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Corporate Governance Guidelines

Chapter 1 General Provisions

Article 1 (Purpose)

These Guidelines provide for the realization of the good corporate governance of Eisai Co., Ltd. (“the Company”), which, through the realization of the “Corporate Philosophy” laid down by the Company in its Articles of Incorporation, shall enhance corporate value and increase the common interests of the shareholders on a long-term basis and thereby enable shareholders to possess the Company's shares over the long-term with peace of mind.
(Corporate Philosophy)
1. 1.The Company's corporate Philosophy is to give first thought to patients and their families, and to increase their benefits that health care provides. Under this Philosophy, the Company endeavors to become a human health care (hhc) company.
2. 2.The Company's mission is the enhancement of patient satisfaction. The Company believes that revenues and earnings will be generated as a consequence of the fulfillment of the mission. The Company places importance on this positive sequence of the mission and the ensuing results.
3. 3.Positioning compliance, the observance of legal and ethical standards as a core in all business activities, the Company strives to fulfill corporate social responsibilities.
4. 4.The Company's principal stakeholders are patients, customers, shareholders and employees. The Company endeavors to develop a good relationship with stakeholders and to enhance their value through making the following efforts:
  1. (1)Satisfying unmet medical needs, ensuring stable supply of high quality products, and providing useful information of safety and efficacy.
  2. (2)Timely disclosure of corporate management information, enhancement of corporate value, and proactive return to shareholders.
  3. (3)Ensuring stable employment, offering challenging and fulfilling duties, and providing full opportunities for the development and enhancement of employees' capabilities.
Article 2 (Basic Framework of Corporate Governance)
1. 1.The Company is always aiming for the good corporate governance, and to continually achieve its fulfillment.
2. 2.In considering respecting the rights of all our shareholders, and as the essence of corporate governance is to ensure fair and transparent management and to enhance corporate vitality, the Company aims to realize the fulfillment of the good corporate governance in accordance with the following basic points of view:
  1. (1)Shareholder Relations:
    The Company shall;
    1. (i)
      Respect the rights of all shareholders.
    2. (ii)
      Ensure the equality of all shareholders.
    3. (iii)
      Structure favorable and smooth relations with the Company's stakeholders including all shareholders.
    4. (iv)
      Disclose properly and ensure the transparency of Company information.
  2. (2)Corporate Governance System
    1. (i)
      The Company has adopted a company with Committees System.
    2. (ii)
      The Board of Directors shall broadly delegate to the Executive Officers the power of decision-making over business conduct to the extent permitted by the laws and regulations and shall exercise its management oversight function.
    3. (iii)
      The majority of the Board of Directors shall consist of independent Outside Directors.
    4. (iv)
      There shall only be one Representative Executive Officer & President who shall be an Executive Officer and a Director concurrently.
    5. (v)
      To clarify the management oversight function, the Chair of the Board of Directors and the Representative Executive Officer & President shall be divided.
    6. (vi)
      The Nominating Committee and the Compensation Committee shall be entirely composed of Outside Directors, and the majority of the Audit Committee shall consist of Outside Directors.
    7. (vii)
      Each of the Chairs of the Nominating Committee, the Audit Committee and the Compensation Committee shall be appointed from the Outside Directors.
    8. (viii)
      The internal controls system shall operate properly to ensure the credibility of financial reports.
Article 3 (Establishment of these Guidelines)

These Guidelines are subject to the Companies Act and the related laws and regulations as well as the Articles of Incorporation, which precede and apply in priority to other rules of the Company.

Chapter 2 Shareholder Relations

Article 4 (Respect for Voting Rights)
1. 1.As the exercise of voting rights in the Shareholder Meetings is the right of all shareholders, the Company will endeavor to enable all shareholders to exercise their voting rights appropriately.
2. 2.In order to enable shareholders to execute their voting rights appropriately, the Company shall promptly send the notice of the resolutions of the Shareholders Meeting, the reference materials, etc., and ensure that there is sufficient time to consider such content.
3. 3.The Company will facilitate circumstances where not only the shareholders who attend the Shareholder Meetings but all shareholders are able to exercise their voting rights appropriately.
Article 5 (Shareholders Meetings)
1. 1.The Shareholders Meeting is the supreme decision-making body, which consisted of shareholders with voting rights, and must appropriately reflect their views.
2. 2.The Company shall determine the date and venue of Shareholders Meetings so that more of the shareholders will be able to attend and reflect the views of all shareholders.
3. 3.In order to develop a relationship of trust with shareholders, Directors and Executive Officers shall provide sufficient explanations and a question and answer session at Shareholders Meetings.
Article 6 (Returns to Shareholders)
1. 1.As the right to receive distribution of profits is a right of the shareholders, the Company will decide on and announce the basic policy related to the shareholder returns including dividends.
2. 2.Dividends will be resolved upon at the Board of Directors Meetings in accordance with the Articles of Incorporation, and such dividends are to be carried out flexibly.
Article 7 (Protection of Shareholders' Rights)

