Note: brackets indicate the numbers assigned to the Corporate Governance Code Principles.
Chapter 1. General Provisions
The TAIYO YUDEN Group believes that it is the Company's social responsibility and management mission to develop its business considering society, the public benefit, and the public spirit from a global perspective in accordance with the three principles of its management philosophy: Employee Well-being, Betterment of Local Communities, and Responsibility to Provide Returns to Shareholders, along with accomplishing the Group's management vision "To be an excellent company that enjoys the trust and highest regard from all stakeholders."
The Company shall strive continuously to improve corporate governance through compliance with this Basic Policy of Corporate Governance (hereinafter referred to as the "Basic Policy"). 【2-1, 3-1】
2.Basic Concept of Corporate Governance
The Company shall emphasize managerial transparency and fairness, and strive to improve corporate governance by establishing a structure and system facilitating timely and appropriate information disclosure, full compliance, quick decision-making, and the performance of duties under the supervision of the Board of Directors. 【3-1】
3.Establishment, Revision and Amendment
Establishment, revision, and amendment of the Basic Policy shall be based on the resolution of the Board of Directors.
Chapter 2: Relationship with Shareholders
1.Security of the Rights and Equality of Shareholders
The Company shall disclose information in a timely, appropriate, accurate, fair, and sincere manner to ensure the security of shareholder rights and the maintenance of equality, and shall strive to ensure an appropriate environment for the exercise of such rights. 【1, 1-1, 1-1-3, 1-2】
2. General Shareholders' Meeting
- In addition to the appropriate establishment of the date, time, and location of the general shareholders' meeting, the Company shall promptly and appropriately provide information to shareholders using its website, the Tokyo Stock Exchange, and online voting platforms. The Company shall also endeavor to send invitations of general shareholders’ meeting at least three weeks prior to the meeting date to provide sufficient time for shareholders to fully consider the proposals to be discussed at the general shareholders’ meeting. 【1-2-1/2/3/4】
- In principle, the company shall not allow so-called "beneficial" shareholders to attend the general shareholders' meeting. Provided, however, that this restriction shall not apply to those beneficial shareholders who have performed the specified procedures. 【1-2-5】
- The Board of Directors shall discuss future action for Company proposals against which a sizable number of votes have been cast. 【1-1-1】
- Should the Board of Directors deem it desirable to delegate some of the matters to be resolved at the general shareholders' meeting to the Board of Directors from the perspective of ensuring flexibility and expertise in respect of management decisions, they shall propose it at the general shareholders’ meeting. 【1-1-2】
3.Basic Principles of Capital Policy
- The Company shall formulate management strategies and management plans, establish medium-term targets for sales, operating profit, and ROE as management indicators to implement management strategies, and aim to improve the Company’s financial structure and capital efficiency. The Company shall also regard the improvement of the redistribution of profits to shareholders as one of its most important management tasks, and shall establish and publish a target for its total return ratio including the acquisition of treasury stock. 【1-3, 5-2】
- In principle, the Company shall not implement any capital policies that lead to changes of control or major dilution in principle. Should major changes be made in capital policies, the Board of Directors shall discuss these based on the opinions of experts and outside board members to avoid causing undue harm to existing shareholders, and provide them with sufficient explanation by disclosing their opinions and the decision-making process.【1-6】
- The Company shall have cross holdings with the approval of the Board of Directors only when this is deemed to contribute to the maintenance and enhancement of business and to collaborative relationships as well as to the enhancement of corporate value and the sustainable development of the company in the medium to long term. The Board of Directors shall comprehensively evaluate the objectives of all possessing crossholdings every year and shall verify the appropriateness of these holdings. Where a shareholding is deemed inappropriate, these shares shall be divested. 【1-4, 1-4-2】
- The voting rights concerning cross-held shares shall be exercised appropriately based on an assessment that there is no violation of any laws and no antisocial behavior, and that the details of the agenda is conducive to sound management for shareholders. 【1-4】
