• Corporate Governance
• Code of Conduct

1. Basic Policy

NPC Incorporated (the Company) fulfills its social responsibility to all stakeholders, including shareholders, employees, clients as well as local communities by taking initiatives in maximizing corporate value, enhancing business management systems with greater transparency and prompt response to business environment changes, and thoroughly complying with laws and regulations.

2. Corporate Attributes

Stock Exchange Listings and Market Classification	Mothers Market of the Tokyo Stock Exchange
Fiscal Year-end	August
Industry	Machinery
Number of Employees (Consolidated)	100 or more and less than 500
Net Sales (Consolidated)	10 billion yen or more and less than 100 billion yen
Parent Company	None
Number of Consolidated Subsidiaries	Less than 10

1. Items Relating to Organization Structure and Operations, etc.

Form of Organization	Company with the Board of Auditors

[Directors]

Chairman of the Board of Directors	President of the Company
Number of Directors	5
Election of Outside Directors	Not Elected

[ Reason for Adopting Current Organization Structure ]

The Company has 5 elected directors. In addition to the President of the Company who supervises the entire company, the organizational structure includes 2 individuals in charge of the photovoltaic module equipment business, 1 individual in charge of the management department, as well as 1 person in charge of planning and IR-related matters, for a total of 5 persons. The reason for adoption of the current organizational structure is its satisfactory functionality from a business execution perspective.
The Company does not elect outside directors, however each auditor is highly independent and holds significant background, knowledge and experience, thus a sufficient audit function is ensured, as stated in "Items Relating to Functions of Business Execution, Audit and Supervision, Nominations, and Decisions on Remuneration, etc.".

[Auditors]

Establishment of the Board of Auditors	Yes
Number of Auditors	3

[ Cooperation between Auditors and Accounting Auditors ]

Auditors cooperate with the accounting auditor by exchanging information and opinions as required concerning the findings of audits conducted by the accounting auditor. Further, the accounting auditor holds a report meeting to conduct a hearing concerning the results of quarterly review and of the fiscal-year-end audit.


[ Cooperation between Auditors and Internal Auditing Department ]

Auditors cooperate with the Internal Auditing Department through mutual coordination, such as information sharing, in an endeavor to conduct effective audits. Upon formulation of annual audit plans for auditor audits, any issues highlighted by such internal audits shall be made the subject matter of audits as needed, so as to effectively utilize the cooperation with internal audits.

Election of Outside Auditors	Elected
Number of Outside Auditors	3

[ Election of Independent Directors ]

The Company elects Kazumi Takemoto, Teruaki Kakimoto and Noboru Kojima who are the outside auditors as independent directors. The three outside auditors stated above do not have conflicting interests with general shareholders.

[Directors' Remuneration]

Means of Disclosure	Securities report, Annual report (Business report)
Disclosure Status	Disclosure of each total amount for all directors

[ Support System for Outside Directors (Outside Auditors) ]

Under the support system for outside auditors, the General Affairs Division provides support for matters related to audit duties. Outside auditors attend the Board of Director Meetings with meeting agendas as well as related materials distributed to them. In the Company, all important matters are introduced and reported on at the Board of Director Meetings, and thus all important matters are communicated to outside auditors.

