Corporate Governance

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UACJ is working to enhance its corporate governance to earn and maintain the trust of all of our stakeholders and increase our corporate value.

Basic Ideas on Corporate Governance

The UACJ Group believes that corporate governance is the basic framework for managing a company amid relationships with shareholders, customers, suppliers, employees, local communities, and all other stakeholders. Our duty is to benefit stakeholders by developing products, technologies, and services that are useful to society and incorporate abundant consideration for safety, and offering them to the market in an effort to continuously increase our corporate value. Toward that end, we strive to ensure proper disclosure of financial and management information, a strong sense of corporate ethics, strict compliance practices, and thorough risk management. Strengthening the functions of the Board of Directors to maintain a solid management oversight structure, and enhancing Audit & Supervisory Board functions, are key to these efforts.

UACJ Group Identity

Corporate Governance System

UACJ is organized as “a company with a board of statutory auditors.” To further strengthen the Board of Directors function and achieve even greater speed in business execution, we have implemented an executive officer system and separated business execution functions from management decision-making and the audit function.

The Audit & Supervisory Board, an independent organ performing a vital corporate governance role, oversees the directors in the performance of their duties.

Corporate Governance System

Organization Type Company with a board of statutory auditors
Directors 10 (4 of whom are outside)
Director terms 1 year
Chairman of the Board President
Corporate auditors 6 (4 of whom are outside)

Corporate Governance System

Fig. Corporate Governance System

Compliance with the Corporate Governance Code

UACJ is striving to enhance its corporate governance in line with the aims of Japan’s Corporate Governance Code. Disclosures concerning the eleven fundamental and supplementary principles on disclosures sought by the Tokyo Stock Exchange are provided in the Corporate Governance Report.

UACJ will continue to strengthen its corporate governance, while taking into account factors such as changes in its business environment.

Nomination and Appointment of Officers

The appointment of Directors and other officers at UACJ begins with the Nomination & Remuneration Advisory Committee reviewing candidates by evaluating their professional experience, positions held, qualifications, special capabilities, and other factors before making recommendations to the Board of Directors, which then decides which candidates are the best fit for the Company.

Concerning the appointment of independent outside Directors, in particular, candidates are selected based on considerations of factors such as possible conflicts of interest with the Company, and potential for actively making straightforward, constructive contributions to discussions in meetings of the Board of Directors. These considerations are based on standards established by the Tokyo Stock Exchange and UACJ’s own standards on independence. UACJ’s Board of Directors currently includes four independent outside Directors. One is a woman and three have corporate management experience. Going forward, UACJ will strive to maintain a diverse Board of Directors that has a strong balance of knowledge, experience, and capabilities, and is of the right size for the Company.

Establishment of the Nomination & Remuneration Advisory Committee

To strengthen its governance by enhancing objectivity and transparency in the processes for nominating and determining remuneration for Directors, Executive Officers, and members of the Audit & Supervisory Board, UACJ established the Nomination & Remuneration Advisory Committee, an advisory body to the Board of Directors, in October 2017. When requested to do so, the committee deliberates matters concerning the nomination and remuneration of Director and Executive Officer candidates, and then provides its findings to the Board of Directors.

The committee consists of seven members, including an independent outside Director as chairman, three independent outside Directors, two inside Directors, and one independent outside member of the Audit & Supervisory Board.

In fiscal 2019, the Nomination & Remuneration Advisory Committee held 11 meetings.

Structure of the Board of Directors

As of June 22, 2020, UACJ’s Board of Directors consists of 10 Directors (including 4 outside Directors) and 6 Audit & Supervisory Board Members (including 4 outside members). The board, which is chaired by the president, comes together for monthly meetings in which it deliberates important matters and hears reports on the status of business activities, as required by laws and ordinances, and UACJ’s Articles of Incorporation and other internal rules.

Director terms have been set at one year in an effort to clarify responsibility.

Of the four outside directors, two are university professors, one a professor emeritus with a wealth of academic experience underpinning his objective perspective and the other also with an extensive academic background, as well as experience as a company director. The remaining two outside directors have broad managerial experience as company directors and play key roles in ensuring the propriety of decision-making by the Board of Directors.

