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Corporate Governance

We are working on continuously improving our systems and their operation to strengthen and enhance a viable corporate governance.

Our basic approach to corporate governance

Under the Nippon Shokubai Group's Mission of TechnoAmenity - "Providing affluence and comfort to people and society, with our unique technology," - we will increase our corporate value and achieve sustainable growth.
We consider viable corporate governance to be essential and have adopted initiatives toward that end. We ensure the rights and equality of our shareholders and maintain an open dialogue, collaborate with various stakeholders as appropriate, disclose information as appropriate and ensure transparency, ensure that the roles of Board Meeting and management teams relate to the appropriate execution of duties, ensure appropriate supervision of the execution of these duties and strengthen and enhance our internal control systems.

Our corporate governance system (as of June 22, 2021)

Roles and Functions of Various Bodies and Committees

Board Meeting
Comprising nine Members of the Board, including three Outside Members of the Board, Board Meeting supervises the business operations of each Member of the Board through reports, deliberations, and resolutions regarding important matters. In general, meetings are convened monthly under the chairmanship of a Member of the Board selected from members who are not executive officers by a resolution of the Board Meeting. Four Statutory Corporate Auditors, including two External Statutory Corporate Auditors, also attend to give advice and state their opinions when necessary.
Corporate Managing Committee
Comprising the President and executive officers appointed by the President, this committee generally convenes twice monthly (with all executive officers in attendance at one of these meetings) to deliberate on items related to the implementation of basic policies and important management issues. Among proposals discussed by the Corporate Managing Committee, important issues are forwarded to Board Meeting for consideration.
Auditors Meeting
Comprising four Statutory Corporate Auditors, including two External Statutory Corporate Auditors, the Auditors Meeting usually convenes monthly, submits reports and engages in discussions and deliberations on important matters related to audits.
Accounting Auditor
Nippon Shokubai is audited by Ernst & Young ShinNihon LLC.
Nominating and Compensation Committee
An advisory body to the Board Meeting, this is a voluntary organization comprising three or more Members of the Board (including a majority of Outside Members of the Board). It advises on the election/dismissal of the President and Representative Member of the Board, as well as draft nominations of candidates for Members of the Board and Statutory Corporate Auditor positions and on compensation and bonuses for Members of the Board.
Nominating and Compensation Committee members
NameStatusAttendance rate
Yujiro GotoPresident and Member of the Board100%
Tetsuo SetoguchiOutside Member of the Board100%
Miyuki SakuraiOutside Member of the Board100%
TechnoAmenity Promotion Committee
We promote sustainability activities based on our belief that promoting sustainability means implementing the Nippon Shokubai Group Mission "TechnoAmenity- Providing affluence and comfort to people and society, with our unique technology." We consider promotion of sustainability activities as a core theme of our corporate management. The Committee is responsible for deciding policies and strategies therefor, providing instructions to relevant departments, and evaluating the results of the activities.
Internal Audit Department
The Internal Audit Department (6 members) conducts audits on the effectiveness and efficiency of each operational process, compliance and other matters from a standpoint independent from other executive sections, with the aim of enhancing internal control of the Company. It also works in cooperation with Statutory Corporate Auditors and the Accounting Auditor through mutual exchange of information and opinions, thereby improving internal audit operations.

Outline of the executive remuneration system

The remuneration system for internal Members of the Board of the Company is intended to have them put the Company's mission into practice, give them an incentive to sustainably enhance corporate value, and have them share interests with shareholders according to the Company's business results and commensurate with their responsibilities. The remuneration is, as its basic policy, set at a reasonable level in light of the Company's business results, the level of the employee salary, and that of other companies.
Specific components of the remuneration for internal Members of the Board are basic remuneration, which consists of fixed remuneration and performance-linked remuneration, and bonuses, which are performancelinked remuneration.
For the performance-linked remuneration portion of the basic remuneration, ROA (return on assets before tax) is used as the index. The total amount of bonuses under performance-linked remuneration is determined at the General Meeting of Shareholders each time payment is made, taking thoroughly into account the profit for the relevant fiscal year, status of dividend payment and other circumstances.
Outside Members of the Board and Statutory Corporate Auditors receive only basic remuneration (in principle, fixed remuneration) because they oversee business operations from an independent standpoint.
Also, the Nominating and Compensation Committee, a voluntary organization consisting mainly of independent Outside Members of the Board, has been established to receive advice on remunerations and bonuses of Members of the Board, thereby ensuring transparency and fairness.

