Corporate Governance

Kureha’s Corporate Philosophy, Corporate Mission, and Employee Code of Conduct together constitute our company’s identity. All executives and employees share these ideals, and constantly strive to achieve ambitious goals. Corporate governance is a critical element in maintaining and acting in accordance with this identity, and we have outlined our basic policies and stance in Kureha’s Corporate Governance Guidelines. Kureha follows these guidelines to ensure compliance and enhance internal control functions, provide for fair and transparent management, and ensure a high standard of corporate governance.

Basic Views

Kureha upholds the following Corporate Philosophy, Corporate Mission, and Employee Code of Conduct as its identity (reason for existing). All executives and employees share these ideals, and constantly strive to achieve ambitious goals.

Corporate Philosophy

  • We treasure people and the natural environment.
  • We constantly evolve through innovation.
  • We contribute to society by developing beneficial products.

Corporate Mission

Kureha will continually strive in the pursuit of excellence.

Employee Code of Conduct

We always act as global corporate citizens, recognizing our corporate social responsibilities

In relation to our clients:
We will act with sincerity and with customer satisfaction as our priority.

In relation to our work:
We will consistently pursue progress and innovation.
We will consistently respond to change and act with a global perspective.

In relation to our colleagues:
We will maintain mutual respect and exhibit teamwork.

Corporate Governance Framework

Diagram of Internal Control Systems (As of April 2022)

Diagram of Internal Control Systems (As of April 2-22)

Overview of Current Corporate Governance System

Corporate governance structure

  1. In order to strengthen corporate governance and speed up decision-making and business execution in the Group management, Kureha has clarified its supervisory and executive responsibilities in management. The Board of Directors, which consists of a total of up to ten Directors, at least one-third of whom are Independent Outside Directors and chaired by the Chairman of the Board of Directors (if the position is vacant, the President & Chief Executive Officer), meets once a month, in principle, to make decisions on important management matters and supervise business execution. The Executive Committee, chaired by the President & Chief Executive Officer and comprised of the President & Chief Executive Officer and other Vice Presidents, meets twice a month, in principle, to deliberate on important matters and other issues related to the management of Kureha, ensuring that management decisions are efficiently made.
  2. With regard to specific business execution, details of the division of duties and the authority of each duty and person in charge are defined in the Organization Rules and Authority Standard Rules to ensure efficient operation.
  3. Furthermore, with regard to matters concerning the appointment and remuneration of the Chairman of the Board of Directors, President & Chief Executive Officer, Representative Director, Directors, Vice Presidents with Title, and Vice Presidents in order to ensure transparency in the decision-making process of the Board of Directors and strengthen accountability to stakeholders, Kureha established the Nomination Advisory Committee and the Remuneration Advisory Committee on June 26, 2018 as a non-mandatory advisory board to the Board of Directors. Each of the Committees consists of three or more Directors, the majority of whom are Outside Directors, and is chaired by an Outside Director. The members of the Committees as of the date of submission of this report are Mr. Osamu Tosaka (Outside Director), Mr. Kazunari Higuchi (Outside Director), and Mr. Yutaka Kobayashi (President & Chief Executive Officer). The Nomination Advisory Committee deliberates on matters concerning the appointment and dismissal of the Chairman of the Board of Directors, President & Chief Executive Officer, Representative Director, and Directors, candidates to succeed the President & Chief Executive Officer and plans for their training, and matters concerning the appointment and dismissal of Vice Presidents with Title and Vice Presidents, and reviews the details of matters to be referred for discussion and resolution at the Board of Directors. The Remuneration Advisory Committee deliberates on matters related to policies on the structures and systems of remuneration for Directors and Vice Presidents, the details of remuneration, etc. for individual Directors and other matters, and reviews the details of matters to be referred for discussion and resolution at the Board of Directors.
  4. Kureha has established the Audit & Supervisory Board, which consists of up to four members including two or more Independent Outside Auditors. Kureha has ensured a system that enables Audit & Supervisory Board Members to understand the deliberation process of Board resolutions and reports. Kureha also makes it possible for Audit & Supervisory Board Members to understand the deliberation status on agenda items at the Executive Committee and the Consolidated Executive Committee.
  5. Representative Director exchanges opinions on a regular basis with the Audit & Supervisory Board on issues that Kureha should address, status of the development of an environment for auditing by the Audit & Supervisory Board Members, important audit issues, etc.
  6. The Consolidated Executive Committee meets on a regular basis, with the purpose of unifying the medium- and long-term management vision and policies of Kureha and Group companies. The Committee is chaired by the President & Chief Executive Officer of Kureha and is working to strengthen consolidated management by mutually exchanging opinions on management policies and business strategies.
  7. Kureha has stipulated matters to be reported to or consulted in advance with Kureha by Group companies in the Group Company Management Rules, thereby conducting proper management and supervision of business execution, while respecting the autonomy of Group companies.
  8. To clarify management responsibilities in each fiscal year, a one-year term is given to all Directors and Vice Presidents.

