values honorably and responsibly for all of our stakeholders.

• Integrity and Effort

People are the foundation of our business.

Our greatest fundamental and most important belief is trust which is gained through integrity and persistent effort.

• Power to carry through

We act upon and accomplish our goals with a commitment to make it happen.

• Creativity

We question the status quo with curiosity and a will to find and try new solutions. We enjoy the journey of creating the future.

• Diversity

We honor and embrace the uniqueness of everyone's ideas and thoughts, and collaborate together.

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

[Principle 1.4]

At the current time, the Company holds strategic-shareholdings (10 stocks). The Company will verify the propriety of holding individual strategic-shareholdings and consider reducing them as needed.

The Company holds shares of strategic-shareholdings based on Article 6 of the Company's Corporate Governance Guidelines and exercises voting rights regarding shares held by strategic-shareholdings based on Article 7 of the same Guidelines.

Furthermore, at the Board of Directors meeting held on May 19, 2021, it was decided that the individual strategic-shareholdings held as of the end of March 2021 would continue to be held, based on a verification of the propriety of holding said shareholdings.

Article 6 (Policy on Strategic-Shareholdings)

1. The Company shall hold shares by strategic-shareholdings when it judges in a comprehensive manner that this contributes to improving corporate value over the mid- to long-term for the purpose of facilitating business transactions and strengthening business relationships.
2. The Company shall confirm the objective and the like for and verify the propriety of holding individual strategic-shareholdings upon verification of the economic rationality and future prospects thereof over the mid- to long-term at meetings of the Board of Directors, on an annual basis.
3. The Board of Directors shall disclose an overview of the results of verifications of the propriety of shareholdings in a timely and appropriate manner.
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Article 7 (Standards for Exercising Voting Rights regarding Shares Held by Strategic-shareholdings)

The Company, when it exercises voting rights regarding shares held by strategic-shareholdings, shall determine whether or not to approve matters to be resolved after careful examination, taking into consideration whether such matters contribute to improving shareholder value or whether such matters do not impair shareholder value in a significant way.

[Supplementary Principle 4.2.1]

At the current time, the Company has not introduced mid- to long-termperformance-based compensation or share-based compensation.

However, all of the Company's Executive Directors have purchased shares in the Company through Press Kogyo Officers' Shareholdings. This gives them a common interest with all shareholders, providing an incentive to conduct business in a way that is conscious of the Company's share price and to improve corporate value.

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

The Company formulated "Corporate Governance Guidelines," which provides for the Company's concept and system of corporate governance, progress of the establishment thereof and operating policies therefor, etc.

"Corporate Governance Guidelines" can be seen on the Company's website. (https://www.presskogyo.co.jp/en/)

[Principle 1.7]

It is disclosed in Article 8 of the Company's Corporate Governance Guidelines.

Article 8 (Related Party Transactions)

When the Company engages in transactions with an Officer or principal shareholders, etc. (i.e., related party transactions), in order to ensure that such transactions do not harm the common interests of its shareholders, the Company shall confirm the contents of such transactions and obtain the Board of Directors' approval thereof before engaging in such transactions as well as report the results of such transactions.

[Principle 2.6]

The Company offers retirement benefit plans in the form of defined contribution pension plans and contract- type defined benefit corporate pension plans.

Regarding defined contribution pension plans, the Company provides employees with explanations of said system, educational opportunities related to the asset management, and the like.

Regarding contract-type defined benefit corporate pension plans, as the asset owner, the Company has established a strategic asset mix that takes into consideration risk and return in order to provide stable benefits to corporate pension fund recipients into the future.

Also, the situation regarding the management of plan assets is regularly monitored and if necessary, the Pension Plan Asset Management Committee will change the strategic asset mix and pick or change products

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under management in accordance with the Fundamental Pension Plan Asset Management Policy. Results of

the management of plan assets are disclosed to employees.

Furthermore, the management of plan assets is entrusted to multiple plan trustees. The selection of individual investment destinations and exercise of voting rights is left entirely up to each trustee which ensures there are no conflicts of interest between corporate pension fund recipients and the Company.

