Based on the Corporate Governance Guidelines, Kureha strives to enhance management transparency, secure relationships of trust with stakeholders, and fulfill its corporate social responsibility and achieve sustainable growth. We will also work to enhance the effectiveness of corporate governance in the Group.
Basic Policy on Corporate Governance
Kureha aims to enhance its internal control functions, including the implementation of compliance, to conduct fair and transparent management, and to enhance the effectiveness of corporate governance based on the Corporate Governance Guidelines. In this way, we aim to achieve sustainable growth and enhance the Group’s corporate value over the medium to long term.
Corporate Governance Structure
To strengthen corporate governance and expedite decision-making and business execution in the Group’s management, we will clarify management oversight and execution responsibilities.
Board of Directors
Based on the size and details of businesses of Kureha and Group companies, the Board of Directors consists of up to ten individuals, of which at least one-third shall be Independent Outside Directors. In appointing Directors, the Company places the highest priority on their experience in corporate management. And by creating a skills matrix that lists candidates’ areas of expertise and experience, and combining different specialist areas and backgrounds, the Company comprehensively takes into account factors such as the balance of knowledge, skills and experience within the Board of Directors as a whole; its diversity including gender, international character, career background, and age aspects; and the appropriate size of the Board to make the final decision.
The Executive Committee, which consists of the President & CEO and executive officers as key members, deliberates on the Company’s important management issues. The consolidated Executive Committee also exchanges views on management policies and business strategies to strengthen consolidated management.
Audit & Supervisory Board
The Audit & Supervisory Board consists of four or fewer Audit & Supervisory Board members, including two or more independent outside Audit & Supervisory Board members, and has appropriate knowledge of finance and accounting. The Audit & Supervisory Board members monitor the deliberation processes of board’s resolutions and reports and audit the execution of duties. In addition, Audit & Supervisory Board members exchange opinions with the independent auditor and the Internal Control and Auditing Department regarding audit plans and the status of audits to ensure mutual cooperation.
Kureha has appointed Ernst & Young ShinNihon LLC as its independent auditor and has been subjected to fair and impartial accounting audits by properly providing management information.
Internal Control and Auditing Department
The Internal Control and Auditing Department, which acts independently of other departments, assesses and verifies the suitability and effectiveness of internal management control systems, makes suggestions and recommendations regarding improvements, and reports the results of audits to the Board of Directors and others. By doing so, we ensure a system that contributes to improving management efficiency and public trust in Kureha.
Nomination Advisory Committee (Non-Mandatory)
The Nomination Advisory Committee deliberates on matters concerning the appointment and dismissal of the chairperson, President & CEO, representative directors and directors, as well as candidates to succeed the President & CEO and relevant succession plans, and examines the content of proposals to the Board of Directors.
Remuneration Advisory Committee (Non-mandatory)
The Remuneration Advisory Committee deliberates on matters related to the system and policies regarding remuneration for directors and executive officers and examines the content of proposals to the Board of Directors.
Assessment of the Effectiveness of the Board of Directors
To improve the functions of the Board of Directors, Kureha shall conduct an annual analysis and evaluation of the effectiveness of the Board of Directors and disclose an overview of the results. From FY2015 to FY2020, the Company conducted evaluations of the effectiveness of the Board of Directors using a questionnaire based on a scoring system, and in this process, the Company continued to make improvements focused on lowscoring items, established the non-mandatory Nomination Advisory Committee and the Remuneration Advisory Committee, and improved the efficiency of the operation of the Board of Directors. As a result, all items reached a high level, and from the FY2021 evaluation of the effectiveness of the Board of Directors, for the Company’s Board of Directors to fulfill their roles and functions at a high level, a questionnaire style was adopted with the aim of sharing the essential issues and discussing initiatives for resolving those issues, in which respondents specifically described those items requiring further improvement and items that should be discussed as a priority. In FY2022 as well, the Board of Directors deliberated based on the results of this questionnaire survey. Specifically, evaluation was conducted on (1) size and composition of the Board of Directors, (2) operation of the Board of Directors, (3) Board of Directors discussions, (4) nomination, remuneration, and auditing, and (5) themes and management issues to be raised as a priority. As a result, Kureha confirmed that there were no items mentioned as requiring immediate action, that gender diversity had progressed at the Board of Directors, and that the effectiveness of the Board of Directors as a whole was ensured. On the other hand, human capital development, including management, was confirmed as an issue that should be discussed in depth on an ongoing basis. Based on the results of evaluation and deliberations for FY2022, Kureha will continue to make efforts to further enhance the deliberations of the Board of Directors, and will further deepen discussions on the implementation of the new mid- to long-term management plan “Toward Creating a New Future” and human resources development in FY2023.
