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[Translation for Reference and Convenience Purposes Only]

CORPORATE GOVERNANCE REPORT

UNICHARM CORPORATION

Last Update: June 5, 2017

Unicharm Corporation

Takahisa Takahara

President & CEO

Contact: Atsushi Iwata

Senior Executive Officer, General Manager of Accounting Control and Finance Division

+81-3-3451-5111

Securities Code: 8113

http://www.unicharm.co.jp/english

The corporate governance of Unicharm Corporation (hereinafter “Unicharm” or the “Company”) is

described below.

I Basic Views on Corporate Governance, and Basic Information on Capital Structure, Corporate Attributes, and Other Matters

1. Basic Views

The Unicharm Group strives to pursue proper corporate management faithful to the Unicharm Ideals, in order to

achieve sustainable growth and creation of corporate value over the medium to long term through business

activities implemented by management and executive divisions in an integrated manner as well as appropriate

collaboration with stakeholders with the aim of becoming an enterprise evaluated and trusted by society.

The Company introduced the Executive Officer System in 1999 in order to separate management oversight from

operational execution. In May 2015, the Company adopted a “company with audit and supervisory committee”

structure to meet expectations of stakeholders worldwide from a global perspective by strengthening oversight of

the executive functions of the Board of Directors and increasing transparency and efficiency of processes through

involvement of outside directors in management.

Under this management structure, independent Audit and Supervisory Committee members have voting rights at

meetings of the Board of Directors, and the Audit and Supervisory Committee performs audits by proactively

utilizing the internal control system. This will enable the Company not only to comply with the laws and

regulations, but also to strengthen audit and supervisory functions of management monitored by the outside

directors with aims to maintain appropriate collaborative relationships with stakeholders, and to foster

organizational culture and climate that respects healthy and ethical business practices, which is the Company’s

basic policy in order to realize corporate activities that strike a balance between growth and discipline as a global

enterprise.

Reasons for Non-implementation of the Principles of the Corporate Governance Code

[Supplementary Principle 2-5-1: Establishment of a Framework for Whistleblowing]

The Company has established the Compliance Hotline and the Ring-ring employee hotline, which are contacts

for whistleblowing in the event that an employee notices any fact that caused or may cause significant damage

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to the Company, such as behavior that violates laws and regulations. In the event that an employee detects

such a fact, he or she has a duty to immediately report it.

The Corporate Ethics Office, which is responsible for the Compliance Hotline and the Ring-ring employee

hotline, periodically reports the status of whistleblowing to the Board of Directors via the Corporate Ethics

Committee while taking into account the anonymity of whistleblowers.

The Company does not have a point of contact that is independent of the management based on the view that

it would be more appropriate to conduct initial screening of collected information in house prior to

investigation and assessment of facts concerning the reported information and suspicions.

Disclosure Based on the Principles of the Corporate Governance Code [Principle 1-4: Cross-Shareholdings]

The Company may hold shares of other companies with which the Company has transactions for the purpose

of maintaining and strengthening the relationships. In such case, the Company shall judge whether it should

invest or not based on whether such investment would contribute to an increase in corporate value of the

Company, taking into consideration dividends, benefits that can be obtained through maintaining and

strengthening the relationships, risks, capital cost, and other factors.

The Board of Directors shall examine the mid- to long-term economic rationale and future outlook of major

cross-shareholdings on an annual basis, taking into consideration both associated risks and returns.

With respect to exercise of voting rights, the Company shall exercise voting rights appropriately by carefully

examining proposals and judging whether they contribute to improvement of shareholder value. The Company

shall not vote for any proposals that may damage shareholder value, regardless of whether they are proposed

by the companies or their shareholders.

[Principle 1-7: Related Party Transactions]

When the Company engages in transactions (including indirect transactions) with its directors (including Audit

and Supervisory Committee members) or their close relatives, the Company shall secure approval of the Board

of Directors in advance.

Regarding inter-Group transactions, in the case of a material transaction, the Company shall make a decision

based on thorough deliberation by the Board of Directors including several independent outside directors in

addition to prior legal check of the appropriateness of the transaction conditions and the method of their

determination.

[Principle 3-1: Full Disclosure]

i) Company objectives (e.g., management principles), business strategies and business plans

The Group has established a corporate philosophy, which is disclosed. For details, please refer to the

Company’s website.

http://www.unicharm.co.jp/english/about/corporate-philosophy/index.html

The Company’s Medium-Term Management Plan is disclosed in the Integrated Report. For details, please

refer to the Company’s website.

http://www.unicharm.co.jp/english/ir/report/highlight/index.html

ii) The Group’s basic views and guidelines on corporate governance

The Company’s basic views and guidelines on corporate governance are described in “1. Basic Views” of “I.

Basic Views on Corporate Governance, and Basic Information on Capital Structure, Corporate Attributes, and

Other Matters” above.

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iii) Policies and procedures of the Compensation Committee in determining the remuneration of directors and

executive officers

■Policies

The remuneration of the Company’s executive directors shall be determined to be a level suitable for their

roles and responsibilities, taking into consideration motivation for improving the financial performance and

enhancing corporate value and securing of excellent human resources.

■Procedures

The remuneration of directors and executive officers shall be deliberated and determined by the Compensation

Committee consisting of the President & CEO, outside directors, and other non-executive directors. The

Compensation Committee shall also deliberate on and determine the policy for the remuneration of directors

and executive officers, as necessary.

iv) Policies and procedures of the Board of Directors for the appointment of executive officers and the nomination

of director candidates

■Policies

Regardless of whether they are internal or outside, the Company shall select directors from among people who

are of excellent character and have expertise in marketing, sales, development, etc. and are capable of fulfilling

the duty of due care of a prudent manager and the duty of loyalty. For directors, emphasis shall be placed on

abilities to contribute to the Company’s sustainable growth and enhancement of corporate value. For outside

directors, particular emphasis shall be placed on knowledge and experience of corporate management.

The Company shall select executive officers from among people who are of excellent character and are well

versed in the Group’s business. For executive officers, emphasis shall be placed on abilities to appropriately

execute the Group’s business by practicing Our Five Great Pillars and employee conduct policy.

Decisions on reappointment and non-reappointment of directors and executive officers shall be made, taking

into consideration performance evaluation.

■Procedures

Nomination and appointment of directors and executive officers shall be determined by the Board of Directors,

reflecting the opinion of the Nomination Committee consisting of the President & CEO, outside directors, and

other non-executive directors.

The Nomination Committee shall also deliberate on the policy on nomination and appointment of directors

and executive officers, as necessary.

