Basic Policy on Corporate Governance
Topy Industries pledges to enhance corporate value in the medium to long term by establishing a corporate governance system that is appropriate for the company from the standpoint of management soundness, transparency, and efficiency in order to maintain and improve the trust of stakeholders. This comes from the group’s basic philosophy: “Win the trust and respect of society through the continuance and development of the Topy Industries Group and the execution of one’s duties as a public institution.”
Overview of Corporate Governance System
Topy Industries has an Audit & Supervisory Board, while the Board of Directors comprises executive directors well-versed in the Group’s business and independent outside directors. The Board of Directors makes decisions on important managerial matters and oversees company management, while the Audit & Supervisory Board, which has a legally stronger right to audit, oversees the company’s management. Through this system, we maintain and strengthen the soundness and efficiency
of the company’s management and improve corporate value.
■ Business Execution Structure
Our management functions consist of a management decision-making function and a business execution function, and we employ an executive officer system to vitalize and improve the efficiency of company management.
■ Nomination Advisory Committee
To ensure the fairness and transparency of director nominations, we have a Nomination Advisory Committee chaired by an outside director and comprising the President and two outside directors. The committee serves as an advisory body to the Board of Directors.
■ Compensation Advisory Committee
To ensure the fairness and transparency of director compensation,
we have a Compensation Advisory Committee chaired by an outside director and comprising the President and two outside directors. The committee serves as an advisory body to the Board of Directors.
Internal Control and Risk Management System
To ensure the effectiveness of the internal control systems of Topy Industries and its Group companies, and to make continuous improvements to these systems, the company’s Internal Audit Department monitors Topy Industries Group companies for compliance with internal control rules established by the Companies Act and Financial Instruments and Exchange Act based on the company’s annual auditing policies and plans.
We have formulated the Group Basic Philosophy and the Group Code of Conduct and ensure that all the officers and employees of the Topy Industries Group are familiar with them through such means as our websites, in-house newsletter, and Group Compliance Guidebook. Moreover, under the leadership of the Risk Management Committee of the company, employees in each department of the company and group companies formulate annual activity plans to ensure full compliance, engage in compliance improvement activities, and share relevant information. In addition, company divisions that include those supervising compliance provide a range of compliance education to employees at each level of the Topy Industries Group. Regarding the whistle-blowing system, the Rules concerning the Topy Industries Group Basic Corporate Ethics Consultation Office and the Topy Industries Group Compliance Hotline stipulate that reports and consultations from employees are held in strict confidence and will not become the basis for any unfair treatment. We also provide outside counsel as recipients of such reports and consultations.
Risk management system
Under the leadership of the Risk Management Committee of the company, employees in each department of the company and group companies formulate annual activity plans for risk management and engage in risk management improvement activities. When an issue related to risk management occurs or is likely to occur in the Topy Industries Group, it is reported to organizations including the Risk Management Committee, with the necessary instructions provided through the risk management system. For responding to major natural disasters and other emergencies, we formulate and regularly review business continuity plans. We also work to improve the earthquake resistance of company buildings and production facilities while regularly conducting drills and other activities to cope with emergencies.
Execution of duties by Directors
The Board of Directors resolves matters required by laws and regulations or the articles of incorporation, as well as important issues of the company as stipulated in the Board of Directors Regulations. Moreover, prior deliberations of matters to be resolved by the Board of Directors are held at the Executive Management Meeting, which comprises the Executive Directors and others. Prior explanations of the agenda for Board of Directors Meetings are provided to Outside Directors who do not attend the Executive Management Meeting. In addition, the company endeavors to ensure efficient deliberations by the Board of Directors and rationality in the course of its decision-making by means such as establishing Bylaws concerning Preparation of Agenda Documents for Board of Directors Meetings.
Business management of the group companies
In accordance with the Group Company Management Regulations, the division of the company supervising the group companies receives reports therefrom regarding their business policies, plans, results and other matters as necessary, while important matters are resolved at Executive Management Meetings or Board of Directors Meetings. In addition, the company promotes the autonomous management of each group company and conducts management soundness evaluations to ascertain business results and risk management status, among other aspects, of each group company for every fiscal year. Based on the results of such evaluations, the division of the company supervising the group companies provides instructions and support to the group companies.
Audits by the Audit & Supervisory Board
Through Board of Directors Meeting attendance, as well as by Executive Management Meeting and other important meeting attendance by full-time members of the Audit & Supervisory Board, Audit & Supervisory Board members receive reports on the activities of such organizations as the Internal Audit Department and Risk Management Committee and other matters that have a significant influence on the Topy Industries Group. In addition, the Representative Director and Audit & Supervisory Board members hold regular meetings to exchange opinions. Information sharing sessions are also conducted among outside directors and Audit & Supervisory Board members. When an issue related to risk management occurs or is likely to occur in the Topy Industries Group, it is also reported to Audit & Supervisory Board members in accordance with the Group Risk Management Regulations. In addition, the company has developed a structure in which whistle-blowing is reported to Audit & Supervisory Board members in accordance with the Rules Concerning the Topy Industries Group Basic Corporative Ethics Consultation Office and the Topy Industries Group Compliance Hotline.