To achieve sustainable growth and increase the corporate value of the Group over the medium to long term, the Company established the Basic Policy on Corporate Governance of ENEOS Group with the objective of establishing and operating a corporate governance framework for the conduct of transparent, fair, timely, and decisive decision-making in the Group’s management.
The policy describes systematically and comprehensively the Group’s basic approach to corporate governance as well as its establishment and operation, taking into consideration the Corporate Governance Code established by the Tokyo Stock Exchange.
The policy, published on the Company’s website, is our commitment to all stakeholders, including shareholders of ENEOS Holdings, Group customers, business partners, employees, and local communities.

• Basic Policy on Corporate Governance of ENEOS Group
• (Exhibit 1) ENEOS Group Code of Conduct
• (Exhibit 2) Medium-Term Management Plan
• (Exhibit 3) Basic Policy on Internal Control System
• (Exhibit 4) Standards for Consideration of Independence of Independent Directors
• (Exhibit 5) Disclosure Policy
• (Exhibit 6) Shareholder Return Policy and Capital Policy
• Corporate Governance Report (Available in Japanese only) (updated December 27,2023)

Corporate Governance Framework

Board of Directors

The Board of Directors makes decisions on matters stipulated by laws, regulations, or the Articles of Incorporation; the medium-term management plan; important matters regarding business execution for the Company and Principal Operating Companies; etc.

Executive Council

The Executive Council has been formed to discuss matters related to operational execution that require the approval of the president. This council is composed of the President, the Executive Vice Presidents, the Senior Vice Presidents who have been appointed by the President, and the President of each Principal Operating Company.
Thus, at the Executive Council, through careful deliberation by executive members of the Company and the Principal Operating Companies, appropriate and efficient decisions by the president are secured.

Corporate Governance Framework at a Glance (As of December 19, 2023)

Item	Details
Organization format	Company with an audit and supervisory committee
Number of directors who are not Audit and Supervisory Committee members*	9 (6 inside, 3 outside)
Number of directors who are Audit and Supervisory Committee members*	5 (2 inside, 3 outside)
Total number of directors	14 (8 inside, 6 outside; 3 female directors)
Percentage of outside (independent) directors	42.9%
Percentage of female directors	21.4%
Chairman of the Board of Directors	Director, Chairman of the Board (Non-executive director with no rights of representation)
Term of directors who are not Audit and Supervisory Committee members	1 year
Term of directors who are Audit and Supervisory Committee members	2 years
Adoption of executive officer system	Yes
Decision-making body for the appointment and dismissal of directors	General Meeting of Shareholders
Decision-making body for the upper limit of director remuneration	General Meeting of Shareholders
Institution assisting the president’s decision-making	Executive Council
Voluntary advisory committees for the Board of Directors	Nomination Advisory Committee and Compensation Advisory Committee (2 inside directors, 3 outside directors; chairperson: outside director)
Term of Independent Auditors	1 year

• * At the most recent General Meeting of Shareholders (13th Ordinary General Meeting of Shareholders), no directors received 10% or more opposing votes.

• 1Composition of the Nomination Advisory Committee and the Compensation Advisory Committee as of December 19, 2023
• 2To ensure constructive discussion between outside directors, who supervise management from an independent and objective perspective, and inside directors, who have the greatest familiarity with the status of management, etc. in the Group, the Nomination Advisory Committee and the Compensation Advisory Committee are each comprised of three outside directors, the chairman of the Board, and one representative director.
• 3For director profiles, see Executives.

Strengthening Corporate Governance

• * Clawback provision: A clause requiring the return of all or part of officer remuneration after payment in the event of a material compliance violation
  Malus provision: A clause preventing the vesting of all or part of officer remuneration before payment in the event of a material compliance violation

Since fiscal 2016, the Company’s Board of Directors has conducted annual evaluations of its effectiveness, which serve as a basis for improvement.
In December 2022 and January 2023, the Board of Directors surveyed all directors, including outside directors, to evaluate the Board’s effectiveness in fiscal 2022. To ensure objectivity and transparency in the evaluation process, in fiscal 2022 we also engaged external organizations in the process to assist with in-depth evaluations of the following items. The results of the evaluation and analysis were reported at the Board of Directors meeting on April 20, 2023.

Evaluation Items

1. 1.Composition and operation of the Board of Directors
2. 2.Role of the Board of Directors
   • Presentation of major directions, such as corporate strategies
   • Establishment of a supportive environment for appropriate risk-taking by management
   • Highly effective supervision from an independent standpoint
3. 3.Dialogue with shareholders

All of the survey questions received mostly positive responses, and the results indicated that the Board of Directors generally continues to be effective.
The results also indicated areas with relatively low evaluations and areas where further improvement is needed. We are accordingly working toward implementation of the following.