Regarding candidates for director who will serve as Audit and Supervisory Committee members, the

Nomination Committee shall prepare a draft through deliberation based on the policy of the Audit and

Supervisory Committee and the Board of Directors makes a decision, securing prior consent of the Audit and

Supervisory Committee.

v) Explanations with respect to the individual appointments of executive management and the individual

nominations of directors and auditor candidates based on iv).

When proposing candidates for director (including a director serving as an Audit and Supervisory Committee

member) to a General Meeting of Shareholders, the Company shall explain the reasons for nomination of such

candidates in the notice of convocation of the General Meeting of Shareholders.

[Supplementary Principle 4-1-1: Scope and Content of the Matters Delegated to the Management]

The Company emphasizes ensuring transparency of decision-making and does not delegate decision-making

of important business execution to directors.

The Board of Directors shall make decisions on important business execution and other matters requiring

resolution by the Board of Directors in accordance with the Rules of the Board of Directors and the Decision-

making Rules.

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Responsibilities of executive officers and the division of roles between the Company’s executive officers and

managers of Group companies in Japan and abroad are also clearly defined by the resolutions of the Board of

Directors and in accordance with the internal rules.

[Principle 4-9: Standards for Independence and Qualification of Independent Directors]

Regarding standards for independence of independent directors, the Company has established the Standards

for Appointment of Independent Directors. For details, please refer to the Company’s website.

http://www.unicharm.co.jp/company/about/corporate-governance/index.html (Japanese only)

The Company has appointed two independent outside directors who have sufficient capabilities to fulfill their

roles and responsibilities in order to contribute to the Company’s sustainable growth and enhancement of

corporate value over the medium- to long-term.

Going forward, the Company strives to select persons who are likely to contribute to frank, vigorous, and

constructive discussion at the Board of Directors meetings as candidates for independent outside directors.

[Supplementary Principle 4-11-1: View on the Balance Between Knowledge, Experience and Skills of the Board

of Directors as a Whole, and also on Diversity and Size of the Board of Directors]

In terms of its composition, the Board of Directors shall be well balanced with respect to knowledge,

experience, and capabilities to effectively fulfill its roles and responsibilities, and it shall be constituted in

such a manner as to accommodate diversity while keeping an appropriate size. At least one person with

appropriate knowledge of finance and accounting shall be appointed to serve as an Audit and Supervisory

Committee member.

For policies and procedures for appointment of directors, please refer to Principle 3-1 (iv).

[Supplementary Principle 4-11-2: Securing Time and Effort of Directors]

Pursuant to the Company’s Board of Directors Regulations, approval of the Board of Directors shall be

required for directors to concurrently serve as directors, auditors or officers at other companies.

If outside directors concurrently serve as directors, auditors or officers at other companies, the number of such

positions shall be limited to a reasonable number so that they can secure sufficient time and energy to

appropriately fulfill their roles and responsibilities as the Company’s directors.

Concurrent positions shall be disclosed in the Business Report, the Securities Report, and the Corporate

Governance Report each year.

[Supplementary Principle 4-11-3: Analysis and Evaluation of Overall Effectiveness of the Board of Directors]

Each year, the Company shall have all directors perform self-evaluation about the overall effectiveness of the

Board of Directors. Based on the results of self-evaluation, the Board of Directors shall have discussion to

enhance effectiveness of the Board of Directors. The results of analysis and evaluation for fiscal 2016 are

outlined below.

1. The Company’s Board of Directors is functioning effectively. Directors with in-depth understanding of the

Company’s business deliberate on matters in a constructive manner both from specialists’ perspectives and

based on comprehensive judgment of overall management. Views of shareholders learned through IR

activities, etc. are now periodically reported to the Board of Directors as a starting point for deliberation,

making it possible to promote management that listens to the voice of shareholders more than previously.

2. The standards for matters to be discussed by the Board of Directors were revised in terms of monetary value.

As a result, because of appropriate screening of agenda items, it has become possible for the Board of

Directors to spend more time on discussion of each item, including risk analysis. Going forward, the

standards for matters to be discussed by the Board of Directors should be revised also from a qualitative

perspective and initiatives to optimize selection of agenda items should be promoted, such as inclusion of

matters suitable for deliberation by the Board of Directors in the agenda regardless of the formal standards.

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3. The format of information materials for the Board of Directors has been improved and the information

materials are now distributed earlier than in the case of the previous arrangement. As a result, directors are

sufficiently informed and understand the content of the agenda, and thus effective discussion at meetings

of the Board of Directors is facilitated. Efforts should be continued to clarify key points so that deliberation

can focus on important issues.

4. In order to further strengthen the Board of Directors’ oversight functions, it is desirable to emphasize

experience in corporate management in nomination of candidates for outside directors. Consideration

should continue about the overall composition of the Board of Directors, successors to internal directors

and outside directors, and other issues.

[Supplementary Principle 4-14-2: Training Policy for Directors and Audit and Supervisory Board Members]

When directors including outside directors newly assume their positions, the Company shall provide them

with opportunities to acquire necessary knowledge about the Company’s business, finance, organizations, etc.

and sufficient understanding of roles and responsibilities (including legal responsibilities) of directors. The

Company shall hold workshops for directors and executive officers during their terms of office. The Company

shall also encourage them to vigorously participate in external seminars.

[Principle 5-1, Supplementary Principle 5-1-2: Policy for Constructive Dialogue with Shareholders]

The Company shall positively and to the extent reasonable, respond to the requests from shareholders to

engage in dialogue (management meetings) so as to support sustainable growth and increase corporate value

over the mid- to long-term. The Board of Directors shall establish and approve policies concerning the

measures and organizational structures aimed at promoting constructive dialogue with shareholders.

■Policies

i) Appointing an executive officer who is responsible for overseeing and ensuring that constructive dialogue

takes place

The executive officer who is responsible for overseeing and ensuring that constructive dialogue takes place

shall be the executive officer responsible for the Accounting Control and Finance Division.

ii) Measures to ensure organic coordination between internal departments such as investor relations, corporate

planning, general affairs, corporate finance, accounting and legal affairs

The IR department, the PR department, and the general affairs department shall periodically hold meetings

about disclosure and briefing on financial closing and other matters. The corporate planning department, the

accounting and finance department, the legal affairs department, and other departments shall participate in the

meetings, as necessary, to ensure organic coordination.

iii) Measures to promote opportunities for dialogue aside from individual meetings

The Company shall implement measures to enable shareholders to deepen their understanding of the

Company’s management strategies and business environment, such as holding of investor meetings and

meetings for presentation of the financial results and disclosure on the website, apart from individual meetings.

iv) Measures to appropriately and effectively relay shareholder views

At a meeting following the announcement of financial results, the Board of Directors shall share views

expressed by shareholders and analysts and vigorously reflect them in reviewing the Company’s management

strategies. The Company shall include a questionnaire survey in the Business Report and relay the responses

received to the Board of Directors.

v) Measures to control insider information

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In principle, the Company prohibits communication of insider information to shareholders. If insider

information is communicated to shareholders, permission of the insider information control manager or a

person in charge of insider information control shall be obtained as well as consent of such shareholders.

