Corporate Governance

Strengthening corporate governance is a key management priority.
We are working to build and improve a structure for enhancing transparency and ensuring fairness
in our business activities, and promoting the reinforcement of internal controls.

Internal Control System

Nissha Co., Ltd. builds and operates an internal control system in accordance with a Policy for Internal Control formulated by the Board of Directors. The system is designed to ensure that the duties of each internal organization are carried out legally, appropriately, and efficiently toward enhancing our corporate value. To ensure reliability of financial reporting, we submit the assessment results of our internal control system in the form of internal control reports to the Prime Minister of Japan and disclose the contents to our shareholders and investors.

Policy for Internal Control

Pursuant to the Companies Act and the Ordinance for Enforcement of the Companies Act, the Company shall establish systems to ensure the properness of operations (hereinafter referred to as “Internal Control”) of the group consisting of the Company and its subsidiaries (hereinafter referred to as the “Nissha Group”) as follows:

1) Systems necessary to ensure that the execution of duties by Directors of the Board and employees of the Nissha Group complies with laws and regulations and the Company’s Articles of Incorporation
  • The Company shall establish a “Guideline of the Corporate Ethics and Compliance” and “Code of Conduct” based on its “Mission,” “Shared Values,” etc., which specify the basis of mission and thought common to the entire Group, so as to comply with laws and social ethics from a global point of view.
  • The Company shall establish a Corporate Ethics and Compliance Subcommittee under the internal regulations to carry out monitoring and educational activities to ensure compliance with laws and regulations, the Company’s Articles of Incorporation and social norms. In addition, the Company shall appoint a Manager and Leader in charge of promotion in each business unit of the Nissha Group to establish a structure for promoting Corporate Ethics and Compliance. An “in-house reporting system” shall be established and operated, through which employees may provide information directly to the Company, while due measures are taken for the protection of whistleblowers.
  • The Company shall elect multiple Independent Outside Directors of the Board to maintain and enhance the function of supervising the execution of duties by Directors of the Board.
    In addition, the Company shall establish a Nomination and Remuneration Committee as an advisory panel for the Board of Directors of the Company in order to ensure the objectiveness and fairness of the nomination of Directors of the Board and Audit and Supervisory Board Members as well as the remuneration of the Directors of the Board. The Nomination and Remuneration Committee shall be chaired by an Independent Outside Director of the Board and the majority of its members shall be Independent Outside Directors of the Board.
  • The Internal Audit Division, which is under the direct control of the Chairman of the Board, President and CEO, shall analyze and evaluate the state of the establishment and operations of an Internal Control system, propose an improvement plan, and enrich the system.
  • The Company shall set a basic policy to counter antisocial forces, shall not have any relationship with antisocial forces, and shall not respond to any unreasonable demands with a resolute attitude in compliance with the Regulations regarding antisocial forces, and the Nissha Group shall strive for thorough implementation of such measures

2) Systems regarding the retention and management of information relating to the execution of duties by Directors of the Board
  • The Company shall retain and manage information regarding execution of duties by Directors of the Board, including the minutes of the General Meetings of Shareholders, the minutes of the meetings of the Board of Directors and the requests for managerial decision, properly and with certainty pursuant to the laws and regulations and in-house regulations on information management, and the information shall be maintained in a condition which can be inspected.
  • The Company shall disclose important information on the Nissha Group timely and properly by establishing a Disclosure Control Committee which shall discuss the necessity of timely disclosure of corporate information and the contents of disclosure.

3) Rules and other systems for risk management of the Nissha Group
  • The Company shall formulate the Basic Policy for Risk Management to specify the Nissha Group’s initiatives in risk management.
  • The Company shall respond to the risk of managerial losses by organizing company-wide and cross-organizational subcommittees to manage the issues of Corporate Ethics Compliance, BCM, Labor and Human Rights, Environment Health and Safety, Information Security, Trade Administration and Control, Quality, and Customer Satisfaction under the CSR Committee led by the Chairman of the Board, President and CEO as the acting Committee Chairman.
  • Each subcommittee and the superintending division shall establish a management policy, rules, etc.; determine risk analysis, risk assessment, and related measures; conduct daily monitoring activities; and report the results of reviews to the CSR Committee.
  • The CSR Committee shall summarize major risks faced by the Company on a regular basis for review by management while reporting them to the Board of Directors.

