Global Governance

Our Group now operates globally 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 streamlining the ownership structure through the acquisition of 100% ownership of the Asian JVs. These actions have further expedited decision-making of the business execution and enabled the Board of Directors to supervise the business execution with higher independence and objectivity. In March 2021, our Group established the “Purpose” which plays an important role when we develop as a global paint company based on Powerful Partnerships. Our Group respects the autonomous management of its partner companies and positions 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 framework centered around the Audit Committee, and has been discussing the revision of the Corporate Governance Policies as well as the appropriate forms of global risk management and internal reporting(whistleblowing) system. The Board of Directors will continue improving the global governance of the Group.

Enhancing the Global Audit Framework

The Audit Department has dual reporting lines to the Audit Committee and the Representative Executive Officers & Co-Presidents to ensure its independence and suitability. It supports the audit activities of the Audit Committee and performs assessments of J-SOX compliance. In collaboration with the Audit Committee, it is committed to enhancing the Global Audit framework that contributes to MSV in the “Asset Assembler” model. Specifically, it analyzes the results of internal control self-assessments conducted by each partner company, encourages collaborations among our internal audit functions worldwide and aims to improve the functions in the Group. . The Audit Department assesses the risk and the effectiveness of the internal control systems of the Group, including governance, operation processes and risk management through these initiatives, and seeks to enhance the “Audit on Audit” framework which is based on the results of internal audits conducted by each partner company.

“Audit on Audit” Group audit system

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”