Roles of Outside Directors

  • Each Outside Director possesses advanced insights and a wealth of experience and has fulfilled their roles and duties including provision of advice and supervision on the management of Kureha as a whole, providing supervision over conflicts of interest, and reflecting the opinions of stakeholders at the Board of Directors meetings.
  • Outside Directors exchange opinions on a regular basis with the Audit & Supervisory Board on issues that Kureha should address, status of the development of an environment for auditing by the Audit & Supervisory Board Members, important audit issues, etc. Furthermore, they receive reports on the results of internal audit and matters related to internal control and express their opinions at the Board of Directors meetings, and also communicate with the Independent Auditor.

Board Directors: Skills and Experiences

  Yutaka
Kobayashi
Michihiro
Sato
Yoshio
Noda
Hiroyuki
Tanaka
Osamu
Tosaka
Kazunari
Higuchi
Osamu
Iida
Corporate Management and Strategic
Planning
Manufacturing
Research and Development
Marketing and Business Strategy
Planning
Financial, Accounting
International, Global Business
Management
Legal, Governance, Compliance, Risk
Management
ESG, Sustainability

Internal audit and auditing by the Audit & Supervisory Board Members

  • Kureha has its annual internal audit plan resolved by the Board of Directors. The Internal Control and Auditing Department assesses and verifies, independently of other departments, the suitability and effectiveness of internal management systems including compliance and risk management systems, and makes suggestions and recommendations for improvement and reports the results of internal audit to the Board of Directors, the Executive Committee, and the Audit & Supervisory Board. In this way, Kureha ensures a system that contributes to the enhancement of management efficiency and public trust in Kureha.
  • The Internal Control and Auditing Department conducts business audit of the Group companies on a regular basis and reports the results of business audit to the Board of Directors, the Executive Committee, and the Audit & Supervisory Board, and aims to ensure early implementation of matters to be improved or considered and rolls out those improvements or considerations in other Group companies.
  • The Internal Control and Auditing Department shares the annual plan for Internal Control of Financial Reporting with the Independent Auditor and exchanges information and opinions as necessary.
  • The Audit & Supervisory Board shall consist of up to four members including two or more Outside Audit & Supervisory Board Members, and consists of three members as of the date of submission of this report: one full-time Outside Audit & Supervisory Board Member, one full-time Audit & Supervisory Board Member, and one Outside Audit & Supervisory Board Member. The full-time Outside Audit & Supervisory Board Member has a background working in financial institutions and qualification as a certified internal auditor, and has experience in finance, accounting and internal auditing operations. The full-time Audit & Supervisory Board Member is responsible for the accounting department of Kureha. Each of them possesses considerable insight into finance and accounting.
  • The Audit & Supervisory Board establishes the annual audit policy, audit plan, and the division of duties for each Audit & Supervisory Board Member, and deliberates mainly on the development and operation status of internal control system of Kureha and Group companies, evaluation of the Independent Auditor, and audit reports.
  • All Audit & Supervisory Board Members attend the Board of Directors meetings to report on audit plans and results, and communicate with Representative Director and other executives on a regular basis to exchange opinions.
  • The full-time Outside Audit & Supervisory Board Member and full-time Audit & Supervisory Board Member attend important meetings including the Executive Committee and various Committees and receive reports from Vice Presidents and business executors as necessary. They also serve concurrently as the Audit & Supervisory Board Member of the major Group companies.
  • Audit & Supervisory Board Members exchange mutual audit plans with the Independent Auditor and the Internal Control and Auditing Department to confirm and coordinate key audit items.
  • Audit & Supervisory Board Members receive reports from, and exchange opinions with the Internal Control and Auditing Department on a regular basis, on the status of business audit implementation based on the annual internal audit plan. Furthermore, the Audit & Supervisory Board Members work with the Internal Control and Auditing Department on a daily basis to enhance audits.
  • Audit & Supervisory Board Members receive reports from, and exchange opinions with the Internal Control and Auditing Department on a regular basis, on the status of the implementation of the evaluation of Internal Control of Financial Reporting.
  • Audit & Supervisory Board Members communicate with the Independent Auditor on a regular and as-needed basis to confirm the status of audits and exchange opinions on various auditing issues.
  • Audit & Supervisory Board Members accompany the Independent Auditor to physical inventory count and receive reports on the audit results from the Independent Auditor.