Rationale for Selection of Outside Directors

Name Independent Officer Rational for Selection Activities
Toshio Suzuki Toshio Suzuki is a university professor emeritus. He was asked to join the Board of Directors based on the judgment that his objective perspective stemming from his wealth of academic experience would enable him to properly perform the duties of an outside member.
Judging also that Professor Suzuki is not in a position that would give rise to a conflict of interest with general shareholders, UACJ has designated him an independent officer.
None of the descriptions provided in Rule 211.4.6 of the Enforcement Rules for Securities Listing Regulations of the Tokyo Stock Exchange apply to Professor Suzuki.
Board of Directors meeting attendance: Attended all 15 meetings

Nomination & Remuneration Advisory Committee meeting attendance: Attended all 11 meetings

Openly expressed his opinion from an objective viewpoint and confidently supported his comments based on his rich academic experience as a professor emeritus. Also serves as chairman of the Nomination & Remuneration Advisory Committee.
Ryoko Sugiyama Ryoko Sugiyama is a university professor. She was asked to join the Board of Directors based on the judgment that her wealth of academic experience, and management experience as a company director, would allow her to properly perform the duties of an outside member.
Judging also that Professor Sugiyama is not in a position that would give rise to a conflict of interest with general shareholders, UACJ has designated her an independent officer.
None of the descriptions provided in Rule 211.4.6 of the Enforcement Rules for Securities Listing Regulations of the Tokyo Stock Exchange apply to Professor Sugiyama.
Board of Directors meeting attendance: Attended 14 of 15 meetings

Nomination & Remuneration Advisory Committee meeting attendance: Attended 10 of 11 meetings

Drew on her experience as a university professor and company director to freely contribute to Board discussions from her objective perspective. Also serves as a member of the Nomination & Remuneration Advisory Committee.
Takahiro Ikeda Takahiro Ikeda is a director of a major chemical manufacturer and has extensive experience in the management of that company and its group companies. He was asked to join the Board of Directors based on the judgment that he will be able to properly perform the duties of an outside member.
Judging also that Mr. Ikeda is not in a position that would give rise to a conflict of interest with general shareholders, UACJ has designated him an independent officer.
While Mr. Ikeda has in the past worked for Mitsubishi Chemical Corporation (MCC), a UACJ customer, transactions with MCC make up less than 0.2% of the consolidated net sales of both companies, respectively, so MCC is not a specified related business entity from UACJ’s perspective.
Board of Directors meeting attendance: Attended all 15 meetings

Nomination & Remuneration Advisory Committee meeting attendance: Attended 10 of 11 meetings

Drew on his experience as a company director to freely contribute to Board discussions from his objective perspective. Also serves as a member of the Nomination & Remuneration Advisory Committee.
Akio Sakumiya Akio Sakumiya is a director and vice president of a major electrical device manufacturer and has extensive experience in the management of that company and its group companies. At the same time, he is a member and vice-chairman of various advisory bodies dealing with personnel and remuneration matters concerning directors and other personnel at these companies and has accumulated a wealth of experience in other aspects of corporate governance as well. He was asked to join the Board of Directors based on the judgment that he will be able to properly perform the duties of an outside member.
Judging also that Mr. Sakumiya is not in a position that would give rise to a conflict of interest with general shareholders, UACJ has designated him an independent officer.
None of the descriptions provided in Rule 211.4.6 of the Enforcement Rules for Securities Listing Regulations of the Tokyo Stock Exchange apply to Mr. Sakumiya.
Board of Directors meeting attendance: Attended all 15 meetings

Nomination & Remuneration Advisory Committee meeting attendance: Attended all 11 meetings

Drew on his experience as a company director to freely contribute to Board discussions from his objective perspective. Also serves as a member of the Nomination & Remuneration Advisory Committee.

Operation of the Board of Directors

At UACJ, the Board of Directors deliberates and renders decisions on important management matters, while the Executive Officers supervise and execute operations. By clearly separating these roles, we have enhanced management transparency and fairness, and created a governance system that clarifies responsibilities for individual business operations. In addition, to help ensure the proper control of operations, management meetings are held regularly, on a monthly basis, with participation 2 full-time Audit & Supervisory Board Members, and 14 Executive Officers (as of June 22, 2020). The purpose of these meetings is to deliberate and consider important management matters, and develop common understanding among those responsible for executing business operations.

