Daio Paper : Announcement of the Revision of the “Corporate Governance Guidelines”

ENGLISH TRANSLATION FOR REFERENCE PURPOSE ONLY

This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail. The company assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising from the translation.

June 29, 2022

To Whom It May Concern:

Name of Company:	Daio Paper Corporation
Name of Representative:	Yorifusa Wakabayashi
	President and Representative Director
	Chief Executive Officer
Securities Code:	3880
	(Prime Market, Tokyo Stock Exchange)
Contact Person:	Shuhei Shinagawa
	Senior Executive Officer
	General Manager of Corporate Planning Division
Telephone No.:	[phone]

Announcement of the Revision of the "Corporate Governance Guidelines"

Daio Paper Corporation hereby announces the revision of the Daio Paper Group's Corporate Governance Guidelines at the Board of Directors meeting held today. The details are as follows.

1. Purpose of the revision

1. In order to clarify that the set of the "Corporate Governance Guidelines" is the document which compiles the Company's basic ideas on the corporate governance, we changed its name to "Corporate Governance Basic Policy."
2. We resolved to reduce the maximum number of the Directors from 20 to 15 at the 111th Annual General

Meeting of Shareholders, which was held today, with the aim to invigorate Board meetings, expedite the decision-making process and thereby improve management efficiency. In line with this, we revised the provisions for the composition of the Board of Directors.

(3) In order to clarify our policy on the reduction of the cross-shareholdings, we have revised the provisions for the cross-shareholdings.

(4) We revised the provisions for the Nomination Committee, Remuneration Committee, etc. and changed the order of these articles.

2. Revised articles

• Article 1. Purpose

  Article 3. Overview of the Corporate Governance Structure of the Company

  Article 5. Composition of the Board of Directors

  Article 9. Establishment of Non-mandatory Committees Article 10. Nomination Committee

  Article 11. Remuneration Committee Article 12. Compliance Committee Article 13. Sustainability Committee Article 16. Policy on Cross-shareholdings Article 1 of the Supplementary Provision

• Refer to the attached "Corporate Governance Basic Policy" for details.

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ENGLISH TRANSLATION FOR REFERENCE PURPOSE ONLY

This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail. The company assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising from the translation.

Corporate Governance Basic Policy

Established October 27, 2015

Revised December 13, 2018

Revised May 27, 2021

Revised June 29, 2021

Revised December 9, 2021

Revised June 29, 2022

Daio Paper Corporation

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Chapter 1 General Provisions

Article 1 Purpose

This Basic Policy sets forth basic guidelines for the corporate governance of the Daio Paper Group (hereinafter referred to as the "Group") for the purpose of establishing effective corporate governance, under the following Corporate Motto and Management Philosophy, in order to realize its sustainable growth and the enhancement of corporate value over its medium- to long-term.

Passion with Sincerity

Shaping an Abundant and Affable Future for the World

"Dedicated" Dedication to manufacturing

Our dedication to society and local communities drives us to innovate and deliver new value born from attention to regions, resources, and realizations.

"Attentive" Bonds with local communities

Our attention to individual cultures and regions drives us to contribute and work in harmony with local communities, demonstrating our standing as good corporate citizens.

"Integrated" Corporate culture providing safety and motivation to work

We will strive to maintain a diverse and friendly corporate culture that offers new challenges and a sense of security and trust to employees.

"Organic" Contribution to the global environment

We will actively work to grow organically, solving environmental problems and realizing a sustainable society for the world over.

Article 2 Basic Approach to Corporate Governance

The Group promotes sustainability management based on its management philosophy "Shaping an Abundant and Affable Future for the World" to realize sustainable creation of values for all stakeholders and society as a whole.

In this context, the Group considers corporate governance as a mechanism to realize sustainable growth and the enhancement of corporate value over medium- to long-term and as ensuring the functioning of the mechanism, by clarifying the role and responsibility of "the decision making and supervisory functions" and "the business execution function" of the management and promoting swift and flexible decision-making and implementation.

Amid the rapidly changing business environment, the Group has been working on reforms for achieving medium- to long-term sustainable growth such as business portfolio reform and speeding up global expansion by constantly adapting to the changing times and with foresight. At the same time, the Group will further enhance governance of management in line with the basic principles stated below with a right balance between offense and defense through initiatives, such as improvements in organizational structure to manage risks that are becoming increasingly complex and diverse, along with the expansion of overseas business and changes in society.

1. We honor the rights of shareholders and make efforts to provide an environment in which shareholders can properly exercise their rights and to ensure substantial equality among shareholders.
2. We acknowledge the importance of social responsibility and ensure appropriate collaboration with various stakeholders, including shareholders, customers, business partners, employees, and local communities, thereby engaging in sound business activities.
3. We ensure timely and appropriate disclosure of corporate information, including non-financial

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information, to be correctly understood and trusted by various stakeholders.

1. The Board of Directors provides highly effective supervision over Directors based on our fiduciary duty and accountability to shareholders.
2. We have beneficial and constructive dialogue to all shareholders as part of our efforts to achieve sustainable growth and increase our medium- to long-term corporate value.

