Corporate Governance

SEKISUI CHEMICAL Group's basic corporate governance policy is to achieve sustainable growth and increase corporate value over the medium to long term.
To achieve this, we are increasing management transparency and fairness and pursuing swift decision-making. At the same time, we will continue to meet the expectations of our five stakeholders-customers, shareholders, employees, business partners, and local communities and the global environment-through the creation of social value as stated in our Corporate Philosophy.

The Company has established and disclosed the SEKISUI Corporate Governance Principles for the purpose of further evolving its corporate governance initiatives and communicating its corporate governance approach and initiatives to stakeholders.
In addition to the above Principles, the status of the Company’s initiatives and its approach with respect to the Corporate Governance Code, consisting of the General Principles, Principles, and Supplementary Principles, are summarized and disclosed in the Initiatives to Each of the Principles of the Corporate Governance Code.
Details of SEKISUI CHEMICAL Group’s Corporate Governance Report, SEKISUI Corporate Governance Principles, and Initiatives to each of the Principles of the Corporate Governance Code are available at the following address.

SEKISUI CHEMICAL has chosen a company with an Audit and Supervisory Board as its organizational structure under the Companies Act. Under the Divisional Company Organization System, we have adopted the Executive Officer System in order to separate the supervisory function of directors from the business execution function of executive officers and to ensure each divisional company responds swiftly to changes in the business environment.

Every year, the Company conducts a survey to evaluate the effectiveness of the Board of Directors for directors and Audit and Supervisory Board members, and to evaluate the effectiveness of the Board of Directors.
Based on the results of the survey, the Company confirmed that the Board of Directors set appropriate agenda items, ensured sufficient time for discussion, and allowed directors and Audit and Supervisory Board members, including outside directors, to actively offer their opinions and suggestions. For this reason, we believe that our Board of Directors contributes to enhancing the corporate value of the Group and is functioning properly.
In fiscal 2023, the Board of Directors thoroughly deliberated on key management issues, including growth strategies (R&D, new large-scale businesses, large-scale capital expenditures, etc.) and fundamental strategies (Sustainability Committee reports, digital transformation, safety, compliance, CS & Quality, etc.).

In order to enhance deliberations at meetings of the Board of Directors, materials for meetings are distributed in advance and prior explanations are provided by the executive officer in charge of the Secretariat. In addition, we provide opportunities to deepen understanding of our business on an ongoing basis through orientation at the time of appointment, business briefings and site visits multiple times a year.
In order to further enhance the effectiveness of management oversight by outside executives, the Nomination and Remuneration Advisory Committee, which is composed of a majority of outside directors, has enhanced its deliberations. In addition, dialogue with Audit and Supervisory Board members and accounting auditors is also conducted. In terms of succession planning, we are also strengthening contact between the current management team and candidates for the next management level. For example, we offer lectures by outside directors at Executive Officers Liaison Committee meetings, which are held at the time of each quarterly settlement of accounts, and provide opportunities for directors, Audit & Supervisory Board members, and executive officers to come together when establishing a new management system after the Annual General Meeting of Shareholders.

In order to deepen understanding of the Company and the characteristics of the Group’s wide-ranging business, we conduct business site inspections by outside executives each year and business briefings for outside officers.
In fiscal 2023, we inspected the core plants of each divisional company (Housing Company: Sekisui Heim Industry Co., Ltd.; Urban Infrastructure & Environmental Products Company: Shiga-Ritto Plant; High Performance Plastics Company: Musashi Plant and Shiga-Minakuchi Plant), as well as Asaka Lead Town and the High Performance Plastics Company’s MINASE INNOVATION CENTER.

We share details of earnings announcements at Executive Officers Liaison meetings held at the time of each quarterly settlement. In addition, we invite speakers from outside the company to provide the latest information on economic, environmental, and social trends that are directly related to management issues, as well as knowledge from other companies and industries.

We have established a voluntary advisory committee on nomination and remuneration to supplement the functions of the Board of Directors and to increase the fairness and transparency of management.
The Nomination and Remuneration Advisory Committee deliberates on matters related to improving the effectiveness of the Board of Directors, including the election and dismissal of senior management, the nomination of candidates for director, and the remuneration system and level of remuneration for directors. The Committee also deliberates on the appointment of former representative directors and presidents to the positions of advisors or executive advisors as well as other relevant factors as their treatment, and submits recommendations and advice to the Board of Directors.
The Nomination and Remuneration Advisory Committee is composed of seven members, the majority of whom are independent outside directors. The chairperson is selected from the independent outside directors.

We have established a management system based on the Divisional Company Organization System to maximize corporate value. Together with assigning operating officers specializing in business execution to each divisional company, the Executive Committee has been established to serve as the top decision-making body in each divisional company. As such, a broad range of authority has been transferred from the Board of Directors to the Executive Committee. Executive officers are appointed by a resolution of the Board of Directors for a term of one year.
Through the transfer of authority to divisional companies, the Board of Directors is responsible for determining the basic management policies of SEKISUI CHEMICAL Group and for making sophisticated management decisions and overseeing business execution in an effort to continuously increase corporate value.

In May 2006, the Board of Directors adopted a basic policy for establishing an internal control system to ensure the appropriateness of its business.
Specifically, under the "Corporate Activity Guidelines" based on the Group corporate philosophy, we closely coordinate the direction, order, and communication of SEKISUI CHEMICAL Group (the Company and its subsidiaries). At the same time, we provide guidance, advice, and evaluation to Group companies to ensure the appropriateness of the Group's overall operations.

In order to appropriately develop and operate the internal control system for the Company and Group companies, our Corporate Audit Department conducted operational and accounting audits of the Company and Group companies based on the annual audit plan, and audited whether business execution was conducted appropriately and efficiently. The results of internal audits are regularly reported at management meetings. In addition, the director in charge or full-time Audit and Supervisory Board member reports to the Board of Directors, as necessary, on the status of improvements made to matters pointed out by internal audits.

In order to ensure that Directors carry out their duties efficiently, the Board of Directors met 17 times in fiscal 2023. In addition, discussions of important matters related to our management policies and strategies were carried out at meetings of the Policy Committee, which is made up of inside Director members charged with the responsibility of carrying out the executive function. Policy decisions were made by the Board of Directions following these discussions.

Audit and Supervisory Board members attended not only the Board of Directors meetings but also other important meetings, carrying out confirmation of the maintenance and operating conditions of the internal control system through operations such as investigation of related departments, including at Group companies, and confirmation of approval documents for major projects. In addition to personally visiting various sites for audits, they also receive reports from the Internal Auditing Department and each headquarters department that has jurisdiction over internal control. The Audit and Supervisory Board met 13 times in fiscal 2023 for the purpose of sharing the information from these reports. Audit and Supervisory Board members regularly exchanged opinions with accounting auditors, cooperating closely to improve the effectiveness of auditing efforts. Liaison meetings were held with related corporate auditors to improve coordination with auditors and enhance the quality of auditing. In addition, regular meetings were held with the Representative Director, and Audit and Supervisory Board members also exchanged opinions with Outside Directors.

Through rules such as our domestic and overseas affiliate company handling policy and affiliate company decision-making guidelines, we have constructed a framework for getting approval and reports from Group subsidiaries to the Company. In addition, our Corporate Audit Department implements internal auditing and results of audits by Audit and Supervisory Board members of our Group companies are collected at Audit and Supervisory Board meetings.