The delegation of duties to, and areas of responsibility for, individual Directors are determined in a Board of Directors meeting following the general meeting of shareholders. Management organization rules govern the Executive Officers’ execution of their responsibilities in accordance with laws and ordinances, the Articles of Incorporation, and Board of Directors resolutions.

Regarding concurrent service by Directors and Executive Officers as officers of other companies, two outside Directors are concurrently serving as outside directors or in other capacities at other listed companies. No other Directors or Executive Officers are concurrently holding positions at other companies.

Evaluation of Board of Directors Effectiveness

At UACJ, we evaluate the effectiveness of the Board of Directors annually. In this evaluation, each Director and member of the Audit & Supervisory Board completes a questionnaire on matters such as the structure and operation of the Board of Directors, and the responses to these questionnaires are discussed by the Directors.

Main Evaluation Items

  • Roles and duties of the BOD
  • Decision-making by the BOD
  • Oversight function of the BOD
  • Structure of the BOD
  • Operation of the BOD

Fiscal 2019 Evaluation Results

  • UACJ’s Board of Directors was found to be operating properly and to be structured in a way that allows it to perform its management oversight function.
  • Discussions by the Board of Directors, in a process starting with preliminary review meetings and extending to meetings of the Board of Directors, were found to be characterized by free and open, constructive debates and exchanges of opinions.
  • Sufficient time is being made available for deliberations.
  • The Board of Directors benefits from the balance of its members’ qualities.

Issues and Measures Going Forward

  • Steps will be taken to further enhance Board of Directors deliberations of the Company’s major courses of action.
  • Efforts to enhance governance-related reports and explanatory materials will continue.
  • To help accelerate globalization and realize ongoing growth, efforts will be made to enhance discussions of the Company’s major courses of action and improve the operation of the Board of Directors based on evaluation results.

Enhancing the Skills of Directors and Audit & Supervisory Board Members

UACJ’s policy is to conduct training for Directors and Audit & Supervisory Board members when they are first appointed and during their periods of service. The purpose of this training is to help ensure that the participants can properly perform their duties.

When they are first appointed, Directors and Audit & Supervisory Board members participate in training to help them understand their roles and duties. Training for outside officers also includes programs to deepen understanding of various aspects of the Company, including its business, finances, and organization. For officers who are no longer new to their positions, we offer training opportunities that are aimed at furthering understanding of governance, training related to issues the Group is facing, and training based on the knowledge, experience, and capabilities of individual Directors and Audit & Supervisory Board members.

In fiscal 2019, we conducted officer training in governance and compliance. We also instituted training on Japan’s Companies Act and other laws and regulations for newly appointed officers.

Support System for Directors and Audit & Supervisor Board Members

To promote the thoroughness of discussions in Board of Directors meetings, continuous support is provided to further individual officers’ awareness and understanding. Lectures given by outside experts on the topic of governance are one example of this support.

In addition, separate and apart from Board of Directors meetings, outside Directors and outside Audit & Supervisory Board members are provided with opportunities to meet with the Representative Director. These meetings are held in an effort to actively incorporate the views of outside officers in business operations. Along these same lines, reference materials are provided to Board of Directors meeting participants ahead of time; briefings on particularly important topics are held in advance of meetings, as needed; and outside officers are permitted to participate in important meetings even when their presence is not required.

Remuneration of Directors and Audit & Supervisory Board Members

UACJ’s officer remuneration system is designed to provide incentives for directors to respond to stakeholder expectations by contributing broadly to society through sound, wholesome business development and by helping the Company to continue generating as much profit as it can. The system is also intended to encourage Directors to help enhance the Company’s corporate value and medium-to-long-term performance. To ensure the proper functioning of the system and enhance objectivity and transparency, decisions on details concerning the design of the remuneration system and its operation are made by the Board of Directors based on input from the Nomination & Remuneration Advisory Committee, which consists of at least three members (at least half of whom are independent outside Directors or independent outside Audit & Supervisory Board Members) selected via Board of Directors resolution.

Current remuneration for Directors and Audit & Supervisory Board members is based on a revised framework approved in the fifth regular general shareholders’ meeting, held on June 21, 2018. Accordingly, total remuneration for all Directors must not exceed ¥650 million annually (Salaries of Directors who are employees are not included, and total remuneration for all outside Directors as a group is limited to basic remuneration not to exceed ¥80 million annually.) The upper limit on remuneration for the Audit & Supervisory Board Members as a group was set at ¥100 million annually.

