The Company implements all the principles established in the Corporate Governance Code.
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- Initiatives to Comply with the Code
Initiatives to Comply with the Code
The following section details disclosure pursuant to the principles of the Corporate Governance Codes.
Corporate Governance Report 
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Reasons for Non-compliance with the Principles of the Corporate Governance Code
Disclosure Pursuant to the Principles of the Corporate Governance Code
Principle 1-4: So-called strategic stockholdings ●Stockholding policyThe 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 stockholdingsThe 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 TransactionsIn 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 WomenSupplementary Principle 2-4-1:1. Appointment of Women to Managerial PositionsThe 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 PositionsRegarding 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.1. Appointment of women to managerial positionsCurrent (as of April, 2026): 15.2% Target: During 2020s: 17.0% / During 2030s: 25.0%2. Appointment of foreign nationals to managerial positionsCurrent (as of April, 2026): 28.3% Target: Maintain current level3. Appointment of mid-career hires to managerial positionsCurrent (as of April, 2026): 49.1% Target: Maintain current levelPrinciple 2-6: Function as asset owner of corporate pensionsIn 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 Disclosures1. 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 https://www.taxan.co.jp/en/company/vision/, 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(1) Under its corporate philosophy of “Everything we do is for our customers,” the Company seeks to enhance corporate value through business activities founded on a customer-first approach. The Company regards its contribution to the creation of a prosperous and fulfilling future as the means by which it meets the expectations of all its stakeholders—including customers, shareholders, and employees—and, to this end, has made it a key basic management policy to continuously strengthen corporate governance as the foundation for ensuring the soundness, efficiency, and transparency of management.(2) In line with the basic policy described above, and to further enhance corporate governance, the Company transitioned from a company with a Board of Auditors to a company with an audit and supervisory committee following the conclusion of the Ordinary General Meeting of Shareholders held in June 2025. The aim of this transition is to promote the separation of management supervisory functions from business execution functions and to achieve highly effective management supervision through robust deliberation at the Board of Directors. The Audit and Supervisory Committee comprises 4 directors who are Audit and Supervisory Committee members, including 3 outside directors. In addition to attending Board of Directors meetings, Audit and Supervisory Committee members carry out their duties by actively participating in important internal meetings and through other means. As a result of this transition, the Company now has 12 directors in total (including 6 outside directors), establishing a structure that enables thorough deliberation and accurate, timely decision-making. In appointing outside directors, including those who are Audit and Supervisory Committee members, the Company places importance on securing independence, and all such directors satisfy the requirements for “independent officers” stipulated by the Tokyo Stock Exchange. With respect to business execution, the Company introduced an executive officer system at an early stage and has since refined it into employment-based and delegation-based systems, thereby clarifying the respective roles and strengthening business execution functions.(3) In light of the increasing emphasis placed on internal controls, the Company has established an Internal Audit Department under the direct authority of the Representative Director, President & COO. In collaboration with the Administration Headquarters and other units, the Internal Audit Department conducts audits across all business activities, including those of Group companies, examining their appropriateness, the use of company resources, and compliance with laws, regulations, and internal rules. The Company also strives to operate its internal control systems in accordance with the requirements of the Financial Instruments and Exchange Act.(4) Furthermore, the Company recognizes the communication of financial and non-financial information to shareholders, investors, and other stakeholders as one of its important corporate governance issues. To further promote dialogue with a wide range of stakeholders, the Company strives to disclose corporate information in a manner that is easy to understand, fair, timely, and appropriate.3. With regard to policies and procedures for the determination of the remuneration of management executives and directors by the Board of Directors・Basic policyThe Company's basic policy is to set the remuneration of directors at an appropriate level based on their respective responsibilities in determining the remuneration of individual directors as a remuneration system that is linked to shareholders' profits so that it can fully function as an incentive to secure and retain excellent human resources who will implement the realization of the Company's management philosophy and continuously improve corporate value. Specifically, remuneration for executive directors consists of fixed remuneration, which is paid at a fixed amount, performance-linked remuneration and stock-based remuneration, while remuneration for outside directors and director who are Audit and Supervisory Committee members, who are responsible for supervisory functions, consists of fixed remuneration only in consideration of their responsibilities.Furthermore, the content of remuneration for directors is designed to be reasonable, objective and transparent in terms of both the content of remuneration and decision-making procedures.