These Guidelines clarify the Company’s basic approach to, framework for, and operation policy of corporate governance to ensure the TOA CORPORATION Group’s sustained growth and enhance its corporate value in the medium and long term.
Chapter 1 General Rules
Basic approach
Article 1
The Company recognizes that in order to continuously create social value and enhance corporate value, it is important to strengthen corporate governance, and in accordance with the basic policies set forth below, the Company shall strive to achieve strengthened corporate governance.
- Ensuring the transparency and soundness of management
- Swift decision-making and business execution
- Respect for shareholders’ rights
- Clarification of accountability to stakeholders
- Timely and appropriate information disclosures
Chapter 2 Management Philosophy and Strategy
Management philosophy
Article 2
The Company upholds the “Corporate Philosophy” as its fundamental idea for management and the “Three Management Policies” as its basic policy for management.
Corporate Philosophy: We will pursue the development of our business with advanced technology and fulfill our social responsibilities through sound management.
Three Management Policies:
- To enhance competitiveness by strategic management.
- To maintain everlasting trust through reliable construction works.
- To strive constantly to improve individual ability and contribute to organizational goals.
*The Corporate Philosophy and the Three Management Policies will be posted on the Company website:
https://www.toa-const.co.jp/eng/corp_overview/philosophy/
Long-term vision and medium-term management plan
Article 3
The Company shall uphold its long-term vision of what its business should be in the future and establish a medium-term management plan to realize such vision.
*The long-term vision and the medium-term management plan will be posted on the Company website:
https://www.toa-const.co.jp/eng/ir/plan/
Corporate code of conduct
Article 4
In order to carry out business activities in accordance with its management philosophy, the Company shall follow and put into practice the separately stipulated Corporate Code of Conduct, ensure thorough compliance therewith, and fulfill its social responsibilities.
*The Corporate Code of Conduct will be posted on the Company website:
https://www.toa-const.co.jp/eng/esg/code/
Chapter 3 Ensuring the Rights and Equality of Shareholders
General meeting of shareholders
Article 5
The Company recognizes that the General Meeting of Shareholders is an opportunity for constructive dialogue with shareholders and shall strive to create an environment to ensure the exercise of their rights at the Meeting.
Creating an environment that ensures the exercise of voting rights
Article 6
- The Company shall send notices of convocation for Ordinary General Meetings of Shareholders in a timely manner so that shareholders will have sufficient time to consider the proposed resolutions for the Meeting and be able to exercise their voting rights properly. (The guideline is to have notices sent three weeks prior to the Meetings.) The Company shall also disclose such notices with the pertinent financial instruments exchanges and on the Company website prior to their delivery.
- The Company shall strive to create an environment in which all shareholders can exercise their voting rights properly, including participation in electronic voting platforms and translation of notices of convocation into English.
Ensuring the equality of shareholders
Article 7
In order to ensure the equality of shareholders in practical terms, the Company shall treat all shareholders equally according to the type and number of shares each holds.
Transactions between related parties
Article 8
If a director of the Company engages in conflict-of-interest transactions or transactions that are competitive with the Company as stipulated in laws and ordinances, he or she must report to the Board of Directors and obtain its approval in advance.
Basic capital policy
Article 9
The Company’s basic capital policy emphasizes three factors: capital productivity growth and growth investment, stable and substantial shareholder returns, and construction of a stable financial foundation. Based on this policy, the Company shall formulate and implement measures to contribute to the enhancement of corporate value from a long-term perspective.
Basic policy for cross-shareholdings
Article 10
- Each year, the Company shall closely examine the shares it holds to determine what purpose the shares have for the Company and whether the benefits of holding such shares fit the cost of capital. The Company shall also properly judge whether holding such shares contributes to its medium- to long-term management strategy and business strategy.
- When exercising the voting rights of listed shares held as part of its cross-shareholdings, the Company shall consider the purpose and other details of proposed resolutions and make appropriate decisions based on whether such shares contribute to enhancing the Company’s corporate value through the enhancement of the corporate value of the companies in which it invests.
Chapter 4 Appropriate Collaboration with Stakeholders Other than Shareholders
ESG Initiatives
Article 11
- Through its business activities, the Company shall fulfill its various social responsibilities and enhance stakeholder satisfaction, thereby contributing to the realization of a sustainable society.
