Corporate Governance Structure

Basic approach

Based on our Group Mission Statement, the strengthening of corporate governance is positioned as one of our most important priorities. We ensure transparency and fairness and promote speedy decision-making and other management efficiencies.

We are engaged in corporate governance enhancements in an effort to respond agilely to business environment and market changes and improve performance while maintaining sound management through the creation, strengthening and practical management of internal control systems to maximize corporate value and meet our ethical and social responsibilities in accordance with the following basic approach.

(1)Respect the rights of shareholders, ensure fairness.
(2)Cooperate appropriately with stakeholders, taking into account the interests of shareholders and all other stakeholders.
(3)Ensure transparency and the appropriate disclosure of Company information.
(4) The Board of Directors attempts to establish an effective executive supervisory function from an objective standpoint emphasizing the role of independent external directors in light of fiduciary responsibilities and accountability to shareholders.
(5)Strive to engage shareholders in constructive dialogue that contributes to sustainable growth and the maximization of corporate value over the medium- to long-term.

Corporate Governance Structure

Structural overview

While maintaining a Board of Directors system comprising a small number of members to heighten the effectiveness of discussions at Board meetings, NICHICON appoints external directors and corporate auditors in an effort to maintain management soundness and transparency.

Board of Directors

At present, NICHICON’s Board of Directors consists of seven members, which is considered as a scale appropriate for promoting continued rapid decision-making.

Furthermore, external directors are appointed for their high degree of specialization in an effort to ensure an optimal structure achieving diversity and an overall balance between knowledge, experience and skills.

Corporate Auditors

At present, NICHICON has appointed four corporate auditors who attend Board of Directors and other important meetings to provide opinions. Based on their review of the execution of business duties by the Board of Directors and the Company’s operational and financial condition, corporate auditors conduct legality audits and monitor business duties, including ascertaining management conditions, through site visits to divisional headquarters, worksites and Group companies.

The Board of Corporate Auditors conducts reports on the condition of reciprocal business duty execution, and based on audit planning and implementation conditions with accounting auditors, works in close cooperation when necessary to exchange mutual information and opinions in an effort to improve the efficacy and efficiency of auditing.

External Directors and Corporate Auditors

NICHICON has three external directors (all of whom are fully independent) and three external corporate auditors. The external directors attend meetings of the Board of Directors, monitor the business execution of each unit, and perform oversight. The external corporate auditors attend meetings of the Board of Directors and the Board of Corporate Auditors, and also audit business operations and provide advice by conducting operational audits of each executing unit. None of the external directors or external corporate auditors has any special interests in the Company.

Operating Officers

NICHICON introduced an operating officer system to clarify the role of management monitoring and business execution functions in an attempt to realize speedy management and accurate and effective business execution through systematic decision-making in response to the clarification of division of duties and administrative authorities and the special characteristics of each department.

Establishment of internal control system and PDCA cycle

NICHICON has established the CSR Promotion Committee to build a platform for ensuring that its business conforms to the Companies Act and the Ordinance for Enforcement of the Companies Act. In addition, the Internal Control Promotion Committee has been established to create an internal control system as required by the Japanese Financial Instruments and Exchange Act. Both committees are chaired by the president.

The CSR Promotion Committee has been established to maintain the public’s trust and avoid or prevent risk that could damage operations. The committee is composed of five sub-committees, Compliance, Competition Law Compliance, Risk Management, Environmental Management, and Information Security, which meet monthly to confirm the status of progress in resolving each issue.

The CSR Office and the General Administration Division currently function as secretariats for the committee. As the head secretariat for the Internal Control Promotion Committee, the general manager of the Financial & Accounting Headquarters conducts activities centered on the Financial & Accounting Division, the Digitalization Promotion Office, the E.D.P. System Division and the Corporate Planning Division, creating and assessing the organization and operating structure for Group-wide internal controls. In practice, this means dividing the business of the Committee into four discrete control categories—Company-wide Controls, Financial Reporting Process Controls, General IT Controls, and Work Process Controls—and building a platform for the spiraling up and effective functioning of internal control.

In terms of internal audit functions, the Internal Auditing Office, which operates under the direction of the president, gives specific guidance and advice based on audits of accounting, business operations and systems, and internal control, which it conducts periodically.

In terms of guidance from internal auditing, the division in question must formulate specific countermeasures and aim for ongoing improvements using the PDCA—Plan, Do, Check, and Act—cycle.

Information disclosure

The NICHICON Group complies with relevant laws related to securities transactions and various stock exchange regulations to fulfill its responsibility to customers, shareholders, investors and all stakeholders to realize management that is fair and highly transparent.

The Group makes a sincere effort to promptly disclose information in recognition of our extremely vital obligation to disclose important company information that impacts investment decisions in a timely and appropriate manner to build and maintain trusting relationships with shareholders and investors.