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Governance

The Group will establish effective governance frameworks to ensure the transparency, objectivity, and fairness of the management of the companies and earn society’s trust everywhere it operates. The Board of Directors recognizes fiduciary responsibilities to all stakeholders, including shareholders and investors, and supervises the Group’s overall management by taking responsibility for the Company’s sustainable growth and maximization of mid- to long-term shareholder value (MSV) through the appropriate exercise its authority.

Analysis and evaluation of the effectiveness of the Board of Directors

Issues and initiatives for FY2024

Issues that required stronger initiatives in FY2024 Main initiatives in FY2024
1) Enrichment of discussion on growth strategy
Increase opportunities for and enrich the discussions on medium to long-term management strategies, to further contribute to MSV
  • To enable comprehensive discussions on growth strategies — one of the key focus areas of the Board of Directors — we developed an annual schedule of brainstorming sessions at the beginning of the fiscal year, ensuring sufficient opportunities for meaningful dialogue. Furthermore, we leveraged platforms such as the Meeting of the Independent Directors to promote effective communication among Directors, thereby enhancing the quality of discussions.
2) Improvement of the operational efficiency of Board meetings
Dedicate further efforts to improve Board operation, to facilitate more sophisticated discussions
  • We created and disseminated the annual Board of Directors meeting schedule well in advance while minimizing regular agenda items. In January 2024, we established the Board of Directors Operations Guidelines to ensure the timely submission of materials by the executive team, fostering an environment where Directors can focus more effectively on discussions
3) Thorough engagement in succession planning
Review and draw up plans to identify and develop talents for the future management team
  • Through reports from the Co-Presidents on the status and evaluation of human capital within the Group, the Board gained a comprehensive understanding of the updated situation and maintained consistent communication with key executives. Additionally, we appointed a new Independent Director bringing extensive global corporate management experience and expertise in the chemical and paint industries, along with expertise in M&A and other strategic initiatives
4) Further fine-tuning of the “Audit on Audit” framework
Modify the audit framework of the pure holding company to better suit our Asset Assembler model
  • To establish an “Audit on Audit” framework suited to the Company’s role as a pure holding company in the Asset Assembler model, the Board engaged in in-depth discussions on the optimal approach to audits in its capacity as a monitoring board.

Evaluation for FY2024 and issues for FY2025

Guidelines for making evaluations in FY2024

Evaluation target

In FY2024 All Directors: 9, Managing Executive Officer, General Council (GC): 1

Method

The evaluation was conducted in the form of a “questionnaire” under the leadership of the Board Chair and the Chairperson of the Nominating Committee. The results of the questionnaire served as the basis for discussions at the Board of Directors to evaluate the effectiveness of the Board. Evaluations by third-party institutions will be considered in the future as needed.

Survey questionnaires

The questionnaire covered topics such as the composition of the Board, preparation and operations of meetings, quality of deliberations, contributions by Directors, monitoring of execution, and the composition and operations of each committee.

Evaluation process

  1. Distribute the questionnaires to Directors and the Executive Officer
  2. Compile and analyze the questionnaire results
  3. Conduct the effectiveness evaluation during the Board of Directors meeting
Overview of evaluation outcome in FY2024

The Board of Directors has concluded that the Board was generally effective in FY2024.

Summary of assessment

  • The questionnaire results indicate progress in addressing previously identified issues, such as those related to the Board’s operations, resulting in an overall positive evaluation of its effectiveness.
  • The Board is working to enhance both the quality and quantity of growth strategy discussions, with the goal of further deepening strategic deliberations aligned with the Asset Assembler model.
  • The Board’s operations have become more efficient through the adoption of annually organized agenda and strict adherence to the operations guidelines.
  • Regarding succession planning, the Board continues to explore the optimal balance between execution and monitoring required to realize the next stage of growth strategies. We remain committed to establishing a sustainable management structure.
  • The Board has engaged in repeated discussions to further refine the “Audit on Audit” framework, fostering a shared understanding among Directors and driving the establishment of an audit system aligned with the Asset Assembler model.
Issues that require stronger initiatives in FY2025
  • Enrichment of discussion on growth strategy
    Further increase opportunities for and enrich the discussion on future strategy in order to facilitate the executive team’s realization of the growth strategy.
  • Thorough engagement in succession planning
    To establish a more sustainable management foundation, review and draw up plans to identify and develop talents.
  • Further upgrading of the “Audit on Audit” framework
    fine-tune the audit framework to better suit our Asset Assembler model.
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