Corporate Governance Report

July 4, 2025

Aica Kogyo Co., Ltd.

Kenji Ebihara Representative Director and President

Contact: General Affairs Department, +81-52-533-3132

Securities Code: 4206 https://www.aica.co.jp/

Note: This is a translation of the Japanese language original for convenience purpose only, and in the event of any discrepancy, the Japanese language original shall prevail.

The corporate governance of Aica Kogyo Co., Ltd. (“AICA”) and / or AICA Group Companies (AICA and AICA Group Companies are jointly referred “AICA Group”) is described below.

1. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other Basic Information
   1. Basic Views

      AICA Group seeks to ensure and improve the value of AICA and the common interests of our shareholders through the enhancement of corporate governance at each of our Group companies, including our subsidiaries in Japan and overseas. In June 2020, AICA transitioned from a Company with Board of Auditors to a Company with Audit and Supervisory Committee. The Audit and Supervisory Committee, more than half of whose members are outside directors, is responsible for auditing and supervising the legality and appropriateness of the execution of duties by directors for the realization of more transparent management. In this way, AICA aims to strengthen our corporate governance further and also to build a framework that will more appropriately meet the expectations of our stakeholders in Japan and overseas. AICA has also established a Governance Committee as an advisory committee to the Board of Directors. This committee is chaired by an outside director and a majority of the members are outside directors. The Governance Committee deliberates on key matters concerning governance, including the appointment and remuneration of management executives, with the aims of sustainable growth, medium to long-term improvement of corporate value, and further enhancement of governance functions.

transactions, the value of transactions, and the future transaction policy for each stock twice a year, and shares with little value are sold. Even if it is deemed reasonable to hold a stock, all or part of shares of the stock may be sold in consideration of factors such as the capital policy and the market environment, in accordance with the basic policy to reduce cross-shareholdings.

AICA exercises its voting rights for shares held as cross-shareholdings by comprehensively considering factors such as whether it contributes to the improvement of corporate value of both the issuing company and AICA, as well as whether there is a risk of impairing shareholder value. In addition, in the case of an event that requires attention, such as a long-term slump in business results or a serious violation of compliance, AICA will sufficiently investigate and collect information before determining whether to vote for or against a proposal.

AICA comprehensively reviewed the value of all shares it held as cross-shareholdings based on factors such as the status of shareholding, acquisition prices, transaction details, changes in transaction values, whether the return on required capital (e.g., revenue from transactions with and dividends received from each issuing company for a single fiscal year) exceeded the target cost of capital, and the future transaction policy. As a result of the quantitative assessment, the returns on required capital for listed shares of more than 90% of the companies were found to exceed the target costs of capital. Taking also into account the results of the qualitative assessment, AICA has determined a policy to sell shares of the stocks with little value in consideration of the market environment.

AICA sold shares of two companies by March 31, 2025 as it judged that, based on qualitative assessments, the purpose of holding the shares to stabilize businesses and expand transactions with the issuing companies weakened. As a result, the ratio of cross-shareholdings to consolidated net assets was 9.26% as of March 31, 2025 (9.77% as of March 31, 2024).

AICA will also continue to sell them quickly if they are judged to be unnecessary.

• AICA has designated transactions between AICA and our Directors or major shareholders with conflicts of interest as matters requiring resolution and reporting by the Board of Directors based on the importance of the transactions, in accordance with laws and regulations as well as the Rules of the Board of Directors.

• In addition, AICA has designated transactions between AICA and AICA Group Companies as well as other important matters as matters requiring approval of the Board of Directors of AICA in accordance with the Regulations on Management of Affiliated Companies and the Regulations on Approvals (Ringi).

1. Views on ensuring diversity

   AICA’s Corporate Policy says, “viewing human resources as the most vital resource of our company, we nurture motivated human resources and organizations through mutual understanding and development.” AICA recognizes that while our employees comprise assets, they are also important stakeholders. Based on this understanding, AICA focuses on activities aimed at deepening mutual understanding as it strives to provide opportunities and an environment in which each and every employee can fully apply his or her abilities. By building a workplace where diverse human resources can recognize each other and play active roles, AICA aims to achieve mutual growth for both the company and our employees. AICA promotes diversity in response to the globalization of business and the diversification of market needs.

   AICA’s activity targets for promoting diversity are disclosed in the AICA Report (Integrated Report). (URL: https://www.aica.co.jp/english/company/sustainability/report/)

   AICA’s human capital-related targets set forth in the current Medium-Term Business Plan are disclosed on our website.