1. 1.Introduction of human resources due diligence and rules and regulations regarding disciplinary measures for officers and officer candidates, and ensuring objectivity and transparency in the processes for appointing and dismissing officers
2. 2.Further improvement of the leadership role of the board chair to stimulate more active discussion
3. 3.Discussion of the Group’s overall management strategy under the new Group management structure beginning in fiscal 2024

The following initiatives were implemented to “further strengthen the oversight function” and “raise the quality of discussions and explanations by the Board of Directors,” which were identified as issues to address in the fiscal 2021 Board of Directors effectiveness evaluation.

1. 1.Provided multiple opportunities to discuss the third Medium-Term Management Plan and ensured sufficient time for deliberation of various measures, including for decarbonization
2. 2.Reported on the progress of major investment projects during the post-merger integration (PMI)^* in business execution status reports and other opportunities
3. 3.Deepened the understanding of the Company by outside directors by providing information on our businesses at meetings of the outside directors and through on-site visits and other means and information relevant to formulation of the Medium-Term Management Plan

In fiscal 2022, we continued our efforts to separate the functions of business management and execution by requiring the appointment of a non-executive director to serve as the chair of the Board of Directors.

In addition, the Company’s Audit and Supervisory Committee conducted an evaluation of the effectiveness of the Company’s audit activities in fiscal 2022. Issues are communicated among the Audit and Supervisory Committee members and will be reflected in the audit plan for fiscal 2023, as we seek to construct an effective auditing system.

• * A process used to integrate two companies after a merger or acquisition

Process for Evaluation of Effectiveness

The Board of Directors is composed of an appropriate number of members to enable free and constructive discussion and exchange of opinions, with members appointed in consideration of Board diversity and the knowledge, experience, and abilities of each member. The Company strives to appoint independent outside directors^* to at least one-third of director positions. As of December 19, 2023, the percentage of outside independent officers was 42.9%.
To ensure objectivity and fairness in the selection of director candidates, excluding outside director candidates, a third-party entity evaluates the candidates from various perspectives and appropriate considerations (human resources due diligence). Prior to appointment, the Nomination Advisory Committee deliberates the evaluation results and reports to the Board of Directors.
As for directors who are not Audit and Supervisory Committee members, the Company appoints persons with high standards of business ethics, superior strategic thinking and judgment capabilities, and flexible attitudes toward change, as well as the ability to supervise decision-making and management from the viewpoint of what is best for the Group as a whole. Two or more of the directors are independent outside directors.
As for directors who are Audit and Supervisory Committee members, the Company appoints persons with high standards of business ethics, a certain level of specialist knowledge in legal affairs, finance and accounting, etc., as well as the ability to appropriately audit the execution of duties by directors and the ability to appropriately supervise the execution of business. The majority of these directors are independent outside directors.

• *Outside directors who have satisfied the Company’s “Standards for Consideration of Independence of Independent Officers”

The directors of the Company and principal operating companies and the corporate auditors of principal operating companies have the duty of working toward the realization of the Group Philosophy, the sustainable growth of the Group, and the achievement of increased corporate value over the medium to long term. To that end, to enhance necessary knowledge and skills, the Company and its principal operating companies provide opportunities for directors and corporate auditors to receive training related to the Companies Act, internal control systems, accounting and taxes, business strategies, and organizations. In addition, the Company pays expenses related to self-study initiatives. When outside directors are appointed, the Company provides explanations of basic matters regarding the Group’s businesses and, after their appointment, offers business presentations and worksite inspection tours to deepen their understanding.

The selection, dismissal, or non-reappointment of the Independent Auditor is resolved every fiscal year in accordance with the policy established by the Audit and Supervisory Committee. Prior to the resolution, the Independent Auditor is evaluated once a year in accordance with the standards established by the Audit and Supervisory Committee.
The Audit and Supervisory Committee has resolved to reappoint the current Independent Auditor as it has been confirmed that there are no issues pertaining to the evaluation items, that the Independent Auditor has sufficient systems and ability to handle the Company’s audit work, and that there are no grounds for dismissal or non-reappointment.
The rotation of executive Representative Partners of the current Independent Auditor has been implemented appropriately, and they have not been involved in the Company’s audit operations for more than seven consecutive fiscal years. The head Representative Partner has not been involved in the Company’s audit operations for more than five consecutive fiscal years.