Corporate Governance Structure
Skills and Experiences of Board Directors
Corporate Governance Report
Corporate Governance Guidelines
Internal Control System
The Board of Directors has adopted a resolution on the “Basic Policy on Internal Control Systems.” To ensure that the Group complies with laws and regulations and conducts our business operations in an appropriate manner, we are working to establish various committees, develop internal rules, and respond to laws and regulations. We also review the performance of internal control systems every year and publish a summary of the review in our Business Report. As for internal control of financial reports to ensure their reliability, we have established basic rules and implement management’s assessment and certified public accountant’s auditing of the effectiveness of the internal control of financial reports, as stipulated in the Financial Instruments and Exchange Law. At the same time, under the responsibility of the President & CEO, we publish Internal Control Reports.
- When determining remuneration, etc. for Directors and Vice Presidents, the Board of Directors reflects corporate performance and medium- and long-term growth of corporate value, and also considers securing
and retaining appropriate human resources, and sets the remuneration structure and level that are appropriate to the required roles and responsibilities.
- Remuneration for Directors consists of 1) basic remuneration and 2) bonuses as performance-linked remuneration, etc. as monetary remuneration, as well as 3) pre-delivery type restricted stock remuneration and 4) performance-linked restricted stock remuneration as performance-linked remuneration, etc. as nonmonetary remuneration; provided, however, remuneration for Outside Directors is limited to basic remuneration, considering their roles.
- Remuneration for Vice Presidents consists of 1) basic remuneration and 2) bonuses as performance-linked remuneration, etc. as monetary remuneration, as well as 3) pre-delivery type restricted stock remuneration as non-monetary remuneration.
- Changes to the remuneration system for Directors and Vice Presidents shall be decided by the Board of Directors based on comprehensive consideration of trends at other companies, and after deliberation by the Remuneration Advisory Committee, a non-mandatory advisory board to the Board of Directors.
Criteria and Approach for Classification of Investment Shares
Kureha holds shares either for the purpose of pure investment or for purposes other than pure investment and classifies them according to this difference. The shares classified as shares for pure investment are held for the purpose of receiving profits from fluctuations in the value of shares or dividends from the shares. The shares classified as shares for purposes other than pure investment are held based on the assumption that they will contribute to current business as well as the sustainable and medium to long-term enhancement of corporate value. Kureha does not hold shares for the purpose of pure investment.
Investment Shares held for Purposes other than Pure Investment
Policy on shareholdings, method for verifying the reasonableness of shareholdings, and details of verification of appropriateness of shareholdings for each stock conducted by the Board of Directors
Kureha holds the shares of its business partners if it is judged that doing so will contribute to current business as well as the sustainable and medium and long-term enhancement of corporate value. The Board of Directors verifies the significance of holding shares for purposes other than pure investment by examining whether the purpose of shareholdings is appropriate and whether the benefits and risks of holding the stock are commensurate with the cost of capital. We will reduce stocks that are deemed no longer necessary in stages, taking into account a comprehensive range of factors, including dialogue with business partners, the impact on the market, and whether capital is being used effectively.
In fiscal 2022, we decided to reduce 2 stocks based on the results of the examination at the Board of Directors meeting held on May 17, and as of the end of March 2023 we held 50 stocks. (Sold all shares of one out of three stocks we held)
The Group’s basic policies on risk management include identifying risks that may adversely affect its 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. The Company has established the Risk Management Rules and has established the Risk Management subcommittee as a subordinate organization of the Sustainability Coordination Committee with the following roles in order to promote and supervise risk management.
- Formulate and manage the progress of annual plans for the Company’s risk management
- Identify, analyze, and assess existing risks for the Company
- On the basis of the analysis and assessment described in 2., consider and implement countermeasures for risks determined as “significant risks,” and monitor their implementation status
- Maintain, correct, and improve the Company’s risk management system (risk management mechanisms including the structure and implementation process)
- Support risk management by each company in the Group
- Examine efforts to promote, operate, and improve the Company’s Business Continuity Plan (BCP)
- Other matters related to risk management
The management and employees of Kureha and its Group companies comply with all relevant domestic and international laws and regulations in all aspects of their corporate activities and practice activities in accordance with social norms.
- In accordance with the Kureha Group Charter of Corporate Behavior, Kureha and each of its Group companies establish their own Compliance Rules and work to comply with domestic and foreign laws, as well as social norms and the spirit of said norms.
- Kureha establishes a Sustainability Coordination Committee chaired by the President & Chief Executive Officer or a Director or Vice President appointed by the President & Chief Executive Officer, and establishes a Compliance subcommittee as a subordinate organization to develop, maintain and operate a cross-departmental compliance system. Kureha works to ensure thorough compliance in accordance with the Employee Code of Conduct based on the Kureha Group Charter of Corporate Behavior and supports thorough compliance at Group companies.
- Kureha and Group companies establish Compliance Hotlines Handling Rules to identify and promptly 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.
- Kureha establishes the Internal Control of Financial Reporting Committee, chaired by the Director or Vice President who supervises the accounting department, and ensures the reliability of its financial reports through the smooth implementation of the Basic Rules for Internal Control of Financial Reports.
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