Overview and System of corporate governance
Corporate Governance Policies（PDF）／Corporate Governance Report
Nippon Paint Holdings’ basic policy for Japan’s Corporate Governance Code：The Company is implementing the principles of the Corporate Governance Code.
Nippon Paint Holdings Corporate Governance Policies (Revised on March 26, 2021)
Corporate Governance Report (Issued on March 29, 2021)
Overview of corporate governance
- In an attempt to strengthen the supervision and execution of the Board of Directors, the Company has been transferring authority to independent directors and increased its members since 2014. To accelerate this movement, we became a Company with Three Committees (Nomination, Audit and Remuneration) by resolution of the General Meeting of Shareholders in March 2020.
- Our goal is 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.
- One of the nine directors of the Board concurrently serves as an executive officer. In order to reflect a more diverse perspective in our management, 6 members, or 2/3, of our total directors are independent directors, including female directors. 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, Nomination, Audit and Remuneration, in which the majority of members are independent directors. Moreover, in order to ensure the effectiveness of each committee and the Board of Directors, the Company has established a secretarial office for each meeting body, with an appropriate budget and personnel.
System of corporate governance
Board of Directors
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 which three are independent directors, and is chaired by an independent director.
To make decisions on the decision-making policy for the individual remuneration, etc., of executive officers and directors, and to make decisions on the content of remuneration, etc., for individuals. The committee is composed of three directors of which two are independent directors, and is chaired by an independent director.
The auditing of the execution of duties of executive officers and directors, 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 which three are independent directors, and is chaired by an independent director.
|Directors||Ratio of outside directors on the Board|
|Name||Masaaki Tanaka||Goh Hup Jin||Manabu Minami||Hisashi Hara||Takashi Tsutsui||Toshio Morohoshi||Masayoshi Nakamura||Masataka Mitsuhashi||Miharu Koezuka|
|Directors||Chairman of the Board Representative Executive Officer President & CEO||Director of the Board Representative of WUTHELAM Group||Director of the Board||Independent Director of|
|Independent Director of|
|Independent Director of|
Director of the Board
|Independent Director of|
|Independent Director of|
|Date of appointment as director||March 2019||December 2014||June 2013||March 2018||March 2018||March 2018||March 2018||March 2020||March 2020|
|Number of shares held||27,632||None||21,782||8,416||7,384||6,819||9,352||2,719||2,719|
at the Board
|Committee membership||Number of|
|Experience / Expertise||Number of|
|Experience in corporate management||◎||◎||◎||◯||◎||◎||◯||◯||◎||9|
|Experience in M&A||◯||◯||◯||◎||◎||◯||◎||◎||◎||9|
|Experience in global business operations||◎||◎||◎||◎||◎||◎||◎||◎||8|
|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.
- 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
- The person in question is not a controlling shareholder (Note 1) of the Company.
- 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).
- 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”).
- The person in question is not an executive or an ex executive of a sister company of the Company (Note 6).
- The person in question does not fall under any of the following persons either currently or anytime during the past three years:
- A major shareholder of the Company (Note 7 ) or an executive of such a shareholder
- A person whose major business partner is the Group (Note 8 ) or an executive of such a person
- A major business partner of the Group (Note 9 ) or an executive of such a business partner
- A person belonging to an audit corporation that conducts statutory audits of the Group
- A person who receives a significant amount (Note 10 ) of money, etc. from the Group, in addition to remuneration of Officers
- An executive of a n organization that receives a significant amount (Note 10 ) of donation or aid from the Group
- 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)
- Independent Directors shall strive to maintain the independence prescribed by these Independence Criteria until the resignation from office. If an Independent Director/Auditor no longer satisfies these Independence Criteria, he/she shall promptly notify th e Company of the fact.
- 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.
- 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.
- 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.
- An ex member means a person who was an executive or a director during the past 10 years.
- An ex executive means a person who has been an executive anytime during the past 10 years.
- A sister company means another company who has the same parent company as the Company.
- A major shareholder means a person who directly or indirectly holds 10% or more of the total voting rights.
- 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.
- 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.
- 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
The role of independent directors is stipulated in the NPHD Corporate Governance Policies as follows.
Article 17 (Role of Independent Directors of the Board)
- 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.
- 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.
- To supervise conflicts of interest between the Company and Directors of the Board, Executive Officers, and controlling shareholders, etc.
- 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 to the Board of Directors the information required in order for directors 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, Important Japanese Partner Company Presidents’ Committee (Japanese PC 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 Committee||Deliberates general matters relating to the Group in response to consultations from the Representative Executive Officer and President.|
|Human Resources Committee||Deliberates 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 and President.|
|ESG Committee||Deliberates matters for responding to issues that should be addressed for the sustainable growth of society in response to consultations from the Representative Executive Officer and President.The targets proposed by the Representative Executive Officer and President shall be set as company-wide targets upon their proposal to and approval by the Board of Directors.|
|Risk Management Committee||Deliberates 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 and President.|
|Compliance Committee||Deliberates matters relating to compliance of the Group in response to consultations from the Representative Executive Officer and President.|