The Company maintains ENEOS, JX Nippon Oil & Gas Exploration, and JX Metals, its principal operating companies, as wholly owned subsidiaries, and maintains other Group companies as wholly owned subsidiaries, listed subsidiaries, or other types of entities based on the need to maintain or expand its businesses. The policy of the Board of Directors is to regularly examine the appropriateness of maintaining a company as a listed subsidiary from the perspective of improving the Group’s overall corporate value and capital efficiency, to consider the reasonableness of maintaining the listed company status, and to deliberate on the effectiveness of the listed subsidiary’s governance system.
The following policies concerning the authority to appoint and dismiss independent outside directors of listed subsidiaries have been adopted to ensure an effective governance system that gives due consideration to the interests of general shareholders of listed subsidiaries.

1. （1）Exercise of Appointment Authority
   1. A.More than one-third of directors shall be independent outside directors. If difficult to immediately put into effect, a mechanism will be introduced for a committee made up primarily of independent outside directors to discuss and consider important business transactions involving conflict of interest.
   2. B.Prerequisites for Independent Outside Directors
      1. i.Strong professional ethics, excellent strategic thinking and judgment, flexibility to change, and the ability to make decisions and supervise the management of a listed subsidiary
      2. ii.Not employed by a company in the ENEOS Group within the past 10 years
      3. iii.Ability to contribute to raising the corporate value of the listed subsidiary, taking into account the protection of the common interests of shareholders, including general shareholders, from an independent perspective
2. （2）Exercise of Dismissal Authority
   Voting rights shall be exercised to dismiss an independent outside director if any of the following conditions occur and in accordance with the decision of the Board of Directors of the relevant listed subsidiary.
   1. i.A serious violation of laws or regulations that materially damages the reputation of the ENEOS Group or a listed subsidiary group
   2. ii.Malicious intent or gross negligence in the execution of duties that causes significant damage to the ENEOS Group or a listed subsidiary group
   3. iii.Actions that cause significant damage to the interests of general shareholders

The ENEOS Group has established the Basic Policy on Internal Control System for the development and implementation of a system for ensuring the appropriateness of our business operations.

Risk Assessment Matrix

The Company has developed and operates a risk management system to identify and analyze Group management risks and ensure appropriate responses.
Risks (tangible and intangible) are identified, taking into account risks identified up to the previous fiscal year, as well as increased risks and potential new risks arising from changes inside and outside the Company, and are assessed for materiality based on the degree of impact, probability and urgency. Risks that are indicated by assessment results as requiring a response from the Group are designated as “material risks” by resolution of the Executive Council, which is chaired by the president of the Company. Relevant departments are assigned for response to material risks, and monitoring is carried out by reporting the status of response to the Executive Council.

The Group’s principal operating companies—ENEOS, JX Nippon Oil & Gas Exploration and JX Metals—maintain and operate their own risk management systems, which are tailored to their specific business content and characteristics. The departments in charge of risk management at the Company and the principal operating companies cooperate and share risk information with each other. If a company identifies, through its risk management process, a risk that could significantly impact the management of the Group, ENEOS Holdings and the company work together to respond to the risk.

The Group has internal rules and regulations for addressing the risks in its business activities. For the screening of new investments, in addition to country risks and foreign exchange rate risks, we analyze and evaluate ESG-related risks, including environmental risks such as those related to the scope of response to biodiversity and environmental regulations; risks in the procurement of raw materials, including water; and human resources risks, including those related to human rights and occupational health and safety, and we take appropriate actions when necessary.
In addition, when reviewing proposed major investments, we perform screenings based on the stage-gate system. The process from initial examination to execution of an investment project is divided into multiple stages of examination, and deliberations are conducted at each stage. During the deliberations, we clarify various risks, including ESG-related risks, using sensitivity analysis, case analysis, and other means, and work to minimize these risks. For important investments, follow-up is carried out after a certain period of time to clarify impacts on the initial outlook caused by environmental changes or other factors and to determine whether to continue with the project.

In the event of a crisis situation that could significantly affect the management of the Group, the Company responds quickly and appropriately in accordance with the ENEOS Group Rules for Responding to Crises and Emergencies and has systems in place to minimize any damage that may occur.
The Group’s basic stance on crisis situations is to place the highest priority on protecting human life, issue information promptly and implement centralized information management, quickly determine, execute, and follow up the most effective response measures, implement transparent and smooth communications, and prevent recurrence.
With the Crisis Management Department as the standing organizational unit, in the event of a crisis situation, we maintain a system enabling immediate reporting on conditions and the status of response measures from the site of an incident. Depending on the magnitude of the crisis, we may set up a response headquarters, led by the president, and organize response teams at the head office and at the site of the incident to ensure agile and effective response.

