Basic Concept on Corporate Governance
Based on our management philosophy, we commit to fulfilling our responsibilities to shareholders, investors, employees, and other stakeholders by continuing to earn stable profits over the medium to long term. At the same time, we commit to continuously contributing to society. We also commit to strengthening the functions of the Board of Directors and improving and strengthening our internal control system, thereby ensuring management transparency and prompt decision-making.
Basic Policy on Building Internal Control Systems
We have established the following basic policies on the establishment of aninternal control system.
Resolution on May 12, 2015
1． System to ensure that directors execute their duties in compliance with laws, regulations, and the articles of incorporation
With regard to the execution of duties by Directors, the Board of Directors shall supervise the execution of duties by Directors through appropriate management based on the Regulations of the Board of Directors, and shall maintain mutual communication among Directors to ensure compliance with laws and regulations and the Articles of Incorporation. In addition, the Board of Directors shall appropriately respect for the opinions of outside directors and corporate auditors concerning the management of the Board of Directors and the execution of duties of Directors, and strive to ensure the effectiveness of such opinions.
2． System to Store and Manage Information on Execution of Duties by Directors
We shall appropriately and securely retain information pertaining to the execution of duties by the directors, including the minutes and other documents required by law, in accordance with the “Document Control Regulations”, and maintain such documents in a readily accessible condition.
3． Matters on the report pertaining to the execution of duties by directors of Subsidiaries to us
The “Group Subsidiary Management Manual” stipulates the matters that must be reported to us by each Subsidiary, and requires each Subsidiary to report on its financial result, the status of important decisions that are necessary to ensure the appropriateness of operations at the General Meeting of Shareholders and the Board of Directors, serious incidents, accidents, lawsuits, and other necessary matter. In addition, the “Group Subsidiary Management Manual” stipulates matters that require prior approval from Subsidiaries, and we are obliged to make decisions on such matters.
4． System to ensure that we and our subsidiaries as the corporate group appropriately conduct operations
Our basic policy is to promote management from a global perspective and to aim to be a corporate group that is highly appreciated by shareholders and business partners and trusted by society through fair and transparent management.
In accordance with this policy, we and our subsidiaries shall establish risk management and legal compliance systems.
In order to maintain and strengthen the appropriateness of operations within the corporate group, we also establish the “Group Subsidiary Management Manual” and the “Group Subsidiary Management Standards”, define the basic matters to be implemented by our Subsidiaries, and monitor the status of compliance.
Furthermore, we establish an internal control system for financial reporting as Nichirin group, and strive for the appropriate operation and management of the system.
①Regulations and other systems related to the risk of loss management for us and our subsidiaries
We realize risk management, which is expected to significantly hinder our management objectives of the entire group, at the Management Committee.
We and our subsidiaries manage risks of quality, environment, and safety, referring to the specialized standpoints by each committee.
In addition, each division and each subsidiary work on risk management through the development of rules and regulations relating to each operation, the implementation of education, the identification of risks, and continuous improvement activities.
Furthermore, we strive to minimize the damage that Nichirin group is possibly suffered by establishing the “Crisis Management Manual”, which stipulates how to respond to emergencies and how to remedy them after emergencies.
②System to ensure the efficient execution of duties by the directors of us and our subsidiaries
We make decisions on important matters related to the management of the entire group, such as matters stipulated by laws and regulations and basic policies for group management at the board of directors.
Important matters related to the management of the entire group include the formulation of the “Group's Medium-Term Management Plan”, which sets targets for Nichirin group as a whole and is shared by all executives and employees of Nichirin group.
Furthermore, by introducing an executive officer system and empowering executive officers to execute their duties, we ensure that directors efficiently execute their duties by focusing on monitoring and supervising important management decisions and business execution.
The Management Committee, composed of directors and executive officers, makes resolutions on matters delegated by the Board of Directors and matters related to the establishment and revision of internal rules, embodies management policies analyzes the business environment, and shares important information in each division, thereby contributing to accurate and prompt decision-making.
The Top Management Conference (TMC) composed of members of the Management Committee and presidents of our subsidiaries is held to share management strategies and management issues across Nichirin group.