Status of accounting audit

Kureha has appointed Ernst & Young Shin Nihon LLC as its Independent Auditor and received fair and unbiased accounting audit, including appropriate provision of management information. The name of the certified public accountants who carried out Kureha’s audit for the fiscal year ended March 31, 2022, and composition of assistants involved in auditing work are as follows:

  • Name of the certified public accountants who carried out the audit:
    Engagement Partners: Shigeyuki Kano and Takahiro Kawagishi
  • Composition of assistants involved in accounting auditing work:
    11 certified public accountants, 5 persons who have passed the certified public accountant examination and 15 other staff members

The Independent Auditors have continuously engaged in the auditing activities for Kureha for eight years.

Outline of the liability limitation agreement

Pursuant to the provisions of Article 427, Paragraph 1 of the Companies Act, Kureha has concluded an agreement with each of the Outside Directors and part-time Outside Audit & Supervisory Board Members regarding liability for damages as stipulated in Article 423, Paragraph 1 of said Act, to limit their liability to the amount stipulated by laws and regulations in the case that they have acted in good faith and without gross negligence in performing their duties

Matters Related to the Internal Control System

“Systems to ensure that the execution of duties by Directors complies with laws and regulations and the articles of incorporation, and other systems to ensure the properness of operations of Kureha and operations of group of enterprises consisting of Kureha and Group companies” (Basic Policies on Internal Control) are as follows:

Policies on corporate activities

Aiming to further strengthen its corporate governance, Kureha upholds the following Corporate Philosophy, Corporate Mission, and Employee Code of Conduct as its basic concept for internal control and guiding principles for corporate activities.

Corporate Philosophy

  • - We treasure people and the natural environment
  • - We constantly evolve through innovation
  • - We contribute to society by developing beneficial products

Corporate Mission

Kureha aims to be an “Excellent Company”.

Employee Code of Conduct

We always act as global corporate citizens, recognizing our corporate social responsibilities.
In relation to our clients: We will act with sincerity and with customer satisfaction as our priority.
In relation to our work: We will consistently pursue progress and innovation. We will consistently respond to change and act with a global perspective.
In relation to our colleagues: We will maintain mutual respect and exhibit teamwork.

