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.

Overview and System of Corporate Governance

Corporate Governance Policies/Corporate Governance Report

Nippon Paint Holdings is implementing the principles of Japan's Corporate Governance Code.

  • Corporate Governance Policies (Revised on September 21, 2021)

  • Corporate Governance Report (Submitted on June 7, 2021)

Overview of corporate governance

  • In an attempt to strengthen the supervision by the Board of Directors and the execution, the Company has been transferring authority to Independent Directors of the Board and increased its members since 2014. To accelerate this movement, we chose a Company with a Nominating Committee, etc. by resolution of the General Meeting of Shareholders in March 2020.
  • Through the transition to a Company with a Nominating Committee, etc., the Company aims to separate management supervision from business execution, enhance the transparency, objectiveness and fairness of corporate management, promote global audits, protect the interests of minority shareholders, and to reinforce our relationships with domestic and overseas stakeholders.
  • None of the eight Directors of the Board concurrently serves as an Executive Officer. In order to reflect a more diverse perspective in our management, 6 members, or 3/4, of our total Directors of the Board are Independent Directors of the Board, including female Directors of the Board. In addition, we also strive to strengthen our audit system and protect the interests of minority shareholders.
  • The Board of Directors has three statutory committees, Nominating, Audit and Compensation, in which the majority of members are Independent Directors of the Board. Moreover, in order to ensure the effectiveness of each committee and the Board of Directors, the Company has a secretarial office for each meeting body, with an appropriate budget and personnel.

System of corporate governance

System of corporate governance

Board of Directors

The Board of Directors shall recognize the fiduciary responsibilities from all stakeholders including shareholders and investors, and supervise the Group’s overall management by taking responsibility for the Company’s sustainable growth and maximization of mid-to-long-term shareholder value through the appropriate exercise of our authority. The Board of Directors shall focuses on discussing matters such as those that need to be resolved by the Board of Directors in accordance with the law and the Articles of Incorporation, matters that have been delegated to the Board of Directors by resolution of the General Meeting of Shareholders, as well as important matters about the Group’s management. None of the eight Directors of the Board concurrently serves as an Executive Officer. In order to reflect a more diverse perspective in our management, 6 members, or 3/4, of our total Directors of the Board are Independent Directors of the Board, including female Director of the Board. In addition, we also strive to strengthen our audit system and protect the interests of minority shareholders. The term of office of our Directors of the Board is one year.

 The Board of Directors has three statutory committees, Nominating, Audit and Compensation, in which the majority of members are Independent Directors of the Board. Moreover, in order to ensure the effectiveness of each committee and the Board of Directors, the Company has a secretarial office for each meeting body, with an appropriate budget and personnel.

Nominating Committee
To make decisions on the content of proposals on the appointment and dismissal of Directors of the Board to be submitted to the General Meeting of Shareholders, and to deliberate on the successor plan, as well as the appointment, dismissal, and successor plan for the President and Representative Executive Officer. The committee is composed of four Directors of the Board of which three are Independent Directors of the Board, and is chaired by an Independent Director of the Board.

Compensation Committee
To make decisions on the decision-making policy for the individual remuneration, etc., of Executive Officers and Directors of the Board, and to make decisions on the content of remuneration, etc., for individuals. The committee is composed of three Directors of the Board of which two are Independent Directors of the Board, and is chaired by an Independent Director of the Board.

Audit Committee
The auditing of the execution of duties of Executive Officers and Directors of the Board, the creation of audit reports, and the making of decisions on the content of proposals relating to the appointment, dismissal, and non-re-appointment of the Accounting Auditor to be submitted to a General Meeting of Shareholders. The committee is composed of four Directors of the Board of which three are Independent Directors of the Board, and is chaired by an Independent Director of the Board.










DirectorsGoh Hup JinManabu MinamiHisashi HaraTakashi TsutsuiToshio MorohoshiMasayoshi NakamuraMasataka MitsuhashiMiharu KoezukaRatio of Outside Directors of the Board
NameGoh Hup JinManabu MinamiHisashi HaraTakashi TsutsuiToshio MorohoshiMasayoshi NakamuraMasataka MitsuhashiMiharu Koezuka
DirectorsChairman
Representative of WUTHELAM Group
Director of the BoardIndependent Director of
the Board
Independent Director of
the Board
Independent Director of
the Board
Lead Independent
Director of the Board
Independent Director of
the Board
Independent Director of
the Board
6/8
Date of appointment as directorDecember 2014June 2013March 2018March 2018March 2018March 2018March 2020March 2020
Number of shares heldNone21,7828,4167,3846,8199,3522,7192,719
Attendance
at the Board
of Directors
meetings
FY2020
19/1919/1919/1919/1919/1919/1914/15
15/15

Committee membershipNumber of
Outside Directors
of the Board
serving as
committee
members
Nominating Committee

12/12


(Chairperson)
12/12


12/12

12/12


3/4
Compensation Committee

15/15



(Chairperson)
15/15


15/15


2/3
Audit Committee

13/13



13/13


(Chairperson)
13/13

12/13
3/4
Experience / ExpertiseNumber of
applicable
Directors
of the Board

Experience in corporate management8
Experience in M&A8
Experience in global business operations
7
Finance


5
Legal affairs



4
IT/Digital





2
Manufacturing / Technology / R&D





2

Outside Director of the Board Independence Judgment Standards/Role of Independent Directors of the Board

Outside Director of the Board Independence Judgment Standards

The Outside Director of the Board Independence Judgment Standards established by NPHD are described in the Appendix of our Corporate Governance Policies.