- When a partner company intends to divest a cross-holding in the Company’s shares, the Company shall not advise any reduction in this transaction or take any other actions that prevent the divestment. 【1‐4-1】
- The Company shall not take measures against major purchase of shares. 【1-5】
- When a large quantity of the Company's shares is purchased, the Board of Directors shall endeavor to disclose this information in a timely and appropriate manner in accordance with the basic policy on corporate governance and shall take measures, as appropriate. The Company shall not prevent shareholders from accepting tender offers for its shares. 【1-5-1】
6.Policie for a Constructive Dialogue with Shareholders
The Company shall designate a director in charge of IR and conduct IR activities to promote a constructive dialogue with shareholders and investors. The Company shall also report opinions and requests from shareholders and investors collected through IR activities to the Board of Directors. 【5, 5‐1, 5‐1-1/2/3】
Chapter 3: Appropriate Collaboration with Stakeholders Other than Shareholders
1.Issues Concerning Sustainability, Including Social and Environmental Issues
The Group shall recognize that addressing issues related to sustainability is important for the enhancement of corporate value in the medium- to long-term. It shall formulate the TAIYO YUDEN Group CSR Charter and the TAIYO YUDEN Group CSR Code of Conduct, and engage in CSR activities. The Board of Directors shall supervise CSR activities through the internal control committee. 【2-2, 2-2-1, 2-3, 2-3-1】
The TAIYO YUDEN Group CSR Code of Conduct shall respect employees' diversity, personality, and individuality while ensuring a workplace environment free from any discrimination. The Group shall employ, develop, allocate, and use human resources based on this concept. 【2-4】
3.Transactions between Related Parties
- The Company shall resolve competitive transactions and conflict-of-interest transactions by directors through the Board of Directors based on the rules of the Board of Directors. Transactions between related parties shall be disclosed in accordance with relevant laws, such as the Companies Act and the Financial Instruments and Exchange Act, as well as the rules and regulations established by stock exchanges. 【1-7】
- The Board of Directors shall monitor the facts and situations of transactions between related parties. 【4-3】
- The Company shall establish a system to respond to reports and consultations concerning violations of laws and regulations or internal regulations by organizations or individuals based on the whistle-blowing regulations for early detection and the correction of violations and other undesirable actions. The Board of Directors shall supervise the operational situation through the Internal Control Committee. 【2-5】
- The whistle-blowing regulations shall prescribe the prohibition of detrimental treatment of internal whistleblowers and the monitoring of any detrimental treatment. Should it be difficult to report to the internal reporting office designated by each Group company, it is possible to report directly to an Audit & Supervisory Board Member who is independent from the management team. 【2-5-1】
Chapter 4: Securing Appropriate Information Disclosure and Transparency
1. Information Disclosure
- The Company shall communicate information considered necessary for shareholders and other stakeholders in a timely manner in consideration of accuracy and impartiality in accordance with its information disclosure policy with respect to both statutory and voluntary disclosure, and shall endeavor to provide plain and concrete descriptions of disclosed materials. 【3, 3-1-1】
- The Company shall actively disclose information deemed useful for a dialogue with stakeholders on its website, securities reports, integrated reports, and invitations of general shareholders' meeting. English translations of settlement-related documents, integrated reports, general shareholders' meeting invitations, and press releases shall be disclosed on the Company's website. 【3, 3-1, 3‐1-2】
Chapter 5: Corporate Governance Structure and Duties of the Board of Directors
Section 1: Organizational Structure
- The Company is a company with a Board of Auditors. It shall appoint a Board of Directors, a Board of Auditors, and an Accounting Auditor. The Company shall also have an operating officer system to further clarify the roles and responsibilities of management supervisors and business operators.
- The Board of Directors shall comprise not more than 10 Directors, of which at least one-third shall be independent outside directors. 【4-8】
- The Audit &upervisory Board shall comprise not more than five members, of which at least one-half shall be independent outside auditors.