The Status of Establishment of the Internal Control System

Systems to ensure that the execution of duties by Directors and employees of Kureha and Group companies complies with laws and regulations and the articles of incorporation

  1. Kureha and Group companies establish Kureha Group Ethical Charter as basic policy on compliance (compliance with laws and regulations and social norms), and each company establishes its own Compliance Rules based on this Charter to cultivate a compliance-focused corporate culture and work to comply not only with laws and regulations but also with social norms.
  2. Kureha establishes a Compliance Committee chaired by an individual appointed by the President & Chief Executive Officer from among Directors, and works to ensure thorough compliance in accordance with the Employee Code of Conduct based on the Kureha Group Ethical Charter and supports thorough compliance in the Group companies.
  3. Kureha and Group companies establish Compliance Hotlines Handling Rules to detect and address any violations of compliance at an early stage, and put in place internal and external (attorney) compliance hotlines for receiving reports and consultations related to compliance.
  4. Kureha clarifies in the Employee Code of Conduct that Kureha takes a resolute and adamant attitude against the anti-social forces, and takes an organized approach by closely collaborating with relevant governmental agencies and external organizations.
  5. Kureha has its annual internal audit plan resolved by the Board of Directors. The Internal Control and Auditing Department assesses and verifies, independently of other departments, the suitability and effectiveness of internal management systems including compliance and risk management systems, and makes suggestions and recommendations for improvement and reports the results of internal audit to the Executive Committee and the Board of Directors. In this way, Kureha ensures a system that contributes to the enhancement of management efficiency and public trust in Kureha.
  6. Kureha and Group companies recognize responsible care initiatives (an autonomous management activity for environmental preservation, security and disaster prevention, etc.) as corporate social responsibilities and establish Responsible Care Policy, and each company formulates and implements its own implementation plan.
  7. Kureha institutes Basic Rules for Internal Control of Financial Reports and implements “management’s assessment and certified public accountant’s auditing of the effectiveness of internal control of financial reports” as stipulated in the Financial Instruments and Exchange Act to ensure the reliability of its financial reports. Subsequently, Internal Control Reports are prepared and submitted under the responsibility of the Representative Director.

Systems for storing and managing information on the execution of duties by Directors

Kureha appropriately stores and manages minutes, approval documents, and other documents that are information related to the execution of duties by Directors, by recording them in writing or on electromagnetic media in accordance with the Document Management Rules.

Rules for managing the risks of loss by Kureha and Group companies and other systems therefor

  1. Kureha’s basic policies on risk management include identifying risks that may adversely affect Kureha’s management on a company-wide basis, preventing the emergence of such risks, and taking necessary measures in advance to mitigate the impact of risks and keep them within the acceptable range in the case of the emergence of risks. Kureha ensures a system in which the Risk Management Committee conducts company-wide risk management based on the Risk Management Rules. The chairperson of the Risk Management Committee reports the status of risk management to the Executive Committee each fiscal year. Furthermore, the Risk Management Committee supports risk management in the Group companies. Of company-wide risks, those related to the responsible care initiatives are managed by the CSR Committee, and those related to information security are managed by the Information Security Committee, a subordinate body of the Information Management Committee. The Risk Management Committee verifies the risk management by each Committee.
  2. In the event of unforeseen circumstances or emergencies that may have a significant impact on management, Kureha will respond to such circumstances or emergencies in accordance with the Emergency Response Rules, and Kureha and Group companies will ensure a system to continue corporate activities as stipulated in the Business Continuity Plan (BCP).

Systems to ensure that the execution of duties by Directors of the Company is conducted effectively

  1. In order to strengthen corporate governance and speed up decision-making and business execution in the Group management, Kureha has clarified supervisory and executive responsibilities in management. The Board of Directors, which consists of up to ten Directors, atleast one-third of whom are Independent Outside Directors, is chaired by the Chairman of the Board of Directors (if the position is vacant, the President & Chief Executive Officer) and meets once a month, in principle, to make decisions on important management matters and supervise business execution. The Executive Committee, chaired by the President & Chief Executive Officer and comprised of the President & Chief Executive Officer and other Vice Presidents, meets twice a month, in principle, to deliberate on important matters and other issues related to the management of Kureha, ensuring that management decisions are efficiently made.
  2. With regard to specific business execution, details of the division of duties and the authority of each duty and person in charge are defined in the Organization Rules and Authority Standard Rules to ensure efficient operation.