Chapter 2 Corporate Governance Structure at Daio Paper

Article 3 Overview of the Corporate Governance Structure of the Company

The Company is a company with an Audit and Supervisory Board. As such, the Board of Directors makes decisions on important management policies and oversees business executions, while the Audit and Supervisory Board and its members, which is independent from the Board of Directors, audits the Directors' performance of their duties. The Management Meeting, which consists of the management team members (i.e., Executive Directors and Executive Officers), makes decisions on matters delegated by the Board of Directors to ensure prompt decision-making, efficient management, and enhancement of business execution function. We have the executive officer system in order to make prompt and courageous management decisions and establish a strong and flexible business execution structure for greater corporate value by clearly defining the roles and responsibilities of the Board of Directors and Executive Officers. The Board of Directors' primary function is to make decisions on critical management matters and supervise business execution, and that of Executive Officers is to execute operations.

We have non-mandatory committees in order to ensure the objectivity and transparency of our management, along with robust corporate governance and compliance across the Group. These committees are the Nomination Committee that deliberates matters regarding the nomination of candidates for Board of Directors as well as Managing Executive Officers and the election or dismissal of Directors and reports the outcomes of the deliberations to the Board of Directors; and the Remuneration Committee that deliberates the policy for determining remuneration for Full-time Directors as well as Managing Executive Officers of the Company, reports the outcomes of the deliberations to the Board of Directors, and finalizes the evaluation of and remuneration for each of these persons according to the policy on remuneration resolved by the Board of Directors.

Furthermore, we have the Compliance Committee that deliberates the consolidated management of comprehensively identified and assessed risks, coupled with countermeasures, and measures based on the severity of each risk. To advance sustainability management and diversity management across the Group to continuously increase our corporate value, we have the Sustainability Committee that deliberates sustainability-related initiatives, and the Diversity Committee that develops basic policy on diversity promotion, sets critical challenges, and advances the efforts to meet these challenges.

Article 4 Roles of the Board of Directors

1. The Board of Directors supervises the overall management, including the performance of duties by the management team, in order to ensure the fairness and transparency of management. The Board of Directors makes decisions for the Company by determining the execution of critical business operations specified in laws and regulations or the Articles of Incorporation.
2. The Board of Directors delegates the authority over the execution of and decision-making on other business operations than the critical operations mentioned in the preceding paragraph to lower- level meeting bodies, including the Management Meeting, and to the officers in charge of those operations. The Board of Directors supervises the performance of duties by those meeting bodies and officers.
3. Outside Directors supervise business execution by the Board of Directors and the management team and watch for any conflict of interest between the Company and the management team, among others, from stakeholders' perspective in order to realize the Group's sustainable growth and the enhancement of corporate value over its medium- to long-term.
4. Given the importance of issues related to sustainability, the Board of Directors sets out the "DAIO

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Global Environment Charter," which is the basic policy on social responsibility that the companies across the Group should fulfill to protect the global environment, thereby raising officers' and employees' awareness. The Board of Directors works to help with the sustainable development of society and continue increasing the Group's corporate value by actively launching initiatives, with giving due consideration to stakeholders, to resolve the issues, based on the discussions at the Sustainability Committee.

Article 5 Composition of the Board of Directors

1. The number of the members of the Board of Directors at the Company shall be within 15 as specified in the Articles of Incorporation. Basically, it must be the number that is necessary and appropriate to ensure an effective management structure as well as substantive discussions at the Board of Directors meetings. Due consideration is also given to diversity and expertise within the Board of Directors.
2. Considering the importance of Outside Directors' functions in corporate governance, one-third or more of the members of the Board of Directors shall be independent Outside Directors.
3. The Company selects Board of Directors candidates so that the Board of Directors will be evenly balanced between human resources capable of leveraging their strengths for the Group's business operation in a wide range of business areas and those who are suited for business management. The Company ensures that the Board of Directors as a whole has a good balance of knowledge, experience, and skills, along with diversity, that are suitable for the Group's business areas.

Article 6 Procedure for Electing and Dismissing Directors

1. The Company's Board of Directors candidates shall be selected from a wide range of human resources in accordance with the guidelines on nomination stated below and officially nominated by a resolution of the Board of Directors. Before the resolution is passed, the Nomination Committee shall provide its opinions. The Nomination Committee is chaired by an independent Outside Director, and more than half of its members shall be independent Outside Directors.
2. 1. A person who has extensive knowledge and experience related to the Group's business management and operation.
   2. A person who will understands social responsibility and missions in operations and will be capable of managing and operating business with fairness and accuracy based on high ethical standards.
3. Notwithstanding the preceding paragraph, the Company's independent Outside Director candidates shall be selected from a wide range of human resources in accordance with the guidelines on nomination stated below and officially nominated by a resolution of the Board of Directors.
4. 1. A person who meets the Company's criteria for determining independence and have no risk of causing any conflict of interest with general shareholders.
   2. A person who understands the Company's Management Philosophy and fully understands the
      Group's social responsibility and role.
   3. A person who is fully aware of his or her role as an Outside Director and be capable of supervising business execution and management by the Directors and of providing accurate and appropriate opinions and advice, applying his or her knowledge of and activities in the fields of corporate management, the economy, legal affairs, accounting, tax, and audits, among others.
5. If any event occurs that makes it difficult for a Director to properly perform his/her duties, such as a violation of law or regulation, the Board of Directors deliberates on the dismissal of the Director from his or her position or other actions, or on presenting a proposal for dismissal to a general meeting of shareholders. Before making the final decision, the Nomination Committee shall provide its opinions.
6. The Board of Directors shall supervise the training of successors to such a post as President and Representative Director based on reporting by the Nomination Committee, taking account of our Management Philosophy and management strategies.

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