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2. Capital Structure

Foreign Shareholding Ratio 30% or more

[Status of Major Shareholders]

Name / Company Name Number of Shares Owned (Shares)

Percentage (%)

Unitec Corporation 154,956,780 24.96

State Street London Care of State Street Bank and Trust,

Boston SSBTC Account UK London Branch Clients -

United Kingdom (Standing proxy: The Hongkong and

Shanghai Banking Corporation Tokyo Branch)

35,704,485 5.75

Takahara Fund Ltd. 28,080,000 4.52

JP Morgan Chase Bank (Standing proxy: Mizuho Bank,

Ltd. Settlement Sales Department) 23,066,061 3.72

The Master Trust Bank of Japan, Ltd. (Trust account) 17,923,600 2.89

The Master Trust Bank of Japan, Ltd. (Retirement Benefit

Trust Account/Hiroshima Bank Account) 17,287,200 2.78

The Iyo Bank, Ltd. (Standing proxy: Trust & Custody

Services Bank, Ltd.) 15,299,856 2.46

Nippon Life Insurance Company 12,188,718 1.96

Japan Trustee Services Bank, Ltd. (Trust account) 11,135,900 1.79

GIC Private Limited-C (Standing proxy: The Bank of

Tokyo-Mitsubishi UFJ, Ltd.) 10,717,100 1.73

Supplementary Explanation

—

Controlling Shareholders (excluding Parent

Company) —

Parent Company None

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3. Corporate Attributes

Listed Stock Exchange and Market Section Tokyo Stock Exchange, First Section

Fiscal Year-End December

Type of Business Chemical

Number of Employees (consolidated) as of

the End of the Previous Fiscal Year 1,000 or more

Net Sales (consolidated) as of the End of

the Previous Fiscal Year ¥100 billion to less than ¥1 trillion

Number of Consolidated Subsidiaries as of

the End of the Previous Fiscal Year 10 to less than 50

4. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling

Shareholders

—

5. Other Special Circumstances Which May Have Material Impact on Corporate Governance

—

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II Business Management Organization and Other Corporate Governance Systems Regarding Decision-making, Execution of Business, and Supervision of Management

1. Organizational Composition and Operation

Organizational Form Company with Audit and Supervisory Committee

[Directors]

Maximum Number of Directors Stipulated

in the Articles of Incorporation 18

Terms of Office of Directors Stipulated in

the Articles of Incorporation 1 year

Chairperson of the Board of Directors President & CEO

Number of Directors 11

Appointment of Outside Directors Appointed

Number of Outside Directors 2

Number of Independent Directors 2

Relationship with the Company (1)

Name Attribute Relationship with the Company (*)

a b c d e f g h i j k

Kimisuke Fujimoto From other company

Takashi Mitachi From other company

* Categories for “Relationship with the Company”

* “” When the category currently applies to or recently applied to the person

“” When the category applied to the person in the past

* “” When the category currently applies to or recently applied to a close relative of the person

“” When the category applied to a close relative of the person in the past

a. Executive of the Company or its subsidiaries

b. Executive director or non-executive of a parent company of the Company

c. Executive of a fellow subsidiary company of the Company

d. A party whose major client or supplier is the Company or an executive thereof e. Major client or supplier of the Company or an executive thereof

f. Consultant, accountant or legal professional who receives a large amount of monetary consideration or other

property from the Company besides compensation as a director

g. Major shareholder of the Company (or an executive of said major shareholder if the shareholder is a legal

entity)

h. Executive of a client or supplier company of the Company (which does not correspond to any of d, e, or f)

(the director himself/herself only)

i. Executive of a company, between which the Company’s outside directors/Audit and Supervisory Committee

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members are mutually appointed (the director himself/herself only)

j. Executive of a company or organization that receives a donation from the Company (the director

himself/herself only)

k. Others

Relationship with the Company (2)

Name

Audit and

Supervisory

Committee

Member

Designation

as

Independent

Director

Supplementary Explanation

of the Relationship

Reasons for Appointment

Kimisuke

Fujimoto

○ ○ —

Mr. Kimisuke Fujimoto

served as Managing Director

of The Sanwa Bank, Ltd.

(current The Bank of

Tokyo-Mitsubishi UFJ,

Ltd.), President of

Mitsubishi UFJ Securities

Co., Ltd. (current Mitsubishi

UFJ Securities Holdings

Co., Ltd. and Mitsubishi

UFJ Morgan Stanley

Securities Co., Ltd.),

Advisor to the Board of

Mitsubishi UFJ Securities

Co., Ltd., and Auditor of

Mitsubishi UFJ NICOS Co.,

Ltd.

Although Mr. Fujimoto, an

outside Audit and

Supervisory Committee

member of the Company,

served as an executive

officer of The Bank of

Tokyo-Mitsubishi UFJ, Ltd.

(then The Sanwa Bank,

Ltd.), which is a principal

lender to the Company, over

10 years have passed since

his retirement from the said

bank and his independence

from the said bank is high.

Moreover, the Company’s

borrowing from the said

bank accounts for 45.7% of

the Company’s total

borrowings and appropriate

competition against other

financial institutions is

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Name

Audit and

Supervisory

Committee

Member

Designation

as

Independent

Director

Supplementary Explanation

of the Relationship

Reasons for Appointment

maintained for execution of

transactions. Thus, the

Company judges that the

existence of the said director

has no adverse impact on the

Company’s governance

structure and he is unlikely

to have a conflict of interest

with general shareholders.

Therefore, the Company has

designated Mr. Fujimoto as

an independent director.

Takashi Mitachi ○ ○ Senior Partner & Managing

Director of the Boston

Consulting Group

Outside Director of

Rakuten, Inc.

External Director of Lotte

Holdings Co., Ltd.

External Director of DMG

MORI CO., LTD.

