The following section details disclosure pursuant to the principles of the Corporate Governance Codes.
Reasons for Non-compliance with the Principles of the Corporate Governance Code
The Company implements all the principles established in the Corporate Governance Code.
Disclosure Pursuant to the Principles of the Corporate Governance Code
Principle 1-4: So-called strategic stockholdings
The company holds publicly traded shares with the aim to build, support, and develop businesses relationships beneficial to increasing its shareholder value. Regarding stock held, business relations with the company, equity-method net earnings, dividend payouts, book value and market value comparisons, and other matters are reported to the board of directors once a year, and the board of directors periodically confirms whether or not to continue to hold the shares (including decreases in the number of shares held). Information concerning the number of shares for each issue of specified shares and the amount recorded in the balance sheet, etc. can be found in the Annual Securities Report
●Regarding the use of voting rights relating to strategic stockholdings
The company will use its voting rights with its stockholding objectives in mind, after careful examination of the other company’s management policy and the content of individual agenda items, and based on whether or not an item will contribute to the expansion of both companies’ medium- and long-term shareholder value.
Principle 1-7: Related-Party Transactions
In cases where Company officers conduct transactions with related parties, the transactions are approved by resolution of the Board of Directors in accordance with the Rules on Corporate Officers and other rules. In addition, all officers are obligated to submit a written Confirmation of Transactions with Related Parties with regard to their transactions with related parties at the end of each year. In cases where the Company conducts transactions with major shareholders and others, the Board of Directors discusses the particulars of the transactions in accordance with the Detailed Table of Authority.
Principle 2-4: Ensuring Diversity, Including Active Participation of Women
Supplementary Principle 2-4-1
＜Approach to Ensuring Diversity＞ 1. Appointment of Women to Managerial Positions
The Company aims to achieve a ratio of female managers of around 25% during the 2030s. Accordingly, based on a mid- to long-term perspective, the Company will promote the creation of an environment where women can actively participate as a matter of course and support the autonomous growth of our employees. At the same time, we will also continuously work to ensure that our female employees accumulate experience, develop a career mindset, etc., and thereby steadily increase the proportion of women among core human resources.
2. Appointment of Foreign Nationals and Mid-career Hires to Managerial Positions
Regarding foreign nationals and mid-career hires, the Company is not aware of any particular differences arising as a result of nationality or the time when employees were hired when appointing employees to managerial positions. As such, our target is to maintain the current level of such appointments.
＜Voluntary and Measurable Goals for Ensuring Diversity＞
1. Appointment of women to managerial positions
Current (as of April, 2023): 16.5% Target: During 2020s: 17.0% / During 2030s: 25.0% 2. Appointment of foreign nationals to managerial positions Current (as of April, 2023): 31.6% Target: Maintain current level
3. Appointment of mid-career hires to managerial positions
Current (as of April, 2023): 46.3% Target: Maintain current level
Principle 2-6 Function as asset owner of corporate pensions
In order to provide retirement benefits to its employees, the company uses both a defined benefit corporate pension plan and a defined contribution pension plan.
The management of the defined benefit corporate pension reserve is relegated to an asset management entity that has declared its acceptance of the Stewardship Code, and the company appropriately supervises said management, e.g. via regular reports to its relevant internal department.
Principle 3-1: Enhancement of Information Disclosures
1. The Company’s vision (corporate principles and so on), management strategies, and management plans are posted on the Company’s website as the Kaga Electronics Corporate Philosophy and Action Guidelines at
and information on our medium-term management strategy can be found at https://www.taxan.co.jp/en/ir/management/management_07.html
2. With regard to the Company’s fundamental approach and policies on corporate governance, refer to this report, Section I: Basic approach to corporate governance, capital structure, corporate attributes, and other basic information, Part 1: Basic approach.
3. With regard to policies and procedures for the determination of the remuneration of management executives and directors by the Board of Directors, refer to this report, Director Remuneration under Section II: Management decision-making, management organizations for execution and supervision, and other elements of the corporate governance system.
