Governance

Governance (Basic Views)

Basic Views

The Nisso Group (the "Group") is promoting respect for human rights and the creation of compassionate human relationships based on (our founding philosophy) "Nurturing and Bringing Out the Best in People". With the aim of creating new corporate value that can contribute to society by striving to create and establish its own unique, proprietary technologies, NISSO CORPORATION (the "Company") shall ensure the transparency of management by complying with laws and ordinances and disclosing accurate information. The Company recognizes the importance of corporate governance in order to achieve continuous improvement of corporate value, and conducts management focused on compliance. Furthermore, the Company respects the rights of shareholders, and aims to be a company that is trusted by society.

Approaches to Corporate Governance Code

[Reasons for Non-compliance with the Principles of the Corporate Governance Code]
The following is based on the revised Corporate Governance Code in June 2021. (However, it does not include the principle for the Prime Market that will be applied after April 4, 2022.)
[Supplementary Principle 2.4.1 Ensuring Diversity in Appointment of Core Human Resources]
In order to ensure diversity, the Company has promoted personnel to managerial positions by comprehensively considering their abilities and attitudes, as well as their missions and roles, regardless of their gender, nationality, or hiring route. However, due to the low proportion of female employees and the lack of business expansion overseas, the Company has not yet set measurable numerical targets.
Recognizing that ensuring diversity is an issue, the Company will continue to promote measures to secure diversity and consider the formulation of its targets.
[Disclosure Based on the Principles of the Corporate Governance Code]
The following is based on the revised Corporate Governance Code in June 2021. (However, they do not include the principles for the Prime Market that will be applied after April 4, 2022.)
[Principle 1.4 Cross-Shareholdings]
In principle, the Company shall not hold cross-shareholdings, except in cases where the significance and rationality of strategic holdings are recognized for the purpose of improving corporate value over the medium to long term. In addition, the Company shall sell shares that it holds, taking into consideration their impact on the market, if the significance and rationality of the holdings have decreased.

Under this policy, no listed shares were held as of the end of September 2021.

Regarding the exercise of voting rights pertaining to cross-shareholdings, the Company shall determine to vote for or against each proposal from the viewpoint of whether or not it will contribute to the enhancement of the corporate value of the Group and issuing companies. The proposals considered to be particularly important are as follows:

①Appropriation of Surplus ②Election of Managing Directors/Audit & Supervisory Board Members
③Organizational Restructuring ④Takeover Defense Measure Proposal etc.

[Principle 1.7 Related Party Transactions]
The Company does not conduct related party transactions in principle, but in cases where they are carried out, in order to ensure that related party transactions do not harm the interests of the Company and the common interests of its shareholders, in accordance with laws and ordinances, the "Regulations of the Board of Directors", and the "Related Party Transaction Management Regulations", and with the consent of the Audit & Supervisory Board Members, the Company shall obtain approval from the Board of Directors. Furthermore, the Company periodically investigates the status of the transactions on a yearly basis, in addition to reporting and receiving approval for such transactions at the first Board of Directors' Meeting held at the beginning of each fiscal year.

[Supplementary Principle 2.4.1 Ensuring Diversity in Appointment of Core Human Resources]
1) Ensuring Diversity
In order to respond to the rapid changes in society and industrial structures, the Company aims to increase overall added value as a company by creating a work environment where diverse employees, including women, the elderly, foreign nationals, and people with disabilities can flourish.
As of the end of November 2021, the ratio of core human resources in managerial positions was 2.5% for female employees, 0.8% for foreign nationals, and 83.2% for mid-career hires.
2) Human Resources Development Policy for Ensuring Diversity, Internal Environment Improvement Policy, and Implementation Status
At the Company, believing in the potential of each person and bringing out such potential are thoughts that have been consistently included in its philosophy since its foundation, and they are fundamental concepts for promoting human resources development. The Nisso Group will develop human resources who challenge all possibilities in all fields in order to achieve sustainable business growth and realize a sustainable society.
・The Group provides educational opportunities that aim to improve the growth and engagement of each employee
・The Group provides educational opportunities in response to social changes so that diverse human resources can play an active role in a diverse society
・By providing educational opportunities, the Group fosters independence and willingness to take on challenges, and supports the realization of career visions
Please refer to the Company's CSR Report for details and the status of implementation of the policy.
Japanesehttps://www.nisso.co.jp/ir/esg/esg_13.html 
Englishhttps://www.nisso.co.jp/en/ir/esg/esg_13.html

