Basic Initiative Policy
In order to carry out appropriate corporate management that meets the expectations of all stakeholders, we recognize the enhancement of corporate governance as an important issue and strive to improve management transparency while promoting speedy management decision-making and management efficiency to respond to changes in the business environment.
Reasons for non-compliance with the principles of the Corporate Governance Code
[Supplementary Principle 1.2.4]
The ratio of institutional investors and overseas investors to the shareholders of Nagoya Electric Works Co., Ltd. (hereinafter, the Company) is relatively low at present. However, the Company will continue to examine the introduction of electronic voting rights and the translation of convocation notices into English, based on the opinions and requests of shareholders and investors, as well as various procedures to take and costs.
[Principle 1.3 Basic Strategy for Capital Policy]
The Company will continue to examine to explain the basic capital policy.
[Principle 1.4 Cross-Shareholdings]
The Company will continue to hold its cross-shareholding when the strategy of which it holds the shares is consistent with the Company’s strategy (capital alliance, etc.). However, the Company will dispose of or reduce the number of shares it hold if they are considered to be of little significance to hold, based on its basic policy to dispose or reduce the number of shares it holds as much as possible, after comprehensively considering the impact on the market and deciding on the method of sale in detail.
The Company will continue to examine to disclosure the details of verification of individual cross-sharing at the annual Board of Directors meeting, as well as the establishment and disclosure of criteria for the exercise of voting rights.
[Supplementary Principle 2.4.1]
The Company will continue to examine how to ensure diversity in the appointment of core human resources, including the appointment of women, non-Japanese and mid-careers to the management positions, and to set voluntary and measurable goals.
The company will also continue to examine to disclosure its human resource development policy and internal environment improvement policy to ensure diversity.
[Principle 3.1 Full Disclosure]
(iv) The company will continue to examine to disclosure its policies and procedures for the election and dismissal of senior management and the nomination of candidates for directors and Corporate Auditors by the Board of Directors.
(v) The company will continue to examine the disclosure of explanations regarding each selection, dismissal and nomination when the Board of Directors selects and dismisses senior management and nominates candidates for directors and corporate auditors based on (iv) above.
[Supplementary Principle 3.1.2]
The Company has its website in English. The Company will continue to examine the introduction of the notice of convocation and other related materials in English based on the composition of the Company's shareholders.
[Supplementary Principle 3.1.3]
The Company will continue to examine the appropriate disclosure of its sustainability initiatives.
The Company will also examine the disclosure and provision of information on investments in human capital and intellectual property.
[Supplementary Principle 4.1.3]
The company has not established selection criteria for nominating a successor to the position of the President, etc. However, all executives, including outside executives are to be consulted while the current President is recommended as the basis for the nomination,
In addition, in order to develop human resources to become successors to senior management who will contribute to the enhancement of the Company’s value over the mid- to long-term, the Company has them attend external training programs as appropriate to improve their abilities by accumulating knowledge and experience, educating and guiding subordinates, etc., and is working to develop human resources to become successors.
The company will continue to examine that the Board of Directors will proactively involved in the establishment and operation of succession plans for the President, etc., and will provide appropriate supervision.
[Supplementary Principle 4.2.2]
The Company will continue to examine that the Board of Directors will also be responsible for effectively supervising the allocation of management resources, including these investments, and the implementation of strategies related to the business portfolio to ensure that they contribute to the sustainable growth of the Company, in order for the Board of Directors to establish a basic policy on sustainability initiatives, and in light of the importance of investments in human capital and intellectual property, etc.,
[Supplementary Principle 4.3.2]
The Company does not set a criteria for the selection of the President. However, the Board of Directors, including outside directors, shall discuss the matter thoroughly and nominate a person with outstanding character, insight and ability based on his or her business background. The Company will continue to examine appointment of the President in accordance with more objective, timely and transparent procedures.