The basic policy for officer remuneration is as described below.

a. Basic Concepts for Officer Remuneration

  • The remuneration system will provide incentives to achieve performance objectives (short-term and medium-to-long-term) for the Company’s business strategies.
  • The remuneration system will offer remuneration levels that are sufficiently competitive for attracting outstanding human resources to lead the Company’s growth and for encouraging their desire to contribute thereto.
  • The remuneration system’s decision-making process will be characterized by high levels of objectivity and transparency.
  • The remuneration system will promote commonality of interests with shareholders and increases in shareholder value.

b. Remuneration Structure

  • Remuneration for the Company’s Directors consists of basic remuneration, which is fixed; short-term performance-based remuneration that varies with annual Company performance; and medium-to-long-term performance-based remuneration that varies with medium-to-long-term Company performance. Remuneration for outside Directors shall consist of only fixed remuneration in light of their principal duty to oversee decision-making from an objective, independent perspective.
  • Basic remuneration for each officer position is set by referring to remuneration survey data provided by an outside institution specializing in the gathering of this kind of data. Remuneration levels are determined based on comparisons to companies that are in similar industries and are of similar size to the Company.
  • For each eligible Director, short-term performance-based remuneration shall be 35%-40% (The standard amount assuming payment of 100% of the potential amount. Same applies below.) of basic remuneration.
  • For each eligible Director, medium-to-long-term performance-based remuneration shall be approximately 25% (the standard amount) of basic remuneration.

Officer Remuneration System

Officer Remuneration System

c. Performance-based Remuneration

  1. 1) Short-term performance-based remuneration shall consist of three elements - one based on an assessment of overall Group performance, a second based on an assessment of department-level performance, and a third based on an assessment of individual performance. Amounts paid will vary depending on annual performance and payments will be made once a year.
    • Remuneration based on an assessment of overall Group performance shall be calculated with reference to the Company’s key management indicators and to consolidated net income, consolidated ROIC, and consolidated ordinary income before the impact of inventory valuations, which are emphasized in the mid-term management plan, as performance indicators. With a payment ratio of 100% for 100% achievement of objectives, payments may vary from 0% to 200% depending on performance.
    • Remuneration based on an assessment of department-level performance shall use as performance indicators department-level ordinary income, department-level ROIC, and department-level ordinary income before the impact of inventory valuations, which correspond to whole-company performance indicators. With a payment ratio of 100% for 100% achievement of objectives, payments may vary from 0% to 200% depending on performance.
    • Remuneration based on an assessment of individual performance shall be based mainly on a qualitative assessment of important initiatives not reflected in annual group or department-level performance. This portion of remuneration shall approximate 10% of overall short-term performance-based remuneration.
  2. 2) Medium-to-long-term performance-based remuneration shall be paid with performance share units (PSUs) using actual equity shares. Payments in equity shares and cash will be made in accordance with achievement of medium-to-long term Group performance objectives. Payments shall be made once every three years based on three-year performance assessments.
    • Using as performance indicators consolidated ROIC and consolidated adjusted EBITDA, which are key management indicators and are emphasized in the mid-term management plan, the three-year average consolidated ROIC and cumulative consolidated adjusted EBITDA for each three-year period will serve as the basis for setting performance objectives at the beginning of each three-year assessment period. With a payment ratio of 100% for 100% achievement of objectives, payments may vary from 0% to 200% depending on performance. After assessment based on performance indicators, the value equal to the TSR (Total Shareholder Return) growth rate over the three-year assessment period divided by the TOPIX (Tokyo Stock Price Index) growth rate over the same period will be used to determine the final payment ratio within the range of 0% to 200%.
    • At the end of each assessment period, half of the calculated PSUs shall be paid in equity shares, with the remaining half paid in cash.