[Principle 2.6 Roles of Corporate Pension Funds as Asset Owners]
With regard to the management of reserved funds of the defined benefit corporate pension to which the Group belongs, the Company has established pension regulations/basic management policies, etc., receives periodic operational status reports from life insurance companies and trust banks, which are entrusted management institutions, and administers the appropriate operation/management of corporate pensions.

With regards to making important decisions such as the reexamination of policy asset proportions, the qualitative evaluation of management institutions, and the changes to each policy, the Personnel Division, which is the division in charge of management, after consulting with the Accounting Division, shall formulate the necessary drafts, and after receiving advisories from the Asset Management Committee, which consists of the person in charge of the Company's relevant administration/finance departments and the officer in charge of the relevant administration department, such decisions shall be made at the Board of Directors' Meetings. The Company discloses the management results of reserved funds to its employees.

Furthermore, the division in charge of management strives to enhance its expertise through the participation of various seminars.

[Principle 3.1 Full Disclosure]
(i) Management philosophy, management strategy and management plan
Under the founding philosophy of "Nurturing and Bringing Out the Best in People", the Company has formulated its management philosophy and has provided it on its web site. In addition, the Medium-term Management Plan has been explained at briefing sessions for investors, and is provided on the Company's website.

(ii) Basic views and policies on corporate governance
The Company's basic views and policies on corporate governance are as stated in I. 1. Basic Views of this report.

(iii) Policies and procedures for the determination of senior management executives/Managing Directors remuneration by the Board of Directors
Please refer to "II. 1. Organizational Composition and Operation Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods" in this report. In addition, in order to ensure fairness, transparency, and objectivity of procedures and to further enhance corporate governance, the remuneration of Managing Directors is determined by resolution of the Board of Directors, after consulting with the Nomination and Remuneration Committee, which is made up in majority by Independent External Managing Directors and an Independent External Audit & Supervisory Board Member.

(iv) Policies and procedures for the appointment/dismissal of senior management executives and the nomination of Managing Director/Audit &Supervisory Board Member candidates by the Board of Directors
The nomination of Managing Director candidates is based on the Company's management philosophy and management strategy, with consideration to business contents/scale/business environment, etc., and personnel with knowledge/experience and qualifications that can contribute to the fulfillment of the functions of the Board of Directors are selected as candidates at the Board of Directors' Meetings after consulting with the Nomination and Remuneration Committee. In addition, the nomination of Audit & Supervisory Board Member candidates is based on the selection criteria prescribed in the Auditing Standards of Audit & Supervisory Board Members, and personnel to which the Audit and Supervisory Board gives consent to are appointed as candidates.
Regarding the dismissal of senior management executives, in cases such as where it is deemed that he/she has not been able to sufficiently contribute to the fulfillment of the functions of the Board of Directors, in the same manner as in their appointment, upon consulting with the Nomination and Remuneration Committee, deliberations shall be held at the Board of Directors' Meetings, and such resolutions shall be made at the General Meetings of Shareholders.

(v) Explanations with respect to individual appointments/nominations for the appointment/dismissal of senior management executives and the nomination of Managing Director/Audit &Supervisory Board Member candidates by the Board of Directors
Regarding the individual appointments/nominations of Managing Director and Audit &Supervisory Board Member candidates, their brief career summaries and reasons for their selection are provided in the "Notice of the General Meeting of Shareholders".