[Supplementary Principle 4.3.3]
The Company does not set a criteria for the dismissal of the President. However, the Board of Directors, including outside directors, shall resolve such dismissal after thorough discussions if it is deemed appropriate due to significant damage to the corporate value of the Company, such as violation of laws and regulations or the Articles of Incorporation. The Company will continue to examine dismissal of the President in accordance with more objective, timely and transparent procedures.
[Principle 4.8 Effective Use of Independent Directors]
The Company has one independent outside director, who is an attorney with expertise in internal control, corporate legal affairs, compliance, and risk management. He is fully fulfilling his role to strengthen the Company's management supervision function from an independent standpoint based on his specialized knowledge, abundant experience, and professional ethics.
In addition, the Company has appointed one corporate auditor who is a certified public accountant and one corporate auditor who is an attorney-at-law. They supervise the execution of business from the standpoint of being well versed in accounting, taxation, and legal affairs. The attendance of the above three independent outside executives at each Board of Directors meeting is satisfactory, and the Company determines that the independent outside executives are contributing to the sustainable development of the Company and the enhancement of corporate value over the mid- to long-term. However, the Company will continue to select independent outside directors to meet the required number in light of the purpose of the Corporate Governance Code.
[Supplementary Principle 4.10.1]
The Company has not established a nomination and remuneration committee at this time. However the Company makes decisions on the nomination and remuneration of directors by seeking opinions and advices of the outside director who is an attorney with expertise in internal control, corporate legal affairs, compliance and risk management. The company recognizes that this contributes to the independence and objectivity of the functioning of the Board of Directors. The Company will continue to examine this issue in light of the purpose of the Corporate Governance Code.
[Principle 4.11 Preconditions for Board and Kansayaku Board Effectiveness]
Currently, there are no female directors on the Board of Directors in the Company, while the Board of Directors consists of internal directors who are familiar with the Company's business and external directors who are highly specialized and have international experience. The Company will continue to examine appointing female directors in the future. One certified public accountant and one attorney-at-law have been appointed as corporate auditors, who have the appropriate experience, ability, and knowledge of finance, accounting, and legal affairs. In addition, the Company analyzes and evaluates the effectiveness of the Board of Directors as a whole, and will continue to take measures to strengthen its functions.
[Supplementary Principle 4.11.1]
The Board of Directors is designed to consist of five to eight directors and three to four corporate auditors, with one to two outside directors and two to three outside corporate auditors.
The Board of Directors consists of executive directors who are well versed in their respective business fields, and outside directors with diverse expertise, such as lawyers who are well versed in internal control, corporate legal affairs, compliance and risk management. In addition, outside corporate auditors with high level of expertise, such as certified public accountants and lawyers, are appointed as corporate auditors. In the process of selection, the balance of the entire Board of Directors is taken into consideration, while giving due consideration to the knowledge and experience of outside directors who are in a supervisory position, so that the Company can achieve sound and sustainable growth while improving the competitiveness of our business.
The Company will continue to examine the disclosure of the combination of skills possessed by directors, including the so-called skills matrix.
[Principle 5.2 Establishing and Disclosing Business Strategies and Business Plans]
The Company has established a mid-term management plan, but has not set specific numerical targets for capital efficiency, etc. at this time. The Company will continue to examine the setting of target figures. The Company will also continue to examine the easy-to-understand explanations for shareholders regarding its business portfolio and allocation of management resources.
[Supplementary Principle 5.2.1]
The Company does not currently determined a basic policy regarding its business portfolio, but will continue to examine to open its policy and status of business portfolio review in an easy-to-understand manner.
Disclosures based on the principles of the Corporate Governance Code
[Principle 1.7 Related Party Transactions]
The Company requires the Board of Directors Meetings to deliberate and resolve transactions with directors, etc. that conflict with the interests of the Company. Based on such procedures, the Company has put in place a system to monitor such transactions to ensure that they do not raise concerns that may harm the common interests of the Company and shareholders.
