Governance

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Sound, Fair, and Transparent Corporate Management

To improve our corporate value, we have established an organizational structure that enables us to respond swiftly and efficiently to changes in our business environment. We are also working to ensure sound, fair, and transparent corporate management. We respect the intent and spirit of Japan’s Corporate Governance Code and continuously pursue ideal corporate governance.

Overview of Governing Bodies (as of the end of June 2020)

 Board of Directors Meeting

 As of June 30, 2020, Tosoh’s Board of Directors comprises five internal and four external directors for a total of nine directors. The Board generally meets once a month. 

 It is tasked with decisions on business planning, strategy, and other issues in accordance with applicable laws, Tosoh’s articles of incorporation, and its own regulations. It is also responsible for overseeing the performance of directors and executive officers. The Board in addition makes decisions concerning the election, dismissal, and division of duties for executive officers.

Analysis and Evaluation of the Effectiveness of the Board of Directors

The effectiveness of the Board of Directors is analyzed and evaluated yearly. In fiscal 2020, the evaluation involved having Board members complete a questionnaire asking for their opinions. The result of analyzing their input was that the Board of Directors is performing effectively.

 In fiscal 2019, conversely, the analysis and evaluation determined that improvement was needed in implementing changes. Progress was made in this regard in fiscal 2020, including the implementation of a jury of explainers and a review of the time allotted for deliberations and questions.

There are suggestions, though, that further improvements are needed in the operation of the Board of Directors, including who attends Board of Directors’ meetings. The Board is working tirelessly to address all such issues identified through assessments of its operations and otherwise in the interest of raising corporate value.

Board of Auditors

As of June 30, 2020, Tosoh’s Board of Auditors comprises two internal and two external auditors, for a total of four auditors. The Board of Auditors generally meets once a month. 

Tosoh has adopted an auditor system. Under that system, individual corporate auditors and the Board of Auditors as a whole audit the directors in the execution of their duties in accordance with applicable laws and the company’s articles of incorporation.

The corporate auditors attend meetings of the Board of Directors and the Board of Auditors. They also attend other internal meetings, receive reports from directors, and review documents relating to important decisions. To improve the efficiency and effectiveness of their audits, moreover, they exchange information and opinions with Tosoh’s Auditing Office, Internal Control Committee, and accounting auditors as needed.

Tosoh has further established a secretariat for its Board of Auditors. The secretariat has a complement of personnel dedicated to assisting the company’s auditors in their duties, thereby enhancing the performance of the corporate auditors.

External Directors and Auditors

Tosoh appoints independent, external officers with a wide range of experiences and insights to oversee corporate governance. These external officers monitor the execution of company business from a neutral and objective perspective. Tosoh has established its proprietary Criteria for the Independence of External Directors and Corporate Auditors. It refers to these criteria when determining whether independence is ensured.

The external officers appointed by Tosoh supervise and audit the company’s business activities by attending meetings of the Board of Directors and other bodies and through their receipt of regular reports and explanations.

Executive Officer System

Tosoh’s implementation of an executive officer system improves the swiftness and efficiency with which the company can make decisions, chiefly by separating management decision-making from supervisory and executive functions. The executive officer system has made possible a corporate management structure that responds effectively to even rapid changes in the business environment because the system clarifies decision-making roles and responsibilities. As of June 30, 2020, there were 25 executive officers, 5 of whom were also directors.

Nomination and Compensation Advisory Committee

To strengthen its corporate governance, Tosoh established the Nomination and Compensation Advisory Committee in June 2019 as an advisory body to the Board of Directors. This committee works to ensure fair, transparent nomination and compensation procedures for directors, auditors, and executive officers. The committee consists of the president and four external directors and is chaired by an external director.

Activities in the process of determining the amount of remuneration and other amounts for Tosoh’s executives during fiscal 2020 included three meetings of the Board of Directors and four meetings of the Nomination and Compensation Advisory Committee. The Board of Directors decides on revisions to directors’ remuneration and other compensation and on reviews of the directors’ remuneration system based on the report of the Nomination and Compensation Advisory Committee.

Total Officer Compensation for Fiscal 2020

Management Committee

 As of June 30, 2020, Tosoh’s Management Committee comprised five executive officers at or above the managing director level. This committee generally meets once a week.

Tosoh’s holding of a management reporting meeting ensures appropriate and efficient decision-making. Attendees at the meeting deliberate issues to be submitted to the Board of Directors and discuss important issues for the management of the Tosoh Group in general. 

Overview of Committees

* The various committees regularly present submissions and reports to the Board of Directors.

Compliance and Cybersecurity

The Tosoh Group aims to be a sound corporate entity that enjoys the trust of society. It seeks to do so by ensuring that its executives and other employees comply with laws and regulations and conduct themselves to the highest ethical standards and recognize the importance of information security.

Compliance

Basic Policy

The Tosoh Group’s basic policy on compliance is to pursue profits through fair competition underpinned by steadfast legal and regulatory compliance, all the while remaining a useful and contributing member of society. Tosoh Group compliance, in short, is founded on the imperative that its employees behave sincerely, fairly, ethically.

Tosoh Group Code of Conduct

The Tosoh Group Code of Conduct prohibits corruption and indicates methods of compliance in business activities. It is steeped in the company president’s belief that compliance is the foundation of Tosoh Group management and must be prioritized above profit. Tosoh Group employees are obliged to observe this policy, particularly as it was revised in October 2018 to include additional CSR initiatives.

It is available in Japanese-, English-, Chinese-, and Korean-language versions primarily, but it has also been translated into languages where our overseas businesses are located for the benefit of local employees and in line with their cultures and customs or requirements. Pamphlets explaining the Tosoh Group Code of Conduct are also available at the Tosoh Group’s domestic subsidiaries.

Compliance Consultation Desks

Tosoh has established compliance consultation desks to swiftly verify and respond to compliance violations or potential violations. This facilitates the prevention and early-stage correction of compliance-related issues. The three compliance consultation desks established are internal, external, and corporate auditor. Full-time and temporary employees of Tosoh and its domestic subsidiaries and its cooperating partner companies can all consult the desks.

The desks provide consultations on corruption in general, including violations of laws and regulations, harassment, human rights violations, and bribery, and confirm the facts and investigate and respond to all cases whether anonymous or not. The details of each consultation are reported to the corporate auditors on a case-by-case basis for guidance and supervision.

A pocket card listing the contact information for each desk is available to employees to ensure that they can contact a desk as needed at any time. Tosoh’s internal regulations stipulate the protection of confidentiality and the prohibition of the disadvantageous treatment of consultees.

Cybersecurity

Tosoh is bolstering not just its conventional security measures. It is also furthering its cybersecurity in response to the growing threat of electronic incursions.

To prevent damage to public trust and corporate competitiveness as a result of the leak or loss of information related to plant control and other mission-critical systems and of other confidential information, including personal information, we are strengthening protections for our operations. This includes upgrading our security risk management and formulating policies utilizing the Cybersecurity Management Guidelines issued by Japan’s Ministry of Economy, Trade and Industry and various additional cybersecurity frameworks.

We hold regular briefings at the Nanyo and Yokkaichi Complexes to raise employee awareness of the need for compliance with our Information Security Management Guidelines. The briefings also alert employees to the threat of cyberattacks and instruct them in defensive measures using case studies and e-mail attacks that give employees first-hand experience of a cyberattack.

Cyberattacks are constantly changing in form and sophistication. So we source the latest cybersecurity information from industry associations and government agencies and apply it in our cybersecurity measures and training.