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Management Rules and the Trade Secret Management Rules for the preservation and management of information. There are also Companywide risk assessments centered on the CSR Management Ofce.5. Limited Liability ContractsIn accordance with Article 427, Paragraph 1 of the Companies Act, the Company has entered into a contract with each of its non-executive directors—outside directors Shinichi Sato, Toru Nozawa, Satoshi Ohoka, and Kanako Osawa—that limits liability for compensation for damages under Article 423, Paragraph 1 of the Companies Act. Based on this contract, liability for compensation for damages is limited to ¥10 million or the minimum liability amount stipulated by law, whichever is greater.Internal Audits and Audit & Supervisory Committee Audits1. Internal AuditsThe Audit Ofce regularly implements internal audits of divisions, work sites, plants, and afliated subsidiaries in addition to verifying that operational execution processes and results comply with the law and internal regulations. The status of these internal audits is reported when necessary to the Audit & Supervisory Committee, and opinions are exchanged on the results of the audits.2. Audit & Supervisory Committee AuditsThe Company’s Audit & Supervisory Committee comprises four directors serving as Audit & Supervisory Committee members, of whom three are outside directors. While utilizing the internal control system, the Audit & Supervisory Committee cooperates with the Audit Ofce and the independent auditor, receives the necessary reports, and conducts audits of the directors’ business execution through such methods as exchanges of opinions. Each Audit & Supervisory Committee member attends management and other meetings, obtains the information needed for the audits, attends Board of Directors’ meetings as a director, and supervises the directors in the execution of its duties by stating opinions and participating in resolutions through their voting rights.Audit & Supervisory Committee members Toshio Yamamoto and Toru Nozawa have considerable knowledge of nance and accounting, having gained many years of experience in their respective roles at the Company’s nance, accounting division, and corporate strategic ofce and Nippon Paper Industries Co., Ltd.’s administrative division.Outside DirectorsThe Company has selected Shinichi Sato, Toru Nozawa, Satoshi Ohoka, and Kanako Osawa as its four outside directors. With the exception of Shinichi Sato, the other three are also Audit & Supervisory Committee members.1. Human, Financial, and Business Relationships and Other Shared Interests between the Outside Directors and the CompanyThere are no particular shared interests between the Company and Shinichi Sato, but Nippon Paper Industries Co., Ltd., where he serves as a senior managing executive ofcer, is a major trading partner of the Company, which purchased ¥2,219 million worth of raw materials from and sold ¥115 million worth of products to Nippon Paper (both results from the scal year ended March 31, 2016). In addition, Nippon Paper is a major shareholder in the Company; its holding amounted to 21,737,792 shares (28.39% of the total number of Company shares outstanding) on March 31, 2016.There are no particular shared interests between the Company and Satoshi Ohoka, who is an independent committee member as stipulated in the Company’s rules of large-scale purchase to deal with an act of large-scale purchase.There are no particular shared interests between the Company and Toru Nozawa, but Nippon Paper Industries Co., Ltd., where he serves as a director and an executive ofcer, is a major trading partner of the Company, which purchased ¥2,219 million worth of raw materials from and sold ¥115 million worth of products to Nippon Paper (both results from the scal year ended March 31, 2016). In addition, Nippon Paper is a major shareholder in the Company; its holding amounted to 21,737,792 shares (28.39% of the total number of Company shares outstanding) on March 31, 2016.There are no particular shared interests between the Company and Kanako Osawa, who is an independent committee member as stipulated in the Company’s rules of large-scale purchase to deal with an act of large-scale purchase.2. Functions Performed and Roles Served by Outside Directors in the Company’s Corporate GovernanceBy utilizing knowledge and experience from his directorship experience at Nippon Paper Industries Co., Ltd., and his many years of business experience in this company’s sales divisions, Shinichi Sato is able to strengthen the Company’s Board of Directors’ supervisory function. He is thus considered qualied to be an outside director.By utilizing knowledge and experience from his directorship experience at Nippon Paper Industries Co., Ltd., and his many years of business experience in this company’s administrative divisions, Toru Nozawa is able to audit and supervise the Company’s Board of Directors. He is thus considered qualied to be a director serving as an Audit & Supervisory Committee member.By utilizing his long years of policy-based nance experience, his rich international experience, his specialist academic experience, and his knowledge and experience gained as an outside director in industries different to that of the Company, Satoshi Ohoka is able to audit and 35LINTEC ANNUAL REPORT 2016

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