ESG

Compliance Guidelines

Introduction

At Ferrotec Holdings Corporation (hereinafter referred to as “Ferrotec Holdings”), we aim to be a company from which our stakeholders, including customers, shareholders, trading partners, employees and regional society, can expect further growth, and which contributes to society through our manufacturing activities, based on our corporate philosophy and code of conduct, and which acts out of public decency by observing laws and regulations, social order and international rules, etc. in our corporate activities. Ferrotec Holdings has stipulated these Compliance Guidelines (for the purpose of thorough implementation of Ferrotec Holdings’ corporate philosophy in observance of all laws and regulations related to our corporate activities and to obtain the trust and positive evaluation of society) as follows, to create and maintain a Ferrotec Group that can enjoy the next level of trust from our customers, shareholders, trading partners, employees and regional society, based upon the aggregate of each and every officer and employee having a strong sense of ethics and awareness of laws and regulations to be observed and acting based on this awareness.

Chapter 1: General Provisions & Basic Approach

1. Observance of Laws and Regulations, etc.Our officers and employees shall observe related laws and regulations, internal regulations, and international rules, etc., in all our business activities, as well as respecting social norms and acting faithfully in accordance with decency as members of society based on a high sense of ethics.

2. Public DecencyOur officers and employees shall maintain fair, just and impartial relations with all their stakeholders and shall not take any actions that damage the trust or honor, or actions that run counter to the interests of Ferrotec Group.

3. Thorough Implementation of ComplianceOur officers and employees shall seek to thoroughly implement compliance throughout the company, by always emphasizing basic human rights and individuality, trying to act with high transparency, and seeking to conduct and maintain good communications.

4. Corrective ActionIn a case where there is concern that a compliance breach may have occurred, our officers and employees shall immediately take corrective action. In a case where they cannot rectify the situation themselves, they shall immediately report it to a superior or related division and request corrective action.

Chapter 2: To Secure Customer Trust

5. Product SafetyCustomer safety and satisfaction shall be the highest priority in everything related to sales activities, such as products, services, quality assurance, information, etc. When a doubt occurs, we shall make efforts to accurately grasp the situation and conduct rapid response. To avoid damaging customer trust, we shall maintain a fair and faithful stance at all times.

6. Approach to TransactionsIn providing products and services, we shall observe related laws and regulations, respect social norms, and adopt impartial and transparent methods.

7. Protection of Customer InformationWe shall strictly manage with careful attention to prevent leaks, etc., any information on customers obtained as a result of concluding a contract, etc.

Chapter 3: To Secure Shareholder and Investor Trust

8. Observation of Laws and RegulationsWe shall observe laws and regulations related to corporate business management, and as well as conducting sound business activities, we shall conduct internal controls and legal and appropriate information disclosure.

9. Prohibition of Illegal Profit-supplying and Insider TradingIllegal profit-supplying related to exercise of shareholder rights and insider trading by persons related to the company are actions that betray the trust of shareholders and investors and cause loss of trust in the company, and we shall not perform such actions by any means.

10.Management of Shareholder InformationShareholder information is important information related to shareholder assets and we shall strictly manage it with careful attention to prevent leaks, etc.

11.Competitive Trading and Conflicting Interest Transactions by DirectorsOur directors shall observe regulations related to restrictions on competitive trading and conflicting interest transactions as stipulated in the Companies Act.

12.Prohibition on Profit-supplying to Anti-social ForcesWe shall take a resolute stance toward anti-social forces and activities and block all relations with them.

13.Appropriate Financial Reporting and Information DisclosureDisclosure of management information, accounting processing, and tax declarations must be appropriately conducted in conformance with the Basic Policy on Financial Reporting stipulated in the appendix to these Guidelines. In addition, timely and appropriate information disclosure on the company’s business situation and overall corporate activities shall be made to shareholders, investors and customers.

14.Respect for Intellectual Property RightsIn planning and designing products and in issuing external PR, we shall endeavor to check for and prevent infringements of other parties’ intellectual property rights.

Chapter 4: To Secure the Trust of Trading Partners

15.Fair and Free TradingIn trading, all business partners shall fully be considered as equal and good partners of Ferrotec Holdings, and we shall secure fair and free trading by avoiding abuse of superior bargaining position and responding in a fair and faithful manner.

16.Entertaining and GiftsGiving and receipt of gifts or entertainment between business partners shall occur within the scope of general business customs and social common sense. We shall not give gifts to or entertain civil servants, quasi-civil servants, outside auditors or inspection certification authority institutions for the purpose of receiving preferential treatment, or if such an intention might be suspected.