d. Procedure for Determining Remuneration

  • Officer remuneration policies and details are deliberated by the Nomination & Remuneration Advisory Committee, which then provides information the Board of Directors uses to make final decisions.
    Independent outside Directors and independent outside Audit & Supervisory Board Members make up over half of the membership of the Nomination & Remuneration Advisory Committee. To provide the committee members with information needed for their work, steps such as obtaining input from external experts are taken as necessary.
  • Regarding short-term performance-based remuneration for Directors, the Nomination & Remuneration Advisory Committee at the beginning of the evaluation period confirms objectives related to whole-company performance and department-level performance, and, at the end of the evaluation period, assesses the degree to which objectives were achieved and determines appropriate amounts of remuneration. The advisory committee also assesses the appropriateness of remuneration based on individual performance evaluations. For medium-to-long-term performance-based Director remuneration, the Nomination & Remuneration Advisory Committee at the beginning of the evaluation period confirms objectives and, at the end of the evaluation period, assesses the degree to which objectives were achieved and determines appropriate amounts of remuneration.
  • Given the determinations of the Nomination & Remuneration Advisory Committee, Director remuneration amounts are set by the president and approved with Board of Directors resolutions at levels within limits authorized in general shareholders’ meetings.
  • Audit & Supervisory Board Member remuneration amounts are set based on discussions by the Audit & Supervisory Board Members at levels within limits approved in general shareholders’ meetings.

Audit Function

Audit & Supervisory Board

As of June 22, 2020, the Audit & Supervisory Board consists of 6 Audit & Supervisory Board Members, including 4 outside members and two members with knowledge of financial and accounting matters. Audit policies and plans are prepared by the Audit & Supervisory Board annually based on the Code of Kansayaku Auditing Standards (“Kansayaku” is the Japanese term for “corporate auditor” and means Audit & Supervisory Board Member at the UACJ Group.) and the rules governing the Audit & Supervisory Board. Each Audit & Supervisory Board Member, in accordance with the audit policies and plans determined by the Audit & Supervisory Board, is engaged primarily in monitoring the implementation and operation of internal control systems, conditions with regard to risk prevention and responses to management issues, and other matters to determine whether the Directors are properly fulfilling their duties. They also confirm the reasonableness of the independent auditor’s methods and results, and they attend Board of Directors and other important meetings, where they express their opinions as necessary.

As a rule, the Audit & Supervisory Board comes together in monthly meetings. During these meetings, full-time members present audit reports to share information among all Audit & Supervisory Board Members, and full-time and outside members engage in thorough discussions of meeting topics.

Rationale for Selection of Outside Audit & Supervisory Board Members

Name Independent Officer Rationale for Selection Activities
Akari Asano Akari Asano has been a senior executive in charge of general affairs and performed other management roles at a manufacturing firm and within that firm’s corporate group. He was asked to join the Audit & Supervisory Board based on the judgment that the knowledge and experience he has acquired throughout his career would enable him to properly perform the duties of an outside member.
Judging also that Mr. Asano is not in a position that would give rise to a conflict of interest with general shareholders, UACJ has designated him an independent officer.
None of the descriptions provided in Rule 211.4.6 of the Enforcement Rules for Securities Listing Regulations of the Tokyo Stock Exchange apply to Mr. Asano.
Board of Directors meeting attendance: Attended all 15 meetings

Board of Auditors meeting attendance: Attended all 14 meetings

As necessary, expressed objective opinions backed by his experience as a company executive. Also serves as a member of the Nomination & Remuneration Advisory Committee.
Yuki Iriyama - Yuki Iriyama has served as a managing executive officer of a major steel manufacturer. He was asked to join the Audit & Supervisory Board based on the judgment that his wealth of management expertise and the sophisticated knowledge he has attained as an attorney familiar with corporate legal affairs would enable him to properly perform the duties of an outside member. Board of Directors meeting attendance: Attended all 15 meetings

Board of Auditors meeting attendance: Attended all 14 meetings

As necessary, expressed opinions backed by his wealth of experience and broad insight as an executive of another company and as an attorney.
Hiroyuki Yamasaki Hiroyuki Yamasaki is a certified public accountant. He is an expert in corporate accounting and has deep experience with financial and accounting matters. He was asked to join the Audit & Supervisory Board based on the judgment that the high level of accounting expertise he has acquired through his career would enable him to properly perform the duties of an outside member.
Judging also that Mr. Yamasaki is not in a position that would give rise to a conflict of interest with general shareholders, UACJ has designated him an independent officer.
None of the descriptions provided in Rule 211.4.6 of the Enforcement Rules for Securities Listing Regulations of the Tokyo Stock Exchange apply to Mr. Yamasaki.
Board of Directors meeting attendance: Attended all 15 meetings