The Board of Directors of the Company is made up of 5 directors and holds meetings at least once a month to engage in management policies, business planning decisions, as well as confirming the status of business execution and thorough compliance with laws and regulations.
The Board of Auditors of the Company is made up of 1 outside standing auditor and 2 part-time auditors, and holds meetings at least once every three months. Each auditor attends the Board of Director Meetings to inspect the status of deliberations and present objective and impartial opinions in relation to appropriate overall management or on particular issues. In addition, auditors receive debriefings from accounting auditors, conduct hearings on the status of execution of duties from directors, and also attend important Company meetings apart from the Board of Director Meetings such as Research and development meetings, Sales meetings and Management Division meetings to present objective and impartial judgments and opinions under a system which enables auditors to inspect the execution of duties by directors.
Under the support system for outside auditors, the General Affairs Department provides support for matters related to audit duties, and upon requests by auditors, employee(s) who assist their duties shall be assigned. In addition, assignment, transfer, assessment and reprimand of the employee(s) shall be performed with consideration of the auditors' opinions in order to ensure the independence of the employee(s) from directors.
As for the election status of an auditor who holds financial accounting knowledge, the Company elected Noboru Kojima, certified as a tax accountant and a public accountant, as outside auditor.
As for the election status of the outside auditors, the Company elects outside auditors who served for a company which has no business relationship with the Company from the past to present, as stated in "Election of Outside Auditors".
The functionality of auditing the management is satisfactory, though the Company does not elect outside directors. This is due to the attendance of highly independent outside auditors, who hold significant background, knowledge and experience, at the Board of Director meeting, which is the top policymaking organization. In addition, the attendance rate of each auditor for the fiscal year ended August 31, 2009 was 100% for Kazumi Takemoto, 89% for Teruaki Kakimoto, and 93% for Noboru Kojima.
As for the internal audits, the Internal Auditing Department which is made up of 2 people conducts internal audits on the status of business execution of all company divisions including overseas subsidiaries based on Internal Auditing Regulation. The Internal Auditing Department formulates annual internal audit plans with an approval from the president and audit whether the business activities of each division are being implemented in compliance with laws and various regulations. In addition, specific indications and assistances are pointed out in order to improve the operation situation and operational efficiency. Additionally, efficient internal audit procedures are in performance by cooperating with the auditors and accounting auditors, receiving appropriate advices.
With regards to accounting audits, an audit contract has been concluded with Ernst and Young ShinNihon LLC based on the Financial Instruments and Exchange Law (Article 193-2-1) and corporate law. The certified public accountants which execute the audit duties of the Company are Takuzo Funayama, Hiroaki Yatabori, and Yukiyasu Yamakawa. In addition 5 certified public accountants and 6 assistant certified public accountants are in assistance of the duties.

-	Supplementary Explanation
Prompt Delivery of Convocation Notice for General Meeting of Shareholders	Measures are taken to promptly deliver the Convocation Notice, with the objective being delivery 3 weeks prior to the meeting date.
Setting the General Meeting of Shareholders on dates which fall outside those when other companies are holding their General Meeting of Shareholders	Since the fiscal year of the Company ends in August, it is considered possible to set dates which fall outside those when other companies are holding their General Meeting of Shareholders.

2. Investors Relations Activities

-	Supplementary Explanation	Explanation by Representative
Holding Regular Presentation Conference for Individual Investors	Presentation conference for individual investors are held as required according to arrangements by securities companies, etc.	Yes
Holding Regular Presentation Conference for Analysts and Institutional Investors	Activities are conducted twice a year as standard; following fiscal term's results and the second quarter financial results. Further, in addition to presentation conference, company information and performance explanations in the form of individual interviews are also provided as required and IR activities are conducted continuously with the objective of creating stable shareholders.	Yes
Holding Regular Presentation Conference for Overseas Investors	There is participation in IR conferences held overseas and individual visits to overseas institutional investors, according to arrangements by securities companies. Further, individual interviews with overseas institutional investors are also conducted within Japan as required according to arrangements by securities companies.	Yes
Web Page Publication of IR Documents	Apart from the disclosure of materials designated by law, press releases are also promptly published on the Company web page. Further, even information that does not come under timely disclosure regulations is also published on the website from the perspective of broad and fair disclosure of the Company information. http://www.npcgroup.net http://www.npcgroup.net	Yes
Establishment of IR Division (Responsible Parties)	Research and Planning Department is responsible for IR. The persons in charge are as indicated below. Hisashi Sato, Director and Head of Research and Planning Department Naoko Kitazumi, Takashi Takimoto, Kanako Nagayama, IR Group, Research and Planning Department	-

3. Measures to Respect the Position of Stakeholders

-	Supplementary Explanation
Provisions of Internal Regulations to Respect the Position of Stakeholders	"NPC Corporate Code of Conduct" have been established, stipulating respect for the position of stakeholders, and is made prevalent through continuous communication with all executives and employees.
Promotion of Environmental Protection, Corporate Social Responsibility (CSR) and other Activities	"Relationship Between Vacuum Technologies and Environmental Issues" has been established as the Company's business policy. ISO14001 has been acquired and continuous maintenance is being carried out.
Establishment of Policy Concerning Disclosure of Information to Stakeholders	IR-related information is released through the Comapany web page, being based on the policy stated in the "Investor Relations Activity".