17.Information ManagementWe shall strictly manage with careful attention to prevent leaks, etc., any confidential information of customers obtained as a result of concluding a contract, etc.

Chapter 5: To Secure the Trust of Employees

18.Observation of the Labor Standards Law and Work RulesWe shall observe the Labor Standards Law and work rules, and we shall not conduct any actions prohibited in the laws and regulations or work rules, or any actions of bad faith that go against the spirit of the work rules.

19.Working EnvironmentWe shall observe laws and regulations related to safety and sanitation and internal regulations, and a healthy working environment that is easy-to-work in shall be maintained. We shall make efforts to tidy and organize the workplace, to maintain cleanliness, to form and maintain healthy human relations, and maintain a comfortable working environment.

20.Respect for Human Rights and Individuality; and, Prohibition on Power Harassment and DiscriminationWe shall respect the human rights of each individual and we shall not use or take words and actions that damage individual dignity. In addition, we shall not discriminate based on individual characteristics such as birth, nationality, race, ethnicity, beliefs, religion, gender, age, or disability of any sort.

21.Prohibition on Sexual HarassmentWe shall not use or take actions that constitute sexual harassment or that might be construed as sexual harassment or sexual words and actions that might make the other party uncomfortable.

22.Management of Personal InformationWe shall strictly manage with careful attention any personal information on officers and employees held by Ferrotec Holdings and we shall not use it for anything but its original purpose. In addition, without permission from the person in question, we shall not disclose this information outside of Ferrotec Holdings without legitimate reason, such as a court order, etc.

Chapter 6: To Secure the Trust of Society

23.Environmental ConservationIn all our business activities, we shall, while prioritizing environmental conservation, observe laws and regulations and internal rules related to the environment, and make efforts to limit environment burden.

24.Consideration for the Global EnvironmentWe shall actively promote activities that consider the global environment, and while making efforts to deploy ISO14001 throughout Ferrotec Group, we shall seek to develop products that respond to global environmental issues, such as new energy industries, etc.

25.Awareness of Social ResponsibilityOur officers and employees shall always check their own actions from a social perspective and, regardless of whether in or outside the context of their work duties, shall not conduct illegal actions or anti-social actions. In addition, we shall always maintain an awareness of each of us being members of the Ferrotec Group, and take actions bearing dignity and good sense.

26.Response to Anti-social ForcesOur officers and employees shall take a resolute attitude toward anti-social forces that threaten civil society and shall not trade with them whatsoever.

27.Prohibition on Acts in Conflict of InterestWe shall not act to cause conflict between our own interests and Ferrotec Holdings’ interests. In addition, we will not conduct any work or business with interests directly or indirectly related to the work or business of Ferrotec Holdings without the permission of Ferrotec Holdings.

28.Thorough Implementation of Internal RulesOur officers and employees shall ensure that they properly understand and observe the items stipulated in the internal rules and various types of internal manuals, etc.

Chapter 7:

29.Revision of these GuidelinesThese Guidelines shall be administered by the Director responsible for Corporate Administration, revised in a timely manner, and reported to the Board of Directors. When revisions are made, officers and employees shall be informed and notified immediately.

Established: April 25, 2008
Revised: February 19, 2016
Revised: April 1, 2017

Appendix: Basic Policy on Financial Reporting

1. Representative Directors shall prioritize appropriate financial reporting and declare to all officers and employees that preparing credible and faithful financial reports is an important matter.

2. In all our business operations, in the processes from the occurrence of a transaction through to financial statements being prepared via the accounting system, we shall maintain an awareness of the risk of false entries or mistakes occurring, and establish and operate an internal control system to prevent the occurrence of mistakes or fraud in our operations processes.

In addition, when it is needed, we will establish a cross-sectional division for its organizing and operation.

3. We shall provide in a timely manner the necessary information and training, etc. to officers and employees for preparation of appropriate, credible and faithful financial reports.

4. We shall appoint an internal audit division separate from the operations division to audit operations processes, etc. in all divisions and make efforts to improve processes to discover and prevent fraud.

5. To conduct rapid, accurate and fair disclosures, we shall manage important information that is subject to timely disclosure based on applicable laws and regulations and the Tokyo Stock Exchange’s regulations for timely disclosure at the President’s Office, which is the department responsible for information disclosure, under the Director responsible for Corporate Administration. When information disclosures are to be made and prior to approval by the Board of Directors, a decision on whether the information should be disclosed shall be made by the Director responsible for Corporate Administration and relevant persons, and disclosure shall be made after approval is granted by the Board of Directors