Board of Auditors meeting attendance: Attended all 14 meetings

As necessary, expressed opinions backed by his wealth of experience and broad insight as a Certified Public Accountant.
Yoshiro Motoyama Yoshiro Motoyama has served as a director and vice president of a major automobile manufacturer and has a wealth of experience in corporate management. He was asked to join the Audit & Supervisory Board based on the judgment that the broad management perspective he has acquired through his career would enable him to properly perform the duties of an outside member.
Judging also that Mr. Motoyama is not in a position that would give rise to a conflict of interest with general shareholders, UACJ has designated him an independent officer.
None of the descriptions provided in Rule 211.4.6 of the Enforcement Rules for Securities Listing Regulations of the Tokyo Stock Exchange apply to Mr. Motoyama.
Board of Directors meeting attendance: Attended all 15 meetings

Board of Auditors meeting attendance: Attended all 14 meetings

As necessary, expressed opinions backed by his wealth of experience and broad insight as an executive of another company.

Enhancing the Effectiveness of the Audit System

To enhance the quality of audits, UACJ uses a three-pronged scheme to perform audit work. Under this scheme, the Audit & Supervisory Board Members, internal auditors, and independent auditors remain in close communication with one another as they perform audit work. For audits by Audit & Supervisory Board Members and audits by internal auditors, on-site audit plans are developed in accordance with respective annual policies and plans. Audit & Supervisory Board Members and internal auditors freely share these plans, the results obtained, and opinions with each other. They also freely share their audit results and opinions with the independent auditors, and follow up on audit findings.

To enhance the functions of the Audit & Supervisory Board, which operates independently, two people have been assigned to assist the Audit & Supervisory Board members in their work.

Internal Audit System

At the UACJ Group, internal audits are performed by the Internal Auditing Department, which reports directly to the president of UACJ Corporation. The department, with 12 full-time and three part-time internal auditors, prepares annual audit policies and plans based on the Internal Audit Rules. It then objectively examines and assesses the activities of the managers of UACJ and each UACJ Group company to determine whether they are being performed within the law, with rationality, and with propriety in accordance with UACJ’s management objectives. Examination and assessment results are reported to the president of UACJ Corporation, together with recommendations and suggestions for improvements.

Internal Controls

The UACJ Group endeavors to strengthen its internal control system to help ensure that its business activities are in line with management objectives, within the law and rational. Furthermore, as regards the status of internal controls stipulated by the Financial Instruments and Exchange Act, the Internal Auditing Department conducts tests and assessments with the aim of ensuring the reliability of financial reporting.

Status of the Internal Control System

As described below, the UACJ Group’s internal control systems (Systems for ensuring that the execution of duties by the Directors and employees of the Company and the Group complies with laws and ordinances, and the Articles of Incorporation, and for ensuring the propriety of the business activities of the corporation and of the corporate group consisting of the corporation and its subsidiaries) have been established in accordance with Japan’s Companies Act and Ordinance for Enforcement of the Companies Act.

a. Systems for ensuring that the execution of duties by the Directors and employees of the Company and the Group complies with laws and ordinances, and the Articles of Incorporation

  • The Company and the Group act in accordance with the management philosophy and company principles, and aim to be virtuous organizations that abide by laws and ordinances, and the Articles of Incorporation.
  • The CSR Committee takes the lead in holding lectures, distributing manuals, and conducting other education activities. It also conducts compliance activities, such as reviews to check for legal and regulatory violations.
  • An internal reporting system has been put in place to promote the early detection and correction of compliance violations.
  • The Internal Auditing Department, as the internal audit unit, monitors the performance of duties in individual units, conducts audits to determine whether internal control systems are functioning effectively, and reports findings to the Board of Directors.

b. Systems for the preservation and management of information on the execution of duties by Directors

  • Board of Directors meeting minutes, approval documentation, and other information on the execution of duties by Directors is prepared and retained in accordance with internal rules.
  • Information is kept in a state that permits viewing by Directors and Audit & Supervisory Board Members whenever necessary.

c. Provisions and other systems addressing management of the risk of loss for the Company and the Group