Although Mr. Takashi

Mitachi is engaged in the

business of the Boston

Consulting Group, he is not

involved in its project with

the Company. Moreover, the

amount of consulting fees

paid to the Boston

Consulting Group by the

Unicharm Group accounted

for under 0.1% of

consolidated net sales in the

past three fiscal years. Thus,

the Company judges that he

is unlikely to have a conflict

of interest with general

shareholders and has

designated Mr. Mitachi as

an independent director.

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[Audit and Supervisory Committee]

Composition of the Committee and Attributes of the Chairman

Total Number

of Committee

Members

Number of

Full-time

Committee

Members

Number of

Internal

Directors

Number of

Outside

Directors

Committee

Chairman

Audit and

Supervisory

Committee

3 1 1 2 Outside director

Appointment of Directors and

Employees Who Assist the Audit

and Supervisory Committee with

its Duties

Appointed

Matters relating to the Independence of Such Directors and Employees from Executive Directors

The Company has appointed one full-time Audit and Supervisory Committee member and has established the Audit

and Supervisory Committee Office to assist the Audit and Supervisory Committee with its duties to which one

employee is assigned to concurrently serve as a support staff. In order to ensure independence of such director and

employee, any decision on matters concerning personnel affairs, including appointment, transfer, and punishment,

requires the prior consent of the Audit and Supervisory Committee.

Cooperation between Audit and Supervisory Committee, Accounting Auditor, and Internal Audit

Department

The Audit and Supervisory Committee works closely with the Accounting Auditor (PricewaterhouseCoopers

Aarata LLC) to inspect execution of operations and assets at the head office, main business sites, and subsidiaries,

and requests them to report on the statuses. In order to improve the reliability of financial statements, the Audit and

Supervisory Committee and the Accounting Auditor hold periodic quarterly meetings and additional meetings as

needed. At these meetings, they share information about their respective audit plans and audit results to increase

the effectiveness and efficiency of audits.

The Audit and Supervisory Committee and the internal audit department hold monthly Internal Audit Report

Meetings. At these meetings, the Audit and Supervisory Committee receives reports on the results of internal audits

of executive business divisions, examines the appropriateness of the internal control system from comprehensive

and objective perspectives. It also provides recommendations for improvement concerning issues identified,

recommendations for remediation, and follow-ups.

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[Voluntarily Establishment of Committees]

Voluntary Establishment of Committees equivalent

to Nomination Committee or Compensation

Committee

Established

Voluntary Establishment of Committees, Composition of the Committee and Attributes of the Chairman

Committee’s

Name

Total

Number of

Committee

Members

Number of

Full-Time

Committee

Members

Number of

Internal

Directors

Number of

Outside

Directors

Number of

External

Experts

Number of

Others

Committee

Chairman

Committees

equivalent to

Nomination Committee

Nomination

Committee

4 0 2 2 0 0 Internal

director

Committees

equivalent to Compensation

Committee

Compensation

Committee

4 0 2 2 0 0 Internal

director

Supplementary Explanation

Please refer to [Principle 3-1 (iv)] for procedures for nomination of candidates for director and appointment of

executive officers and [Principle 3-1 (iii)] for procedures for determining the compensation of directors and

executive officers.

[Independent Directors]

Number of Independent Directors 2

Matters relating to Independent Directors

The Company has appointed all outside directors as independent directors, insofar as they meet the qualification

thereof.

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[Incentives]

Incentive Policies for Directors Introduction of the Stock Option System

Supplementary Explanation

The Company considers that the results of management are reflected in change in the Company’s market

capitalization and have a direct impact on shareholders’ benefits. Based on this, the Company grants subscription

rights to shares as stock options to directors of the Company who do not serve as Audit and Supervisory

Committee members, employees of the Company, and employees of wholly owned subsidiaries in Japan

according to their positions and responsibilities within the limit approved by the General Meeting of Shareholders

with conditions such that their rights will expire if the predetermined target stock price conditions are not met

within a certain period of time.

Grantees of Stock Options Internal Directors, Employees, Employees of

Subsidiaries

Supplementary Explanation

The stock option program allows directors of the Company who do not serve as Audit and Supervisory Committee

members, employees of the Company, and employees of wholly owned subsidiaries in Japan to enjoy benefits

linked with benefits of shareholders and other stakeholders when the target corporate value (market capitalization)

is reached through realization of Unicharm Ideals. The Company grants stock options with the aim of enhancing

motivation of every individual involved in the Company’s business activities, cultivating a sense of unity based

on shared recognition that achieving plans leads to an increase in the value of the Company as a whole, further

increasing the probability of success.

[Director’s Compensation]

Disclosure of Individual Directors’ Compensation Selected Directors

Supplementary Explanation

Information on directors who receive compensation totaling ¥100 million or more is disclosed in the Company’s

Securities Report.

The Securities Report and the Business Report are posted on the Company’s website.

Policy on Determining Compensation Amounts and

Calculation Methods Established

Disclosure of Policy on Determining Compensation Amounts and Calculation Methods

Please refer to [Principle 3-1 (iii)] for policies for determining the compensation of directors and executive

officers.

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[System for Supporting Outside Directors]

Support staff assigned to the Audit and Supervisory Committee Office, which has been established to assist the

Audit and Supervisory Committee assist two outside directors who serve as Audit and Supervisory Committee

members. Also, a secretary has been assigned to each of them and a framework for communication of information

is put in place, including holding of periodic meetings with directors and executive employees, distribution of

materials concerning monthly meetings of the Board of Directors in advance, and holding of meetings with

relevant organizations in the case that prior briefing is required.

2. Matters on Functions of Business Execution, Auditing and Oversight, Nomination, and Determination of Compensation (Overview of Current Corporate Governance System)

● The Company operates as a Company with Audit and Supervisory Committee. The current management

structure comprises eight directors, 23 executive officers (including seven concurrently appointed as directors)

and three Audit and Supervisory Committee members (including two outside directors).

● The term of directors who are not Audit and Supervisory Committee members is one year to enhance

management responsiveness and flexibility. The term of directors who are Audit and Supervisory Committee

members is two years.

● The Company’s business execution structure is headed by the Company’s President & CEO. Executive

officers are appointed annually to lead each executive business division.

● Business plans are deliberated at meetings of the Business Plan Advisory Board, which are attended by all

directors, in order to strengthen the Board of Directors’ oversight of business execution.

The Company has established the Business Execution Council to reinforce business execution in accordance

with the determined business plans. The Business Execution Council, which is chaired by the Company’s

President & CEO, meets each month. At council meetings, the executive officers and related executive

business divisions seek to effectively and promptly resolve key issues raised by the chairman each month in

light of the status of operations of the Company. Directors who are Audit and Supervisory Committee

members also attend meetings of the Business Execution Council to evaluate operating efficiency of executive

business divisions and effectiveness of internal controls, as necessary.