The Group’s basic policy is to (1) place the highest priority on respect for human life and make every effort to protect against and prevent the spread of infectious diseases to the Group’s officers, employees and their families, and (2) engage all Group companies in maintaining a continuous supply of our products, which support the functioning of society. In the event that management is significantly affected by an infectious disease epidemic, a system is in place to set up a response headquarters, led by the president, to ensure the prompt determination and execution of countermeasures.
ENEOS has business continuity plans at its head office, branch offices, refineries, and other sites to ensure that we can fulfill our responsibility of providing a stable supply of petroleum products, even during an epidemic. To protect employees from infection and prevent the spread of disease, we systematically stockpile surgical masks, goggles, alcohol-based disinfectants, and other items at our business sites in Japan and overseas. We also maintain a system and an IT environment that enable employees to work from home.

COVID-19 countermeasures (Examples)

1. 1.Encouraging employees to work from home (excluding employees at production and distribution sites)
2. 2.Refraining from non-essential domestic business trips
3. 3.Prohibiting overseas business trips
4. 4.Enabling remote participation in training and meetings
5. 5.Refraining from holding or attending social gatherings and events

At ENEOS refineries and plants in particular, we are working to maintain a stable supply of petroleum products, having established infection prevention guidelines for our sites and by thoroughly implementing countermeasures to prevent viruses from entering our sites and prevent mass infections.

COVID-19 countermeasures at refineries and plants (Examples)

1. 1.Ensuring the use of masks, hand washing and alcohol-based disinfectants, ventilation in the workplace, and patrols by industrial physicians
2. 2.Checking the temperature of employees and visitors when they enter the sites
3. 3.Limiting the number of people using cafeterias, changing rooms, and bathing facilities, and increasing the floor space of break areas/rooms
4. 4.Recommending the use of private cars and avoiding public transport when commuting to work
5. 5.Refraining from visiting areas where states of emergency have been declared due to the spread of infection
6. 6.Maintaining appropriate supplies of test kits

• Note:
• These measures ended on May 8, 2023, when the Japanese government reclassified COVID-19 from a Class 2 to a Class 5 disease, the same category as seasonal influenza, under the Infectious Diseases Control Law.
  We will continue monitoring the government’s actions and the status of the pandemic and implement any necessary prevention measures.

Company information is an important asset of the Group, and we work to prevent the improper use, disclosure, or leakage of this information in accordance with the ENEOS Group Basic Rules for Information Security. The Group also strives to maintain information accuracy and reliability and to prevent falsification or mishandling while ensuring that information is available to authorized users when needed.
In addition, we have developed personal information protection procedures and established rules to ensure compliance with the Personal Information Protection Act and the appropriate handling of personal information to protect people’s rights. We are working to promote better understanding of laws and company rules by distributing the Personal Information Protection Procedures Guidebook to employees.
Following the leak of personal customer information at ENEOS in fiscal 2021, we carried out a Group-wide inspection of legal compliance focused primarily on the protection of personal information and conducted e-learning training for all ENEOS employees in fiscal 2022.
At ENEOS, when a leak of personal information is detected, it is immediately shared among the relevant departments and reported to the Personal Information Protection Commission as necessary. In such cases, we conduct prompt root cause analysis and response to prevent the spread of damage. We are also working to prevent recurrence through efforts such as providing training on personal information protection laws to all employees. We will continue working to strengthen our personal information management systems to ensure appropriate management.

In order to protect its important information and systems from cyberattacks, which have become stealthier in recent years, the Group has established the ENEOS Group Cybersecurity Council, chaired by the president of the Company. The council checks the status of cybersecurity measures, and also determines and implements cybersecurity measures using a top-down approach.
In addition, the IT Security Basic Procedures for ENEOS Group have been established and communicated to Group companies to ensure that cybersecurity countermeasures are carried out across the entire Group. The procedures require the appointment of IT cybersecurity managers to implement and oversee IT security measures at each Group company. The procedures also stipulate that disciplinary action is to be taken in the event that an employee violates the procedures and causes damage to the company.
For employees, as ongoing initiatives, the ENEOS Group conducts drills and issues reminders on the handling of suspicious emails, and also provides Group-wide security training using curricula translated into multiple languages.

The ENEOS Group Code of Conduct states that we will properly maintain, manage and protect corporate tangible and intangible assets along with new discoveries made in the course of business activities, as well as respect the intellectual property rights of third parties.

Through a dedicated department, ENEOS manages and uses intellectual property appropriately in accordance with its regulations on intellectual property rights (“Regulations on Inventions and Devices”). Given the important role of intellectual property in our business strategy, we are working particularly to ensure that the acquisition, protection and use of intellectual property contributes to our business. In addition, as part of our business risk management, we are implementing necessary measures through close collaboration between this dedicated department and other business and research departments in order to prevent the unauthorized use of the intellectual property of third parties. Moreover, we provide training for employees on the creation of intellectual property, investigation of patents, and handling of contracts, which improves awareness of intellectual property.

• Note:
• Data from ENEOS and JX Metals