  • The Company and the Group, in accordance with internal rules, properly address environmental, safety and health, quality, information security, export management, and other Company or Group risks. Risks unique to particular units are managed by those units. The CSR Committee advances horizontal risk management.

d. Systems for ensuring efficient execution of duties by Directors of the Company and the Group

  • Within the Company and the Group, duties are efficiently fulfilled based on the rule-based division of duties and responsibilities, and on other measures as well.
  • Mid-term management plans and fiscal year budgets are prepared, and specific targets are established and their achievement is managed by individual units or groups.

e. Systems for ensuring the propriety of operations by the subject corporation and the corporate group consisting of it and its parent company and/or subsidiaries

  • The UACJ Group has constructed and put in place an internal control system.
  • The Internal Auditing Department conducts audits of operations. It then reports results to the Audit & Supervisory Board Members and Representative Director as a measure for promoting compliance throughout the Group. In addition, subsidiaries are obligated by their own internal rules to discuss important management matters with the Company. If necessary, rules concerning the management of subsidiaries will be revised to ensure the propriety of business activities carried out by the Group.

f. Matters concerning employees to be assigned to assist Audit & Supervisory Board Members at their request

  • An employee has been assigned to assist the Audit & Supervisory Board Members. This employee supports the work of the Audit & Supervisory Board Members in accordance with their instructions.

g. Matters concerning the independence of the employee referred to in the previous item and the validity of instructions issued to the employee, from Directors

  • The employee referred to above is an employee designated to be outside the direction and supervision of Directors, and personnel decisions concerning that employee require the prior agreement of the Audit & Supervisory Board.

h. Systems enabling Directors and employees of the Company and the Group to report concerns to Audit & Supervisory Board Members, and systems for other reports to Audit & Supervisory Board Members

  • In connection with the execution of their duties, Directors, Executive Officers, and employees of the Company and the Group report to the Company’s Audit & Supervisory Board Members without delay instances of significant violations of laws and ordinances, and the Articles of Incorporation; improprieties; and developments that could result in significant damage to the Company or Group.
  • Directors, Executive Officers, and employees, based on the Board of Directors meeting rules and other internal rules, report or settle matters in Board of Directors meetings or other meetings at which Audit & Supervisory Board Members are in attendance.
  • Subjecting Directors, Executive Officers, and employees of the Company and the Group, who have reported a matter, such as those described above, to the Company’s Audit & Supervisory Board Members, to disadvantageous treatment on account of their having reported the matter is prohibited.

i. Other systems for ensuring that audits by Audit & Supervisory Board Members can be performed effectively

  • The Board of Directors ensures Audit & Supervisory Board Member attendance at Board of Directors meetings, and management and other important meetings.
  • The Audit & Supervisory Board Members and representative Director periodically hold meetings to exchange views.
  • When the Audit & Supervisory Board Members make a request concerning the effectiveness of audits performed by the Audit & Supervisory Board Members, the Directors, Executive Officers, and heads of relevant units respond in good faith.
  • Expenses covered by Article 388 of the Companies Act are handled in accordance with rules.

Strategic Shareholdings

UACJ maintains strategic shareholdings judged to be necessary for promoting continued business growth and smooth progress by, for example, maintaining or strengthening business ties, advancing business collaborations, or promoting stable procurement of raw materials.

Our policy is to hold the minimum number of shares necessary and to reduce our holdings going forward. Every year, the Board of Directors examines individual strategic shareholdings, examining quantitative factors such as economic rationality and qualitative factors such as the purpose of the holding. If, as a result of these examinations, it is determined that maintaining a shareholding is no longer sufficiently meaningful or rational, the shareholding will be gradually divested. Regarding the exercise of voting rights attached to strategic shareholdings, UACJ takes the position that it should exercise its rights as a shareholder and, in principle, exercises all voting rights on all resolutions put before shareholders. Voting rights are exercised on individual resolutions based on considerations of whether they are consistent with UACJ’s purpose for maintaining the shareholding, would promote sound management at the issuing company, and would enhance the corporate value of both UACJ and the issuing company. In fiscal 2019, all or a portion of 14 shareholdings were divested. As of March 31, 2020, UACJ had strategic shareholdings in 34 companies.

Takeover Defense Strategy

Presently, UACJ has not adopted any takeover defense strategies.