[Supplementary Principle 3.1.3 Initiatives for Sustainability, etc.]
In accordance with the Group's Sustainability Policy formulated in September 2021, the Company provides Human Resources Solution Services that support the growth of companies and people, and aims to realize its mission of "Creating opportunities and hopes for people to work".
Based on its Sustainability Policy, the Group considers that it is important to contribute to society and the environment through its business, and has identified materiality (key issues) with the aim of achieving both social and corporate value. Materiality for achieving the mission is defined as "creation of a comfortable workplace", "responding to social changes and changes in industrial structures", and "strengthening of governance". In order to realize the "creation of a comfortable workplace", the Company is clarifying and improving what a rewarding workplace is in accordance with the characteristics of its business. In order to realize "responding to social changes and changes in industrial structures", the Company is investing in human capital, intellectual property, and other assets to respond to rapidly changing business environments such as diversity and DX, with the aim of changing to a business structure that is resilient to economic fluctuations. In addition, the Company has strengthened corporate governance, promoted compliance management, and established a risk management system in order to realize the "strengthening of governance".
In order to enhance the quality and quantity of information disclosure based on TCFD (Task Force on Climate-related Financial Disclosures) and other frameworks, the Group has begun efforts to achieve sustainable corporate development in accordance with its Environmental Policy formulated in June 2016. The effects of climate change include the fact that business partner factories are suspended due to abnormal weather conditions such as large typhoons and storms, which affects the working conditions of dispatching and business contracting. In addition, in order to manage risks due to climate change, the Company analyzes, evaluates and responds to risks appropriately in conjunction with the Risk-Compliance Subcommittee, which operates and manages compliance and risks in corporate activities. Furthermore, in accordance with ISO 14001, which was acquired in 2005, the Company is conducting activities with the goal of further reducing its environmental impact, taking into account the impact of its business partners. Moreover, in the environmental management system, the Company has formulated an environmental action plan with its President as top management, and has established a system to provide feedback of the results of activities back to the President.
Please refer to the Company's CSR Report for the progress of these activities.
Japanesehttps://www.nisso.co.jp/ir/esg/esg_13.html 
Englishhttps://www.nisso.co.jp/en/ir/esg/esg_13.html

[Supplementary Principle 4.1.1 Roles/Responsibilities of the Board of Directors (1)]
The Board of Directors makes important decisions on management strategies, management plans and other matters concerning the management of the Company, as well as supervising the execution of business in accordance with laws, the Articles of Incorporation, and other regulations of the Company. With respect to other matters, in order to promptly make decisions concerning the execution of business, the authority related to the execution of business is entrusted to the President, the Managing
Executive Officer, Senior Executive Officers, and Dovision Directors.

[Principle 4.9 Independence Standards and Qualifications for Independent External Managing Directors]
In selecting Independent External Managing Directors, the Company has formulated its own independence standards, as well as meeting the requirements of External Managing Directors as stipulated in the Companies Act and the independence criteria set by the Tokyo Stock Exchange.
Regarding the "Criteria for Appointment of Independent Officers" established by the Company, please refer to section II. 1. "Independent Officers" of this Report.

[Supplementary Principle 4.10.1 Appropriate Involvement/Advice of Independent External Managing Directors Through the Establishment of Independent Nomination and Remuneration Committees]
Please refer to II. 1. "Voluntary Establishment of Committees" (Supplementary Explanation) for more information.

[Supplementary Principle 4.11.1 Preconditions for Board of Directors/Audit and Supervisory Board Effectiveness]
The Board of Directors shall maintain the diversity and appropriate number of its members in order to make appropriate decisions in accordance with the Company's business domain/scale. The appointment of Managing Directors is based on the Company's management philosophy and management strategy, with consideration to business contents/scale/business environment, etc., and personnel with knowledge/experience and qualifications that can contribute to the fulfillment of the functions of the Board of Directors are selected.
A skills matrix listing the expertise and experience of each Managing Director is provided on the last page of this Report.

[Supplementary Principle 4.11.2 Preconditions for Board of Directors/Audit and Supervisory Board Effectiveness]
The Company's Managing Directors/Audit & Supervisory Board Members select candidates who can secure the time and effort required to appropriately fulfill their roles and responsibilities. In cases where Managing Directors/Audit & Supervisory Board Members concurrently serve as officers of other listed companies, the number of such positions shall be kept within a reasonable range, and the status of significant concurrent positions of the Company's Managing Directors/Audit & Supervisory Board Members are provided in the "Annual Securities Report" and the "Notice of the General Meeting of Shareholders".