In order to protect shareholders' rights, the Company will appropriately disclose to shareholders the information related to the allocation of new shares to particular third parties, etc., or changes to the Company's shareholder composition or actions for the purpose of such changes in the future.
Article 8 (Ensuring Shareholder Equality)
1. 1.The Company will treat each shareholder with equality based on equity stake.
2. 2.The Company will not provide any special benefits including property benefits to any particular shareholder.
Article 9 (Prevention of Conflicts with Shareholder Interests)
1. 1.In order to protect shareholders' interests, the Company will endeavor to prevent any of the Company's related persons like Directors, Executive Officers, employees from abusing their position or conducting any transaction in conflict with the interests of the Company and the shareholders.
2. 2.Directors and Executive Officers shall not conduct any transactions involving conflict of interest or competition without the approval of the Board of Directors subject to the Companies Act.
3. 3.The Company will appropriately disclose the material facts relating to any transactions described in the preceding clauses.
4. 4.In order to preemptively prevent insider transactions by related persons of the Company, the Company will provide for rules relating to the treatment of material facts that have not yet been publicly announced and strictly apply such rules.
Article 10 (Favorable and Smooth Relations with Stakeholders)

The Company will endeavor to respect and maintain favorable and smooth relations with important stakeholders described in the Articles of Incorporation including patients, customers, shareholders and employees, with the view to enhance long-term corporate value.
Article 11 (Disclosure and Transparency)
1. 1.The Company will actively, timely and in an appropriate manner disclose to shareholders important information related to management, regardless of whether the content is positive or negative.
2. 2.The Company will determine the disclosure policy for important information related to management, etc., and facilitate such system.
3. 3.The company shall disclose information intelligibly and through a variety of methods which enable shareholders to access easily.
4. 4.The Company will develop a relationship of trust and enhance communications with shareholders by establishing a enquiries contact point, etc.