● The Company has established the Management Audit Department as its internal audit department. The

Management Audit Department, in cooperation with the Audit and Supervisory Committee, conducts internal

audits of business divisions and creates internal audit reports in which findings and necessary remedial

measures are described. These reports are submitted to the Company's President & CEO, the Audit and

Supervisory Committee, and the business divisions that have been audited. In the event that issues requiring

remediation and/or deficiencies are identified, remedial measures are formulated and implemented. The

Management Audit Department monitors the outcomes of the remedial measures.

● Regarding “ensuring of corporate ethics,” “quality assurance,” “environmental protection,” “compliance with

pharmaceutical regulations,” and “ensuring of product safety,” which are important issues for the Company’s

business activities, the Corporate Social Responsibility (CSR) Division is spearheading the Company’s efforts

to ensure proper corporate management, which brings together efforts to maximize customer satisfaction and

reinforce business competitiveness and reports the progress and results of the initiatives to the CSR Committee

and the Corporate Ethics Committee. Audit and Supervisory Committee members attend meetings of the CSR

Committee and the Corporate Ethics Committee as full-time members and evaluate effectiveness of internal

controls, as necessary.

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● The Company has contracted with PricewaterhouseCoopers Aarata LLC as its Accounting Auditor. As part

of the accounting audit process, the Accounting Auditor provides advice that leads to improvements in the

operations. There are no special conflicts of interest between the Company and the Accounting Auditor or

between the Company and partners of the Accounting Auditor who are engaged in audits of the Company.

<Certified Public Accountants who conducted audits of the Company>

Hisashi Shirahata, Taisuke Shiino, Yusuke Yaguchi

<Composition of accounting audit support team>

Seven Certified Public Accountants and ten other staff

● The Company receives advice on legal matters from corporate lawyers.

3. Reasons for Adopting the Current Corporate Governance System

In June 1999 the Company introduced the executive officer system to promote separation of the Board of

Directors’ management decision-making and oversight functions and executive officers’ business execution

functions. In light of the recent circumstances where strengthening the corporate governance system is becoming

a social norm, the Company adopted a new governance system, a company with audit and supervisory committee,

on the date of enforcement (May 1, 2015) of the Act for Partial Revision of the Companies Act (Act No. 90 of

June 27, 2014). This governance structure contributes to strengthening the function of the Board of Directors

concerning oversight of business execution and increasing transparency and efficiency of processes through

involvement of outside directors in management and is suitable for striking a balance between growth and

discipline and acceptable to overseas stakeholders.

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III Implementation of Measures for Shareholders and Other Stakeholders

1. Measures to Vitalize the General Meeting of Shareholders and Smooth Exercise of Voting Rights

Supplementary Explanation

Other

The notice of convocation of Ordinary General Meeting of Shareholders

and reference documents for exercise of voting rights are posted on the

Company’s website. The Company is striving to visualize corporate

information for communication to shareholders, such as use of

PowerPoint for presentation of matters to be reported and proposals at the

General Meeting of Shareholders.

The Company is implementing measures to vitalize the General Meeting

of Shareholders and smooth exercise of voting rights, including the

change of the financial closing date to December 31 effective from fiscal

2014, the adoption of a system for exercise of voting rights via the

Internet, and the participation in the electronic voting rights exercise

platform for institutional investors.

2. IR Activities

Supplementary Explanation Presentation by

Representatives

Regular Briefings for Analysts

and Institutional Investors

In order to fulfill accountability and enhance

management transparency, the Company is

emphasizing IR activities in addition to appropriate

disclosure in accordance with laws and regulations.

The Company holds biannual meetings for analysts

and institutional investors in the afternoons of the days

of announcement of financial results for the first six-

month period and financial results for the full year. At

these meetings the President & CEO makes

presentations on management information covering the

financial position, the status of operations, policies and

strategies from now on.

Available

Regular Briefings for Overseas

Investors

The President & CEO visits overseas investors once a

year both in Europe and the Americas. Available

Posting of IR Materials on the

Website

IR information materials, including financial results,

securities reports, presentation materials for investors,

notices of convocation of General Meetings of

Shareholders, and Integrated Reports, are posted on

the Company’s website

(http://www.unicharm.co.jp/english/ir/index.html).

Their English translations are also posted on the

Company’s website.

18

3. Measures to Ensure Due Respect for Stakeholders

Supplementary Explanation

Stipulation of Internal Rules for

Respecting the Position of

Stakeholders

The Company announced “Beliefs and Pledges and Corporate Principles of

Action” and “Five Great Pillars and Associate Principles of Action” in

1999. These clearly state the set of values that associates should share with

the Unicharm Ideals and the code of conduct based on these values. The

Company is striving to instill the five pledges, “Pledge to our customers,”

“Pledge to our shareholders,” “Pledge to business partners,” “Pledge to

associates,” and “Pledge to society” among associates.

Implementation of

Environmental Activities and

CSR Activities, etc.

• The Company has established a framework for environmental

management in accordance with the Environmental Policy and the

Environmental Action Guidelines. The Company’s major business sites

in Japan and overseas are ISO 14001 certified.

• The Company established an organization dedicated to CSR in 2003 and

is executing CSR activities throughout the Group. The Company aims to

become a CSR-minded company that continues to make every effort to

sincerely and stably contribute to society.

• At the Customer Service Center, operators who are qualified consumer

advisers respond to customers and gather information from them. The

Company was commended by the Minister of Economy, Trade and

Industry as an “excellent consumer-oriented corporation” in 2005. In

July 2006, the Company made a declaration of self-conformity to

“ISO10002 Complaint Correspondence Management System.” This

system has been applied to Customer Service Centers at the Company’s

major overseas sites as a Group-wide measure to enhance customer

satisfaction.

• The Company is striving to create employee-friendly workplaces and has

put in place an in-house training program, a mental health program, the

childcare leave system, and other systems that support work-life balance.

The Company’s initiatives to support childcare were highly regarded.

Attesting to the excellence of the Company’s childcare practices, the

Company acquired “Platinum Kurumin” certification in 2015. The

Company established the Work-style Reform Development Office in

2016 and is promoting work-style reforms on the themes of productivity

improvement and greater female participation in the workplace.