1. Framework to ensure that officers and employees, in execution of their duties, comply with the applicable laws and the company articles of incorporation
   1. --- In order to ensure that corporate activities are predicated on adherence to the applicable laws, company articles of incorporation and social ethics, the President of the Company will thoroughly communicate with officers and all employees on an ongoing basis.
   2. --- The Company has established an "Internal Control Committee" for which the President assumes ultimate responsibility, and which operates broadly across divisions so as to build, maintain and improve on a compliance risk management framework.
2. Matters pertaining to maintenance and management of information concerning Directors in execution of their duties
   
   1. --- Information concerning Directors in execution of their duties must be maintained in accordance with the "in-house rules concerning documentation management." Directors and Auditors shall be entitled to access such documents when necessary.
3. Regulations and other framework pertaining to managing risk of losses
   
   1. --- Total control of the Company's risk management shall be executed by the "Internal Control Committee" specified in Item 1 (2) above, which shall improve its framework of company-wide risk management.
4. Framework to ensure the efficiency in the execution of Directors' duties
   1. --- As a basis of the framework to ensure Directors in executing their duties efficiently, the Company will hold the Board of Director meeting once a month, and hold an extraordinary Directors' meeting when necessary so as to make prompt decisions regarding important issues.
   2. --- In relation to execution of duties based on decisions at Directors' meetings, responsible persons and their responsibilities shall individually be specified in accordance with the "in-house rules on organization."
   3. --- The Company shall establish mid-term and annual management plans, as well as policies for business execution and numerical targets. In addition, each division will work to achieve their goals and conduct reviews on a regular basis.
5. Framework to ensure the appropriateness of business activities carried out by the corporate group comprising the Company and its affiliated companies
   
   1. --- With regard to the management of affiliated companies, such management shall be performed in accordance with the "in-house rules on management of affiliated companies," and departments specified in the "in-house rules on management of affiliated companies" shall work closely with the "Internal Control Committee" to improve group management.
6. Matters concerning Auditors' request for assigning assistants to support their duties
   
   1. --- Upon requests by auditors, employee(s) who assist their duties shall be assigned. Assignment, transfer, assessment and reprimand of employee(s) shall be performed with consideration of the Auditors' opinions in order to ensure the independence of such employee(s) from Directors.
7. The frameworks for facilitating communication with Auditors by Directors and employees and other reporting, and the framework for promoting increased efficacy in the execution of Auditors' auditing activities
   1. --- Directors and employees shall notify Auditors about important issues which affect work or business performance of the Company and its affiliated companies, and make reports without delay in cases in which they have known the facts of violation of the applicable laws or the company articles of incorporation or dishonest act in relation to performance of duties, or facts that cause damage to the Company or its affiliated companies. Auditors shall be entitled to request Directors and employees to make reports.
   2. --- Auditors shall be entitled to attend the Board of Director meeting as well as meetings of the Company and its affiliated companies when necessary to identify the state of business performance, and request explanations from Directors and their employees.
   3. --- Auditors shall exchange opinions with the President on a regular basis to foster communications, and strive to exchange information with accounting auditors and the Internal Auditing Department to ensure effectiveness of auditing of the Company and its affiliated companies.
8. Fundamental Position on Elimination of Anti-social Influences
   1. --- In the documentation of "the NPC Corporate Code of Conduct," the Company clearly and comprehensively instructs all officers and employees regarding rejection of relations with anti-social elements, for the purpose of observation of laws, protection of the environment, and fulfillment of the Company's ethical responsibility.
   2. --- Employees who detect any suspicions as to this policy should not take action on their own but immediately report the matter to their Administrative Department Manager or the President, and in the event of discovery of any related problems, action shall be taken as an organization in consultation with corporate lawyers and/or the police.
   3. --- In regard to partners in transactions, an internal system is established whereby company divisions mutually perform checking prior to the start of transactions as well as on an ongoing basis, through credit investigating institutions and newspaper article searches etc., and through gathering of information from regional companies etc.
   4. --- Through operational procedures documentation, the Company defines anticipated risks and strategies for avoidance, and strives to recognize, detect, and eliminate risk in its daily operating activities.

1. Items Relating to Takeover Defense

At the Board of Director Meeting held on October 12, 2007, countermeasures were determined in relation to basic policy concerning Company control, as well as countermeasures concerning large scale purchasing of Company shares (Takeover Defense Measures) which were approved at the 15th Ordinary General Meeting of Shareholders held on the November 29, 2007.
*The full text of this plan is published on the internet at the Company's web page (http://www.npcgroup.net/ir/index2.html).