・Policy regarding the determination of the amount of remuneration, etc. for each individual in fixed remunerationThe fixed remuneration for directors of the Company shall be fixed monthly remuneration in cash, which shall be determined in accordance with the position and responsibilities, etc., while taking into consideration the levels of other companies, the business performance of the Company, and the level of employee salaries, and reviewing the remuneration as appropriate in a comprehensive manner.・Policy for determining the details of performance-linked remuneration, etc. and non-monetary remuneration, etc. and the method for calculating the amount or number of such remunerationPerformance-linked remuneration, etc. is monetary remuneration reflecting performance indicators in order to raise awareness of the need to improve performance for each fiscal year, and an amount calculated in accordance with the degree of achievement of the target values for operating income, ordinary income and net income attributable to owners of parent for each fiscal year is paid as a bonus at a specified time. The target performance indicators and their values are based on the profit-oriented management set forth in the Medium Term Management Plan, and will be reviewed in accordance with changes in the business environment, respecting the report of the Nomination and Compensation Committee. The amount of performance-linked remuneration is based on the consolidated business results.Non-monetary remuneration, etc. is granted at a set time after the end of the fiscal year as restricted stock compensation with a transfer restriction period of up to 20 years, which is designed to provide incentives for the sustainable enhancement of the Company's corporate value and to promote further value-sharing with shareholders through the holding of the Company's shares. The number of shares to be granted is determined in consideration of the position, responsibilities, stock price, etc., and with respect to the report of the Nomination and Compensation Committee.・Policy on determination of the ratio of the amount of monetary remuneration, the amount of performance-linked remuneration, etc., or the amount of non-monetary remuneration, etc., to the amount of individual remuneration, etc., of directorsThe ratio of type of remuneration for directors (excluding outside directors and director who are Audit and Supervisory Committee members) is determined based on the report of the Nomination and Compensation Committee, taking into consideration the position, responsibilities, and trends in the remuneration levels of other companies with similar business scale as the Company.・Matters related to the decision policy concerning the details of remuneration, etc. for individual directorsBased on the delegated resolution of the Board of Directors, Representative Director, Founder & CEO and Representative Director, President & COO are delegated the authority to determine the amount of fixed remuneration for each director, the allocation of performance-linked remuneration (bonuses, etc.) based on the performance of the business for which each director is in charge, and the number of shares to be allotted to each individual in the form of restricted stock compensation.The Board of Directors consults the Nomination and Compensation Committee on the draft and obtains its report to ensure that such authority is properly exercised by the Founder & CEO and President & COO, and the Founder & CEO and President & COO, who have received the above delegation, make decisions with respect to the content of this report.・Matters concerning the method of decision when the decision on the details of remuneration, etc. is delegated to a director or other third partyThe Representative Director, Founder & CEO and Representative Director, President & COO determine the specific details of the amount of remuneration, etc. and the number of shares to be allotted to each individual based on the delegated resolution of the Board of Directors. The Board of Directors shall take measures to make decisions after consultation and reporting by the Nomination and Compensation Committee to ensure that such authority is properly exercised by the Founder & CEO and President & COO.The Founder & CEO and President & COO determine the details of individual remuneration for each director by fully respecting the advice and report of the Nomination and Compensation Committee, while taking into consideration the Company's overall performance, stock price, the role of each director, the impact of each director on the Company's performance and other circumstances.