  1. The Company will determine that Outside Directors of the Board or candidates for Outside Directors of the Board are sufficiently independent from the Company if they are found to satisfy all the requirements prescribed in the following items as a result of a reasonable investigation by the Company
    1. The person in question is not a controlling shareholder (Note 1) of the Company.
    2. The person in question is not an executive (Note 3), a director or an ex-member (Note 4) of the parent company of the Company (Note 2).
    3. The person in question is not an executive or an ex executive (Note 5 ) of the Company or any of the subsidiaries of the Company (hereinafter “the Group”).
    4. The person in question is not an executive or an ex executive of a sister company of the Company (Note 6).
    5. The person in question does not fall under any of the following persons either currently or anytime during the past three years:
      1. A major shareholder of the Company (Note 7 ) or an executive of such a shareholder
      2. A person whose major business partner is the Group (Note 8 ) or an executive of such a person
      3. A major business partner of the Group (Note 9 ) or an executive of such a business partner
      4. A person belonging to an audit corporation that conducts statutory audits of the Group
      5. A person who receives a significant amount (Note 10 ) of money, etc. from the Group, in addition to remuneration of Officers
      6. An executive of a n organization that receives a significant amount (Note 10 ) of donation or aid from the Group
    6. The person in question is not a spouse or a relative within the second degree of kinship of a person falling under any items from (1) to (5)
  2. Independent Directors shall strive to maintain the independence prescribed by these Independence Criteria until the resignation from office. If an Independent Director no longer satisfies these Independence Criteria, he/she shall promptly notify th e Company of the fact.

(Notes)

  1. A controlling shareholder means an individual among the controlling shareholders set forth in the “Securities Listing Regulations (Tokyo Stock Exchange)”(Listing Regulations) Article 2, Item 42-2, Article 3-2 of the Enforcement Regulations of the same.
  2. Parent company means the parent company set forth in the Regulation s on Terminology, Forms and Methods of Preparation of Financial Statements ” (Financial Statement Regulations) Article 8, Paragraph 3.
  3. An executive means an executive director, an Executive Officer, a Corporate Officer, and a person holding a similar position at a corporation or other organization.
  4. An ex member means a person who was an executive or a director during the past 10 years.
  5. An ex executive means a person who has been an executive anytime during the past 10 years.
  6. A sister company means another company who has the same parent company as the Company.
  7. A major shareholder means a person who directly or indirectly holds 10% or more of the total voting rights.
  8. A person whose major business partner is the Group means a person who has received from the Group a payment equivalent to 2% or more of the annual consolidate sales revenue or annual consolidated net sales for the latest fiscal year of that person.
  9. A major business partner of the Group means a person who has paid to the Group an amount equivalent to 2% or more of the annual consolidated sales revenue for the latest fiscal year of the Company or a person who has an outstanding balance of loans to the Company that is equivalent to 2% or more of the consolidated total assets of the Company as of the end of the latest fiscal year of the Company.
  10. A significant amount means an amount exceeding an annual amount of 10 million yen on average over the past three fiscal years of the Company.

Role of Independent Directors of the Board

Executive System

The role of Independent Directors of the Board is stipulated in the NPHD Corporate Governance Policies as follows.

Article 17 (Role of Independent Directors of the Board)
  1. In regard to management policies and the improvement of management, based on their own knowledge, to provide advice from the perspectives of the sustainable growth of the Group and the maximization of shareholder value in the medium to long term.
  2. To supervise management through the nomination and dismissal of Executive Officers, the appointment and dismissal of Representative Executive Officers and other Executive Officers with titles, as well as other important decisions of the Board of Directors.
  3. To supervise conflicts of interest between the Company and Directors of the Board, Executive Officers, and controlling shareholders, etc.
  4. In a position of independence from business executives and controlling shareholders, etc., to ensure that the opinion of stakeholders such as minority shareholders is appropriate reflected at the Board of Directors.

Executive Officers make decisions on the execution of business of the Company that they have been delegated by resolution of the Board of Directors, and execute such business. Executive Officers shall bear the obligation of loyalty and the obligation of care in regard to the execution of their duties, and contribute to the sustainable growth of the Group and the maximization of medium to long term shareholder value. Executive Officers shall report regularly, at least once every three months, to the Board of Directors on the status of the execution of duties and provide explanations on matters in accordance with the requests of the Board of Directors and committees. Executive Officers are also required to submit the information required to the Board of Directors in order for Directors of the Board to fulfill their responsibilities, and in addition, to report the necessary proposals to the Board of Directors. There are currently 10 Executive Officers in the Company, and their tenure as Executive Officer is one year, from January 1 to December 31.

Voluntarily established meeting bodies

The Company has voluntarily established the following meeting bodies to promote management: Executive Management Committee, Human Resources Committee, ESG Committee, Risk Management Committee, Compliance Committee, and the Responsible Care Committee. Please refer to the following table for details.

Executive Management CommitteeDeliberates general matters relating to the Group in response to consultations from the Representative Executive Officer & Co-President.
Human Resources CommitteeDeliberates matters relating to realizing the appropriate allocation of human resources in the Company and Partner Companies in Japan in response to consultations from the Representative Executive Officer & Co-President.
ESG CommitteeDeliberates matters for responding to issues that should be addressed for the sustainable growth of society in response to consultations from the Representative Executive Officer & Co-President. The targets proposed by the Representative Executive Officer & Co-President shall be set as company-wide targets upon their proposal to and approval by the Board of Directors.
Risk Management CommitteeDeliberates matters relating to continuous review and improvement on the systems for the management of internal control and important risks concerning safety, environment, and quality, etc., of the Group in response to consultations from the Representative Executive Officer & Co-President.
Compliance CommitteeDeliberates matters relating to compliance of the Group in response to consultations from the Representative Executive Officer & Co-President.
Responsible Care CommitteeDeliberates matters relating to responsible care of the Group in response to consultations from the Representative Executive Officer & Co-President.
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