We recognize our responsibility to society and offer beneficial products and services while maintaining the highest standards of integrity. Through our growth, we will contribute to society and enrich the lives of our employees.
Based on this philosophy, we created the NAGASE Vision, which is a promise to our stakeholders that each of us will embody our value proposition to Identify, Develop and Expand to realize a sustainable world where people live with peace of mind.
To execute this Vision, we created a long-term management plan that guides us in becoming a corporate group capable of sustainable growth in the face of dramatic changes in the external environment. This plan calls for our willingness to undertake challenges for growth and to work toward the reinforcement of our business base, engaging in measures to improve corporate value over the medium and long term.
We believe that rapid decision-making, execution, and transparency are essential for us to accomplish these initiatives as we engage in strengthening our corporate governance.
Business Execution and Auditing Framework
The Board of Directors, at the foundation of a structure to ensure efficiency in the execution of directors’ duties, is clearly positioned as the body in charge of making decisions on management policies and strategies, and supervising the execution of operations. It holds a regular monthly meeting in addition to provisional meetings as necessary, reviews and formulates measures regarding important decisions and tracks business performance.
Under an executive officer system, the roles of executive officers, their responsibilities, and procedures within basic organizational regulations for operation and division of duties are based on decisions of the Board of Directors. Executive officers attend General Managers’ Meetings (sales), where they discuss sales and marketing issues, and General Managers’ Meetings (Administration), where they discuss administrative issues and establish concrete measures based on status reports received from each department.
In addition to attending Board of Directors’ meetings and other important meetings, Audit & Supervisory Board Members closely monitor the execution of duties by directors and executive officers, based on audit policy and division of duties determined by Audit & Supervisory Board Members, through surveys of Company operations and assets and management reports from subsidiaries, which they request on an as-needed basis. Monitoring and assignment of tasks are based on policies set at Audit & Supervisory Board Members’ meetings.
The Audit Office is in charge of internal audits, including audits to assess the appropriateness and efficiency of business activities. The Audit Office and Audit & Supervisory Board Members regularly exchange information regarding internal audits and audits of domestic and overseas subsidiaries and hold meetings twice a year with auditors of affiliated companies. In addition, they perform liaison activities including receiving regular reports from Nagase’s independent auditors Ernst & Young ShinNihon LLC regarding accounting matters and associated internal controls. Members of the Audit Office are also present at accounting audits conducted by the independent auditors.
As Nagase’s independent auditors, Ernst & Young ShinNihon LLC conducts fair and impartial audits of the Company’s accounts.
Internal Control System and Risk Management System
The Company enhances the following systems to strengthen and thoroughly implement internal control and risk management.
System to Ensure Compliance with the Law and Nagase’s Articles of Incorporation in the Execution of Directors’ Duties
Based on the management philosophy, “maintain good and fair business practices as a member of society,” which Nagase has upheld for many years, the Company has established a basic policy and code of conduct for legal compliance and employs the services of outside professionals as necessary to prevent violations of the law or Nagase’s Articles of Incorporation. Measures to strengthen the corporate governance system include a provision for a director who discovers a violation of the law or Nagase’s Articles of Incorporation by another director to report immediately to the Board of Directors or Audit & Supervisory Board Members.
Storage and Control of Information Related to the Execution of Directors’ Duties
Information related to the execution of directors’ duties is recorded in documents or electronically, and stored according to internal regulations. Directors and Audit & Supervisory Board Members can view these materials at any time.
Risk Management System
The Company Board of Directors has established the Risk Management & Compliance Committee to integrate overall risk control for the Company and Group companies, setting in place a structure that defines its functions and authority, as well as clarifies its roles and responsibilities. Under the committee's leadership, the Company and Group companies address risks in their particular areas by setting rules and guidelines, holding workshops and preparing and distributing manuals. To deal with additional risks that materialize, Nagase is also working to develop a system that designates the departments responsible for rapid response, ensures speedy and appropriate communications within the Group should an incident arise, and handles emergencies.
To upgrade and maintain its compliance structure, the Company established the Risk Management & Compliance Committee and a basic compliance policy, and uses regular workshops and other initiatives to ensure that corporate activities are strictly in line with the Nagase Group Code of Conduct. Should employees of Nagase or its Group companies become aware of legal or other compliance issues, they report to the Risk Management & Compliance Committee, which immediately reports to Audit & Supervisory Board Members. In addition, the Company has introduced an internal reporting system where employees and others can report or discuss issues directly.