・Matters related to the resolution of the General Meeting of Shareholders regarding the remuneration of directors and Audit and Supervisory Committee members The maximum amount of remuneration for directors was resolved at the 57th General Meeting of Shareholders held on June 26, 2025, to be less than 1,200 million yen per year (of this amount, up to 200 million yen is for outside directors; salaries for services as employees are not included). As of the close of this General Meeting of Shareholders, the number of directors, not including the Audit and Supervisory Committee members, was 8 (including 3 outside directors).In addition, it was resolved that the annual amount of monetary remuneration claims to be paid to directors, not including the Audit and Supervisory Committee members (excluding outside directors), for the granting of restricted shares shall be 300 million yen or less, separately from the above maximum amount of remuneration. As of the close of this General Meeting of Shareholders, the number of directors, not including the Audit and Supervisory Committee members (excluding outside directors) was 3.It was resolved that the maximum amount of remuneration to be paid to the Audit and Supervisory Committee members shall be 100 million yen or less per year. The number of Audit and Supervisory Committee members as of the close of this General Meeting of Shareholders was 4. Furthermore, the remuneration of Audit and Supervisory Committee members is determined through consultation among said committee members.4. The appointment and dismissal of executive officers are determined by the Board of Directors based on the Regulations on Employment-Based Executive Officers, and the appointment and dismissal of titled executive officers at the rank of Senior Executive Officer and above are determined by the Board of Directors based on the Regulations on Delegation-Based Executive Officers, in each case after deliberation by the Group Management Headquarters Meeting and the Nomination and Compensation Committee.For the nomination of director candidates, the requirement for selection is that the person be “an individual of strong character and insight who will contribute to the sustainable growth of the Group and the enhancement of corporate value over the medium to long term.” In making such nominations, the Nomination and Compensation Committee deliberates on the matter and submits its report to the Board of Directors; upon receiving this report, the Board of Directors deliberates and makes its decision. For the nomination of candidates for directors who are Audit and Supervisory Committee members, the requirement for selection is that the person be “an individual of character befitting an Audit and Supervisory Committee member, with advanced specialist knowledge and abundant experience.” In nominating such director candidates, after the Nomination and Compensation Committee has deliberated on the matter and the consent of the Audit and Supervisory Committee members has been obtained, a report is submitted to the Board of Directors; upon receiving this report, the Board of Directors deliberates and makes its decision.The Nomination and Compensation Committee, a voluntary advisory body to the Board of Directors, is chaired by an outside director and has outside directors constituting a majority of its total membership, thereby ensuring thorough oversight of management through the perspective of outside officers.5. The Company provides explanations regarding the appointment, dismissal, and nomination of directors in a timely manner through means such as news releases and convocation notices for general meetings of shareholders.6. On its website, the Company discloses, in both Japanese and English, the management information set out herein regarding its corporate philosophy, management strategy, medium-term management plan, and annual business performance. In addition, the Company endeavors to disclose simultaneously in both Japanese and English any material corporate information requiring timely disclosure to the Tokyo Stock Exchange, including the appointment and dismissal of directors.Supplementary Principle 3-1-3:The Kaga Electronics Group recognizes the promotion of CSR and sustainability as important management issues. We have established a Sustainability Committee chaired by the Representative Director and President of Kaga Electronics Co., Ltd. Under the committee, we have set up specialized subcommittees for Environmental Management Promotion, Diversity Promotion, Governance, Risk Management, Compliance, and Information Disclosure. These initiatives are led by the Sustainability Promotion Department, which is likewise established under the direct authority of the President. Under the commitment of top management and in collaboration with the business divisions, the Company works to promote sustainability in an organized and systematic manner through the specialized subcommittees, including by formulating policies, measures, and targets for ESG issues and managing their progress.In fiscal 2024, the Sustainability Committee met two times, with each subcommittee directly under the Sustainability Committee meeting once each month, in principle, actively engaging in a series of discussions and considerations on each theme.Regarding the Medium- to Long-term Sustainability Management Plan formulated on November 2021, each committee directly under the Sustainability Committee reports the progress on each KPI to the Sustainability Committee on a semi-annual basis. The Sustainability Committee verifies the appropriateness of the measures and checks the need for additional measures, thereby implementing the PDCA cycle to work toward resolving the ESG issues set forth in the plan. These matters are also reported to the Board of Directors once a year.Led by the Environmental Management Promotion Committee, 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. Sustainability site: https://www.taxan.co.jp/jp/csr/conservation/index.htmlLed by the Diversity Promotion Committee, the Company is working to ensure diversity in the areas of “promoting women’s empowerment” and “appointing women, foreign nationals, and mid-career hires to managerial positions.” Additionally, under the theme of “balancing work–life management and enhancement of productivity,” the Company has reviewed work styles and developed an environment and systems focused on childcare and nursing care, revising its rules and has also established rules and regulations that make remote work a permanent system. In 2026, the Company was again recognized as a certified “Health & Productivity Management