In order to improve operational efficiency, we establish and operate rules concerning the organization, authority, and division of duties and other necessary rules to determine and execute specific measures to be implemented, as for us, in accordance with the “Organization, Division, and Authority Manual” established by the Management Committee, and as for our subsidiaries, in accordance with the “Group Subsidiary Management Manual” and the “Group Subsidiary Management Standards”, which are subordinate regulations.
③System to ensure that the execution of duties by our employees and subsidiaries’ directors and their employees complies with laws and regulations and the Articles of Incorporation
We establish the “Nichirin Group Charter of Corporate Behavior” to clarify our basic stance on legal compliance and corporate ethics and to fulfill our corporate social responsibilities.
In accordance with the “Nichirin Group Charter of Corporate Behavior”, the executives and employees of the Nichirin Group comply with laws, regulations, and the Articles of Incorporation, and take a firm stance against unreasonable demands by blocking any relationship with antisocial forces that threaten the order and safety of society.
In order for all executives and employees to act in compliance with laws, regulations, and the Articles of Incorporation, we and our subsidiaries establish the “Compliance Manual”, disseminate it, and strive to improve the compliance system.
We establish the “Compliance Committee” to organize an internal compliance system and provide compliance support to our subsidiaries.
The Compliance Committee continuously and effectively educate our employees and our subsidiaries’ directors and employees with regard to compliance with laws and regulations and the Articles of Incorporation. The Compliance Committee also establish a hotline (Nichirin Helpline, including hotlines from subsidiaries and external contact points) for reporting violations of laws and regulations or acts that may violate laws to ensure thorough awareness of compliance.
In addition, the Internal Audit Office monitor compliance with laws and regulations by auditing the operations of each division and subsidiary.
Furthermore, we dispatch our officers to each subsidiary or appoint as regional general managers to enhance the management of subsidiaries through mutual check and balance between dispatched directors.
The board of directors of subsidiaries are required to hold meetings at least once every three months, except for joint ventures companies with partners.
5． Independence of any employee who assists in the duties of the auditor from the directors and Insurance of such employee to perform instructions
Employees who assist the duties of auditors are not currently assigned. However, in the event that auditors request the appointment of such employees, sufficient consideration is given to the assignment of such employees to ensure independence in personnel affairs, and to ensuring the effectiveness of instructions given by auditors.
The Internal Audit Office maintain close communication and cooperation with the auditors.
6． System for reports to auditors from our directors and employees and our subsidiaries’ directors and their employees, as well as persons who received from reports from them, and other matters related to reports to auditors
All executives and employees of Nichirin group report to our corporate auditors on matters that have a significant impact on us and our subsidiaries, the status of implementation of internal audits, and important matters related to compliance, as well as matters stipulated by law.
As a contact point for reporting compliance-related matters, it is possible to report to our corporate auditors.
In order for our corporate auditors to understand the important decision-making process and the status of business execution, we and our subsidiaries shall ensure that the corporate auditors attend important meetings and have access to important documents related to business execution.
7． System to ensure that the person who reports to the auditor shall not receive any disadvantageous treatment by reason of such report
We prohibit the Group's officers and employees who have reported to the corporate auditors from treating reporters disadvantageously on the grounds that they have made the report, and ensure that all executives and employees of the Group are informed of such prohibition. In the Compliance Manual, we and our subsidiaries clearly state that the whistleblower shall not receive any disadvantageous treatment as a result of the whistleblower's report.
8． Matters on the advance payment or reimbursement of expenses incurred in the performance of duties by the auditors and other execution of such duties, as well as policies on the disposal of liabilities
In the event that a corporate auditor requests advance payment of expenses, etc. pursuant to Article 388 of the Companies Act with regard to the execution of duties, we deal with such request after deliberation by the division in charge, unless it is deemed that the expenses or liabilities pertaining to such request are not necessary for the execution of duties by such corporate auditor.
In the event that the Board of Corporate Auditors requests that independent outside experts (attorneys, certified public accountants, etc.) serve as advisors for the Company Auditors, we bear the expenses of such outside experts unless deemed not necessary.
9． Other systems to ensure effective audits by Corporate Auditors
The executives and employees of the Group are fully aware of the audit plan of the Board of Corporate Auditors, and cooperate with the auditors in auditing activities, such as surveys of each division and subsidiary, and other hearings.
We also hold regular discussions between the repzresentative director and corporate auditors.