SYSMEX CORPORATION

• Corporate Governance Structure
• Internal Control
• Risk Management
• Security Export Control
• Intellectual Property Control
• Compliance
• Anti-corruption
• R&D Ethics
• Respect of Human Rights
• Promotion of CSR Activities

Corporate Governance Structure

To Improve Management Efficiency through Enhanced Management Robustness and Better Transparency

Sysmex considers reinforcing corporate governance to be one of its most important management priorities. We believe that enhanced management robustness, better transparency, and improved management speed and efficiency will help us to maximize the overall corporate value of the Group.

The Company’s Board of Directors consists of 8 directors, who deliberate on important management issues. The Company has adopted the corporate auditor system, and the Board of Auditors consists of 4 corporate auditors, 2 of whom are external auditors. The corporate auditors supervise the directors’ business conduct both independently and objectively.In April 2005, we adopted the executive officer system in order to increase the speed of decision making in the conduct of business and respond quickly to changes in the business environment. A consultative body to the President, the Steering Committee deliberates on important matters concerning the Group’s business. Seven out of the 14 executive officers are concurrently directors. The Company has also established the Nominating Committee and the Compensation Committee, which have responsibilities in accordance with the “Companies with Committees” system.

In order to protect stakeholders’ interests, we have established regulations concerning insider trading, personal information protection, compliance, and ethics for clinical research and development.

Corporate Governance Structure

See the Corporate Governance section for details.

Brand Committee Established

Following the introduction of a new corporate logo in October 2008, a Brand Committee was established in January 2009.

Chaired by an executive officer of the Company, the Brand Committee aims to enhance corporate brand value by deliberating on and evaluating the usage of the corporate brand and ensuring its proper management.

See the Corporate Brand section for details.

Internal Control

To Ensure the Appropriateness of Financial Statements

Sysmex is working on the establishment of an internal control system for the entire Group. To expedite this ongoing effort, in November 2008 we laid down Internal Control Regulations concerning Financial Statements and established an Internal Control Committee concerning Financial Statements, a consultative body to the President.

To standardize financial reporting operations within the Group, we began rebuilding our ERP* system in fiscal 2009. In fiscal 2010, we completed its implementation across the Group except for some sites in Europe.

* Enterprise Resource Planning. A method / concept for enhancing management efficiency through an integrated approach toward managing an entire enterprise for efficient use of management resources

Risk Management

Promoting Risk Management by Establishing a Dedicated Committee

To control Group-wide risk management activities, Sysmex established a Risk Management Committee, which is chaired by a Risk Management Officer (Senior Managing Officer), the Group’s chief executive in charge of risk management.

In fiscal 2010, in order to select priority risks to address during the mid-term management plan, this Committee conducted risk assessment and determined new priority risks.

Risk Management Structure

Security Export Control

Strengthening a Security Export Control Structure

Ever since the establishment of the Security Export Control Regulations in 1997, Sysmex Corporation has made constant efforts to strengthen its security export control, so as to verify the destinations and purposes of use of its exports without fail. At each department in Japan, a security export control officer is appointed who is responsible for ensuring security export control and employee training on the issue at his or her department.

Intellectual Property Control

Preventing Infringement on Others' Intellectual Property Rights

Dedicated to intellectual property management, Sysmex makes efforts to protect and utilize its own intellectual property rights, as well as to prevent any infringement on the intellectual property rights of others. Each product development project conducts a patent review so as to decide which patent to apply for in order to protect our own intellectual property and review third parties' intellectual property information. As a part of this review, a patent application study committee is held, where Intellectual Property members and R&D engineers draw up patent application policies and planning for technologies under development. At the same time, the committee investigates the status of third-party intellectual property rights, thereby minimizing any risks associated with intellectual property.

In fiscal 2010, Sysmex applied for 141 patents inside Japan and 283 patents outside. Sysmex holds 431 patents inside Japan and 704 patents outside (as of the end of fiscal 2010). Applications have been made for ten environment-related patents.

Compliance

Pursuing “Open and Aboveboard Business Activities”

Sysmex has defined its view of compliance as “respecting laws and regulations and going about our business boldly with a strong sense of ethics”.

In accordance with this definition, we have established a Compliance Code, in which particularly important conformance rules for all executives and employees to abide by are compiled.The Compliance Code has been translated into English, Chinese, German and other local languages for use by subsidiaries and affiliates outside of Japan. We have collected a written pledge to comply with this Code from all employees within the Sysmex Group.

Continuously Providing Education on Compliance

Activities During Compliance Enforcement Month

In fiscal 2010, we designated October as “Compliance Enforcement Month”, and intensively conducted a variety of activities during this period to raise employee awareness concerning compliance.

Specifically, we conducted a questionnaire survey with all employees of Group companies in Japan to confirm the progress of improvements pertaining to employee knowledge and the effectiveness of education.We also held a series of lectures and seminars to further raise employee awareness concerning compliance.

