To expedite business operations and clarify executive responsibilities, Chugai has adopted an executive officer system to keep decision-making on management issues of primary importance separate from business execution. The Board of Directors is in charge of the former, while executive officers are entrusted by the board with the authority to conduct the latter. While the Board of Directors is in charge of decision-making with respect to the most important managerial matters, other decisions on business operations are made at organizations such as the Executive Committee. The Chief Executive Officer (CEO) has ultimate responsibility for making decisions on Company-wide management strategies and important matters concerning business execution

Board of Directors

The Board of Directors makes decisions on management issues of primary importance and receives quarterly reports on the state of business execution as well as reports on key decisions made at the Executive Committee. It is also responsible for oversight of the execution of business operations. The Board consists of nine directors including three independent outside directors. In 2022, the Board of Directors convened 10 times.

Executive Committee

The Executive Committee makes decisions on Company-wide management strategy and important matters concerning business execution. It consists of executive directors, including the CEO, and key executive officers. In addition, the Corporate Communications Committee, Risk Management Committee, Compliance Committee and EHS Committee^* have been established under the Executive Committee.

• * Environment, Health and Safety Committee. Promotes EHS activities for the Chugai Group.

Appointment Committee, Compensation Committee, and Special Committee

As an advisory body to the Board of Directors, the Appointment Committee deliberates on the selection of Director candidates, succession plan for Executive Directors, including CEO, and dismissal of Directors. The Appointment Committee consists of one internal committee member and three or more outside committee members, including at least one Independent Outside Director. The Board of Directors appoints the internal committee member from Representative Directors and / or persons with past experience as such Representative Directors, and outside committee members from Non-Executive Directors including Independent Outside Directors, and /or persons with past experience as such Non-Executive Directors.

As an advisory body to the Board of Directors, the Compensation Committee deliberates on remuneration policy and the remuneration of individual directors. It consists of three or more outside committee members, including at least one Independent Outside Director, and the outside committee members are appointed by the Board of Directors from Non-Executive Directors including Independent Outside Directors, and / or persons with past experience as such Non-Executive Directors.

The special committee, as an advisory board to the Board of Directors, deliberates and reviews significant transactions and conducts, etc. that may generate a conflict of interests between the parent company Roche Group and minority shareholders.

The Special Committee consists of only three or more Independent Directors or Audit & Supervisory Board Members including one Independent Outside Director who is also serving as an outside committee member of the Compensation Committee.

Roche, the parent company of Chugai, holds 59.89 percent of Chugai’s outstanding shares based on the strategic alliance agreement between the two companies. Roche and Chugai have agreed to cooperate in maintaining the listing of Chugai’s common stock on the Prime Market of the Tokyo Stock Exchange.

The aim of this alliance is to establish a new business model that differs from conventional corporate acquisitions and joint ventures. Although Roche Holding Ltd. includes Chugai in its consolidated accounts, Chugai functions as an independent listed company and makes all of its own management decisions based on the principle of self-governance. Chugai believes that autonomy and diversity are key to generating innovation, that maintaining its independent management brings diversity to the Roche Group, and that the pharmaceuticals it creates as a result contribute to all stakeholders, including patients and minority shareholders. Chugai recognizes that the various benefits from being listed on the Prime Market of the Tokyo Stock Exchange – such as its solid credit rating, flexible fund procurement, name recognition and social presence – are supported by the understanding of minority shareholders, Roche and investors who are potential shareholders. That is why in its business dealings with the Roche Group, Chugai conducts all transactions fairly using third-party prices to protect the interests of minority shareholders.

As of April 1, 2023, two of Chugai’s nine directors are from the Roche Group. However, they do not comprise a majority of the Board of Directors, and thus Chugai considers its management independence to be secure. Chugai will continue to manage its business with autonomy and independence as a publicly listed company.

Chugai believes that securing substantially equal treatment of shareholders is very important. We therefore emphasize giving due consideration to minority and foreign shareholders and to maintaining an environment that allows them to exercise their rights.