Chapter 3 Corporate Governance System

Article 12 (Structure of the Board of Directors and Each Committee)
1. 1.The Company has adopted a company with Committee System. The oversight function to the management shall be carried out by the Board of Directors, and the function of business conduct shall be carried out by the Executive Officers. Through this, the Company will clearly separate the functions between management oversight and business conduct, increase management vitality and secure the fairness and transparency of management.
2. 2.The Board of Directors will be composed of a diversity of Directors with differing backgrounds of specialized knowledge, experience, etc., and maintaining an appropriate number of Directors so that the Board of Directors can exercise its function most effectively and efficiently.
3. 3.The majority of the Board of Directors shall be composed of Outside Directors who are independent and neutral.
4. 4.There shall only be one Representative Executive Officer & President who shall be an Executive Officer and a Director concurrently.
5. 5.To thoroughly separate the functions between management oversight and business conduct, the Chair of the Board of Directors and Representative Executive Officer & President shall be divided and not combined in one person.
6. 6.The Company will establish the Nominating, Audit and Compensation Committees in accordance with the Companies Act. Also, the Board of Directors will establish, as needed, Committees within the Board of Directors other than the Nominating, Audit and Compensation Committees.
7. 7.The Nominating Committee and the Compensation Committee shall be entirely composed of Outside Directors, and the majority of the Audit Committee shall consist of Outside Directors.
8. 8.Each of the Chairs of the Nominating Committee, the Audit Committee and the Compensation Committee shall be appointed from the Outside Directors.
9. 9.Outside Directors who are members of the Audit Committee shall be appointed from those with expertise in finance, accounting, legal affairs, management, etc. Internal Directors shall be appointed from those with abundant experience within the Company.
10. 10.In order to ensure the independence of auditing, members of the Audit Committee shall not concurrently be members of the Nominating Committee or Compensation Committee.
11. 11.A Secretariat of the Board of Directors shall be established to act as the Secretariat of the Board of Directors, the Nominating Committee and the Compensation Committee. A Management Audit Department shall be established to act as the secretariat of the Audit Committee.
Article 13 (Duties of the Board of Directors)
1. 1.The Board of Directors shall aim for the realization of the Corporate Philosophy through the construction of good corporate governance. The Board of Directors shall fulfill oversight function and conduct the best decision-making through fair judgment.
2. 2.The Board of Directors shall determine the material matters required by law, the Articles of Incorporation and the Rules of the Board of Directors, including basic management policies and the appointment of Executive Officers.
3. 3.In order to accelerate speed and increase flexibility of business execution and to enhance the vitality of management, the Board of Directors shall, except for the items provided in the preceding clause, delegate the decision-making function on business conduct to the Executive Officers.
4. 4.The Board of Directors shall oversee the execution of duties by the Directors and Executive Officers on the basis of reports from the Nominating Committee, Audit Committee, the Compensation Committee and the Executive Officers.
5. 5.The Board of Directors will endeavor the realization of the Corporate Philosophy, the corporate value and the long-term enhancement of the common interests of the shareholders, and shall have the duty to make fair decisions and take actions on such conduct that may possibly damage such goals.
6. 6.In order for the Representative Executive Officer & President to be elected by the Board of Directors, all Directors shall share information related to the plan to develop the future Representative Executive Officer & President.
7. 7.The Board of Directors, together with the Nominating, Audit and Compensation Committees, shall execute their duties with consideration of each of their respective authority and without violating each other, and they shall have communication.
8. 8.The Board of Directors and Executive Officers shall fulfill their responsibilities, and have communication.
Article 14 (Chair of the Board of Directors)
1. 1.The Chair of the Board of Directors shall not concurrently be an Executive Officer. She/He shall be appointed from the Outside Directors.
2. 2.The Chair of the Board of Directors shall select agenda and provide to the Directors the necessary information to consider them in advance of the Board of Directors Meetings.
3. 3.The Chair of the Board of Directors shall enhance the quality of the discussions among the Board of Directors and manage the meeting effectively and efficiently.
Article 15 (Directors)
1. 1.The term of office of Directors shall be one (1) year. Directors shall be elected every year at the Shareholders Meeting.
2. 2.Directors shall assume the duty of care and the duty of loyalty.
3. 3.Directors shall request explanations at the meeting of the Board of Directors, express their opinions mutually and proactively, conduct discussions, and exercise their voting rights, as well as collect sufficient information to execute their duties.
4. 4.Directors shall deal with the management issues known about the Company. This shall be carried out through the timely and appropriate execution of the right to propose agenda to the Board of Directors and the right to convene a meeting of the Board of Directors.
5. 5.Directors shall execute their duties by demonstrating the expected ability and spending a sufficient time in responding to the confidence conferred by all shareholders.
Article 16 (Outside Directors)
1. 1.Outside Directors shall be personally and financially independent from the Company.
2. 2.Outside Directors shall satisfy not only the requirements of the Companies Law but also “the requirements of independence and neutrality of the Outside Directors” provided by the Nominating Committee.
3. 3.Outside Directors shall take the initiative to increase the fairness of the decisions and actions of the Board of Directors and each Committee and to realize good corporate governance.
4. 4.Outside Directors shall continually be provided with information, such as that related to the Company's Corporate Philosophy, corporate culture and managerial environment, through the Secretariat of the Board of Directors.
5. 5.Outside Directors shall hold a meeting solely composed of Outside Directors every year and freely discuss matters related to the Company's corporate governance and business.
Article 17 (Nominating Committee)
1. 1.The Nominating Committee shall determine the content of proposals of Shareholder Meetings related to the nomination and dismissal of Directors.
2. 2.The Nominating Committee shall provide for “the requirements of independence and neutrality of the Outside Directors” in order to appoint the Outside Directors who are independent.
3. 3.The Nominating Committee shall establish the basic policies, rules, procedures, etc., necessary for the execution of its duties.
Article 18 (Audit Committee)
