Chapter 1: General Provisions
1. Basic Concept of Corporate Governance
The TAIYO YUDEN Group (the “Group”) is committed to corporate social responsibilities and the mission of management to develop businesses on an ongoing basis while fulfilling sociality, public interest and public nature of the Group from a global viewpoint to put into practice and realize “Mission”, “Management philosophy” and “Vision”.
Based on the views, the Company has been established Basic Policy of Corporate Governance (the "Basic Policy"), and emphasizes transparency and fairness of corporate management, the Company is making efforts to enhance corporate governance under the supervision of the Board of Directors, including the development of structures and mechanisms that enable timely and appropriate information disclosure, thorough compliance and speedy decision making and execution of duties.
Stronger and more socially aware through the wonders of science
Betterment of Local Communities
Responsibility to Provide Returns to Shareholders
To be an excellent company that enjoys the trust and highest regard from all stakeholders
2. Establishment, Revision and Abolition
Establishment, revision and abolition of the Basic Policy shall be based on the resolution of the Board of Directors.
Chapter 2: Relationship with Shareholders
1. Securing the Rights and Equal Treatment of Shareholders
The Company shall disclose information in a timely, appropriate, accurate, fair and sincere to fully secure shareholder rights and equal treatment of shareholders, and endeavor to maintain the environment in which shareholders can properly exercise their rights.
2. General Meeting of Shareholders
- In addition to the appropriate establishment of the date, time and location of the General Meeting of Shareholders, the Company shall speedy and appropriately provide information to shareholders on the Company’s website, the Tokyo Stock Exchange and the Electronic Voting Platform. The Company shall also endeavor to send the notice of convocation of the Ordinary General Meeting of Shareholders at least three weeks prior to the date of the meeting, to ensure that shareholders have adequate time to review the agenda for the General Meeting of Shareholders.
- In principle, the company shall not allow so-called "beneficial" shareholders to attend the General Meeting of Shareholders. Provided, however, that this restriction shall not apply to those beneficial shareholders who have performed the specified procedures.
- The Board of Directors shall discuss future action for Company proposals against which a considerable number of votes have been cast.
- If the Board of Directors determines that it is desirable to delegate a part of the resolutions of the General Meeting of Shareholders from the perspectives of agile decision-making and expertise in business judgment, the Board of Directors shall propose it to the General Meeting of Shareholders.
3. Basic Strategy for Capital Policy
- The Company shall formulate management strategies and management plans, establish medium-term targets for net sales, operating margin, ROE and ROIC as management indicators to implement management strategies and aim to improve the Company’s financial structure and capital efficiency. The Company shall also consider one of the most important issues for management to be the distribution of plentiful returns to its shareholders, and shall establish and disclose a target for its dividend payout ratio and conduct a purchase of treasury shares as necessary.
- In principle, the Company shall not implement the company's capital policy that results in the change of control or in significant dilution. In the event of major changes in capital policy, the Board of Directors shall discuss these based on the opinions of experts and outside officers not to unfairly harm the existing shareholders’ interests, and provide them with sufficient explanation by disclosing their opinions and the decision-making process.
- The Company shall hold shares only if the Board of Directors determines that such shareholdings are conductive to the maintenance and reinforcement of commercial and collaborative relationship with our business partners as well as medium- to long-term improvement of the corporate value and sustainable growth, which can be attained through such relationships. The Board of Directors shall annually examine all such cross-shareholdings to verify the reasonability of holding them based on comprehensive judgment from the perspective of their holding purposes. The Company shall reduce any shareholdings that are determined to be unreasonable by selling such shares.
- The Company shall appropriately exercise its voting rights of the cross-shareholdings based on comprehensive judgment on several factors such as non-infringement of any laws and/or regulations, non-involvement in any antisocial actions and the fact that relevant proposal can be judged to have sound content.
- When cross-shareholders indicate their intention to sell their shares, the Company shall not hinder the sale of the cross-held shares by, for instance, implying a possible reduction of business transactions.
5. Anti-Takeover Measures
- The Company shall not adopt anti-takeover measures regarding large-scale purchases of shares.
- In the case of a large-scale purchase of the company’s shares, the Board of Directors shall strive to disclose information as timely and appropriate, and develop a suitable response in accordance with Basic Policy on the Control over the Company. In case of a tender offer, the Company shall not frustrate shareholder rights in response to the tender offer.
6. Policy for Constructive Dialogue with Shareholders
The Company shall designate a Director in charge of IR and conduct IR activities to promote constructive dialogue with shareholders and investors. The Company shall also report to the Board of Directors any opinions and requests from shareholders and investors collected through IR activities.
Chapter 3: Appropriate Cooperation with Stakeholders Other Than Shareholders
1. Sustainability Issues, Including Social and Environmental Matters
- The Group shall aim to increase corporate value by increasing both economic and social value, and set KPI (numerical targets) related to economic and social value after clarifying the Materiality (important issues). The initiatives to achieve the targets shall be disclosed in the integrated reports and on the Company’s website.
- The Group 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.
The Group shall pledge to promote workforce diversity, respect the individuality of each employee, and ensure a fully discrimination-free workplace, as is explicitly stated in TAIYO YUDEN CSR Code of Conduct. And in accordance with TAIYO YUDEN Group Diversity Policy based on above, the Group shall employ, develop, allocate, and use human resources.