[Supplementary Principle 4.11.3 Preconditions for Board of Directors/Audit and Supervisory Board Effectiveness]
For the evaluation of the effectiveness of the Board of Directors for the Fiscal Year Ended March 31, 2021, from the viewpoints of 1. Evaluation of effectiveness regarding overall management (ensuring the rights and equality of shareholders, appropriate collaboration with non-shareholder stakeholders, ensuring appropriate information disclosure and transparency, responsibilities of the Board of Directors, etc., dialogue with shareholders), 2. Substantial evaluation of the effectiveness of the Board of Directors (the size of the Board of Directors {number of personnel} and the appropriateness of the constituent members, the quality of the Board’s decision-making process, the quality of information provided to the Board of Directors), and 3. Comprehensive evaluations, the Company conducted a nominal questionnaire for all Managing Directors (including 2 External Managing Directors), and all Audit & Supervisory Board Members (including 3 External Audit & Supervisory Board Members) in April 2021. As a result, all of the items have been generally positively evaluated by all officers, and the Company recognizes that the effectiveness of the Board of Directors of the Company has been ensured. However, opinions were expressed regarding the allocation of time for deliberation proposals at the Board of Directors' Meetings and the provision of materials in advance. Based on these opinions, the Company will continue to strive to further improve the effectiveness of the Board of Directors.

[Supplementary Principle 4.14.2 Managing Director/Audit & Supervisory Board Member Training]
The Company's Managing Directors/Audit & Supervisory Board Members shall endeavor to acquire and appropriately update the knowledge deemed necessary to fulfill their roles and responsibilities, for matters such as corporate governance and compliance, and the Company shall provide opportunities for training and support of costs for such purposes. In addition, when an External Managing Director or External Audit &Supervisory Board Member assumes office, the Company shall provide opportunities for them to acquire information about its businesses, business environment, financial condition, organization, etc.

[Principle 5.1 Policy for Constructive Dialogue with Shareholders]
The Company actively engages in IR and SR activities based on the following basic policy in order to contribute to the sustainable growth and the enhancement of corporate value over the medium term by promoting constructive dialogue with shareholders and investors.

(1) Designation of management personnel, etc., regarding dialogue with shareholders
The President & Representative Director plays a central role in dialogue with shareholder and investors, and the Senior Executive Officer in charge of IR, along with the division in charge of IR assist and promote such dialogue.

(2) Initiatives for seamless collaboration within the Company
At the Company, the Accounting, Finance, Legal Affairs, Internal Auditing, and other business divisions, centering on the division in charge of IR, will work together for constructive dialogue with shareholders through the discussion, sharing and preparation of disclosure information, in addition to cooperating with the Corporate Value Enhancement Committee to ensure timely and appropriate disclosures.

(3) Initiatives to enhance means of dialogue other than individual interviews
By recognizing that the General Meeting of Shareholders is a forum for dialogue with shareholders, the Company strives to set the date and time of the General Meeting by avoiding days when such meetings are concentrated, as well as sending out and disclosing convocation notices and reports as soon as possible.
In addition, in order to help deepen the understanding of the Company, it holds Financial Results Briefings and Medium-term Management Plan Briefings for institutional investors and analysts, and conducts Company Briefings for individual investors.

(4) Initiatives for feedback of shareholder opinions and concerns
The Company has established a system for the timely reporting of IR activity reports, including opinions and concerns of shareholders and investors obtained through dialogue, to the Board of Directors, etc.

(5) Initiatives related to management of insider information
Regarding dialogue with shareholders and investors, in addition to establishing "Information Disclosure Regulations" and "Insider Trading Prevention Regulations" in order to prevent material information from being disclosed to some specified persons and to thoroughly manage material information, the Company has selected a Chief Information Officer, and strives to prevent the leakage of material information and insider trading by internal personnel.
Furthermore, the Company will refrain from dialogue with shareholders and investors for a certain period of time prior to the announcement of financial results, setting it as a "silent period".

(6) Other initiatives
In addition to regularly ascertaining the shareholder composition on the register of shareholders, the Company conducts shareholder identification surveys of those who hold substantial shares of the Company, which is utilized in constructive dialogue with shareholders and investors.

Furthermore, the Company will focus further on providing non-financial information such as business strategies and information related to ESG, etc.

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