- The Company shall have an arbitrary nominations committee and remuneration committee to enhance the independence and objectivity of the functions of the Board of Directors in relation to the nomination and remuneration of Directors and operating officers, as well as to achieve greater accountability. 【4‐10, 4‐10-1】
Section 2: Board of Directors and Directors
1.Roles and Responsibilities of the Board of Directors
- The Board of Directors shall supervise the formulation of basic policies such as management strategies and Group plans and the execution of operations by each division to fulfill fiduciary responsibilities, provide greater accountability to shareholders, and contribute to the common interests of the Company and its shareholders. 【4, 4-1, 4-1-2, 4-5】
- The Board of Directors shall make decisions on the formulation of basic policies such as management strategies and plans after holding discussions and exchanging opinions with outside directors. Execution of important operations such as management strategies and plans shall be discussed and determined in accordance with basic policies. 【4-1】
- The Board of Directors shall develop an internal control system and engage in compliance and risk management. The Board of Directors shall also familiarize itself with the operational situation of the internal control system and evaluate its appropriateness and the effectiveness of activities through the internal control committee. 【4-3-4】
2.Decisions of the Board of Directors and Delegation of Authority to the Management Team
- In addition to matters specified in law or legislation, regulations, and the articles of incorporation, the Board of Directors shall discuss important matters for the Company such as the medium-term management plan for the Group and its business plan, business alliances with other companies, and joint projects from a long-term perspective for enhancing sustainable corporate value. 【4-1-1】
- To ensure efficient decision-making by the Board of Directors, policy issues related to the execution of Group management operations shall be discussed at Management Committee, and the personnel, organization, and remuneration system of the Group as a whole (excluding the authority of the nominations committee and remuneration committee) at the top management (TM) meetings. Matters designated by the Board of Directors shall be determined at these two meetings. 【4-1-1】
- Based on the management policies and strategies determined by the Board of Directors, operating officers shall act expeditiously as chief operating officers of their departments under the supervision of the President and Chief Executive Officer.
3.Term of Office and Requirements of Directors
- The term of office for each Director shall be one year to clarify their managerial responsibilities.
- For the composition of the Board of Directors to be diverse and well-balanced in terms of gender and nationality, candidates for Executive Directors shall be selected from among those with excellent aptitude and insight who have previously achieved outstanding results and who are familiar with management and the business based on the criteria for appointment and dismissal of Directors. In addition, candidates for outside Directors shall be appointed based on factors such as their personality, experience, expertise, and the criteria for the independence of outside Directors. 【4-11, 4-11-1】
4.Independent Outside Directors
- The Board of Directors shall select candidates for independent Outside Directors based on the criteria for appointment and dismissal of Directors and the standards for the independence of Outside Directors. The standards for the independence of Outside Directors shall be disclosed on the Company's website. 【4-9】
- Based on extensive insight using their expert knowledge and management experience, independent Outside Directors shall express their opinions from a professional perspective and the perspectives of shareholders and other stakeholders, independently from the execution of operations, and participate in the decision-making process to enhance the supervisory function of management, and thus contribute to the sustainable growth of the Company, as well as the enhancement of corporate value in the medium to long term. 【4-6, 4-7, 4-8】
- To actively contribute to the discussions of the Board of Directors, independent Outside Directors shall participate in important meetings other than the Board of Directors meetings as observers where necessary, and share information, while exchanging opinions with Directors, Operating Officers, Internal and Outside Audit & Supervisory Board Members, and the Internal Audit Department. 【4-8-1】
- The head of independent Outside Directors shall be selected by mutual vote as necessary. 【4-8-2】
- To revitalize the organization, the Company shall introduce a retirement system for Operating Officers, including the President and Chief Executive Officer.
- The President and Chief Executive Officer shall recognize that training his or her successor is one of the most important responsibilities and shall train Executive Directors as potential successor candidates through various experiences, including job rotation as required and management targets based on important management indicators to enhance their eligibility for the role. 【4-1-3】
- The President and Chief Executive Officer shall select candidates to be his or her successor, and the Board of Directors shall determine the successor to the President and Chief Executive Officer based on deliberations at the nominations committee meeting.
Section 3: Audit & Supervisory Board, Members, and Accounting Auditors
1.Roles of Audit & Supervisory Board and Its Members
- The Audit & Supervisory Board and its members are independent of the Board of Directors. They shall implement matters stipulated in laws and regulations including audits of the performance of duties by Executive Directors.
- Candidates to be members of the Audit & Supervisory Board must have adequate experience, ability, and knowledge of finance, accounting, and legal affairs, based on the criteria for the appointment and dismissal of Directors to ensure the effectiveness of audits. 【4-11】
- Full-time Audit & Supervisory Board members shall attend important meetings and communicate with other employees. They shall visit subsidiaries to conduct audits, collect information, report the results to the Audit & Supervisory Board meeting held every month, and share information with part-time members of the Audit & Supervisory Board. Part-time members of the Audit & Supervisory Board shall review the reported information from an independent position and use it to perform their duties.