[Principle 2.6 Roles of Corporate Pension Funds as Asset Owners]
The Company has adopted a defined contribution pension plan and a defined benefit corporate pension plan. The employees manage the defined contribution pension plan by themselves. For defined benefit corporate pension plans, the Company has assigned appropriate personnel for its management, and is striving to develop human resources with appropriate qualifications for operations by attending training sessions to acquire business knowledge and to enhance expertise.
[Principle 3.1 Full Disclosure]
(i) The Company discloses its management philosophy and management strategies on the website and in its annual securities reports.
(ii) The Company discloses its basic stance and basic policy on corporate governance in the Corporate Governance Report and in its Annual Securities Reports, etc.
(iii) The policies and procedures of the Board of Directors Meetings in determining the remuneration of senior management and directors are disclosed in the Annual Securities Report.
[Supplementary Principle 4.1.1]
Any matters stipulated by laws and regulations, described in the Articles of Incorporation and the Regulations of the Board of Directors are resolved by The Board of Directors Meetings, while other key issues are decided by the Management Meetings to ensure the systematic and efficient management of business operations.
[Principle 4.9 Independence Standards and Qualification for Independent Directors]
The company has adopted the independence standards set forth by the Nagoya Stock Exchange in selecting independent outside directors. In making the selection, the Company has made a judgment based on the premise that sufficient independence can be secured to enable the outside executives to perform their duties as outside directors independent of the Company's management, based on their career and relationship with the Company.
[Supplementary Principle 4.11.2]
The status of concurrent positions held by the outside directors and the outside corporate auditors at other companies is disclosed annually through the notice of convocation of the General Meeting of Shareholders, the Annual Securities Report, and the Corporate Governance Report.
One outside director and all directors in charge of each department do not hold concurrent posts as executives at other listed companies and are able to concentrate on their duties as directors.
The full-time corporate auditor does not hold concurrent post as executive at other companies and is able to concentrate on his duty as a corporate auditor at all time.
[Supplementary Principle 4.11.3]
The Company conducted questionnaires on the evaluation of the effectiveness of the Board of Directors for all directors and corporate auditors, and the results were analyzed and evaluated to be generally appropriate. In pursuing the improvement of the effectiveness of the Board of Directors as a whole, the Company has realized the early distribution of Board of Directors meeting materials. The Company will continue to conduct periodic evaluations of the effectiveness of the Board of Directors in order to further enhance its effectiveness and to make continuous improvements.
[Supplementary Principle 4.14.2]
The Company provides trainings for directors and corporate auditors, with particular emphasis on compliance as opportunities to acquire necessary knowledge and to understand their roles and responsibilities.
For the purpose of deepening the understanding of outside directors and outside corporate auditors regarding the Company Group's management philosophy, management policies, business activities, organization, etc., the Company provides them with information on these matters at the time of inauguration and continuously thereafter. In addition, the Company provides opportunities, mediates, and supports expenses necessary for directors and corporate auditors, including outside directors and outside corporate auditors, to acquire knowledge of business, finance, organization, and other matters necessary to fulfill their roles and responsibilities.
[Principle 5.1.1 Policy on Constructive Dialogue with Shareholders]
The Company has designated the Management Administration Division and the President's Office as the divisions in charge of investor relations. The executives, Corporate Administration Division and the President's Office respond to requests for dialogue from shareholders and investors as necessary.
In order to promote dialogue with shareholders and other stakeholders, the executives in charge of the IR department supervises dialogue with shareholders and other stakeholders, and collaborates with other departments, including related departments that assist in dialogue, to share information as appropriate.
In order to promote constructive dialogue with shareholders, IR activities such as briefings by directors and financial results briefings shall be conducted as appropriate, and opinions and concerns from shareholders shall be shared and fed back to directors, management and related departments through reports at meetings or distribution of reports, as necessary.
In addition, when engaging in dialogue with shareholders, etc., the Company will strive to prevent the leakage of insider information and to manage information.