   (URL: https://www.aica.co.jp/english/company/philosophy/vision/#headline-1628144740)

2. Voluntary and measurable goals for ensuring diversity

   1. Promotion of women to managerial positions

      As of March 31, 2025, women managers are nine and a ratio of women management positions is 4.27% (Non-consolidated). Business divisions where women can actively work are broadening, including sales,

      administration, and production. In addition, the ratio of women in the qualification grades that qualify as candidates for management positions increased from 6.0% before the Medium-Term Business Plan to 12.8% at the beginning of fiscal year 2025. AICA will continue to increase the ratio of women managers and expand the scope of participation by providing equal opportunities through promotion and hiring, helping them network and be independent, aiming to optimize the management.

      (Target) Ratio of women management positions (by fiscal year 2024): 5.80 % (Non-consolidated) (Results) Ratio of women management positions (fiscal year 2024): 4.27% (Non-consolidated))

   2. Promotion of foreign nationals to managerial positions

      As of April 1, 2025, AICA appointed two foreign nationals executive officers and will continue to proceed with appointment of the foreign director, executive officer, or other managerial positions. Overseas Group companies focus on actively utilizing local human resources and is promoting the appointment of talented locally employed staff to key positions. In fiscal year 2024, 91.1% of Overseas Group companies appointed foreign nationals to the presidential position.

      AICA continuously practices equal opportunity hiring regardless of nationality and hired total of three foreign nationals (one new graduate and two mid-career hires) in fiscal year 2024. Currently 11 foreign nationals are working for AICA, who joined as new graduates or mid-career hires. They play active roles in a wide range of fields, including overseas locations, sales, R&D, and administrative divisions. AICA is actively recruiting foreign nationals as it expands our business globally and will hire more foreign nationals than the present. In the mid to long term, AICA aims to grow into a corporation with culturally diverse teams ready to meet various needs in the organization.

   3. Promotion of mid-career hires to managerial positions

   AICA recruits a certain number of mid-career hires every year to have experienced personnel with minimum training. AICA hired 40 people in fiscal year 2024 as mid-career hires, for a wider range of positions, including sales, R&D, administrative divisions and production technology. AICA currently has 321 mid-career hires, and 53 of them are serving as director, executive officer, or other managerial positions. The ratio of mid-career hires in the senior management (directors and executive officers) is 25% to the total number of executive officers. The ratio is 24.9% for management positions. AICA will continue to maintain more than 20% the ratio of mid-career hires to management positions.

   AICA encourages mid-career hiring and their recruitment to management positions as part of our management strategy.

3. Human resource development policy and internal environment development policy to ensure diversity and their implementation status

   Under the Corporate Policy saying, “viewing human resources as the most vital resource of our company, we nurture motivated human resources and organizations through mutual understanding and development,” AICA is working to cultivate diverse human resources who have a strong awareness of personal growth and their futures, and who strive forcefully toward the Corporate Principle of “Challenge and Creation,” while establishing human resource development policy and internal environment development policy. To this end, AICA has established generation-based, grade-based, and occupation-based training programs, the overseas trainee system, the correspondence education system, the support system for obtaining official qualifications, and the environment for e-learning. Responsible departments, committees, and project teams (the Sustainability Development Committee, the C&C Promotion Committee and the Overseas Governance Committee) work with an aim of creating a work environment where diverse individuals respect and encourage each other. Our work environment is undergoing a transition, such as a workforce shortage, facing diversified needs and changes in work styles, but AICA will continue to work to cultivate diverse human resources and develop an internal environment that are capable of adapting to such changes flexibly and promptly following our Corporate Principle “Challenge and Creation.”

   The details of human resource development policy and internal environment development policy are as follows.

   • Human resources development policy

     We aim to achieve the Corporate Policy saying, “viewing human resources as the most vital resource of our company, we nurture motivated human resources and organizations through mutual understanding and

     development.” We cultivate people who have a strong awareness of personal growth and their futures, and who strive forcefully toward the Corporate Principle of “Challenge & Creation.”

   • Internal environment development policy

By building a workplace where diverse human resources can recognize each other and everyone can play active roles, we aim to achieve mutual growth for both the company and our employees. Based on the recognition that while our employees comprise assets, they are also important stakeholders, we focus on activities aimed at deepening mutual understanding as we strive to provide opportunities and an environment in which each and every employee can fully apply his or her abilities.

AICA has adopted both a contract-type defined benefit pension plan and a corporate-type defined contribution pension plan. The Human Resources Department, which is the division in charge of managing the contract-type defined benefit pension fund, appropriately manages it such as by obtaining information on the status of management from asset managers including life insurance companies and trust banks through a report or in writing. In addition, AICA appropriately invests and manages pension assets by establishing the “Basic Policy for Pension Asset Management” while checking an assurance report on the effectiveness of internal controls and their operation status of each asset manager when necessary.