- The Audit & Supervisory board shall endeavor to cooperate with Directors, the Internal Auditing department, and the accounting auditors on a regular or occasional basis. 【4-4-1, 3-2-2】
- The Audit & Supervisory board shall develop standards for evaluating accounting auditors, receive explanations on audit plans and independence form the accounting auditors, and confirm all relevant and significant details. The Audit & Supervisory Board Members shall observe accounting audits conducted by accounting auditors and report the details to the Audit & Supervisory Board for the Board to confirm the expertise of accounting auditors. 【3-2-1】
2.Role of Accounting Auditors
Accounting auditors shall report any fraud or serious issues to the Audit & Supervisory board, after which the Audit & Supervisory board members shall investigate them, report to the Board of Directors, and request correction. 【3-2, 3-2-2】
Section 4: Arbitrary Nominations Committee and Remuneration Committee
- The Nominations Committee shall consist of the President and Chief Executive Officer, an outside Director and an Audit & Supervisory Board Member, while an independent outside director shall serve as the chairperson to ensure the objectivity of deliberations.
- The Nominations Committee shall designate candidates for board members (including renomination), submit proposals for the dismissal of board members, including the President and Chief Executive Officer, and proposals for the appointment and dismissal of Operating Officers, discuss disciplinary matters, and report to the Board of Directors. The appointment and dismissal of candidates as Audit & Supervisory Board members shall be approved by the Audit & Supervisory Board in advance. 【4‐3, 4‐3-1/2/3, 4-10】
- The Remuneration Committee shall consist of the President and Chief Executive Officer, an outside Director and an Audit & Supervisory Board member, while an independent outside Director shall serve as the chairperson to ensure the objectivity of deliberations. 【4-2-1】
- The Remuneration Committee shall discuss the remuneration scheme and remuneration levels for Directors and Operating Officers and report this to the Board of Directors. Remuneration for Directors (excluding outside Directors) and Operating Officers shall be based on a remuneration scheme that considers performance-linked incentives and comprises monthly remuneration, Directors' bonuses, and stock option remuneration. 【4-2, 4-2-1, 4-10】
Section 5: Management and Functional Evaluation of the Board of Directors
1. Management of the Board of Directors
- The chairperson of the Board of Directors shall serve as the chairperson of the Board of Directors meeting. The President and Chief Executive Officer shall serve as chairperson in the absence of the chairperson.
- The Board of Directors shall conduct the following operations to encourage discussions. 【4-12-1】
- i) Materials of the Board of Directors shall be organized in such a way as to facilitate the understanding of the main points and distribute them to board members at least two business days prior to the meeting date to provide sufficient time for their consideration.
- ii) In principle, Board of Directors meetings shall be held once a month. The annual schedule of the Board of Directors and important meetings shall be determined in advance and reported to the Board of Directors.
- iii) Sufficient time shall be provided for discussions of important matters such as proposals for management strategies.
2.Concurrent Posts of Board Members
- Directors and the Audit & Supervisory Board members (excluding outside Directors) shall not concurrently serve as Directors of other companies unless the Board of Directors deems this to be in the best interests of the Company.
- If outside Directors concurrently serve as corporate officers of other companies, the Board of Directors shall confirm the amount of time required for them to fulfill their duties as outside Directors of the Company, before approving their appointment. 【4-11-2】
3.Information Gathering and Support System
- Directors and Audit & Supervisory Board members may request the provision of information to each department in order to gather information necessary for the performance of their duties. 【4-13】
- In addition to maintaining a system that allows all corporate Directors to obtain important information of the Company on its intranet as necessary, the Company shall provide necessary support to part-time Directors, such as supplementary explanations pertaining to the proposals of the Board of Directors by the Director in charge.
- Directors and Audit & Supervisory Board members may receive advice from outside experts at the Company's expense when this is necessary for the fulfillment of their duties. 【4-13-2】
- The Company shall provide Directors and Audit & Supervisory Board members with opportunities to attend in-house training courses such as external seminars and related laws and regulations to help them acquire knowledge and information outside their fields of expertise, and the Company shall bear the necessary expenses. Plans for provision and mediation of training opportunities shall be created and implemented at the beginning of each year. 【4-14, 4-14-1, 4-14-2】
4.Functional Evaluation of the Board of Directors
The Board of Directors shall establish a mechanism for evaluating its own efficiency and effectiveness and disclose the outline of the results to ensure its viability. 【4-11, 4-11-3】
Established on November 26, 2015
Revised on November 26, 2018