4) Systems necessary to ensure the efficient execution of the duties by Directors of the Board of the Nissha Group
  • Through the introduction of the corporate officer system, the Company shall establish functional segregation between strategy development and management monitoring functions to be undertaken by the Board of Directors and business execution functions to be undertaken by the Corporate Officers.
  • The Board of Directors of the Company shall approve medium-term business plans, and the Directors of the Board and employees shall execute operations based on such strategic and performance plans.
  • The Chairman of the Board, President and CEO shall request the Corporate Officers to report the status of their execution of business and confirm whether or not the business is executed according to the plans at a monthly meeting (MBR: Monthly Business Review).
  • The Company shall share the status of execution of business by the Corporate Officers and the strategy implementation items to be undertaken by its organizations through the use of IT to improve business efficiency.

5) Systems necessary to ensure the proper business operation of the Nissha Group
  • The Company shall formulate the Affiliated Company Management Regulations to set basic administration policy for the management of each company of the Nissha Group. In addition, the Company shall manage the performance of important operations of each company of the Nissha Group by designating matters requiring approval of and reporting to the Company with regard to the execution of those operations in the Regulations on Requests for Managerial Decisions.
  • The Company shall appoint its officers or employees to become Directors of the Board and Audit and Supervisory Board Members of each company of the Nissha Group in order to ensure the proper execution of operations.
  • The corporate division shall manage the proper execution of operations at each company of the Nissha Group and lead and counsel it, as necessary.
  • The Company shall periodically convene the Group Audit and Supervisory Board meeting for the exchange of information among the Audit and Supervisory Board Members of the Nissha Group and strive to improve and strengthen the audits for each company of the Nissha Group.

6) Matters regarding employees assisting the duties of Audit and Supervisory Board Members, when Audit and Supervisory Board Members ask for appointment of such employees, and matters regarding the independence of such employees from Directors of the Board
  • The Company shall establish an Auditor and Supervisory Board Member’s Office to assist the duties of Audit and Supervisory Board Members, and shall arrange for employees to be exclusively assigned to the Office.
  • The Auditor and Supervisory Board Member’s Office shall belong to the Audit and Supervisory Board and be independent from Directors of the Board. With regard to matters regarding the personnel affairs of the employees of the Auditor and Supervisory Board Member’s Office, approval of the Audit and Supervisory Board shall be obtained through consultation.

Systems for reporting to Audit and Supervisory Board Members by Directors of the Board and employees of the Nissha Group and other systems regarding reporting to Audit and Supervisory Board Members

Directors of the Board and employees of the Nissha Group shall quickly report to the Audit and Supervisory Board items that will potentially have a serious influence on the Nissha Group, the status of risk management, the results of internal audits, the status of internal reports and the details of such reports, etc. The Audit and Supervisory Board Members of the Company shall request the Directors of the Board and employees of the Nissha Group to report such matters as necessary. In addition, whistleblowers shall not be treated disadvantageously in any way whatsoever as a consequence of such reporting.

8) Other systems necessary to ensure the effective audit by Audit and Supervisory Board Members
  • The regular meetings for exchanges of opinions between the Chairman of the Board, President and CEO, Directors of the Board and the Audit and Supervisory Board shall be held. The Audit and Supervisory Board Members shall also set up regular meetings with the Accounting Auditor, Internal Audit Divisions and corporate division to cooperate with them closely.
  • The Audit and Supervisory Board Members shall attend not only the meetings of the Board of Directors, but also other important meetings, and express their opinions as necessary. In addition, they shall also examine the requests for managerial decision and other important documents.
  • The Company shall ensure objectivity and effectiveness of audits through Independent Audit and Supervisory Board Members, including those who have considerable knowledge concerning finance and accounting or legal affairs, such as a certified public accountant or an attorney, etc.
  • The Company shall bear expenses necessary for the execution of duties by the Audit and Supervisory Board Members. If an Audit and Supervisory Board Member requests the Company to make an advance payment of such expenses pursuant to laws and regulations, the Company shall promptly comply with the request upon confirmation.

Risk Management

With a risk management policy in place to clarify our approach, we promote risk management to counter risks that may have a significant impact on our business activities, and to be fully prepared in the event an emergency does occur.

