Corporate Governance Report (Last updated December 23, 2021)
Fundamental corporate governance policy
We want to be a valuable presence for all stakeholders, including shareholders and investors, business partners, employees, local communities and everyone who uses our products.
To achieve this goal, we believe that corporate governance should be implemented as a business not only by ensuring strict compliance with laws and regulations, but also by implementing appropriate risk management measures in order to ” act flexibly and sufficiently in line with constant socio-economic developments. economic environment. The in-depth dissemination and implementation of this policy is exactly what we believe to be corporate governance.
On the basis of this fundamental policy mentioned above, we strive to fully implement corporate governance as a priority issue and to promote the strengthening of the management of the Group.
Nifco corporate governance
(1) Brief explanation of the organizations within the company
With the approval obtained at the general meeting of shareholders on June 24, 2021, Nifco has changed from a company with a board of auditors to a company with an audit and oversight committee.
As of the above date, there are nine directors (including five outside directors). Three of these directors (including two outside directors) are also members of the audit and supervisory committee.
Five of the nine directors on the board come from outside the organization so they can bring new perspectives and opinions different from those of the company which can then be reflected and used in management.
In addition, our company has a management system with the aim of ensuring a clear awareness and efficiency of the decision-making and supervisory functions of the management as well as of the business execution function.
In addition, to ensure that business operations are conducted in a proper manner, we have established various committees under the board of directors, including the Risk Management Committee, the Compliance Committee and the Information Security Committee.
These committees are responsible for ensuring that the execution of business by members of senior management is carried out in an appropriate manner and for ensuring the efficient execution of business.
We will explain the function of the board of directors, the audit and oversight committee and the external auditor as follows.
1) Board of Directors
The board of directors holds a regular meeting once a month in principle and other meetings from time to time as necessary to make corporate decisions and develop strategies for the management of the affairs of the subsidiaries.
The Board of Directors thus strives to improve the performance of the company and to support the growth of the entire Group as well as to strengthen corporate governance.
In addition to the board meetings, the directors also consult extensively on important management issues during the monthly management meeting and ensure that these decisions are executed swiftly and smoothly.
In addition, when necessary, the administrators assist the managing director and the managing director of the division concerned at management meetings to receive reports on the status of execution and management of current affairs and to provide appropriate instructions. , thus improving the efficiency of task execution.
Through such communication, we have put in place a system that allows the decisions, policies and instructions of directors to be communicated throughout the organization and that enables officers and other executives to carry out their duties in a manner. integrated and efficient.
2) Audit and oversight committee
The audit and oversight committee is responsible for auditing and overseeing the performance of duties by the directors of the board of directors and other committees in accordance with the standards of the audit and oversight committee.
Unlike conventional auditors, directors who are also members of the audit and supervisory committee have the right to vote on the board of directors.
By giving an audit administrator greater authority than a conventional auditor, we will improve the audit and oversight functions of the company and further strengthen corporate governance.
3) External auditor
Our company is fairly and legally subject to accounting audits conducted by KPMG AZSA LLC, which acts as our company’s external auditor under the audit contract.
In order to increase the independence, objectivity and transparency of the procedures for determining compensation, the Appointments, Compensation and Governance Committee, headed by the Chairman and the majority of the members of the Committee acting as directors independent external partners, was created as an advisory body to the Board of Directors. directors.
The appointment of directors is in accordance with the opinions and recommendations of the Appointments, Compensation and Governance Committee.
(2) Corporate governance framework
(3) Foundations of internal control systems
We have adopted resolutions on the following points to ensure that the performance of duties by directors complies with laws, regulations and articles of incorporation and to ensure that other systems are in place to ensure the relevance of operations commercial.
These revisions were made to take into account the transition to a company with an audit and oversight committee and resolved at the board meeting on June 24, 2021.
System to ensure that the performance of tasks by directors and employees complies with laws, regulations and statutes.
System for storing and managing information relating to the performance of duties by administrators
Regulations and other risk-of-loss management systems
System to ensure efficient execution of tasks by administrators
System to ensure proper operations within the Nifco group
System concerning the directors and employees who must assist the audit and oversight committee in its functions, questions concerning the independence of these employees from the directors, and questions concerning the execution of instructions concerning these employees
Systems for employees and directors, excluding those who are part of the audit and oversight committee, to report to the aforementioned committee
System to ensure that audits of the audit and oversight committee are carried out effectively
In the event of an approach of anti-social forces, these forces will be blocked and eliminated under the supervision of the compliance committee without responding to unreasonable demands, etc.
We have also entered into a Memorandum of Understanding with our business partners involving strict compliance to exclude anti-social forces from any business relationship.
(4) Reason for choosing the current system of corporate governance
During the board of directors of June 24, 2021, the company decided to modify the articles of association concerning the transition to a company with an audit and supervisory committee, and the company officially changed to a company with a board on the same date. administration. from statutory auditors to a company with an audit and supervisory committee.
The aim is to strengthen the audit and oversight function of the board of directors and to further improve corporate governance by making members of the audit and oversight committee, who are responsible for overseeing the execution. functions by the directors, members of the board of directors and granting them voting rights on the board of directors.
At Nifco, the majority of directors are outside directors. In this case, a company with an audit and oversight committee may delegate decision-making on important business matters from the board of directors to executive directors (i.e. directors who are not members of the audit and supervisory committee). This will allow for rapid decision making led by the executive directors.
By moving to a company with an audit and oversight committee, Nifco will further strengthen its management base and aim to become a company that continues to grow steadily.