• In order to establish fruitful relationships with business partners, the

Company holds annual meetings with them: Policy presentation meeting

for business partners of the sales department and Management policy

meeting for suppliers for business partners of the procurement

department. Moreover, the Company is promoting CSR procurement and

CSR Procurement Guidelines are implemented at major overseas sites.

• The Company holds Dialogues with Stakeholders from the viewpoint of

CSR and reflects views of stakeholders in management.

• In the event of a disaster etc., the Company provides support to the

maximum extent, including provision of goods through administrative

and industry bodies, as part of social contribution activities.

19

Supplementary Explanation

• To ensure fairness and transparency of disclosure of information on

corporate activities, the Company receives third party assurance for

certain disclosure information by an expert organization. Information is

also disclosed on the website so that many stakeholders can have access

to it.

Development of Policies on

Information Provision to

Stakeholders

In the “Beliefs and Pledges and Corporate Principles of Action,” the pledge

to our shareholders” states “We will strive to vigorously disclose

management information and promote reliable corporate management.”

Based on the “Pledge to our shareholders,” the Company is striving to

ensure timely disclosure of accurate information to all the stakeholders,

including shareholders and investors, and to enhance management

transparency by disclosure of a wide range of information.

Other

<Policy and initiatives for enabling female workers to demonstrate their

full potential>

Under the corporate philosophy “NOLA & DOLA: Necessities of Life with

Activities & Dreams of Life with Activities,” Unicharm supports female

workers in the realization of their aspirations through work by reducing the

double burden of managing home and work, and strives to offer

opportunities for individuals to display their capabilities to the maximum

extent.

To foster female workers and enable them to continue to work for the

Company, the Company has introduced various systems for female

workers to meet their needs and circumstances. They include a leave

system for receiving advanced infertility treatment. Maternity leave and

childcare leave systems have been enriched. The Fresh-Mom Recruitment

program allows women who are pregnant or plan to have children to delay

joining Unicharm up until the age of 30. The Company also offers career

training for female workers as an opportunity for them to consider their

career plans.

20

IV Matters Related to the Internal Control System

1. Basic Views on the Internal Control System and the Progress of System Development

(1) Systems to Ensure that Directors and Employees Perform Their Duties in Accordance with Laws and

Regulations and the Articles of Incorporation and Other Systems to Ensure Appropriate Business

Operations

1) Corporate Governance a) The Company is a company with audit and supervisory committee. The purpose is to strengthen the Board

of Directors’ functions for overseeing business execution and to ensure appropriateness and transparency of

the decision-making process through outside directors’ involvement in management. The Board of Directors

shall determine important matters in accordance with laws and regulations, the Articles of Incorporation,

Board of Directors’ Regulations and other internal rules and oversee directors’ execution of duties.

b) Directors perform their duties based on the roles determined by the Board of Directors and in accordance

with laws and regulations, the Articles of Incorporation, resolutions of the Board of Directors, and internal

rules.

c) The Company has adopted the executive officer system to separate management decision-making and

oversight from business execution and to strengthen the Board of Directors’ oversight function, enhance

efficiency of operations of organizations responsible for business execution, and accelerate decision-making.

Based on the decisions made by the Board of Directors and entrusted by the Board of Directors and the

representative director, executive officers perform their duties and execute business for which they are

responsible.

d) The Company has established the Decision-making Rules shared throughout the Group and operates business

in accordance with the Decision-making Rules to ensure appropriateness of business operations. The

decision-making process is designed in a manner to enhance efficiency of organizational operation and to

accelerate decision-making, such as by Group-wide authorization and proposals.

2) Compliance

a) The Company’s mission statement says “We strive to pursue proper corporate management principles which

combine corporate growth, associate well-being and the fulfillment of our social responsibilities.” This is an

integral part of the Company’s management policy.

b) The Company has created a booklet titled The Unicharm Way, which contains the Unicharm Group’s Action

Guidelines etc. to guide directors and employees in their efforts to maintain high ethical standards and

comply with laws and regulations and the Articles of Incorporation. The Unicharm Way is the basis of the

Company’s compliance system.

c) The Company strives to enhance employees’ awareness of corporate ethics and inculcate the principles

articulated in The Unicharm Way by having the President & CEO and executive officers continue to

disseminate them among the associates all over the world. In this way, the Company emphasizes that

ensuring compliance is a prerequisite for any corporate activities.

d) The Company has established the CSR Committee that monitors activities relating to corporate social

responsibility encompassing quality, safety, and the environment to ensure compliance, fairness, and

soundness of corporate behavior. The CSR Division has been established as a dedicated organization for

promoting CSR activities.

e) As part of efforts to enhance the compliance system, the Company has established the Compliance Hotline,

which is a point of contact for seeking advice and for reporting violations of laws and regulations, violations

of internal rules, or significant violations of corporate ethics and the Ring-ring employee hotline, which is a

point of contact for seeking advice and for reporting workplace issues such as harassment and problematic

21

personal relationships. The Corporate Ethics Office in the CSR Division is responsible for operating these

points of contact. In the event of occurrence of a material problem, the President & CEO convenes a meeting

of the Corporate Ethics Committee whose standing members are Audit and Supervisory Committee

members and leads efforts to solve the problem as the committee chairman.

f) In order to enhance awareness about compliance and prevent occurrence of problems, the Company’s legal

affairs department provides compliance education to directors and employees, periodically checks the status

of compliance with laws and regulations etc., and implements improvement measures.

g) In order to verify that business execution by divisions is appropriate and in accordance with laws and

regulations and provide recommendations for improvement, as necessary, the Company has established an

internal audit department, which is independent from executive business divisions and directly reports to the

President & CEO. The internal audit department performs internal audit of the Company and its subsidiaries.

h) The Company’s policy and criteria for elimination of antisocial forces are specified in the Unicharm Group’s

Action Guidelines contained in The Unicharm Way. Moreover, a system is in place to collaborate with

lawyers and the police and act systematically.

(2) Systems to Store and Manage Information Related to Duties Performed by Directors In accordance with the Information Management Security Rules and other internal rules, the Company

appropriately stores and manages important documents related to duties performed by directors together with

the related information materials. Directors have access to these documents at any time.

(3) Rules related to Managing Risk of Loss and Other Systems a) The Board of Directors analyzes and evaluates material risks periodically reported by divisions and

deliberates on and determines measures for improvement.

b) When performing their duties, employees take responsibility and manage risks in accordance with the

segregation of duties and authority defined by internal rules.

c) A system is in place to ensure performance of duties is in accordance with the segregation of duties and

authority defined by internal rules. Duties shall be performed based on the recognition that directors and

employees take responsibility and manage risks in accordance with their duties and authority.

d) In the event that a material risk arises, the Company shall establish the Crisis Management Team in

accordance with the Crisis Communication Manual, which was established as rules for crisis management,

and strive to take swift and appropriate action and achieve early recovery.

e) The internal audit department audits the status of daily risk management of each division in accordance with

the relevant rules and manuals in cooperation with the departments concerned.