4. At Kaga Electronics, our policy when nominating director candidates is to “nominate persons with character and insight, who will contribute to the sustainable growth of the Group and corporate value over the mid to long term as director candidates.” When selecting corporate auditors, our policy is to select “persons of appropriate character for corporate auditors, with advanced specialist knowledge and abundant experience.”When nominating director candidates, first, the Nomination and Compensation Committee, an advisory body to the Board of Directors, deliberates the nominations and makes a report to the Board of Directors, then upon receiving this report, the Board of Directors deliberates and decides on the nominations.When nominating corporate auditor candidates, after the Nomination and Compensation Committee has deliberated the matter and the consent of Board of Auditors has been obtained, a report is made to the Board of Directors. Upon receiving this report, the Board of Directors deliberates and decides on the nominations.The Nomination and Compensation Committee consists of 3 outside directors and 2 internal directors.In addition, the Board of Directors decides on the selection and dismissal of upper-level management based on the employment-based and delegation-based executive officer regulations and criteria of each type of qualification, and after evaluation by the Group Management Headquarters Meeting and the Nomination and Compensation Committee.
5. The company will provide explanations regarding the naming and selection and dismissal of board directors and corporate auditors at appropriate times via means such as news releases and convocation notices for general shareholder meetings.
Supplementary Principle 3-1-3
In order to strengthen unity within the Group with regard to SDGs initiatives and promote sustainability management, as of April 1, 2021, the Company has established the SDGs Committee chaired by the Representative Director, President & COO and its members consisting of the officers overseeing each division, etc. We have created working groups based on the themes of “Environment,” “Society,” and “Governance,” each reporting directly to the SDGs Committee.
As of April 1, 2022, the Company has also established the SDGs Promotion Office (now SDGs Promotion Department), under the direct authority of the Representative Director, President & COO. With such systems in place, we are working to formulate policies, measures, and goals that address these ESG issues, and monitor the state of progress. To date, the SDGs Committee has held 6 times, and each working group has held once a month, in principle, in an effort to actively engage in discussions and deliberations on each theme.Regarding the Medium- to Long-Term Sustainability Management Plan formulated on November 25, 2021, each working group reports the progress of each KPI to the SDGs Committee every half year, and the SDGs Committee verifies the validity of the measures and confirms the need for additional measures. Through this PDCA cycle, the Company has taken steps to implement the ESG issues set forth in the plan.
〈Disclosure Based on the TCFD or Equivalent Frameworks〉
Led by the Environment Working Group, and giving reference to the TCFD recommendations framework, the matters the Company consider to be the major physical risks as well as the transition risks and opportunities relating to climate change, and our response policies, can be found on the sustainability information page of our website.
〈Investment in Human Capital, Intellectual Property, etc.〉
Led by the Social Working Group mentioned above, the
Company worked to ensure diversity in the areas of “promotion of women’s
activities” and “appointment of women, foreign nationals, and mid-career hires
to managerial positions” under the theme of “promotion of diversity.” The Company
has revised its rules and regulations to introduce a telework system on a
permanent basis by reviewing work styles and developing an environment and
systems targeted at childcare and family care under the theme of “balancing
work–life management and enhancement of productivity.” Further, the Company was
certified as a “2023 Health and Productivity Management Organization.”
Principle 4-1: Roles and Responsibilities of the Board (1)
Supplementary Principle 4-1-1
The Company established Board of Directors Rules, clarifying matters for resolution by the Board. The
Company also established Rules on Work Authority, clarifying the authority entrusted to and scope of duties of the management team.
Principle 4-9: Independence Standards and Qualifications for Independent Outside Directors
In accordance with the Tokyo Stock Exchange standards on independence, the Company requires that there be no special interests with the Company with regard to the election of outside directors. In addition, to reinforce the functions of the Board of Directors, outside directors are required to have extensive experience and broad powers of judgment as corporate managers and the like.
