Toyo Ink Group Basic Corporate Governance Policies
The Board of Directors of Toyo Ink SC Holdings Co., Ltd. (hereinafter referred to as the “Company”) has established the following basic corporate governance policies to contribute to the sustained growth of the Company and its subsidiaries and affiliates (hereinafter referred to as the “Group” collectively) and the improvement of their corporate values in the medium and long term.
Chapter 1: General Provisions
Article 1: Basic Ideas Concerning Corporate Governance
The Company shall continue to improve corporate governance based on the following approaches from the perspectives of sustaining the growth of the Group and enhancing its value in the medium and long term.
- Respect the rights of shareholders and make efforts to guarantee their substantial equality.
- Attempt appropriate collaborations with various stakeholders.
- Guarantee transparency by disclosing corporate information (including nonfinancial information) appropriately.
- The Board of Directors acknowledges its fiduciary responsibility to shareholders, and works to maintain and improve its functions.
- Hold constructive dialogues with shareholders that have investment policies in agreement with medium- and long-term shareholder returns.
Chapter 2: Guarantee of the Rights and Equality of Shareholders
Article 2: General Meetings of Shareholders
1. The Company shall issue the convocation notice for an Ordinary General Meeting of Shareholders at least three (3) weeks before the date of the Meeting so that shareholders can sufficiently examine the items on the agenda of the Meeting and exercise their voting rights appropriately. At the same time, the Company shall disclose the relevant convocation notice through the Timely Disclosure Network (TDnet) of the Tokyo Stock Exchange and on its official website.
2. The Company shall make efforts to prepare conditions for the exercise of voting rights by shareholders, including the practical use of a platform for the electronic exercise of voting rights.
Article 3: Guarantee of the Rights and Equality of Shareholders
The Company shall attempt to make appropriate responses for substantially guaranteeing the rights of shareholders and work to prepare conditions for the exercise of their rights. In addition, the Company shall give consideration to the substantial equality of shareholders, including foreign shareholders.
Article 4: Shareholdings Based on Policies
1. Each year, the Board of Directors shall verify the economic rationality of each one of the listed shares owned by the Company on the basis of its policies from medium- and long-term perspectives. Where the Board of Directors judges it inappropriate to hold shares of a particular company, the number of the shares owned by the Company shall be reduced, taking into consideration the conditions of the company and the market trend.
2. The Company shall exercise voting rights based on the listed shares held on the basis of its policies appropriately for each agenda item, taking into consideration points such as whether or not the agenda item concerned will contribute to enhancing the value of issuing companies in the medium and long term, whether or not the agenda item concerned will contribute to the common interests of shareholders, including the Company, and how the agenda item concerned will affect the management and businesses of the Group, both qualitatively and comprehensively. Where an issuing company has special circumstances, such as the occurrence of significant damage to its corporate value or a serious compliance violation, or where there is a concern that an issuing company may damage the corporate value of the Company as its shareholder, judgment over whether or not to approve shall be made carefully by collecting sufficient information through dialogues with the issuing company or by other means.
Article 5: Capital Policies
The Company shall calculate the capital cost accurately and disclose management targets, such as the overseas sales ratio, the operating margin, the return on equity (ROE) and the balance of interest-bearing debt, in its medium- and long-term business plans. At the same time, the Company shall implement financial strategies for their achievement, giving consideration to the balance of operating, investing and financing cash flows. In so doing, as its capital policies, the Company shall aim to enhance shareholder value in a sustained manner and realize flexible responses to business opportunities. At the same time, the Company shall adopt the basic policy of keeping an equity capital level to prepare sufficiently for sudden changes in economic conditions and the like.
Regarding shareholder returns, the Company shall attach importance to the continuation of stable dividends while working to secure business foundations that are sustainable on a long-term basis. Regarding capital policies that may cause changes in the hierarchy or large-scale dilution, the Company shall ask the Board of Directors to discuss their rationality and provide sufficient explanations to stakeholders, including shareholders and investors.
Article 6: Related Party Transactions
The Board of Directors shall keep watch on transactions with related parties so that such transactions will cause no harm to the interests of the Group and the common interests of shareholders.
Chapter 3: Appropriate Collaboration with Stakeholders
Article 7: Rules for Corporate Behavior
The Company shall establish the Toyo Ink Group Business Conduct Guidelines that outlines the basic approaches and behaviors sought from Group employees based on the Toyo Ink Group's Corporate Philosophy System, which consists of three (3) elements: corporate philosophy, corporate policies and guiding principles. The Board of Directors shall review the status of the Standards' practice on a periodic basis.
Article 8: Relationships with Stakeholders
The Company shall aim to realize customer satisfaction (CS), respect for the diversity of employees (ES), coexistence with society (SS) and improved shareholder satisfaction (SHS), and work to enhance the value of the Group in compliance with the Toyo Ink Group Business Conduct Guidelines prescribed in the foregoing Article.
Article 9: The Whistle-Blowing System
1. Sections within the Company or external offices shall promptly submit reports on directors or operating officers that they receive on the basis of the Company's whistle-blowing system to the Audit & Supervisory Board.
2. The Company shall protect individuals who submit reports based on the whistle-blowing system stated in the preceding paragraph in accordance with the company regulations on whistle-blowing.
Chapter 4: Corporate Governance Structure
Article 10: Roles of the Board of Directors
1. The Board of Directors shall make management decisions for the entire Group, including a strategic course chosen for the entire Group, and supervise the execution of duties by directors and operating officers. In addition, the Board of Directors shall make preparations for raising the levels of internal control systems in a bid to link their improvement to the enhancement of corporate value.
2. Directors and Audit & Supervisory Board Members shall evaluate the functions of the Board of Directors once a year. In addition, directors and Audit & Supervisory Board Members shall ask a third party to evaluate the Board of Directors as required.
Article 11: Composition of the Board of Directors
The Board of Directors shall consist of an appropriate number of people within the number prescribed in the Articles of Incorporation, taking diversity and expertise into consideration. At least two (2) members of the Board shall be independent outside directors who conform to the standard for independence established separately by the Company.
Article 12: Composition of the Audit & Supervisory Board
The Audit & Supervisory Board shall consist of a number of people required to guarantee the effectiveness of audits within the number prescribed in the Articles of Incorporation. At least half of the Outside Audit & Supervisory Board Members shall conform to the standard for independence established separately by the Company. At least one (1) individual with an appropriate knowledge of finance and accounting shall be appointed as an Audit & Supervisory Board Member.
Article 13: Advisory Committee
The Company shall establish a voluntary Advisory Committee, chaired by an Outside Director. The Advisory Committee shall be available to the Board of Directors for consultation regarding the process of nominating Directors and Audit & Supervisory Board Members, and other details such as executive remuneration, and shall discuss the appropriate course of action.
Article 14: Training
The Company shall provide the training and information required by directors and Audit & Supervisory Board Members to perform their roles and functions appropriately.
Chapter 5: Dialogues with Shareholders
Article 15: Dialogues with Shareholders
The Company shall hold dialogues with shareholders based on its policies for establishing systems and taking actions for promoting constructive dialogues with them. The details of such dialogues shall be shared among directors by means including their reports to the Board of Directors on an as-required basis.
Chapter 6: Other Provisions
Article 16: Supplementary Provisions
The Board of Directors may revise or abolish these Basic Policies.
(Established in November 9, 2015, Revised in December 14, 2018)