Lectures and Seminars Held During Compliance Enforcement Month

Name	Number of participants
Compliance lecture for directors	17 persons
Compliance lecture for (executive) vice president	81 persons
Seminar on copyrights and trademarks (for employees)	380 persons

Internal Reporting System

An internal reporting system originally developed for Group companies in Japan, the “Campanula Lines” allow our staff members to seek consultations and file a report via telephone, postal mail or e-mail through two lines (in-house and external).Any information received is handled anonymously to protect the personal information of those providing the information.

We are expediting the introduction of an internal reporting system at our subsidiaries and affiliates outside of Japan. As of January 2011, the system had been introduced to 38 of the 44 overseas Group companies.

“Campanula Lines” internal reporting system

See the Corporate Compliance Efforts section for details.

Anti-corruption

Educational Campaign for the Prevention of Corruption

In fiscal 2008, Sysmex Corporation established a Sysmex Promotion Code (SPC), which stipulates the core behaviors for preventing bribery and other inappropriate acts and maintaining fair trade. At the same time, the Company established a Fair Trade Promotion Committee, under which three Sub-committees are placed in charge of “training and guidance”, “investigation”, and “auditing”.

In fiscal 2010, seminars continued to be organized and held for employees involved in sales and service activities, including those from Group companies in Japan and those from R&D who deal with public agencies.

R&D Ethics

R&D Ethics Compliance

Being involved in clinical research and human genome and genetic analysis research, Sysmex Corporation adopted the “Ethics Regulations on Clinical Research and Development and Human Genome and Genetic Analysis Research”, whose basic policies include “respect of human dignity” and “thorough protection of personal information”. The Company also established a “Research Ethics Examination Committee”, which includes outside members such as legal and science experts, in order to review research content.

The list of committee members and examination results are disclosed on our website, thus ensuring transparency.

Respect of Human Rights

Group Company in Brazil Obtains SA8000^*1 and OHSAS18001^*2 Certification

Certification project team at Sysmex do Brasil Industria e Comercio Ltda.

In fiscal 2008, our affiliate Sysmex do Brasil Industria e Comercio Ltda. began their initiative to acquire certification for Social Accountability 8000 (SA8000)^*1, an international standard for the protection of workers’ fundamental human rights, and has since briefed their employees and business partners on this standard.

In fiscal 2010, the company obtained SA8000 certification as well as certification for OHSAS18001^*2, an international standard for occupational health and safety management systems.

*1 SA8000: Created by an American CSR assessment body based on the International Labor Organization (ILO) conventions, Universal Declaration of Human Rights, and the United Nations Convention on the Rights of the Child.

*2 OHSAS18001: Published in 1999 based on the BS8800 standard, which was developed by the British Standards Institute (BSI) in 1996, by a team consisting of some 30 certification bodies and standardization organizations in various countries.

Promotion of CSR Activities

Participation in the United Nations Global Compact

To demonstrate our increased emphasis on activities pertaining CSR, Sysmex expressed its intention to participate in the United Nations Global Compact and was officially registered on February 22, 2011.

The UN Global Compact sets forth ten principles that companies and organizations should abide by. It was originally proposed by UN Secretary-General Kofi Annan in an address to the World Economic Forum in January 1999. Then, in July 2000, it was officially adopted by the United Nations Headquarters in New York. The UN Global Compact asks participating companies and organizations to embrace, support and enact ten principles in the areas of human rights, labor, the environment and anti-corruption. The number of participating companies and organizations total 8,800 worldwide, and more than 125 in Japan (as of the end of December 2010).

Through participation in the Global Compact, Sysmex deepens its understanding of the social responsibility that it must fulfill through business activities and also incorporates the ten principles pertaining to human rights, labor, the environment and anti-corruption into its corporate activities in a bid to build trust and confidence to people all around the world.

The UN Global Compact’s Ten Principles

Human Rights	1.Businesses should support and respect the protection of internationally proclaimed human rights; and
	2.make sure that they are not complicit in human rights abuses.
Labor	3.Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;
	4.the elimination of all forms of forced and compulsory labor;
	5.the effective abolition of child labor; and
	6.the elimination of discrimination in respect of employment and occupation.
Environment	7.Businesses should support a precautionary approach to environmental challenges;
	8.undertake initiatives to promote greater environmental responsibility; and
	9.encourage the development and diffusion of environmentally friendly technologies.
Anti- corruption	10.Businesses should work against corruption in all its forms, including extortion and bribery.

Reorganizing the Structure for Promoting CSR

In fiscal 2010, Sysmex established a new CSR Division in order to aggressively fulfill its corporate social responsibility. Placed under the CSR Division are the CSR Promotion Department (formerly the CSR Promotion Division) and the Risk Management Department. With this organizational structure, we will promote CSR activities that also encompass risk management.

We also began examining Sysmex’s priority CSR issues in fiscal 2010.

Holding CSR Opinion Exchange Meetings

Sysmex holds CSR opinion exchange meetings with the CSR Promotion Department (formerly the CSR Promotion Division) and managers of various divisions and facilities.

In fiscal 2010, a total of six meetings were held. Participants exchanged information on the progress of Sysmex’s CSR activities and discussed future activities.