Having organized a CSR Committee chaired by the President and CEO and defined risks that require addressing as “any thing or situation that hinders Nissha Group’s implementation of Mission,” we are working to reduce all conceivable risks associated with business processes, including those related to disasters, accidents, and compliance, as well as to appropriately cope with risks that have surfaced.

Risk Management Policy

 The Nissha Group strives to accurately identify the risks we face, avoid unexpected loss, and appropriately control risks, thereby ensuring business continuity and enhancing our corporate value toward realizing the enrichment of people’s lives by creating technology and developing it into economic and social value.

     1.We build and maintain a structure for responding to the various risks present in our
business environment.
     2.We promote risk management at the managerial level toward conducting
organization-wide activities and preserving management resources.
     3.In the event of an emergency, such as a situation with critical managerial
consequences or a natural disaster, we work to minimize damage, resume business
activities as quickly as possible, and prevent recurrence while prioritizing the safety
of human lives.
     4.We conduct in-house training to enhance awareness of and the ability to respond to
risks, and ensure that each employ takes responsible, swift, and appropriate action.
     5.We periodically review our risk management structure, including this policy, and
make improvements on a continuous basis to ensure effective risk management at
all times.
 

Established on July 1, 2015
Revised on January 1, 2018

Junya Suzuki
Chairman of the Board
President and CEO
Nissha Co., Ltd
We have in place a set of Emergency Response Regulations that defines “emergency” and stipulates the action and structure required between initial response to a disaster and the early stages of business recovery. For instance, in the event of a serious interruption of business due to emergency over a certain level, such as a large earthquake or new global influenza epidemic, we are to set up a response task force headed by the president at Global Headquarters in Kyoto. We also stockpile supplies at major bases in Japan, distribute “survival cards” listing information about what to expect and do should an earthquake strike, and educate employees using an e-learning system to promote awareness about the general rules for action and response in an emergency.

Our Basic Plan for Business Continuity Management (BCM) stipulates in detail the steps to be taken in order to promote early recovery of key business locations. In efforts to verify the effectiveness of these steps, we organize business continuity planning (BCP) exercises on a regular basis for employees including the management. Any changes in management environment and reorganization are reflected quickly in the latest editions of relevant documents.

Through these activities, we aim to secure the safety of Nissha Group employees and their families, contribute to the restoration of communities and of society at large, and ensure business continuity and maximum service to our customers.

Column 1: Exchanging Views on Risk Management with
Nissha Group Companies in Europe and the US

In September 2017, representatives from Nissha Group companies in Europe and the United States gathered at Nissha USA for an exchange of views on risk management. The session provided a good opportunity to deepen communication beyond national and cultural boundaries about topics centering on the Nissha Group’s approach to risk management, BCM, and risk hedging with property insurance.

Column 2: BCP Training for Earthquake Emergency

On December 22, 2016, we conducted BCP training at Nissha Group’s Global Headquarters targeting primarily the management. The exercise simulated a situation in which bases of the Devices business in Japan were struck by an earthquake. The management received reporting from relevant divisions, provided instructions in response, and verified the effectiveness of their decision-making flow. The President served as leader of the headquarters task force. Following his instructions, management, corporate divisions, and bases worked as one and succeeded in taking appropriate action.

We quickly resolved the challenges that surfaced through this session, and will continue to organize further training toward even more effective BCP. Our goal is to build a structure capable of achieving swift restoration and business continuity in the event of a real-life emergency.

Initiatives of Internal Audit

Internal Audit, to maintain impartiality and objectivity in its functions, serves as an organization independent of business execution divisions in drawing up annual auditing plans, investigating whether business activities are carried out appropriately and efficiently, and offering advice and recommendations to internal organizations. Furthermore, it conducts follow-up audits to confirm how each finding that has surfaced through the audits is improving. The office makes reports and offers suggestions based on the results of its audits to the President and CEO at monthly meetings, and presents particularly important matters at Board of Directors’ meetings. Moreover, it holds meetings with full-time Audit and Supervisory Board Members every three months to establish mutual cooperation with the Audit and Supervisory Board.

Audits in the fiscal year ended December 2017 focused on communication covering strategies and the execution thereof at business divisions, business administration and the process of post-merger integration at Nissha Group companies in Japan, and safety control structures at factories in Japan. Internal Audit also established the scope of evaluation and performed an independent assessment of financial reporting-related internal controls in accordance with the Financial Instruments and Exchange Act.

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