- In order to promote ESG management, the Company shall establish an ESG Committee with the President as its Chairman, and considering its business from the viewpoint of sustainability, strive to enhance its ESG initiatives.
- The Company shall stipulate a set of regulations for the ESG Committee in order for the Committee to properly operate as stipulated in the preceding paragraph.
*ESG-related information will be posted on the Company website as follows:
Initiatives for respecting human rights
Article 12
- As part of its ESG management efforts, the Company shall establish a policy for human rights and respect the human rights and individuality of each and every one of its personnel.
- The Company has put in place an internal system to respect human rights and carry out continuous initiatives such as responding to human rights risks and taking corrective action./li>
Promotion of diversity
Article 13
- In order to continue to create value as required by society, the Company shall respect diversity in such terms as gender, age, nationality, culture, and lifestyle and strive to create a work environment in which all employees with their diverse characteristics, traits, and values can work together easily and demonstrate their abilities to the fullest.
- The Company shall work systematically to ensure full diversity in the appointment and treatment of core personnel.
Environmental initiatives
Article 14
- The Company considers protecting the global environment to be the most important issue enabling the future sustainability of both society and TOA CORPORATION and shall carry out environmental initiatives in all its business activities.
- In order to ensure the sustained growth of both TOA CORPORATION and society and protect the global environment, the Company shall deliberate and determine measures (such as goals) that meet the environmental standards required by society in the future from a broad and medium- to long-term perspective and evaluate their progress.
Internal reporting system
Article 15
- As an aid to ensure thorough compliance, the Company shall internally and externally establish reporting hotlines and consultation desks in accordance with the Whistleblower Protection Act. This internal reporting system shall enable a wide range of stakeholders, including Company employees, to report any illegal business-related act committed by any TOA CORPORATION Group executive or employee without fear of the risk of suffering disadvantageous treatment upon discovering such act, and the Company shall make thorough efforts to implement such system.
- The Board of Directors shall periodically receive and review reports regarding the operation of the internal reporting system from the department in charge.
Chapter 5 Timely and Appropriate Information Disclosures
Information disclosures
Article 16
- In accordance with its disclosure policy, the Company shall strive for fair information disclosures and shall swiftly, justly, fairly, and appropriately disclose all information to be disclosed in accordance with laws and ordinances and other corporate information it considers effective in fostering a deep understanding of TOA CORPORATION, including its management strategy and business activities.
- From the viewpoint of ensuring the fairness of information disclosures, the Company shall promote information disclosures in English to a reasonable extent.
Account auditors
Article 17
- The Company recognizes that account auditors play an important role in ensuring the accuracy of financial reports and shall take appropriate measures to ensure that audits are conducted appropriately.
- As necessary, the Company shall request account auditors to explain how they maintain their independence from the Company and satisfy the quality management standards required to conduct audits while also confirming the adequacy of such evaluation standards.
- The Company shall strive to create an environment that enables high-quality audits, including providing opportunities for interviews with the Representative Director & President and the director in charge of the finance department and establishing a cooperative relationship with the internal audit department.
- The Company shall confirm with the Audit & Supervisory Committee whether the account auditors are performing their duties appropriately and whether the audit system and the independence, expertise, etc. of the account auditors are appropriate in order to decide whether such account auditors should be elected, reelected, or dismissed.
Chapter 6 Corporate Governance System
Risk management and compliance
Article 18
- The Company views risk management and compliance as one of the most important management issues and fully recognizes that company-wide, throughgoing risk management and compliance provide the foundation for the Company’s management. It shall not only comply with all laws and ordinances, internal regulations, etc., as required in its corporate activities, but also carry out fair and just corporate activities in line with social codes. It shall also carry out activities to avoid various risks, including compliance risks, and minimize the human, social, and economic losses caused by such risks.
- In order to ensure thoroughgoing risk management and compliance, the Company shall deliberate, discuss, and decide the important matters related to the preceding paragraph as well as exchange information and communicate with related parties under the leadership of the ESG Committee as stipulated in Article 11.2.
