Basic Policy and Features

Achieving higher levels of sound and transparent corporate management

Basic Policy

In order to sustainably enhance corporate value over the long term while working to realize a Kirei World in which all life lives in harmony, which is our Purpose, and to become an essential company in a sustainable world, as raised in Kao Mid-term Plan 2027 “K27,” Kao positions corporate governance as a top-priority management issue and continuously strengthens governance in both systems and operations. Kao’s corporate governance is a framework for transparent, fair, prompt and decisive decision-making. It takes into account the perspectives of all stakeholders and responds in a timely and appropriate manner to changes that are increasingly diverse, complex, and difficult to predict so that we can contribute to society and continuously enhance corporate value. The foundations of our efforts to achieve this are establishing and operating the necessary management structures and internal control systems, implementing the necessary measures in a timely manner, and demonstrating accountability. In addition, we work to understand social trends at all times and actively engage in dialogue with stakeholders to review the status of corporate governance from time to time and implement appropriate and necessary countermeasures and improvements.

Features of Kao’s Corporate Governance

To realize a Kirei
World in which all
life lives in
We position the establishment of effective corporate governance systems as the foundation and a
driver for achieving our Purpose to realize a Kirei World in which all life lives in harmony.
Integrity as the
only choice
We practice corporate governance that places our corporate philosophy, the Kao Way, at the
core of our business management, and with a consistent focus on Integrity as the only choice,
which is one of values of the Kao Way. Employees work together based on mutual respect and
fairness, bring an attitude of sincerity and diligence, and conduct themselves lawfully and
ethically, and by so doing we are able to maintain the support and trust of all stakeholders and
engage in sound and honest business activities.
Innovation for
today and
At the Annual General Meeting of Shareholders held in March 2023, the number of independent
outside directors was increased by one to ensure further diversity of the Board of Directors and
strengthen supervisory functions. With the aim of ensuring diversity, the Board of Directors is
composed of 10 members, including one U.S. Director and two female Directors (including five
independent Outside Directors). The Board of Directors is working to enhance corporate value by
reviewing the structure and operation of the system to ensure a higher level of governance.
Use of outside
We have put in place a system of governance able to maintain a high degree of objectivity,
including making 8 of the 15 members of the Board of Directors/Audit & Supervisory Board
Members independent and outside members and having an Outside Director serve as
Chairperson of the Board of Directors, to ensure that the Board of Directors is able to
appropriately perform management oversight. Outside Directors and Outside Audit & Supervisory
Board Members are designated with priority placed on their independence as well as
their expertise and high-level insight. They oversee and audit planning and execution of business
strategy and the like from their diverse viewpoints, facilitating effective and judicious decision-
internal control
The Internal Control Committee leads discussions on compliance, risk and crisis management,
and related topics across the Kao Group to improve the effectiveness and efficiency of our
business processes, ensure the credibility of our financial reporting, comply with laws and
regulations in our business activities, and preserve our assets, and we are strengthening internal
control throughout the Kao Group.

The Path toward Strengthened Governance

We have also practiced Innovation, which is one of Values of the Kao Way, in the area of corporate governance from an early stage. We have pursued creation of the most optimal structure to respond to changes in the business environment as well as social demands, and will continue to take steps to reform our governance.

Standards for Independence of Outside Directors/Audit & Supervisory Board Members

Kao has established the “Standards for Independence of Outside Directors/Audit & Supervisory Board Members of Kao Corporation” to clarify the standards for independence of an outside director/Audit & Supervisory Board Member.

Kao Group Tax Policy

The Kao Group has implemented a “Tax Policy” aiming to improve its tax governance framework, reflecting the group’s tax code of conduct and its consistent standards for approaching tax matters throughout the group.

The publication of this strategy statement is regarded as satisfying the duty under Paragraph 16(2), Schedule 19, Finance Act 2016 in UK.

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