Outstanding Organization”, marking its fourth consecutive year of certification.Supplementary Principle 4-1-1:The Board of Directors has established the Board of Directors Rules as a decision-making body for important matters that include the formulation of basic management policies and management plans, and decisions on matters delegated by the General Meeting of Shareholders, in an effort to clearly define the matters to be resolved. In order to ensure timely management, the Board also has adopted an executive officer system and formulated the Rules on Work Authority to properly delegate authority. The Board assumes its roles of appointing the executive officers to be delegated and overseeing the execution of their duties.With respect to Yoichi Sato, although there is an agreement for the provision of legal services and the like between the Company and the law firm to which he belongs, he is not a partner of that law firm and is not involved in its management or practical business. In addition, although Kyoko Oyanagi is the representative of the Social Insurance and Labor Advisors Corporation with which the Company has entered into an advisory agreement, the transaction amount is insignificant.Principle 4-9: Independence Standards and Qualifications for Independent Outside DirectorsIn accordance with the Tokyo Stock Exchange standards on independence, the Company requires that there be no special interests in the Company with regard to the election of outside directors and discloses the qualification criteria for outside directors through convocation notices. 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 4-10-1:The Company has established a Nomination and Compensation Committee as a voluntary advisory body to the Board of Directors. The Nomination and Compensation Committee has a majority of independent outside directors, and the chairperson is appointed from among the independent outside directors. The committee provides appropriate advice on and involves itself in such matters as the independence, objectivity, and accountability of the functions of the Board of Directors concerning the nomination and compensation of directors and delegation-based executive officers, as well as succession planning. By respecting the findings of the Nomination and Compensation Committee, the independence, objectivity, and accountability of the functions of the Board of Directors are also strengthened appropriately.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 57rd Ordinary General Meeting of Shareholders.https://www.taxan.co.jp/en/ir/management/management_03.htmlSupplementary Principle 4-11-2:The Company discloses the materials regarding the concurrent positions of directors in its notice of convocation of the regular ordinary General Shareholders Meeting and securities reports.Directors’ concurrent positions as new officers at other Group Companies are appropriately reported to the Board of Directors, and the time and work necessary to appropriately fulfill their roles and responsibilities as directors of the Company are secured. 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 directors 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 directors, and governance systems). The results of the questionnaires are then analyzed and evaluated.Based on the questionnaire conducted in April 2026, the Company has judged that a certain level of effectiveness of the Board of Directors as a whole has been ensured.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 to fulfill their roles and perform their responsibilities.Principle 5-1: Policy on Constructive Dialogue with Shareholders● Fundamental ApproachThe Company undertakes active measures to engage in dialogue and other interactions with shareholders and investors in order to achieve sustainable growth and increase corporate value in the medium to long term.(1) Investor relations structuresThe Representative Director, President & COO oversees dialogues with shareholders and investors, along with the CFO and the specialized Investor Relations and Public Relations Department. (2) Methods of dialogueThe 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 individual investors, the Company strives to enhance information disclosure by posting on its website (IR site) its management policies, business details, results, videos of financial results briefings, and records of question-and-answer sessions, among other materials. In addition, the Company has established a page dedicated to individual investors that presents its management plan, performance highlights, shareholder returns, and other information in an easy-to-understand manner.In addition, the Company regularly participates in large-scale briefings for individual investors held in Tokyo, Osaka, Nagoya and other major metropolitan areas and responds appropriately to individual inquiries. (3) Internal feedbackFeedback regarding the details of dialogues with shareholders and institutional investors is provided by the officers responsible for management divisions and Investor Relations and Public Relations Department to the Board of Directors and other relevant divisions as necessary.(4) Insider trading and quiet periodsIn its dialogue with shareholders and investors, the Company does not communicate insider information (material facts that have not been publicly disclosed). Internally, the Company has established Rules on Internal Information Management and the Restriction of Insider Trading and strives to manage insider information. The period from the end of each quarterly accounting period until the announcement of the financial results for that period is designated a “quiet period,” during which the Company refrains from dialogue concerning financial results information.
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