Nippon Chemi-Con's basic concept of corporate governance is to ensure the transparency and efficiency of management for shareholders and all other stakeholders.
In addition to legal functions such as General Meeting of Shareholders, the Board of Directors, the Board of Auditors, and Accounting Auditor, the company established the internal control systems, and continuously provided information on business conditions through briefing session on financial results and timely disclosure to implement sound, efficient and transparent corporate management.
2. Details of Corporate Organization
- A) Details of Corporate Organization
Nippon Chemi-Con adopts an auditing system, whereby two standing auditors and two external auditors are monitoring and supervising the management decisions made by the Board of Directors as well as the directors' operational executions.
The Board of Directors is positioned as a management decision-making body and is comprised of nine directors. In addition to the subjects required by law, the Board of Directors makes important decisions on basic management policies and other important matters. The Board of Directors is held once a month in principle and criteria for matters requiring resolutions is set in the Regulations of the Board of Directors.
For agile decision making, the company has established the Executive Committee Meeting as a consultative body for operational execution policies. The Executive Committee Meeting is held once a week to deliberate important management matters. The matters of which are especially important among those referred at the Executive Committee Meeting are to be determined by the Board of Directors.
The Board of Auditors, consisting of four auditors, audits directors' operational executions as well as business and financial positions of the company and its affiliates in Japan and overseas.
In addition to the auditors as legal functions, the company established the Internal Audit Department (one person) exclusively for internal audit. The Internal Audit Department carries out on-site audits to verify compliance with the law, business efficiency and validity of business procedures.
- B) Board of Directors
The Board of Directors is comprised of nine directors as of March 31, 2009. The company's Articles of Incorporation stipulate the number of directors as fifteen or less.
Other than the Corporate Law, Nippon Chemi-Con's Articles of Incorporation stipulates that resolution for the appointment of directors requires attendance by shareholders with more than one-third of the voting rights of shareholders able to exercise voting rights, and is adopted by a majority of voting rights, and not the cumulative number of votes.
- C) External Directors
Nippon Chemi-Con has appointed two external auditors in this current period. There are no special interests between Nippon Chemi-Con and the external auditors.
- D) Status of Accounting Auditing
Ernst & Young ShinNihon LLC is retained as Nippon Chemi-Con's accounting auditor for Nippon Chemi-Con to receive accounting auditing as required by the Corporate Law and auditing as required by the Financial Instruments and Exchange Law in a fair and independent manner. There are no special interests between Nippon Chemi-Con and this firm, as well as its assigned employees.
The following states the name of the certified public accountants that have provided auditing services and the number of assistant for auditing in the current period.
Certified public accountants who have provided auditing services
Hideo Doi, Ryou Kayama
Assistants for auditing
Three CPAs and fifteen others
Note: others include CPA candidates, those who passed the Certified Public Accountant Examination, and those in charge of system auditing
- E) Requirements for Special Resolution of General Meeting of Shareholders
Nippon Chemi-Con's Articles of Incorporation stipulate that a special resolution of General Meeting of Shareholders, as specified in Article 309, Paragraph 2 of the Corporate Law, shall be passed in a meeting attended by shareholders with more than one-third of the voting rights of shareholders able to exercise voting rights, and shall be passed by two-thirds of the voting rights represented.
The objective of moderating the stipulation of resolution by a quorum is to allow for flexible operation of General Meeting of Shareholders.
- F) Items for Resolution by General Meeting of Shareholders that May Be Resolved by the Board of Directors
- 1. Under the provisions of the Articles of Incorporation and pursuant to Article 165, Paragraph 2 of the Japanese Corporate Law, Nippon Chemi-Con may, in pursuit of conducting capital policies expeditiously, acquire its own shares through market transactions and other methods through the resolution of the Board of Directors,.
- 2. Under the provisions of the Articles of Incorporation, pursuant to Article 454, Paragraph 5 of the Japanese Corporate Law, Nippon Chemi-Con may, through the resolution of the Board of Directors, pay an interim dividend to allow an expeditious distribution of profits to shareholders.
3. Status of Internal Control Systems and Risk Management Systems
- A) Basic Concept of Internal Control Systems
Nippon Chemi-Con recognizes that it is essential to enforce thoroughgoing compliance and control risks to continuously enhance corporate value. Pursuant to basic policies for implementation of internal control systems, Nippon Chemi-Con proceeds with the measures to enhance risk management systems and compliance systems, as well as other various measures from the standpoints described below.