System to Ensure Fairness in Business of the Nagase Group
The Company ensures fairness in business with Group companies through specific articles of operational standards, requiring Group companies to seek the approval of or notify the Company after making decisions and providing in principle for the dispatch of Company executives.
In creating clear targets based on the medium-term management plan and annual budget system, Nagase implements budget and performance control at the Company and Group companies. In order to increase the reliability of financial reporting, the Company documents, evaluates and improves its overall internal control system and the process for preparing financial statements, based on the Financial Instruments and Exchange Law.
The Risk Management & Compliance Committee takes the lead role in conducting overall risk management for the Company. The Committee discusses matters and measures, making decisions related to risk management and compliance. At the same time, the Committee deliberates significant issues related to Group-wide compliances, recommending courses of action.
Matters Related to Staff Selected to Assist Audit & Supervisory Board Members
Audit & Supervisory Board Members may request to have staff assigned to assist in audit work. Such staff shall be assigned to the Audit Office as their official department of employment.
Independence of Corporate Audit Staff and Practicability of Directions by Corporate Auditor Directions
To ensure corporate audit staff independence from the Board of Directors, any staff assignments or evaluations will require consultation with and approval of the corporate auditors beforehand. Directions provided to corporate audit staff should reflect considerations of practicability concerning the time necessary to select the individual and to perform work assisting corporate auditors.
System to Ensure Effectiveness in Reports to Directors and Audits
The Company has upgraded the system for Audit & Supervisory Board Members to understand the overall state of Company and Group Company management on an ongoing basis by attending important meetings including Board of Directors’ meetings and exchanging information, and viewing approval-process documents and reports. Moreover, directors report the following items to Audit & Supervisory Board Members or Audit & Supervisory Board either individually or through the Board of Directors of the Company and Group Companies.
- Misconduct related to the execution of directors’ duties, violations of the law or Nagase’s Articles of Incorporation, compliance-related problems
- Matters that have the potential to significantly damage the Company
- Important items of disclosure
- Reporting of matters based on the internal reporting system, etc.
Reports to Audit & Supervisory Board Members may be filed directly by Group Company board directors or employees. Individuals filing such reports shall in no way be subject to punishment. This policy has been clearly communicated throughout the Group and through our internal reporting system.
Other Systems to Ensure Corporate Audit Practicability
Representative Director, Outside Director and Audit & Supervisory Board Members hold regular conferences to exchange opinions to recognize and understand the importance and usefulness of audits. In addition, to enable Audit & Supervisory Board Members to carry out their duties efficiently and effectively, the Company has upgraded its system for close coordination and reciprocity between Audit & Supervisory Board Members and the independent auditors, the Audit Office and auditors of affiliated companies. In the event that Audit & Supervisory Board Members and the Audit & Supervisory Board call in attorneys, certified public accountants, or other outside experts to provide advice, investigations, assessments, or other services related to the performance of audits, the Audit & Supervisory Board Members and the Audit & Supervisory Board may request that related costs and expenses be paid for by the Company. The Company may not refuse to make such payment, unless said services performed by outside experts are deemed to have been unnecessary for the performance of Audit & Supervisory Board Member and Audit & Supervisory Board work.
The Company has established Basic Compliance Policies that require compliance with laws, regulations and Company rules, as well as disclosing information to stakeholders. We proactively disclose corporate information in a fair manner, striving to maintain management transparency.
The Company has set into place the following internal systems to support the timely and appropriate disclosure of Company information to investors.
This system allows the Company to identify and manage information for timely disclosure. The Company works to consistently manage important internal information and prevent insider trading, as guided by Company rules in this area.
Facts or information subject to disclosure are reported to the responsible party through the related general manager/department GM, according to information provided from a department or subsidiary. The responsible party coordinates with internal departments and reports to the representative director/president of the Company. As necessary, a report is made to the Board of Directors, after which the Finance Division promptly makes a public disclosure of said facts or information.
Information related to decisions is forwarded via department/subsidiary internal memo to the Corporate Planning Div. or related department for approval. From there, the information is reported to the Company representative director/president, and then on to the Board of Directors for a final resolution before the timely disclosure of said information by the Finance Division.
To ensure reliability, information related to financial results (including information from consolidated affiliates) is submitted for review by the Accounting Division, Finance Division, and Corporate Planning Div. to corporate auditors and outside experts for advice and guidance. Subsequently, financial data and publication drafts are prepared and submitted for approval to the Board of Directors, after which the information is promptly disclosed to the public by the Finance Division.