Global governance

Our Group has developed into a global company that operates in 30 countries and regions with about 34,000 employees. We have endeavored to strengthen its global governance through a series of actions, such as shifting to a company with a Nominating Committee, etc. structure in March 2020, separating business execution and supervision, and simplification of the ownership structure due to the acquisition of 100% ownership of the Asian JVs. Consequently, decision-making on the business execution has been further expedited, and the Board of Directors has become able to supervise the business execution with higher independence and objectivity. In March 2021, our Group established the Purpose to play an important role as we develop as a global paint company based on Powerful Partnerships. Our Group respects the management autonomy of its partner companies, and has positioned the Purpose as the shared identity of our Group, while respecting the management philosophies and visions set forth by each partner company. Under the leadership of Representative Executive Officers & Co-Presidents Wakatsuki and Wee, which started in April 2021, we will step up collaborations among our Group businesses worldwide that are expanding through M&A and other strategic initiatives. The Board of Directors, which supervises such initiatives, has reinforced a global audit system centered on the Audit Committee, and has been discussing the revision of the Corporate Governance Policies and appropriate forms of global risk management and internal reporting(whistleblowing) system. In these ways and others, the Board of Directors will continue improving the global governance of the Group.

Initiatives to Establish the Global Audit Framework

The Audit Department has ensured the independence and suitability of audits by establishing dual reporting lines to the Audit Committee and the Representative Executive Officers & Co-Presidents. The Audit Department supports audit activities of the Audit Committee and performs assessments of J-SOX compliance. In addition, the Audit Department supports a global internal audit framework by supervising internal audit activities by internal audit units in each region. Specifically, the Audit Department analyzes the results of internal control self-assessments conducted at business locations and provides assistance for improving the maturity level of the group-level internal audits by encouraging collaborations among our internal audit functions in Japan and other countries. Through these initiatives, the Audit Department evaluates the effectiveness of the internal control systems of the Group, including governance, processes, and risk management. These evaluations use a risk-based approach with the goal of establishing an “Audit on Audit” framework which is based on the results of internal audits conducted by every business location.

Group Audit Structure (Audit on Audit)

Basic policy on internal control (Basic policy on internal control systems)

The Company, as a listed holding company, respect the independence and autonomy of its subsidiaries and, in order to ensure the sound and lawful business operations of the entire corporate group consisting of the Company and its subsidiaries (hereinafter referred to as "the Group"), based on this policy, establish an internal control system of the Group, continually assess the contents of the system and its operation, and take necessary improvement measures.
The Company shall, by making ongoing reviews on this policy in accordance with changes in the management environment, endeavor to maintain and operate more effective internal control system.

Operation status of internal control system (Internal Control System Operational Status Report)

The operational status of the internal control system is reported to shareholders as “Systems for Ensuring Proper Business Activities and Operation of the Systems”