For the corporate-type defined contribution pension plan, AICA has introduced a matching contribution scheme in 2019 to provide support for self-help efforts of employees. AICA has also been striving to create an environment by opening a dedicated website for employees to provide them with monthly performance reports for each product and allow them to access to educational materials on the plan in the forms of video and text as needed.

As a company that is widely trusted by society, AICA has a basic policy of disclosing information about AICA to all stakeholders at the right time and in the most fair and appropriate manner. AICA strives to engage in constructive dialogue with shareholders by actively disseminating information through various means, including holding Financial Results Briefings, disclosing information through AICA’s website, issuing press releases and Integrated Reports. Please refer to the following URL for details of AICA’s “Disclosure Policy” (available in Japanese only).

(URL: https://www.aica.co.jp/company/ir/management/disclosure/)

1. AICA objectives (e.g., corporate philosophy), management strategies, and business plans

   AICA’s Corporate Principle, Corporate Philosophy, Corporate Policy, Sustainability Policy, Code of Conduct, long-term and medium-term business plans are disclosed on the following URL on AICA’s website.

   (URL: https://www.aica.co.jp/english/company/philosophy/principle/)

   Challenge and Creation

   The AICA Group creates new value and contributes to society through continuous innovation in the spirit of our philosophy of Kyosei*.

   * Japanese word Kyosei stands for active engagement with the AICA Group's stakeholders (customers, employees, shareholders, suppliers, business partners, and local communities, etc.) and the global environment. Kyosei represents our approach to minimize the adverse effects of the AICA Group's business activities and products, and to contribute to society through the value we create and build better relationships with surroundings, with aiming for a sustainable existence together with the stakeholders mentioned above.

   1. Chemistry and Design

      We create uniquely original products through the power of chemistry and design, to contribute to the achievement of a prosperous society.

   2. Group Synergies

      We create group synergy through collaboration in technologies and market network.

   3. Leading Products

      Throughout the specific domains and regions of our business, we enhance and expand our market-leading products.

   4. Global Presence

      We strive to achieve sustainable growth in global markets by enhancing the capabilities of our overseas operations and participating in the higher growth sectors.

   5. Human Resources and Organizations

      Viewing human resources as the most vital resource of our company, we nurture motivated human resources and organizations through mutual understanding and development.

   6. Compliance Management

      We practice fair and transparent management in accordance with all relevant laws, regulations, and social order.

   7. Commitment to Safety and Security

      We ensure trusted quality and engage in environmentally considerate business activities by focusing on our communication with stakeholders.

      1. We address social issues through our business activities to contribute to the creation of a better society.

      2. We have established “Compliance with laws and regulations,” “Respect for human rights,” “Harmony with society,” “Fair business practice,” “Customer’s security and trust,” “Proper information disclosure,” “Protection of company information and property,” and “Environment and safety” as the basic principles of the Code of Conduct, and we base our actions on these principles as shared values for all employees.

      3. We emphasize dialog with stakeholders, including customers, employees, shareholders, suppliers, business partners, local communities, and local governments, and respond promptly to social needs and changes.

      4. We identify material issues from the perspectives of both corporate management and stakeholders, address those issues alongside our business activities, and disclose our progress in addressing them.

      < Aica’s 10 years vision > (FY2017‐FY2026)

      [Financial targets] Consolidated net sales: 300.0 billion yen Consolidated ordinary profit: 30.0 billion yen ROE: 10% or more

      Overseas sales ratio: 45% or more Please refer to AICA’s website for details.

      (URL: https://www.aica.co.jp/english/company/philosophy/vision/)

      (FY2023–FY2026) [Financial targets] Consolidated net sales: 300.0 billion yen

      Consolidated ordinary profit: 30.0 billion yen ROE: 10% or more

      ROIC: 9% or more

      Overseas sales ratio: 50% or more

      AS products sales: 28.0 billion yen

      [Non-financial targets] GHG emissions reduction: 14% reduction vs. FY2022

      Environmental investment: 2.0 billion yen (cumulative over four years) Human capital investment: 4.0 billion yen (cumulative over four years) Engagement score: 4.0 point or more

      Please refer to AICA’s website for details.

      (URL: https://www.aica.co.jp/english/company/philosophy/vision/#headline-1628144740)

2. Basic views and guidelines on corporate governance

   Basic views on corporate governance are disclosed on AICA’s website and I-1 in this report. (URL: https://www.aica.co.jp/english/company/ir/library/corporate_library/index.html)

3. Board policies and procedures in determining the remuneration of the senior management and directors

   • The details of decision-making policies regarding the contents of individual remuneration for directors are as follows.

   1. Composition of remuneration

Remuneration of directors (excluding directors who are members of the Audit and Supervisory Committee and outside directors) consists of fixed monthly basic remuneration, variable performance-based remuneration, and stock remuneration. The stock remuneration was approved and passed at the 121st Ordinary