The Group will establish effective governance frameworks to ensure the transparency, objectivity, and fairness of the management of its companies and earn society’s trust everywhere it operates.


Compliance system

Our Company has a Compliance Committee, chaired by an Executive Officer who is the General Counsel. The Compliance Committee has the CAO as its vice-chair and the persons responsible for compliance at partner companies in Japan and the heads of the related departments at our Company as its members. It mainly deliberates on matters concerning compliance within the domestic Group or monitoring compliance-related matters.It supports the enhancement of compliance activities at companies in Japan.
Specifically, it carries out PDCA activities related to compliance and various compliance-related training, enhances the consultation desk for compliance (the internal reporting system), and identifies and deliberates on issues related to the development of internal regulations, etc. In fiscal 2021, notably, the Committee created guidelines related to the behavior of staff with the goal of distributing them to employees within the year. The Committee also implemented some initiatives related to improving awareness of compliance, and also set key themes in view of community standards, such as preventing harassment and managing working hours appropriately.
For each overseas partner company, however, in order to respect their autonomy, they use their own systems and training to ensure compliance.

Enhancement of internal reporting system (whistleblowing system)

Our Company has established the “NPHD Group Hotline”. This allows any employee of our Company or a domestic partner company discovering a potential compliance violation to report this. It handles a wide range of reports including legal violations, human rights abuses such as discrimination and any other compliance violations. This allows it to prevent such things before they happen, and work to detect them and correct them early, contributing to achieving compliant business operations. In addition to the NPHD Group Hotline, there is also a Harassment Desk consultation office dedicated to problems related to harassment.

See here for details of the Harassment Desk.

Compliance education

Our Company created the Nippon Paint Holdings Compliance Guidebook (digital version) in 2017 in order to improve compliance awareness among domestic Group employees and officers. In 2020, our company updated its contents, then in 2021, changed the name to the “Compliance Textbook”, and provided this new edition to all employees and officers. This Textbook provides case-by-case explanations using cases commonly encountered by staff in paint and coating companies, introducing human rights issues such as the elimination of harassment and discrimination, appropriate management of working hours including overtime, occupational health and safety, entertainment, gifts and anti-corruption, antitrust and other laws and regulations that staff should be aware of.
In addition, the Compliance e-Mail Newsletter is sent out to all domestic Group employees, etc. once a month, and an internal site providing legal and compliance information has been set up. In these ways, activities are continuing in order to increase awareness of compliance. In addition to these, ongoing initiatives such as holding position-based training and harassment seminars are carried out, which are expected to improve interest in and sensitivity to compliance in addition to mere knowledge of it.
Moreover, the online Compliance Comprehension Test is carried out to check the effects of these measures to improve compliance awareness.

Internal reporting system

Outline of internal reporting system (whistleblowing)

We have established an internal reporting hotline with contact points both within and outside the Group (external law firm) in Japan, to ensure the confidentiality of internal reporting information, making it easier for employees to use the hotline. We have also established a system that enables employees to report directly to or consult with the Audit Committee.
In addition to e-mail consultations, all contact points also accept reports by telephone or post. When a report is received at a contact point, we will investigate the situation while taking the utmost care not to identify the informant. If an investigation reveals a problem, we will promptly take corrective action.

In fiscal 2020, to enhance the Group's internal reporting system (whistleblowing), we revised the Group's internal regulations and further strengthened the system, renaming it the NPHD Group Hotline.
As a result, our group's efforts were recognized as achieving the purpose of the "Guidelines for Private Enterprises Regarding the Development and Operation of Internal Reporting Systems based on the Whistleblower Protection Act", and we acquired WCMS (Whistleblowing Compliance Management System) certification under the jurisdiction of the Consumer Affairs Agency. The number of internal reports made by our partner companies in Japan in fiscal 2020 is shown below.

Number of internal reports in fiscal 2020 (in Japan)

Harassment 10
Business improprieties and violations of rules 5
Labor management 3
Other 1
19 cases

In addition to the internal reporting system (whistleblowing), we have established a permanent Harassment Desk to provide employees with consultation on harassment in order to create an environment in which they do not have to face harassment issues on their own.
In fiscal 2020, we handled 10 consultations at the Harassment Desk.

Anti-corruption initiatives

Basic ideas

At our Group, we work to prevent bribery and corruption. We have established “Nippon Paint Global Code of Conduct” and it states “We compete fairly.”, “We do not tolerate bribery or corruption.”, “We avoid conflicts of interest and are responsible to act sensibly with gifts and entertainment”.
Preventing bribery and corruption is considered one of the foundations that will allow us to achieve our Group's purpose of “Prosper Together,” our desire to always be fair.

Anti-corruption training and monitoring

We carry out regular training related to anti-bribery regulations aimed at domestic employees who are involved in overseas business and Japanese staff stationed overseas using an e-learning system, working to foster a mindset that does not allow corruption.
In addition, at our domestic Group, we have regulated the Rules on Entertaining and Gifts and ensure all domestic Group employees and officers are aware of them. These Rules, in addition to prohibiting Group employees and officers from offering entertainment and gifts to government officials, prohibit the offering or receiving of entertainment or gifts, etc. over and above social norms even among private-sector business partners, and fix the standards and procedures for entertainment and gifts, thus serving as one of our methods to prevent corruption.
An internal reporting system (whistleblowing) has been put into place that allows people to inform without fear of repercussions if they discover actions that violate or may possibly violate compliance, including bribery and corruption. The operating status of the internal reporting system hotline is reported to the Board of Directors on a regular basis.

Transparency of taxes

The Nippon Paint Group is engaged in global business activities and business development based on our “Global Code of Conduct”, and complies with applicable laws and regulations in all countries where we do business. We believe it is our social responsibilities to maintain our compliance system and to pay taxes appropriately, and to play an important role in the society.
Further, the Nippon Paint Group ensures it builds a relationship of trust with our stakeholders, maximizes corporate value and shareholder value based on transparency of an appropriate tax management, and aims to achieve a sustainable growth as the Group.
The Nippon Paint Group tax policy is shown below:

The Nippon Paint Group Tax Policy

  1. Compliance with Laws and Regulations
    The Nippon Paint Group complies with the spirit of the tax laws and regulations in each country where we engage in business activities and we file and pay taxes in each country.We do not engage in any tax avoidance measures, such as secrecy jurisdictions, or so-called ‘tax havens', in tax planning. We appropriately evaluate and minimize tax risks by seeking tax advice from external tax professionals as necessary.
  2. Tax Transparency
    The Nippon Paint Group understands that international initiatives such as the BEPS Project are critical for promoting tax avoidance prevention and maintaining tax transparency. We ensure tax transparency of appropriate tax management stipulated in the BEPS Project.
  3. Transfer Price Taxation Initiatives
    The Nippon Paint Group makes appropriate tax payment in each country and region by applying the arm’s length principle to determine prices for transactions conducted with foreign related parties in accordance with the OECD Transfer Pricing Guidelines.
    Further, the Nippon Paint Group evaluates appropriateness in allocating profits among foreign related parties, based on function, assets and risk analysis of each group company, and also prepares transfer pricing documentation accordingly.
  4. Relationship with Tax Authorities
    The Nippon Paint Group strives to build a relationship of trust with tax authorities by maintaining open transparent communication in each country. We respond to tax information request from tax authorities in a timely manner and endeavor to immediately resolve matters of opinion between the Nippon Paint Group and tax authorities in a sincere manner.
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