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
Principle 4-1 Role and duties of board of directors (1)
Supplementary principle 4-1 (3)
The company recognizes planning for the succession of its chief executive officer as an important management issue, and will cultivate management staff (board directors and operating officers) as such successors.
In the event of personnel changes, the board of directors will consider such placement as will allow potential successors to accumulate the necessary experience.
Principle 4-10 Utilization of discretionary arrangements
Supplementary principle 4-10 (1)
The company is a corporation with a board of corporate auditors, and although the number of external board directors does not have a majority on the board of directors, the company actively considers the opinions of external directors concerning matters such as the independence and objectivity of board functions and the board’s accountability regarding, for example, the naming and compensation of upper-level management and board directors. Although there is no discretionary advisory board, the company is taking appropriate measures to enhance the independence and objectivity of board functions as well as the board’s accountability.
Disclosure Pursuant to the Principles of the Corporate Governance Code
Principle 1-4: So-called strategic stockholdings
The company holds publically 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).
●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 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 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 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 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, 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. The board of directors decides on the selection and dismissal of upper-level management and on the naming of board director and corporate auditor candidates based on management regulations and board regulations and after evaluation by the Corporate Management Conference.
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.
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 4-11 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.
[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.
[Supplementary Principle 4-11-3]
To analyze and evaluate the effectiveness of the Board of Directors as a whole, the Company administers questionnaires to all directors and Supervisory Board members with the participation of outside directors and outside Supervisory Board members and analyzes and evaluates the results.
Based on the results, the Company has determined that the directors and Supervisory Board members utilize their respective knowledge and are able to engage in high-quality deliberations at Board of Directors meetings. Also, the Company believes that the frequency of meetings, the method of deliberation, and other matters relating to the operation of Board of Directors meetings are appropriate and that the Board of Directors as a whole is effective.
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, CFO and Investor Relations and Public Relations Office handle
dialogues with shareholders and investors.
(2) Methods of dialogue
The Company holds financial briefings for news organizations, analysts, and institutional investors twice annually (in May and November), conducts individual visits, and responds appropriately to requests for information and other requests. 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 and respond 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 Office 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.