- · System to ensure that the execution of duties by directors and employees shall comply with the law and the Articles of Incorporation
- · System to store and manage information related to execution of directors' duties
- · Rules and other systems regarding the management of risks for losses
- · System to ensure efficient execution of duties by directors
- · System to ensure the appropriateness of business operations of the corporate group consisting of Nippon Chemi-Con and its subsidiaries
- · Matters related to employees of whom was requested by the auditor for assisting its duties, and matters related to the independence of such employee from directors
- · System for directors and employees to make a report to auditors, and system for others to make a report to auditors
- · Other systems to ensure the effectiveness of auditors' performances on audits
- The "Internal Control Promotion Department" which is controlled directly by the president is implementing internal control systems over financial reporting as stated in the Financial Instruments and Exchange Law.
- B) Implementation of Risk Management System
Nippon Chemi-Con declared the "Basic Policy for Risk Management" to all of its employees as top management policies, aiming to eliminate various factors which hamper the company's business activities and realization of its corporate philosophy.
Based on this "Basic Policy for Risk Management", the company has laid down the "Basic Regulations for Risk Management" and established Risk Management Committee chaired by the risk management officer who is responsible for the risk management systems.
In addition, based on the "Basic Regulations for Risk Management", the company has established "Risk Management Regulations" and its subordinate rules as well as manuals, in order to prepare the system for emergency situations.
As a part of the risk management systems, the company is going ahead with its approach to information security and environment.
For information security, the company manages information in accordance with "Basic Policy Regarding Information Security ", "Information Security Basic Regulations" and its subordinate regulations as well as manuals, in order to protect personal information, customer information and other information assets. In particular, the Information Security Committee appoints the chief information security officer and information security officer in each division to clarify responsibility of information management, takes physical measures, and raises all employees' awareness through educational activities.
For environment, the company has formulated "Environmental Policy", which is a code of conduct for its environmental management, expressing its basic philosophy regarding environment. In accordance with "Basic Regulations for Environment Management", the company has set up the Environmental Committee chaired by the chief environmental management officer to thoroughly boost environmental awareness of all employees, and to control group-wide environmental conservation activities.
- C) Compliance
Nippon Chemi-Con stands on the basis that corporate social responsibility is not only to pursue appropriate profits but also to contribute broadly to society through fair, transparent and free business transactions. Based on this recognition, the company ensures that every corporate activity is based on compliance with the law by repeatedly conveying the spirit of "Nippon Chemi-Con Group Charter of Corporate Behavior" to the company's officers and all employees by the president.
The company is also proceeding with the implementation of compliance systems for thorough adherence to "Nippon Chemi-Con Group Business Conduct Guidelines", which provides routine mind-sets the company should keep in mind.
In concrete terms, the company appoints the chief compliance officer who controls the compliance systems, and the Compliance Committee chaired by the chief compliance officer is promoting concrete measures for the penetration and firm establishment of compliance awareness.
In an effort to eliminate antisocial forces, the company has specified in "Nippon Chemi-Con Group Business Conduct Guidelines" that the company do not support any activities by any nations' antisocial forces or groups and take a resolute stance on these activities, and keep all employees informed of it.
As well as trying to collect information from outside specialized agencies including the police on a regular basis, the company has built a system to take prompt action in cooperation with outside specialized agencies if such cases occur.
4. Director Compensation
Compensation paid to directors and auditors
Eleven Directors: 174 million yen
Four Auditors: 54 million yen (including two external auditors: 14 million yen)
Details of Auditor Compensation
1. Compensation for Certified Public Accountants
| ||Previous consolidated fiscal year||Consolidated fiscal year|
|Audited Company||─ ||─ ||42||─ |
|─ ||─ ||― ||― |
|Total ||─ ||─ ||42||― |
2. Other important compensation
Four consolidated subsidiaries of Nippon Chemi-Con have received certification services and non-auditing services from the certified public accountants and others of Ernst and Young Group of which is in the same network as Nippon Chemi-Con
s certified public accountants. The compensation to be paid is 17 million yen.
3. Non-auditing services provided by the Certified Public Accountants
No matters to be reported.