Independent Director and Independent Statutory Auditor Requirements

Teijin Limited Independent Director and Independent Statutory Auditor Requirements

On April 1, 2003, Teijin Limited (the Company) prescribed "Requirements for Independent Directors" for outside directors, including candidates. These conditions for appointment are designed to increase the level of precision and ensure the transparency of the management supervisory function of the Board of Directors. At the same time, the Company also prescribed "Requirements for Independent Statutory Auditors," which covers outside corporate auditors and candidates. These requirements are intended to enhance the precision and transparency of the auditing of duties of internal directors and the management team. With regard to independent director and independent statutory auditor requirements, the Company has formulated and operates regulations concerning independent directors and independent statutory auditors of its own accord. The primary content of these requirements is described below.

  • Note:
    Hereinafter, the "Teijin Group" is used to refer collectively to 1) "Teijin Limited," 2) "subsidiaries of Teijin Limited" and 3) "equal joint venture partners."

Independent Director and Independent Statutory Auditor Requirements

  • (1)
    Persons having no significant special interests in the Teijin Group.
  • (2)
    Persons to whom items (a) through (e) below do not apply are deemed to be Independent Directors or Independent Corporate Auditors having no significant special interest in the Teijin Group.
    • (a)
      Internal officers or employees and former internal officers or employees of the Teijin Group
    • (b)
      Providers of specialized services to the Teijin Group
    • (c)
      Persons having customer or business partner relations with the Teijin Group
    • (d)
      Persons having "inter-directorship" relations with the Teijin Group
    • (e)
      Persons having other special interests in the Teijin Group

Detailed Internal Standards Concerning Persons Falling under Items (a) through (e) Above

Applicability of the category

  • (a)
    Internal officers or employees and former internal officers or employees of the Teijin Group
    • (1)
      In the event that the person does not satisfy the requirements under Company Law (Please refer to Company Law, Article 2, Paragraph 1, No. 15 and 16) for outside director or outside Statutory auditor of Teijin Limited
    • (2)
      In the event that the person is a director of an "equal joint venture company," (including persons defined as "management executives" in Note 1 below) or has held such a position within the past five years
    • (3)
      In the event that a member of the person´s "family" (Note 2) is currently a director of the Teijin Group (including persons defined as "management executives")
  • (b)
    Providers of specialized services to the Teijin Group
    • (1)
      In the event that the person or the person´s "family" provides accounting audit services to the Teijin Group or has done so within the past five years, or in the event that the person or the person´s "family" is currently a member of an outside auditing firm that provides accounting audit services to the Teijin Group or has been a member of such a firm within the past five years
    • (2)
      In the event that the person or the person´s "family" provides, or has provided within the past three years, services other than accounting services that involved compensation of more than 7 million yen (or US$60,000) and fall into the following categories:

      (i) Lawyers, (ii) certified public tax accountants, (iii) chartered patent agents, (iv) judicial scriveners, (v) management, financial, technical or marketing consultants

  • (c)
    Persons having customer or business partner relations with the Teijin Group

    In the event that the person currently holds the position of Director or any of "Executives and top managers" (Note 4) in a company or other for-profit organization in Japan or overseas that is presently a "major customer or business partner" (Note 3) of the Teijin Group

  • (d)
    Persons having "inter-directorship" relations with the Teijin Group
    • (1)
      In the event that the relationship exists wherein the outside director currently holds the position of director in a company in Japan or overseas or holds a position in a for-profit organization that is equivalent to the director position, and a director of the Teijin Group currently holds a director or equivalent executive position in that same organization
    • (2)
      In the event that the relationship exists wherein the outside statutory auditor holds a director position in a company in Japan or overseas or an equivalent executive position in a for-profit organization, and a director or statutory auditor of the Teijin Group currently holds a director,statutory auditor or equivalent executive position in that same organization
  • (e)
    Persons having other special interests in the Teijin Group
    • (1)
      In the event that the person currently receives contributions, financing or debt guarantees from the Teijin Group
    • (2)
      In the event that the person´s "family" currently receives contributions, financing or debt guarantees from the Teijin Group amounting to 1 million yen or more
    • (3)
      In the event that the person or the person´s "family" currently holds the position of Director or any of "Executives and top managers" (Note 4) in a company or for-profit organization in Japan or overseas that currently receives contributions, financing or debt guarantees from the Teijin Group amounting to 1 million yen or more

The terminology used above is defined below.

  • Note 1:
    "Management executives" are employees who hold positions of importance, including operating officers, senior officers or positions higher than general manager.
  • Note 2:
    "Family" includes spouses, children, people sharing the same household and other persons related by blood or marriage within two degrees of consanguinity
  • Note 3:
    "Major customer or business partner" describes a person or an entity whose total annual transaction relationship, either as a seller or a purchaser, has exceeded 2% of consolidated net sales at any time within the past three years. (If the Teijin Group is the seller, this amount refers to the percentage of consolidated net sales of Teijin Limited. If the Teijin Group is the buyer, this amount refers to the percentage of consolidated net sales of the other party.)
  • Note 4:
    "Executives and top managers" are employees, counselors or advisors who hold positions of importance, including auditor, operating officer or positions higher than general manager.

This "Teijin Limited Independent Director and Independent Statutory Auditor Requirements" document is intended as a reference to help deepen the reader´s understanding of the Teijin Group. This document is an overview of the Independent Director Regulations and Independent Statutory Auditor Regulations as prescribed by the Company and is not a rigorously defined record of these regulations, Company Law or any other legislation.