Principle 4-10: Use of Optional Approach
Supplementary Principle 4-10-1
＜Approach to the Independence of the Composition of the Nomination and Compensation Committee, as well as its Rights, Roles, etc.＞
The Company has a Board of Auditors, and although outside directors do not make up a majority of members of the Board of Directors, it has established the Nomination and Compensation Committee as a discretionary body. Independent outside directors make up a majority of the members of the Nomination and Compensation Committee, and an independent outside director serves as chair of the Committee. With regard to the independence, objectivity, accountability, etc., of the functions of the Board of Directors concerned with the nomination and compensation of directors and delegation-based executive officers, as well as succession plans, the Board of Directors receives appropriate advice and involvement from the Nomination and Compensation Committee and respects the Committee’s reports. In this way, the independence, objectivity, and accountability of the functions of the Board of Directors are appropriately strengthened.
Principle 4-11 Preconditions for Ensuring the Effectiveness of the Board of Directors and Supervisory Board
Supplementary Principle 4-11-1
The Company emphasizes ensuring diversity on the Board of Directors as a whole with different specialized knowledge, experience, and so on with regard to nominating candidate directors so that the Board can demonstrate maximum effectiveness and efficiency.
The Company discloses a skill matrix for each director along with the career summaries of independent outside directors and other information on our website and in the Notice of the 53rd Ordinary General Meeting of Shareholders.
Supplementary Principle 4-11-2
The Company discloses the materials regarding the concurrent positions of directors and Supervisory Board members in its notice of convocation of the regular ordinary General Shareholders Meeting and securities reports.
Further, directors and Supervisory Board members spend the time and perform the work necessary to appropriately fulfill their roles and responsibilities.
The Company discloses the status of attendance at Board of Directors meetings in its notice of convocation of the regular ordinary General Shareholders Meeting, integrated reports, and securities reports.
Supplementary Principle 4-11-3
Every year, the Company analyzes and evaluates the effectiveness of the Board of Directors as a whole.
In terms of the method of analysis and evaluation, the Company administers self-assessment questionnaires to all officers (including outside officers) with questions related to the effectiveness of the Board of Directors (such as the composition, operation, and functions of the Board of Directors, the provision of information to outside officers, and governance systems). The results of the questionnaires are then analyzed and evaluated.
In the questionnaire conducted in March 2022, all officers replied that performance exceeded expected levels across all areas. As a result, the Company has judged that the effectiveness of the Board of Directors as a whole has been ensured.
Based on the questionnaire conducted in April 2023, the Company has judged that a certain level of effectiveness of the Board of Directors as a whole has been ensured, but challenges that we should further address in the future, such as ensuring diversity, have also become apparent.
Principle 4-14: Director and Supervisory Board Member Training
Supplementary Principle 4-14-2
The Company provides necessary opportunities and supports the cost of acquiring knowledge relating to the management, compliance, and so on necessary for directors and Supervisory Board members to fulfill their roles and perform their responsibilities.
Principle 5-1: Policy on Constructive Dialogue with Shareholders
● Fundamental Approach
The Company undertakes measures to engage in dialogue and other interactions with shareholders and investors in order to achieve continuous growth and raise corporate value in the medium to long term.
(1) Investor relations structures
Under the leadership of the president & COO, CFO and Investor Relations and Public Relations Department handle dialogues with shareholders and investors.
(2) Methods of dialogue
The Company holds financial briefings for mass media, analysts, and institutional investors twice annually (in May and November), as well as briefings on its business and strategy, and responds appropriately to requests for individual visits and for information. For our shareholders and individual investors, information on management policies, business details, results, videos of financial briefings for institutional investors, and other information are posted on the Company’s website and the Company strives to enhance information disclosures. In addition, the Company participates in large-scale briefings for individual investors and responds appropriately to individual inquiries.
(3) Internal feedback
Feedback regarding the details of dialogues with shareholders and investors is provided by the officers responsible for management divisions and the Secretarial and Public Relations Department to the Board of Directors and other relevant divisions as necessary.
(4) Insider trading and quiet periods
The Company does not divulge insider information during dialogues with shareholders and investors. The Company has established Rules on Internal Information Management and Restriction of Insider Trading and strives to manage insider information. The periods from the last day of each quarterly financial period until the announcement of financial results for that period are designated quiet periods and dialogue and information disclosures are restricted during those periods.