Chapter 7 Directors and the Board of Directors
Organizational design
Article 19
- The Company shall establish a corporate governance system as a company with an Audit & Supervisory Committee, and the Board of Directors shall supervise and make important decisions regarding business execution.
- The Director and President entrusted with decisions regarding important business execution matters shall make such decisions at the Management Meeting. The Company shall adopt an executive officer system to clarify responsibilities and ensure swift business execution.
- If a Representative Director and President is appointed, the Representative Director and President will be able to make decisions on the entrusted matters stipulated in the preceding paragraph by obtaining the consent of the Chairman of the Board of Directors and a resolution of the Management Meeting.
Roles and responsibilities of the board of directors
Article 20
- Entrusted by the shareholders, the Board of Directors shall strive to fulfil the Company’s corporate philosophy, implement efficient and effective corporate governance, achieve the sustained growth of the Company, and maximize medium- to long-term corporate value.
- Each director must gather sufficient information to perform his or her duties and actively express his or her opinions to ensure the thorough discussion of matters.
- In order to fulfill the responsibilities set forth in the preceding paragraphs, the Board of Directors shall ensure the fairness and transparency of management by demonstrating its supervisory function of the overall management and making optimal decisions mainly through the appointment and evaluation of senior managers, determining their remuneration, assessing any serious risks faced by the Company, formulating measures to respond thereto, and determining the proper execution of the Company’s important business.
- By stipulating matters to be resolved by the Board of Directors in the Board of Directors Regulations, the Board of Directors shall make it clear that it shall entrust executive directors and executive officers with decisions on matters that do not fall under the matters to be resolved by the Board of Directors.
- In order to maintain the effectiveness and efficiency of internal controls, the Board of Directors shall stipulate basic policy to establish an internal control system and strive for its optimal operation and maintenance.
- The Board of Directors shall receive reports from the ESG Committee, which deliberates, discusses, and decides important matters related to risk management and compliance and exchanges information and communicates with related parties, and shall ensure that risk management and compliance are implemented fairly and effectively.
- The Board of Directors shall advance the medium-term management plan and confirm progress in achieving its goals at the Management Meeting and the Business Plan Meeting from time to time and implement any necessary measures. If it revises said goals, the Board of Directors shall fully analyze the factors for such revisions and disclose the results of the analysis to shareholders in an easy-to-understand way.
- The Board of Directors views improving the abilities of managers as an important task in achieving the sustained growth of the Company, and based on the requirements and other conditions for managers as drawn from the Company’s management philosophy, action guidelines, and management strategy, the Board of directors shall put sufficient time and resources into continuously discussing the way in which successor planning takes changes in the business environment and other factors into account, drawing up manager development plans, and appropriately supervising the development of candidates as successors so that succession is implemented in a systematic way.
Composition of the board of directors
Article 21
- Since it makes decisions regarding important matters related to corporate management policy and business execution, the Board of Directors shall consist of persons of integrity who possess the skills required to execute business and enhance corporate value as well as technical knowledge, experience, and ability in such areas as sales, legal affairs, finance, or human resource development that takes diversity into account, including gender, international perspective, professional career history, and age, and shall disclose a matrix listing the combinations of the skills and other abilities of the individual directors and candidates for directorship in notices of convocation for General Meetings of Shareholders and other documents.
- The number of directors (excluding those who serve on the Audit & Supervisory Committee) shall be ten or fewer, and the number of directors who serve on the Audit & Supervisory Committee shall be four or five.
- Directors (excluding Audit & Supervisory Committee members and independent directors) shall be elected in light of the requirements for managers as drawn from the Company’s corporate philosophy and management strategy with evaluations of factors such as experience, sound judgment, expertise, etc. taken into consideration.
- In order to maintain the diverse balance of knowledge, experience, and ability stipulated in the preceding paragraph, several independent directors shall be elected from among corporate managers, experts, and other candidates by taking into account their experience, sound judgment, and expertise.
- The number of independent directors as stipulated in the preceding paragraph shall be one-third of the members of the Board of Directors or more to ensure the effectiveness of independent and objective supervision over business execution.
