Corporate Governance

Ever since its foundation, Kokuyo has always followed a philosophy of enriching the world through our products. While this philosophy remains central to our entrepreneurial spirit, we now use the phrase “Be Unique” to express our philosophy and value-creating ethos in a way that is relevant to today’s challenges, in a world that is undergoing tumultuous changes. “Be Unique” expresses the idea that we produce products and services that deliver experience value, stimulating creativity and celebrating uniqueness.
What has supported our continued growth down the years is the warm trust we have built up with our shareholders, customers, supply-chain partners, employees, communities, and other stakeholders. We recognize that these stakeholder relationships are tangible and intangible assets that constitute the source of our value as an organization. Safeguarding these assets is a major strategic priority.
As well as safeguarding stakeholder relationships, we commit to making our organizational structures and processes efficient, transparent, and fair so that we remain true to our brand values and sustain long-term value creation.

We have a longstanding commitment to separating business execution from management oversight. Back in 2011, we started reserving places on the Board of Directors for independent directors and established the Nominating & Compensation Committee to advise the board about nominations and director compensation. In 2015, we had a CEO succession. Since 2020, an independent director has served as chair of the Board of Directors. We took another important step in enhancing corporate governance in 2024: We transitioned our corporate structure from that of a “company with a board of auditors” to that of a “company with a nominating committee and other committees.” The move took effect when it was approved by shareholders at the 77th Annual General Meeting of Shareholders, held on March 28, 2024. The three designated committees enables better corporate governance.

The Board of Directors has nine members, six of whom are independent directors. One of these independent directors serves as the board’s chair. All directors serve one-year renewable terms. This setup helps ensure a dynamic board, capable of responding swiftly to changing business conditions.

The Board of Directors holds regular monthly meetings, as well as ad-hoc meetings when necessary.

The board’s role of supervising management is separated from its role of executing the company’s business. With this separation, the board can both devote sufficient time to discussing matters of strategic importance (such as making decisions about the company’s policies and business strategies) and focus on supervising the management.

The Nominating Committee has four members. All members are independent directors, including the chair, who is elected by the members. The committee vets candidates to be nominated to shareholders for election or re-election to the Board of Directors. It also vets candidates that the Board of Directors may appoint as shikko-yaku (a legal title describing an executive who bears fiduciary duties) or shikko-yaku-in (a non-legal title describing an executive who bears no fiduciary duties; in English, our shikko-yaku-in are known as “corporate executive officers” or “managing officers”).
The committee has a total membership of between three and five members, with independent directors making up the majority of members. As a general rule, the committee’s chair is elected by the members from among the independent directors. The committee designates one of its members to give the Board of Directors timely updates about the committee’s decisions and agenda.

The Audit Committee has four members. Three of the members are independent directors. The chair is elected by members. The current chair is a non-independent non-executive director who was also elected by members to be a full-time Audit Committee member.
The committee audits the execution of the company’s business by corporate officers and directors, prepares audit reports, and decides on proposals for appointing or dismissing (or not reappointing) the accounting auditor. To ensure that audits are effective, the members regularly liaise with the heads of Kokuyo’s business units and corporate divisions and coordinate closely with their counterparts in Kokuyo’s Internal Audit Division and in key Kokuyo subsidiaries.
The committee has a total membership of between three and five members, with independent outside directors making up the majority of members. The committee designates one of its members to give the Board of Directors timely updates about the committee’s decisions and agenda.

The Compensation Committee has three members, all of whom are outside directors. The chair is elected from among the outside directors.
The committee designs the compensation system for directors, corporate officers, and managing officers, and sets the compensation amounts to be paid to each recipient.
The committee has a total membership of between three and five members, with independent outside directors making up the majority of members. As a general rule, the committee’s chair is elected by the members from among the independent directors. The committee designates one of its members to give the Board of Directors timely updates about the committee’s decisions and agenda.

Internal auditing is undertaken by the Audit Office. The office follows an internal audit plan, approved by the Audit Committee to evaluate whether the company’s compliance and control processes are reasonable and working effectively. It reports the results to the Audit Committee and Representative Corporate Officer. The office does not report the results of its audits to the Board of Directors directly, but the Audit Committee may report the results to the board as appropriate.
The office members attend regular meetings with Audit Committee members to report findings and share opinions on the auding structures and auditing operations, and to enable close coordination in auditing. The members also hold regular meetings with departments responsible for internal controls and risk management to share opinions and coordinate activities. Additionally, they attend regular tripartite audit meetings to coordinate with the accounting auditor and share opinions as necessary.