(4) Systems to Ensure Directors Perform Their Duties Efficiently The Company implements the following measures to ensure efficient business operations by putting in place a

system for appropriate division of responsibilities between directors and for oversight.

a) The Company applies the Schedule-Action-Performance-Schedule (SAPS) Management Model, which is

the Company’s unique approach for devoting time and efforts to priority issues. All sites throughout the

Group link up via a video conferencing system each and every week for decision-making using a specific

thinking process so that directors and employees perform their duties efficiently.

b) By adopting the executive officer system, the Company separates management and business execution and

clarifies responsibilities of executive officers for business execution. Moreover, apart from the Board of

Directors, the Business Execution Council, which has been established as a system for swift and flexible

response to change in the business environment, meets every month.

c) The Board of Directors determines the Group Policy Outline and executive officers responsible for divisions

thoroughly communicate the policy throughout their divisions. Then, each division formulates a business

plan and submits it to the Advisory Board.

d) To implement the business plan of each division, half-yearly budgetary targets are formulated for each

business division and each Group company, which are submitted to the Board of Directors for approval.

22

e) At monthly meetings of the Business Execution Council, executive officers report on the status of their

performance and countermeasures are considered, as necessary. Important matters are reported to the Board

of Directors.

f) IT shall be used effectively and appropriately for communication of information throughout the Group and

for business operations.

(5) Systems to Ensure Appropriate Business Operations by the Unicharm Group 1) Systems for Reporting the Company Matters Related to the Performance of Duties by Directors etc. of the

Company’s Subsidiaries

a) In accordance with the Rules for Management of Affiliated Companies, the Company requires subsidiaries

to submit relevant information materials in order to accurately grasp the management status of subsidiaries.

b) The Company requires subsidiaries to submit quarterly financial reports for the purpose of receiving reports

on business results, financial position, and other important information.

2) Rules related to Managing Risk of Loss and Other Systems of the Company’s Subsidiaries

a) The Company analyzes and evaluates material risks pertaining to subsidiaries periodically reported to the

Board of Directors and the Business Execution Council and deliberates on and determines measures for

improvement.

b) The Company requires subsidiaries to establish a system to ensure performance of duties is in accordance

with the segregation of duties and authority. The Company also requires subsidiaries to take responsibility

and manage risks. It is specified in the Regulations for Management of Subsidiary Companies that executive

officers periodically report to the parent company about material risks pertaining to the subsidiaries for

which they are responsible.

c) In the event that a material risk arises at a subsidiary, the Company shall establish the Crisis Management of

Team in accordance with the Crisis Communication Manual, which was established as rules for crisis

management, and strive to take swift and appropriate action and achieve early recovery.

d) The Company’s internal audit department audits the status of risk management of divisions of subsidiaries in

accordance with such manual etc. in cooperation with the internal audit department of each subsidiary and

other departments concerned.

3) Systems to Ensure Directors etc. and Employees of the Company’s Subsidiaries Perform Their Duties

Efficiently

While respecting managerial autonomy and independence of subsidiaries, the Company implements the

following measures to ensure efficient business operations.

a) The Company applies the Schedule-Action-Performance-Schedule (SAPS) Management Model, which is

the Company’s unique approach for devoting time and efforts to priority issues. All sites throughout the

Group link up via a video conferencing system each and every week for decision-making using a specific

thinking process so that directors and employees perform their duties efficiently.

b) The Company’s Board of Directors determines the Group Policy Outline and executive officers responsible

for subsidiaries thoroughly communicate the policy throughout the subsidiaries. Then, each subsidiary

formulates a business plan and submits it to the Company’s Advisory Board.

c) To implement the business plan, each subsidiary formulates half-yearly budgetary targets, which are

submitted to the Company’s Board of Directors for approval.

d) In accordance with the Company’s request, subsidiaries report on the status of their performance at a meeting

of the Business Execution Council, and countermeasures are considered, as necessary. Important matters are

reported to the Company’s Board of Directors.

e) IT shall be used effectively and appropriately for communication of information between the Company and

subsidiaries and for business operations.

4) Systems to Ensure that Directors etc. and Employees of Subsidiaries Perform Their Duties in Accordance with

23

Laws and Regulations and the Articles of Incorporation

a) The Company distributes The Unicharm Way to all directors etc. and employees of subsidiaries, which

provides guidelines for them to comply with laws and regulations and the Articles of Incorporation. The

Company strives to inculcate The Unicharm Way and ensure compliance with it.

b) The Company shall establish the Compliance Hotline, which is a point of contact for seeking advice and for

reporting violations of laws and regulations, violations of internal rules, or significant violations of corporate

ethics concerning subsidiaries and the Ring-ring employee hotline, which is a point of contact for seeking

advice and for reporting workplace issues such as harassment and problematic personal relationships.

c) In order to enhance awareness about compliance and prevent occurrence of problems, the Company provides

compliance education to directors etc. and employees of subsidiaries, periodically checks the status of

compliance with laws and regulations etc., and implements improvement measures.

d) The Company performs internal audits of subsidiaries to verify that business execution by subsidiaries is

appropriate and in accordance with laws and regulations and to provide recommendations for improvement,

as necessary.

(6) Matters Regarding Employees Who Assist the Audit and Supervisory Committee with Its Duties a) The Company has established the Audit and Supervisory Committee Office to assist the Audit and

Supervisory Committee with its duties.

b) The Company secures approval of the Audit and Supervisory Committee before determining appointment,

personnel changes and disciplinary action against such employees who assist the Audit and Supervisory

Committee.

(7) Systems for Reporting to the Audit and Supervisory Committee 1) Systems for Directors and Employees of the Company to Report to the Audit and Supervisory Committee

a) When requested by the Audit and Supervisory Committee to report on the business, directors and employees

shall swiftly report to the Audit and Supervisory Committee. Any fact detected that caused or may cause

significant damage to the Company shall be immediately reported to the Audit and Supervisory Committee.

b) In accordance with the request of the Audit and Supervisory Committee, directors and employees shall

cooperate with any investigation of the status of operations and property.

c) In the event that an employee detects any fact that caused or may cause significant damage to the Company,

such as behavior that violates laws and regulations, he or she shall immediately report to the Compliance

Hotline or the Ring-ring employee hotline. The Corporate Ethics Office, which is responsible for the

Compliance Hotline and the Ring-ring employee hotline, shall periodically report the status of

whistleblowing to the Board of Directors via the Corporate Ethics Committee while taking into account the

anonymity of whistleblowers.