Roles and responsibilities of independent directors
Article 22
- Independent directors of the Company shall perform the functions of monitoring from an independent standpoint and giving reliable advice regarding the Company’s management based on their extensive, high-level knowledge.
- The Company shall elect several independent directors with broad perspectives to be stakeholders who will contribute to achieving sustained growth, enhancing medium- to long-term corporate value, and improving social value.
- Independent directors must devote the time and labor required to fulfill their roles and responsibilities and perform their duties as Company directors.
- The Company shall create a favorable work environment for independent directors, including setting meeting and other schedules in advance so that they can perform their duties efficiently, and shall from time to time confirm the actual performance of their duties, including the number of companies in which they concurrently serve as independent directors, their participation in meetings there, and the opinions expressed at such meetings, and disclose information thereon in its business report.
- In order to fulfill their responsibilities to the fullest extent, independent directors shall understand relevant laws and ordinances as well as the Company’s Articles of Incorporation, Board of Directors Regulations, and other internal rules upon assuming office.
- The Company shall provide opportunities for independent directors to exchange opinions with directors who are not independent directors or Audit & Supervisory Committee members in order to help the Company achieve sustained growth and enhance medium- to long-term corporate value and contribute actively to discussions with the Board of Directors.
Election of independent directors
Article 23
Independent directors shall meet the requirements set forth below:
- They shall play leading roles in such areas as corporate management, legal affairs, accounting, administration, consulting, and education and possess years of experience and profound technical knowledge thereof.
- They shall take a deep interest in the Company’s business and have the ability to grasp the essence of the issues the Company faces by examining the Company’s overall management from a broad perspective, and they shall express their opinions and provide guidance and supervision to management in a timely and appropriate manner.
- In addition to the requirements for independence established by financial instruments exchanges, they shall satisfy the requirements for independence set by the Company.
Roles and responsibilities of the audit & supervisory committee
Article 24
- The Audit & Supervisory Committee shall have the responsibility of ensuring the Company’s sound and sustained growth and establishing a high-quality corporate governance system that meets social trust by auditing the performance of duties by directors, voting on proposed resolutions for election, dismissal, or non-election of account auditors brought before General Meetings of Shareholders, and conducting business audits, account audits, and other matters stipulated under laws and ordinances as an independent organ with a shareholder mandate.
- In order to fulfill the responsibilities set forth in the preceding paragraph, Audit & Supervisory Committee members must attend Board of Directors meetings and other important meetings, examine the content of reports received from directors, employees, account auditors, etc., and take necessary measures as required, including expressing their opinions and providing advice and recommendations to directors and employees.
- The Audit & Supervisory Committee shall comply with the Audit & Supervisory Committee Regulations and Standards and shall perform its duties as stipulated therein.
Policies and procedures for decisions regarding nominations and appointments
Article 25
- The Board of Directors shall nominate candidates for directorship and Audit & Supervisory Committee membership and elect or dismiss executive officers, including representative directors, from the viewpoint of whether they have the extensive experience, excellent ability and knowledge, and high-level expertise suitable to become or remain Company executives in order to fulfill the Company’s corporate philosophy and achieve effective corporate governance, sustained growth, and medium- to long-term corporate value enhancement.
- When appointing directors, the Board of Directors shall give consideration to the diversity of its entire membership and shall appoint several independent directors from the viewpoint of supervising management from an independent standpoint, ensuring the transparency of management, and enhancing shareholder value.
- The nomination of candidates for directorship and Audit & Supervisory Committee membership and the election and dismissal of executive officers, including representative directors, shall be first deliberated in the Nomination & Remuneration Committee, in which independent directors have a majority, to ensure the fairness and transparency of decisions on executive changes, and then, proposed nominations, elections, and dismissals shall be reported to the Board of Directors and decided by its resolutions.
- The Nomination & Remuneration Committee shall consist of the President, directors elected by the Board of Directors, and independent directors with its majority held by independent directors and its chairmanship assumed by an independent director.
- Candidates for Audit & Supervisory Committee membership shall be nominated with the consent of the Audit & Supervisory Committee.
- When nominating candidates for directorship and Audit & Supervisory Committee membership and electing and dismissing executive officers, the Board of Directors shall provide details regarding the career and knowledge of each of the candidates and officers, the posts he or she concurrently holds, and the roles he or she has played or is expected to play in the Company as well as the reason he or she is thought to be capable or incapable of doing so.
