Summary of Corporate Governance

Strengthening Corporate Governance

The Teijin Group realizes that its basic mission as a company is to ensure sustainable growth in shareholder value. On this basis, in order to fulfill our responsibilities to other various stakeholders, we are striving to strengthen corporate governance. We have implemented a series of groundbreaking management reforms relating to basic elements of corporate governance with the aim of enhancing transparency, ensuring fairness and objectivity, and accelerating decision-making. These reforms include establishing the Advisory Board, a system for appointing independent outside directors, and separating frontline management and monitoring/auditing functions. Together with these reforms, the Teijin Group Corporate Governance Guide was published to specify guidelines regarding corporate governance.

Corporate Governance System (As of June, 2018)

Promoting Compliance and Risk Management

The Teijin Group comprehensively manages/controls compliance and risk management, both of which are essential for effective internal control.

In compliance, we believe it is important that all directors, officers and employees act with integrity based on the ethics and values requested of members of the enterprise and society. To ensure this, we have formulated the Code of Conduct, the Corporate Standards of Conduct, and the Regulations for Teijin Group Corporate Ethics, and we are promoting greater group-wide awareness of these policies through training and education at all workplaces.

In risk management, we believe it is essential that the various risks and uncertainties faced by the whole Teijin Group be dealt with through comprehensive and efficient assessment/management of the risk. We have introduced the Total Risk Management (TRM) Committee alongside the Board of Directors to accelerate group-wide decision-making that effectively counters business operating and management strategy risk that may arise. Additionally, we are promoting establishment of business continuity plans so that we can protect ourselves from loss of corporate value in emergencies, such as accidents and disasters, by preventing interruption of our business activities or by quickly restoring the activities if interrupted.

Internal Control

The internal control system was established and is operated and improved according to annual decisions made by the Board of Directors regarding its functioning.

An internal control report is also submitted every year. In accordance with the Financial Investments & Exchange Act, this report includes the opinions of an accounting auditor regarding system maintenance/operating status and helps to ensure the reliability of financial reporting.

In addition, an internal auditing body under the direct control of the CEO has been established in order to increase the effectiveness of our internal control activities.

Separation and Strengthening of Decision-making, Internal Operation and Monitoring/Supervision Roles

Our articles of incorporation limit the size of Teijin Limited’s Board of Directors to ten members with the goal of realizing quick decision-making and clear accountability. We have also introduced a corporate officers’ system and delegated considerable authority and responsibility to corporate officers. We have established the Group Strategy Committee and Group Management Committee as bodies deliberating on decision-making of the CEO to ensure quick and highly transparent decision-making processes in the presence of full-time Statutory Auditors.

Four of the directors are independent individuals appointed from outside the Group. To separate responsibilities for monitoring/supervision and those for internal operations, the Teijin Limited Chairman of the Board (counselor or outside director in the case that the chairman in absent) is not involved as a corporate officer.

The Board of Statutory Auditors consists of five members and is in charge of overseeing and auditing management. The majority (three) of the Statutory Auditors are independent and appointed from outside the Group to ensure outward transparency in management. Additionally, we have established the Committee of Teijin Group Statutory Auditors (which meets once every two months) consisting of statutory auditors of Teijin Limited and core group companies and other members. Through sharing of group auditing policy and auditing information, this board, which integrates management of the group, seeks to increase the effectiveness of group-wide monitoring/auditing and maintain a fair auditing system.

Advisory Board

The Advisory Board is a consultative body to the Board of Directors. It is comprised of five to seven Japanese and non-Japanese outside experts, the chairman or a senior advisor, and the CEO of Teijin Limited. Its role is to give advice/make proposals regarding corporate strategy and results, and function as the Nomination and Compensation Committee in deliberating on matters such as a change of CEO and the successor, and the performance evaluation and standards of remuneration for directors.