[Principle 3.1]

1. It is disclosed in the"materials for Financial Statement briefings'" on the Company's website and Article 1 of the Company's Corporate Governance Guidelines.
   (https://www.presskogyo.co.jp/en/)

Article 1 (Basic Concept of Corporate Governance)

The Company is committed to enhancing corporate governance on an ongoing basis for the purpose of seeking sustainable growth and increased corporate value over the mid- to long-term, based on the Press Kogyo Group's "Vision / Mission / Values"

1. It is disclosed in Article 1 of the Company's Corporate Governance Guidelines.
2. It is disclosed in Articles 28 and Schedule 3 of the Company's Corporate Governance Guidelines, and

• Ⅱ .1.[Director Remuneration] Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods" of the Corporate Governance Report.

Article 28 (Remuneration, etc., for Directors)

The Company shall be determined the remuneration, etc., for Directors, based on Policy for Determining Directors' Remuneration, etc. provided for in Schedule 3.

Schedule 3 : Policy for Determining Directors' Remuneration, etc.

The Company will determine the policy for remuneration, etc. for Executive Directors, Non-executive Directors and Directors who are Audit & Supervisory Committee Members as follows.

Directors' (excluding Directors who are Audit & Supervisory Committee Members) remuneration, etc. is determined upon ensuring objectivity and transparency through deliberation with the Nomination & Remuneration Committee, in which majority of the members are External Directors, and opinions from the Audit & Supervisory Committee each fiscal year.

< Remuneration, etc., for Executive Directors >

1. Remuneration, etc., for executive directors, from among the Company's Directors (excluding Directors Who Are Audit & Supervisory Committee Members), shall be determined taking into consideration the ratio of fixed compensation and performance-based compensation (bonuses for Officers, etc.), as well as the appropriate ratio of cash compensation and share-based compensation.

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2. The allocation of remuneration, etc., for individual executive directors is entrusted to Representative Director, President by the Board of Directors and determined within the limits of the aggregate amount resolved at the Shareholders' meetings.

<_remuneration2c_ _etc.2c_="" for="">Non-executive Directors>

1. Remuneration, etc., for non-executive directors who will advise and supervise the management of the Company from an independent standpoint shall only be fixed compensation from the viewpoint of securing independence.
2. The allocation of remuneration, etc., for individual non-executive directors is entrusted to Representative Director, President by the Board of Directors and determined within the limits of the aggregate amount resolved at the Shareholders' meetings.

<_remuneration2c_ _etc.2c_="" for="" directors="" who="" are="" audit="" _26_="" supervisory="" committee="" members="">

1. Remuneration, etc., for Directors Who Are Audit & Supervisory Committee Members shall only be fixed compensation from the viewpoint of securing the appropriateness of their duties including conducting audits and supervising the execution of business.
2. The allocation of remuneration, etc., for individual Directors Who Are Audit & Supervisory Committee Members shall be determined by consultation of Audit & Supervisory Committee Members, within the limits of the aggregate amount resolved at the Shareholders' meetings.

Fixed compensation is based on the basic compensation decided by position, and is paid monthly upon its resolution within the scope of the remuneration limit of 400 million yen per year for Directors (excluding Directors who are Audit & Supervisory Committee Members) (resolved at the 114th Annual Shareholders' Meeting held on June 29, 2016), and 60 million yen per year for Directors who are Audit & Supervisory Committee Members (resolved at the 114th Annual Shareholders' Meeting held on June 29, 2016).

performance-based compensation, etc., and policy regarding the determination of the amount of their personal compensation, etc. for performance-based compensation>

The payment of bonuses for Officers as performance-based compensation for executive directors is considered each fiscal year, and if it is paid, the Company will decide the details of the proposal (eligible Directors, total amount of bonuses for Officers, etc.) for the Annual Shareholders' Meeting at a meeting of the Board of Directors.

Bonuses for Officers are decided at each Annual Shareholders' Meeting in a separate frame from the remuneration limit of 400 million yen per year for Directors (excluding Directors who are Audit & Supervisory Committee Members) (resolved at the 114th Annual Shareholders' Meeting held on June 29, 2016).

The total amount of bonuses for Officers takes performance and other factors for each fiscal year into consideration. However, the main reference indicators pertaining to bonuses for Officers include profit attributable to owners of parent and annual dividends per share. Furthermore, bonuses will be paid to eligible Directors upon consideration of position and personal level of contribution.

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