Policies and procedures for decisions regarding remuneration
Article 26
Remuneration, etc. for directors and executive officers shall be determined in consideration of the matters listed below:
- Remuneration shall be at a level that is suitable for the roles and responsibilities and shall be appropriate, fair, and well-balanced.
- Remuneration shall be determined in accordance with a system in which consideration is given to increasing motivation to improve the Company’s financial results, continuously enhancing its value, and securing excellent human resources.
- From the viewpoint of reflecting business performance and sharing value with shareholders, specific remuneration, etc. shall consist of fixed compensation, performance-linked compensation, and performance-linked, stock-based compensation, and appropriate ratios of these three types of compensation shall be determined in such a way as to stimulate the willingness of directors and executive officers to improve financial results and increase corporate value in the medium and long term.
Operation of the board of directors
Article 27
- The Board of Directors shall strive to improve the way its meetings are operated so that free, open-minded, and constructive discussions and exchanges of opinions, including the raising of questions by independent directors, are valued to invigorate deliberations.
- Materials for the Board of Directors shall be delivered according to their content so that directors have ample time for proper prior examination, and in addition to such materials, other materials required for ascertaining the status of management shall be provided as needed.
- The annual schedule for Board of Directors meetings and matters expected to be brought before and reported to the Board of Directors shall be made known to its members in advance as much as possible.
- Agendas for Board of Directors meetings, deliberation times, and the frequency of meetings shall be set so that necessary and sufficient discussions can be held in order to make important decisions on business execution and supervise the performance of duties.
- The Management Meeting shall fully deliberate on the execution of important business entrusted by the Board of Directors to the Meeting and other important matters related to management so that significant opinions are expressed, comments are made, and questions are asked at Board of Directors meetings, and efforts shall be made to send materials to independent directors and provide explanations concerning such materials in advance as required.
Support system for directors
Article 28
- Directors and Audit & Supervisory Committee members shall strive to gather information to fulfill their roles and responsibilities effectively, and the Company shall strive to establish a system to properly provide them with the necessary information.
- Independent directors shall request the Company to provide additional information if they deem it necessary to thoroughly fulfill their roles and responsibilities.
- The Company shall establish a system to enable directors to obtain assistance as required from external specialists, such as lawyers and certified public accountants, and shall bear any expenses incurred by engaging them.
- The Internal Audit Department and other executive units shall establish a system of cooperation with directors and shall actively provide the information required for directors to perform their duties if they are so requested.
Evaluation of the board of directors
Article 29
The Board of Directors shall analyze and evaluate its effectiveness based on periodic questionnaire surveys of the directors, etc. and disclose summaries of such survey results in a timely and appropriate manner.
Chapter 8 Dialogues with Shareholders
Dialogues with shareholders
Article 30
- In order to contribute to the achievement of sustained growth and the enhancement of medium- to long-term corporate value, the Company shall strive to build long-term relationships of trust with shareholders through constructive dialogues with them.
- The Corporate Communication Department and the Administration Department at the head office shall be in charge of constructive dialogues with shareholders in general.
- The Company shall hold various briefings with shareholders as required to obtain a deeper understanding of the Company’s management strategy, business lines, financial results, etc., and in addition, it shall utilize its website and other resources to disseminate information to shareholders in an easy-to-understand way.
- Dialogue feedback, such as shareholder opinions and concerns, shall be given to the Board of Directors, Management Meeting, and related departments periodically.
- In order to prevent the divulgence of unpublished important internal information (insider information) during dialogues with shareholders, the Company shall make all-out efforts to manage information in accordance with the Regulations for the Management of Internal Information and the Prevention of Insider Trading. Furthermore, it shall hold appropriate dialogues with shareholders through fair disclosures in accordance with the separately stipulated Corporate Information Disclosure Regulations and disclosure policy.
Chapter 9 Other
Revision
Article 31
In order to maintain effective corporate governance amidst changes in economic and social circumstances, these Guidelines shall be reviewed by the Board of Directors from time to time and revised by resolution of the Board of Directors as required.