Systems to ensure the properness of operations in the Group companies

  1. Kureha has stipulated matters to be reported to or consulted in advance with Kureha by Group companies in the Group Company Management Rules, and conducts proper management and supervision of business execution, while respecting the autonomy of Group companies.
  2. Kureha dispatches Directors or Audit & Supervisory Board Members to Group companies to supervise and monitor the management of each Group company.
  3. The Consolidated Executive Committee meets on a regular basis, with the purpose of unifying the medium- and long-term management vision and policies of Kureha and Group companies. The Committee is chaired by the President & Chief Executive Officer of Kureha and works to strengthen consolidated management by mutually exchanging opinions on management policies and business strategies.
  4. The Internal Control and Auditing Department conducts business audit of the Group companies on a regular basis and reports the results of business audit to the Executive Committee and the Board of Directors, and aims to ensure early implementation of matters to be improved or considered and rolls out those improvements or considerations in other Group companies.

Matters concerning systems regarding employees who should assist the Audit & Supervisory Board Members with their duties, the said employees’ independence from Directors, and ensuring the effectiveness of instructions given to the said employees

  1. When Audit & Supervisory Board Members request to assign employees to assist them in their duties, Kureha discuss specific selection of personnel with the Audit & Supervisory Board Members to assign them.
  2. When assigning employees to assist the Audit & Supervisory Board Members in their duties at the request of the Audit & Supervisory Board Members, Kureha ensures their independence from the Directors, and clarifies the authority of the assistants, the department to which they are to be assigned, and their authority to give directions and orders, thereby ensuring the effectiveness of instructions given by the Audit & Supervisory Board Members to the relevant employees.

Systems for reporting by Directors and employees of Kureha and executives and employees of the Group companies to Audit & Supervisory Board Members of Kureha, systems to ensure that they are not treated disadvantageously for making such reports, and systems to ensure that auditing by the Audit & Supervisory Board Members is conducted effectively

  1. Directors promptly report to Audit & Supervisory Board Members on important matters that affect business operations, and the status of reporting to and consultation with compliance hotlines. Kureha ensures a system that enables Audit & Supervisory Board Members to request reports from Directors and employees of Kureha and executives and employees of the Group companies as necessary.
  2. Kureha ensures a system that enables Audit & Supervisory Board Members to understand the deliberation process of Board resolutions and reports. Kureha also makes it possible for Audit & Supervisory Board Members to understand the deliberation status on agenda items at the Executive Committee and the Consolidated Executive Committee.
  3. Kureha reports all proposals for approval, requests, audit results by the Internal Control and Auditing Department, and the status of receipt of complaints about products to Audit & Supervisory Board Members.
  4. Representative Director and Outside Directors exchange opinions on a regular basis with the Audit & Supervisory Board on issues that Kureha should address, status of the development of an environment for auditing by the Audit & Supervisory Board Members, important audit issues, etc.
  5. Kureha and Group companies stipulates in their Compliance Hotlines Handling Rules that no disadvantageous treatment shall be given to any person who has reported to, consulted with, or cooperated with the compliance hotlines in any way because of such actions.
  6. Kureha appropriates a certain amount of expenses incurred in the execution of duties by Audit & Supervisory Board Members to the annual budget to secure necessary expenses for auditing.

Basic Views on Eliminating Anti-Social Forces and the Status of Establishment of the System

Kureha clarifies in the Employee Code of Conduct that Kureha takes a resolute and adamant attitude against the anti-social forces, and takes an organized approach by closely collaborating with relevant governmental agencies and external organizations