* The above ratio is subject to change according to the Company's business results and degrees of achievement of targets by each individual as assessed by the target management system.

*1 The number of persons and the amounts of remuneration above include four Members of the Board and one Statutory Corporate Auditor who stepped down during the fiscal year under review.
*2 Bonuses under performance-linked remuneration were not paid during the fiscal year under review, taking thoroughly into account the profit, status of dividend payment and other circumstances.

Policy and procedure for election/dismissal of Members of the Board and
Statutory Corporate Auditors

The Board Meeting, including three independent Outside Members, decides on election/dismissal of management executives and nomination of candidates for Members of the Board and Statutory Corporate Auditors, taking thoroughly into account their expertise, experience, achievements, qualities, abilities, personalities and the like. Also, the Nominating and Compensation Committee, a voluntary organization consisting mainly of independent Outside Members of the Board, has been established to receive advice on election/dismissal of the President and Representative Member of the Board and nomination of candidates for Members of the Board and Statutory Corporate Auditors, thereby ensuring transparency and fairness in election/dismissal of the President and Representative Member of the Board, and nomination of candidates for Members of the Board and Statutory Corporate Auditors.

Evaluation of the effectiveness of the Board Meeting

Based on the results of analysis and evaluation of responses to a questionnaire, which was distributed to all Members of the Board and Statutory Corporate Auditors, an opinion exchange meeting was held between all independent Outside Members of the Board and the President and Representative Member of the Board. Based on these, the evaluation of the effectiveness of the Board Meeting was summarized at a Board Meeting.

 Points that required improvementEvaluation of the efforts made during the year and
the points that require further improvement
FY2019
  • Enhance reports to the Board Meeting on important strategies and issues of Group companies
  • Report to the Board Meeting on the status of talks with shareholders and institutional investors
  • Set opportunities, besides the Board Meetings, to explain strategies and progress of new businesses
The evaluation confirmed that the measures formulated in response to the points that required improvement identified in the evaluation of fiscal 2018 have been well implemented.
At the same time, with a view to further increasing the effectiveness of the Board Meeting, the evaluation identified points that require improvement, such as continuous and more detailed explanations and discussions of the important strategies and issues of our Group companies and business strategies and issues in both existing and new fields, as well as explanations and discussions of the status of cooperation with our stakeholders, including not only shareholders and investors but also customers and employees.
FY2020
  • Report to the Board Meeting on important medium-term plan strategies and issues for the year of Group companies
  • Continuous and detailed explanations and discussions on business strategies and issues in existing and new fields
  • Explanations and discussions of the status of cooperation with our stakeholders, including not only shareholders and investors but also customers and employees
The evaluation confirmed that the measures formulated in response to the points that required improvement identified in the evaluation of fiscal 2019 have been well implemented.
At the same time, with a view to further increasing the effectiveness of the Board Meeting, the evaluation identified points that require improvement: explanations and discussions to aid understanding of the entire business on "issues, risks and outlook" and "business environment and strategies including review of decision making in the past" of Group companies and in existing and new fields, which have been continuously conducted; improvement in preparation of materials and documents; holding opinion-exchange meetings for outside officers; and enhancement of training programs.

Cross shareholding

Under the Nippon Shokubai Group's Mission of TechnoAmenity - "Providing affluence and comfort to people and society, with our unique technology" - we are willing to further advance our contributions to industry and society. To this end, Nippon Shokubai, as a chemical manufacturer, with a view to continuously improving its corporate value, believes that long and stable relationships of trust with business partners are important in development, production, sales and other activities. Based on this belief, we own shares of our partners for the purpose of crossshareholding when deemed necessary.
Each year, the Board Meeting, including three independent Outside Members of the Board, comprehensively examines all the listed shares we own by issue in light of the above purpose, taking into consideration the capital costs, and confirms the importance of the shareholding. We sell shares if it is judged no longer important to hold such shares. In the first half of fiscal 2021, we sold all shares of three issues and a part of the shares of two issues. As a result, the number of issues of crossheld shares as of September 30, 2021 decreased from 70 as of the end of the fiscal year before introduction of the Corporate Governance Code (March 31, 2015) to 42.