1. 1.The Audit Committee shall audit the execution of the Directors' and Executive Officers' duties, determine the content of proposals related to the election, dismissal and non-reappointment of Accounting Auditors to be submitted to Shareholder Meetings, and conduct accounting audits and other matters required by laws and regulations.
2. 2.The Audit Committee shall endeavor to realize efficient and higher quality of auditing, along with receiving timely and appropriate reports from Directors, Executive Officers, employees and the Accounting Auditor related to necessary items for auditing of the execution of their duties and cooperating with the Accounting Auditor and internal audit department.
3. 3.The Audit Committee shall establish the basic policies, rules, procedures, etc., necessary for the execution of its duties.
4. 4.The independence of the Management Audit Department, which executes duties based on the resolutions of the Audit Committee and the instructions of the members of the Audit Committee, from the Executive Officers regarding work instructions and orders, personnel evaluations, etc., shall be secured in order to ensure the objectivity of audits.
Article 19 (Compensation Committee)
1. 1.The Compensation Committee shall determine the policies related to the determination of the content of the compensation of Directors and Executive Officers and the content of their individual compensation.
2. 2.Upon deciding the compensation of the Directors and Executive Officers, the Compensation Committee shall utilize external research or data proactively in order to ensure the objectivity, examine the validity of the decision-making process and determine it.
3. 3.The Compensation Committee shall establish the basic policies, rules, procedures, etc., necessary for the execution of its duties.
Article 20 (Compensation of Directors and Executive Officers)
1. 1.The compensation of Directors and Executive Officers shall, in accordance with the preceding Article, be appropriately decided with fairness and transparency by the Compensation Committee.
2. 2.The compensation of Executive Officers, which is a separate system from the compensation of Directors who perform the duty of supervising the management, shall be strongly motivates them as Executive Officers and taken their performance into consideration.
3. 3.Compensation of Directors shall be commensurate to sufficient performance of their management oversight function.
Article 21 (Representative Executive Officer & President)
1. 1.The Representative Executive Officer & President is the Chief Executive Officer (CEO) who shall hold powers delegated by the Board of Directors in relation to the business conduct. She/He shall make decisions for the best execution of business towards the realization of the Company's Corporate Philosophy, enhancement of corporate value, and the long-term increase of the common interests of the shareholders, and shall implement such corporate measures.
2. 2.The Representative Executive Officer & President shall provide sufficient explanation to the Board of Directors regarding the business conduct. She/He shall concurrently be a Director for this purpose.
3. 3.The Representative Executive Officer & President shall establish an internal control system, including a legal compliance system and risk management, and continually strive towards its improvement as well as evaluate its effectiveness.
4. 4.The Representative Executive Officer & President shall timely and appropriately provide to the Audit Committee sufficient information that is conducive to the work of the Audit Committee.
Article 22 (Executive Officers)
1. 1.The term of office of Executive Officers shall be one (1) year. The Representative Executive Officer & President shall nominate the candidates every year, and the Executive Officers shall be appointed by the Board of Directors.
2. 2.Executive Officers shall assume the duty of care and the duty of loyalty.
3. 3.Executive Officers shall fulfill the important responsibility of business conduct to realize the Corporate Philosophy, enhance corporate value and increase the common interest of shareholders in the long-term. They shall undertake the authority delegated from the Representative Executive Officer & President to make decisions on the specific matters within their duties and areas of which they are in charge, orient themselves towards the fulfillment of their goals responsibly and execute the business, and develop excellent human resources who will be responsible for the management of the Company in the future.
4. 4.The number of Executive Officers shall be appropriate to enable the most effective and efficient performance of their function which have been entrusted with decision-making of the business conduct from the Board of Directors.
Article 23 (Internal Control)
1. 1.The fulfillment of internal control of the whole Company group is an important element in obtaining the trust of shareholders. Based on the Companies Act, the Board of Directors shall determine “the rules related to the necessary items for the execution of the Audit Committee's duties” and “the rules related to the maintenance of a system to ensure that the execution of the duties of the Executive Officers conforms to the laws and the Articles of Incorporation and a system necessary to ensure the appropriateness of other business”.
2. 2.Based on the resolutions of the Board of Directors related to internal control, the Executive Officers shall maintain a system necessary for compliance with laws and ethics, the efficacy and efficiency of business and the reliability of financial reports, and make such a system effectively work.
Article 24 (Accounting Auditors)
1. 1.The Accounting Auditors shall ensure the reliability of financial statements and they have an important role in realizing the better corporate governance.
2. 2.The independence of the Accounting Auditors from the Company shall be ensured.
3. 3.The Accounting Auditors shall conduct systematic management for the quality control of auditing.
4. 4.The Audit Committee shall confirm ensuring of the Accounting Auditors' independence, and the systematic management for the quality control of auditing.
Article 25 (Exceptional Measures)

In case it is necessary to make exemptions to these Guidelines, the Board of Directors shall clarify the reason for the exemption, and make it clear that the purport of these Guidelines was taken into account and that reasonable measures were taken.
Article 26 (Self-Review)

Every year, the Board of Directors shall conduct a self-review that the execution of duties by the Board of Directors is being applied in accordance with these Guidelines, and increase the effectiveness of the corporate governance.
Article 27 (Revisions)

These Guidelines may be revised only by resolution of the Board of Directors.

Supplementary Provisions

Article 1 (Enforcement)

These Guidelines have been in force since October 29, 2004 in lieu of the Corporate Governance Regulations which were established by the Company on March 23, 2001. The revision history of these Guidelines is as follows:

- March 23, 2001: Established (Corporate Governance Regulations)
- September 21, 2001: Revision made
- April 25, 2002: Revision made
- June 27, 2002: Revision made
- June 24, 2003: Revision made
- May 11, 2004: Revision made
- October 29, 2004: Revision made (Corporate Governance Guidelines)
- July 29, 2005: Revision made
- April 26, 2007: Revision made
- February 27, 2012: Revision made

(End of document)

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