3. Related Party Transactions
- The Company shall resolve competitive transactions and conflict-of-interest transactions by Directors through the Board of Directors based on the Board of Directors Regulations. 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.
- The Board of Directors shall monitor the facts and situations of related party transactions appropriately.
4. Whistleblowing System
- 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 TAIYO YUDEN GROUP 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.
- The TAIYO YUDEN GROUP 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 top management.
Chapter 4: Ensuring 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.
- The Company shall actively disclose information deemed useful for a dialogue with stakeholders on the Company’s website, the financial reports, the integrated reports, the notice of convocation of the General Meeting of Shareholders. English translations of the financial statement briefing materials, the integrated reports, the notice of convocation of the General Meeting of Shareholders, and press releases shall be disclosed on the Company's website.
Chapter 5: Corporate Governance Structure and Responsibilities of the Board of Directors
Section 1: Form of Corporate Organization
1. Form of Corporate Organization
- The Company is a company with an Audit & Supervisory Board and shall have the Board of Directors, the Audit & Supervisory Board and the Accounting Auditors. The Company shall also adopt an Operating Officers system in order to further clarify roles and responsibilities of Directors who monitor and supervise the management of business and persons who execute business operations.
- The Board of Directors shall be composed of not more than ten (10) Directors, not less than one third (1/3) of whom shall be Independent Outside Directors.
- The Audit & Supervisory Board shall be composed of not more than five (5) Audit & Supervisory Board Members, a majority of whom shall be Independent Outside Audit & Supervisory Board Members.
- To strengthen the independence and objectivity of the functions of the Board of Directors concerning the nomination and remuneration for Directors and Operating Officers and to fulfill its accountability, the Company shall establish two voluntary advisory panels with the majority of Independent Outside Directors: Nomination Committee and Remuneration Committee
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.
- 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.
- 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.
2. Decisions of the Board of Directors and Delegation of Authority to the Top Management
- 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.
- To ensure the effective decision making by the Board of Directors, the Management Committee shall deliberate in advance policy matters regarding business operations for Group management, whereas the TM (Top Management) Meeting shall deliberate in advance matters concerning personnel, organization and remuneration systems (excluding the mandates of the Nomination Committee and the Remuneration Committee) for the entire Group. Both organs shall determine matters delegated by the Board of Directors.
- The Operating Officers shall conduct business flexibly and quickly as an executor responsible for the section he or she is in charge, under the direction of the President and Chief Executive Officer, in accordance with management policies and strategies determined at meetings of the Board of Directors.
3. Term of Office and Requirements of Directors
- To clarify management responsibilities, Directors’ term of office shall be one (1) year.
- The composition of the Board of Directors shall ensure ample diversity in terms of gender and nationality and adequate balance. The candidates for Director shall be selected based on the “Officer Appointment and Dismissal Standards” and the “Standards for the Independence of Outside Directors/Outside Audit &Supervisory Board Members”.
4. Independent Outside Directors
- The Board of Directors shall select candidates for Independent Outside Director based on the “Officer Appointment and Dismissal Standards” and the “Standards for the Independence of Outside Directors/Outside Audit & Supervisory Board Members”. The “Standards for the Independence of Outside Directors/Outside Audit & Supervisory Board Members” shall be disclosed on the Company's website.
- 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.
- 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.
- The head of Independent Outside Directors shall be selected by mutual vote as necessary.
5. Succession Plan
- 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.
- 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 Nomination 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 “Officer Appointment and Dismissal Standards” to ensure the effectiveness of audits.
- 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.
- 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.
2. Role of Accounting Auditors
The 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.
Section 4: Voluntary Nominations Committee and Remuneration Committee
1. Nomination Committee
- The Nomination Committee shall be composed of the President and Chief Executive Officer, all Independent Outside Directors and an Audit & Supervisory Board Member, with the majority of Independent Directors. In addition, the committee shall be chaired by an Independent Outside Director to ensure the objectivity of deliberation.
- The Nomination Committee shall deliberate on, among others, the nomination of candidates for Officer (including candidates for reappointment), any proposal for dismissal of Officers including the President and Chief Executive Officer, any proposal for the selection of a rank for or dismissal of each Operating Officer, and disciplinary matters based on the “Officer Appointment and Dismissal Standards” and report the deliberation results to the Board of Directors. The consent of the Audit & Supervisory Board shall be obtained in advance for the nomination of a candidate for Audit & Supervisory Board Member.
2. Remuneration Committee
- The Remuneration Committee shall be composed of the President and Chief Executive Officer, all Independent Outside Directors and an Audit & Supervisory Board Member, with the majority of Independent Directors. In addition, the committee shall be chaired by an Independent Outside Director to ensure the objectivity of deliberation.
- The Remuneration Committee shall deliberate the remuneration policy, plan, calculation methods and specific remuneration content of individual Officers, and report this to the Board of Directors.
Section 5: Operation and Evaluation of the Effectiveness of the Board of Directors
1. Operation of the Board of Directors
- The President and Chief Executive Officer shall serve as chairperson while the vacancy of the chairperson.
- The Board of Directors shall conduct the following operations to encourage discussions.
- 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 meetings and another 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 Positions 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.
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.
- 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.
- 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. Evaluation of the Effectiveness 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.
Established on November 26, 2015
Revised on November 26, 2018
Revised on October 28, 2021