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The Ube Group instituted an executive officer system in 2001 to separate the governance and management functions and changed the management structure of the Board of Directors.

Introduction of the executive officer system has enabled executive officers to concentrate exclusively on business management, thus speeding up decision-making processes. The Company also clarified the Board of Directors' responsibility to shareholders as guardians of shareholder value, thereby ensuring that the Company's actions are geared to maximizing shareholder value in the medium to long-term. The chairman of the board who cannot serve concurrently the executive officer, presides over the board, and supervises executive officers in the execution of their duties to ensure propriety and efficiency, increase transparency, maximize shareholder value and minimize risk. In accordance with these measures, the Company has reduced the membership of the Board of Directors to nine members.

Although the Company has not switched to a board committee system, it has introduced internal committees responsible for director nomination, and for evaluation and compensation.

Also, in 2005, the Company introduced two outside directors as a way to add a third-party perspective to management decision-making and thereby ensure greater transparency and objectivity. As for auditors, two of Ube's four corporate auditors are external auditors.

The Company will continue to study new ways to improve corporate governance structures as it strives to strengthen and speed up the management function, enhance the strategic decision-making and corporate governance functions and thereby improve the operation of the company.

Overview and Organizational Chart of Corporate Governance Structure

1. Management Structure for "Group Management" and "Company Consolidated Management"

1.	Group Management
	It is the duty of the Company CEO (President), who has been delegated the authority to manage the business of the Ube Group by the Board of Directors, to clearly define Group business management policy, set specific targets for each member company and allocate the necessary management resources (including human, material and financial) needed to achieve those targets. The Company CEO is also responsible for decisions on the most important issues which exceed the authority of any given company.

2.	Company Management and Business Activities
	Companies are expected to take the initiative in working toward their individual targets using the management resources allocated to them on the basis of policies established in accordance with group management policy.

3.	Group Service Units
	The group service units are responsible for such duties as providing support for the group management and company management strategy formulation and business performance monitoring functions, procuring management resources (human, material and financial) and providing highly specialized functions and functions common to business divisions in an integrated and efficient way.

2. Decision-Making System

The Ube Group has taken steps to separate the governance function from the management function in order to promote more transparent and efficient company management. The following committees have been established to assist in the decision-making process.

1.	Board Of Directors
	Comprised of all company directors, the Board of Directors serves as the guardian of stockholder value. Its role is to discuss issues from the medium to long-term perspective and implement decisions concerning items covered by the commercial code, basic company policy and key business matters. Meetings of the Board of Directors are led by the Chairman of the Board, and are held as needed, or at least once every three months. To achieve more flexible management, the Nominating Committee and Evaluation and Compensation Committee, comprised of several members of the Board, have been established as subordinate entities to assist the Board of Directors.

2.	Group Management Committee
	The Group Management Committee is responsible for discussing and making decisions on key matters concerning resource allocation, items that need to be adjusted from the overall group perspective (preliminary financial results and forecasts, medium-term management plans, plans for capital investment and financing loans) and other key matters that affect the group as a whole, in accordance with group management policy and Group Management Committee rules.

3.	Company Operating Committee
	The Company Operating Committee is responsible for discussing and making decisions on key matters, such as business strategy, at the company level for Ube Industries and other companies in the group in accordance with the Group Management Guidelines and Group Management Committee rules.

3. Internal Auditing and Corporate Auditors

Internal auditing duties for the Company are performed by the Auditing Department, an independent unit that reports directly to the president. The Auditing Department is responsible for monitoring internal controls and compliance with laws, regulations, ordinances and designated procedures, in order to discern risk with regard to overall management activities. The Head of the Auditing Department is a member of such organizations as the Compliance Committee and the Information Security Committee, which provide company-wide risk management. This enables the department to work in close cooperation with the various committees to strengthen the risk management system.

The corporate auditing organization is comprised of four corporate auditors (of which two are external auditors) and the Corporate Auditor's Office, which provides the auditing staff. Audits are performed in accordance with audit policy and audit plans, which are renewed every year. Auditors attend key corporate meetings and audit the execution of duties by directors and executive officers based on meetings with and reports from directors and related personnel. Corporate auditors meet regularly with staff from the Corporate Auditor's Office to exchange information, and they maintain close cooperation with the Office to ensure that staff from the Corporate Auditor's Office support their actual audit activities. They also hold regular meetings with independent auditors as well as auditors from group companies to receive audit plans and progress reports, and hold training seminars and briefings to exchange views in order to improve audit quality.

4. Enhancement to Risk Management System

Examples of efforts to enhance the risk management system include establishing the Group Environment Safety Committee and the Group Product Liability (PL) Committee under the aegis of the Group Management Committee. Responsible for safety and environmental protection and product safety, respectively, these committees formulate and implement various measures for the entire Ube Group. They have also established the following group-wide organizations as part of the system of risk management.

Compliance Committee

The Personal Action Guidelines were established in 1998 to ensure that the management and staff of all Ube Group companies are made thoroughly aware of and familiar with compliance issues. In 2003, the following steps were taken to strengthen the Personal Action Guidelines.

(1)	Parts of the Personal Action Guidelines were strengthened to emphasize corporate ethics.
(2)	The position of compliance officer was created to establish and promote compliance, and the Compliance Committee, which includes a consulting attorney, was set up in an assisting capacity.
(3)	The "Ube C-Line" message center was established to enable employees to report any compliance violations directly without having to follow formal reporting channels, so that any problems can be quickly corrected.

Information Security Committee

The Information Security Committee was set up to formulate information security policies, thoroughly educate employees and monitor compliance. It also implements various policies with regard to security rules and regulations.

Restricted Cargo and Export Management Committee

In accordance with basic Ube Group export management policy, this committee is responsible for preventing illegal export or supply of all types of cargo and technology controlled in accordance with export management regulations, including foreign exchange and foreign trade legislation, designed to maintain international peace and security. Duties include making employees thoroughly aware of policy.

Overseas Crisis Management Committee

The Overseas Crisis Management Committee was established to secure the safety of employees who work overseas, both in long-term and short-term roles, as well as their families in times of crisis, given the increasing number of employees who are dispatched to sites overseas and the deteriorating condition of public safety in some countries and regions in the world. Duties include identifying the different levels of risk overseas, compiling an information manual and establishing emergency response systems to protect employees and their families in times of crisis.

Domestic Emergency Response Manual (E Manual)

A Domestic Emergency Response Manual has been compiled, which sets out procedures to follow, both internally and externally, in the event an emergency situation occurs in Japan. It includes instructions on establishing an emergency contact network and a crisis management center.