2) Systems for Directors and Employees of Subsidiaries to Report to the Audit and Supervisory Committee of

the Company

a) When requested by the Audit and Supervisory Committee of the Company to report on the business, directors

and employees of subsidiaries shall swiftly report to the Audit and Supervisory Committee except for a

justifiable reason.

b) In accordance with the request of the Audit and Supervisory Committee of the Company, directors and

employees of subsidiaries shall cooperate with any investigation of the status of operations and property

except for a justifiable reason.

c) In the event that a director or an employee of a subsidiary detects any fact that caused or may cause significant

damage to the Company or subsidiaries, such as behavior that violates laws and regulations, he or she shall

immediately report to the Compliance Hotline or the Ring-ring employee hotline. The Corporate Ethics

Office of the Company, which is responsible for the Compliance Hotline and the Ring-ring employee hotline,

shall periodically report the status of whistleblowing to the Board of Directors via the Corporate Ethics

Committee while taking into account the anonymity of whistleblowers.

24

(8) Systems to Ensure that Persons Who Reported to the Audit and Supervisory Committee Will Not Receive

Detrimental Treatment Because of the Reporting a) The Company shall prohibit detrimental treatment of persons who sought advice or reported to the

Compliance Hotline or the Ring-ring employee hotline.

b) The Company shall prohibit detrimental treatment of persons who reported to the Audit and Supervisory

Committee because of the reporting. The Company shall put in place a strict information management

system concerning persons who reported to the Audit and Supervisory Committee and the content of such

reports to prevent detrimental treatment of such persons.

(9) Matters Related to Policies Concerning the Treatment of Expenses Incurred by the Performance of Duties

by Audit and Supervisory Committee Members

When Audit and Supervisory Committee members request advance payment or reimbursement of expenses for

their performance of duties, the Company shall make advance payment of or reimburse such expenses except

in the case that such expenses or liabilities are proved to be unnecessary for the performance of duties by such

Audit and Supervisory Committee members.

(10) Other Systems to Ensure Effective Audits by the Audit and Supervisory Committee a) The Audit and Supervisory Committee shall periodically meet the Company’s Accounting Auditor and

internal audit department and subsidiaries’ audit and supervisory board members to share information and

exchange views.

b) The Audit and Supervisory Committee shall periodically meet the President & CEO to audit directors’

performance of duties and put in place the audit system

c) The Audit and Supervisory Committee shall cooperate with external experts such as lawyers and certified

public accountants, when necessary for performance of duties.

2. Basic Views on Eliminating Anti-Social Forces and the Progress of System Development

Under its “Beliefs and Pledges and Corporate Principles of Action (Pledge to Society),” the Unicharm Group’s

Action Guidelines state that the Company has no dealings whatsoever with anti-social forces and stands firmly

against any requests from anti-social forces.

Progress of System Development for Eliminating Anti-Social Forces

The Company believes that taking a firm stance in accordance with laws and regulations and corporate ethics

is crucially important in eliminating the influence of anti-social forces. Based on this recognition, the Company

ensures that directors and employees throughout the Group understand and observe the Group’s Action

Guidelines. Moreover, the Company works closely with the police and other external specialist organizations

to gather and manage information about anti-social forces. The Company is committed to improving and

strengthening internal systems in order to exclude the influence of anti-social forces through ongoing education

and awareness-raising of employees, and development of manuals.

25

V Other

1. Adoption of Anti-Takeover Measures

Adoption of Anti-Takeover Measures Not Adopted

Supplementary Explanation

The Company recognizes that enhancing corporate value is an important task for the Company. Based on this

recognition, the Company strives to establish a system that enables enhancement of international

competitiveness and earnings power by enhancing product development capabilities and technology

development capabilities and committing to profit-oriented operation.

The Company believes that enhanced earnings power and higher corporate value will lead to the benefit of

shareholders, enable the Company to reach a wider range of investors, and bring about long-term stability of

capital, and moreover, recognizes that they are the most effective anti-takeover measures.

2. Other Matters concerning Corporate Governance System

The Company’s internal system for timely disclosure of corporate information is described below.

(1) Timely Disclosure Policy

In The Unicharm Way, which sets action principles for all directors and employees of the Group consisting

of the Company and affiliated companies, “Beliefs and Pledges and Corporate Principles of Action (Pledge

to Shareholders)” is determined. Regarding disclosure of management information, the Company has

declared: “We will disclose corporate information, including financial conditions, the status of business

activities, policies, and strategies, to shareholders and investors through IR activities. We will take their

opinions on such information seriously, and strive to improve management.” The Company strives to

disclose corporate information in a timely manner to fulfill its accountability as a listed company.

(2) Timely Disclosure System

The Company has established a system by which important corporate information, including information

concerning affiliated companies, is concentrated at the Company’s corporate functional divisions. Based on

discussion by the persons responsible for such divisions and after securing approval of the President & CEO,

the information handling officer registered with the Tokyo Stock Exchange determines the content, timing,

and method of disclosure of information subject to timely disclosure and instructs the division responsible

for information handling and the IR Group to register the information on TDnet, post the information,

arrange a press conference, etc.

The system for integrated management of important corporate information is described below.

● Matters that have been determined (including financial closing information)

The Unicharm Group Decision-making Rules shared throughout the Company and affiliated companies

stipulates the decision-making body, the decision-maker, and persons to be consulted according to the

nature of the determined matter and its materiality. By integrating internal control and information

control, the Company has established a system by which important corporate information is concentrated

at the Company’s corporate functional divisions. In particular, regarding important matters to be

determined by the Board of Directors, the division responsible for information handling or the secretariat

of the Board of Directors is required to review the agenda in advance and judge whether it requires timely

disclosure in light of laws and regulations, guidelines and case examples.

26

● Matters that have occurred

In the event that any fact that has a material impact on the Company and affiliated companies occurs,

directors and employees of the Company and affiliated companies are required to act in accordance with

the Crisis Communication Manual, which stipulates rules for crisis management. The Company has

established a system by which departments or affiliated companies where such facts occurred notify

information pertaining to such matters that have occurred to the Company’s corporate functional

divisions.

27

Diagram (Reference Material)

Indicated below is a diagram of the corporate governance system of the Company (as of March 31, 2016)