In parallel with the development of a structure capable of responding quickly to changes in the management environment, we have positioned efforts to ensure a ready and robust management and administration structure is in place as a priority issue, with an eye to enhancing strict regulatory and ethnical compliance, as well as management transparency, from a stockholder-oriented perspective.
Regarding relationships with stakeholders, our position is outlined in the following four items from the Company’s Code of Conduct.
- Shareholders: All employees, including directors and other officers, place emphasis on the disclosure of information to shareholders and other investors, striving for appropriate disclosures and to gain both understanding and trust of the Company’s business activities.
- Clients: All employees, including directors and other officers, contribute to stable production in the agricultural industry through the Company’s mainstay products, agricultural chemicals, while also striving to contribute to the safe and reliable production of agricultural goods.
Business partners: All employees, including directors and other officers, respect the social position and rights of the Company’s business partners; accordingly, we maintain sound relationships with business partners, conducting business transactions based on contracts in compliance with both the law and customary business practices.
All employees: To the greatest extent possible, the Company provides opportunities for skill development and self-actualization for all employees.
Guided by the four items above, we will seek to foster a corporate culture that continues to respect the standpoint of our stakeholders, while ensuring a robust internal structure is in place to support this effort.
Matters Regarding Functions Related to Business Execution, Audit and Supervision, Nomination, and Compensation Decisions (Overview of Present Corporate Governance Structure)
The Company’s management and administration organization consists of the Board of Directors, the Full-time Executive Committee, and the Management Committee, for a structure in which business execution occurs based on the respective decisions and deliberations of these organizations.
the Board of Directors consists of 10 directors responsible for important decision-making regarding business execution; meetings are also attended by the outside auditors, with a view to strengthening their management check function.
the Full-time Executive Committee consists of full-time executives and is responsible for decision-making regarding business execution; as a rule, the committee meets twice monthly.
The Management Committee consists of directors with executive duties and engages in deliberations regarding important management strategy and business execution; the committee meets on an as needed basis.
The Company has not elected any outside directors. However, full-time corporate auditors (outside auditors and independent executives), in addition to attending meetings of the Board of Directors, the Full-time Executive Committee and the Management Committee, also attend other important internal meetings in an effort to strengthen audit functions regarding business execution. the Board of Directors, the Full-time Executive Committee, and the Management Committee, as stipulated by internal regulations, determine the criteria for their respective decision-making regarding business execution, operate within these parameters, and conduct business execution based on these decisions. Consequently, the Company has determined that each of these organizations has a structure that adequately retains management check functions.
the Board of Corporate Auditors of Kumiai Chemical Industry consists of four corporate auditors, three of whom are outside auditors. In addition to attending meetings of the Board of Directors, the corporate auditors conduct audits of each business department and business site based on audit plans determined by the Board of Corporate Auditors. In an effort to ensure proper communication during audits, audit readiness status and management information are shared between corporate auditors.
The three outside auditors are as follows. The Full-time Corporate Auditor, Isao Fujiwara possesses both a wealth of experience at financial institutions and wide-ranging knowledge and insight. The Corporate Auditor, Shozo Kubo is the General Manager of the Planning Division of Agricultural Production & Sales of the National Federation of Agricultural Cooperative Associations (JA), one of the Company’s leading shareholders and an important business partner. Kubo has many years of experience at JA, as well as wide-ranging knowledge and insight. The Corporate Auditor, Tetsuhiro Maeda is General Manager of the Consumer Living Division of JA Shizuoka Keizairen, one of the Company’s key shareholders and an important business partner. Maeda has many years of experience at JA Shizuoka Keizairen, as well as wide-ranging knowledge and insight.
The Company has no special provisions regarding independence in the election of outside auditors. Nevertheless, with respect to audits, outside auditors are expected to function and serve in a capacity that reflects their high level of expertise and practical experience, and to apply their wide-ranging knowledge and insight in an objective and fair manner. The Company’s basic approach is to elect individuals who present no risk of a conflict of interest with general shareholders.
Refer to “Status of Coordination among Corporate Auditors, the Accounting Auditor, and the Internal Audit Department” and “Support Structure for Outside Directors (Outside Auditors)” for details regarding the status of measures for enhancing the capacity of the corporate auditors.
Company has an auditing agreement with the accounting auditor, Fuyou Audit Corporation to conduct audits pursuant to Japan’s Companies Act and Financial Instruments and Exchange Act.
The Certified Public Accountants responsible for conducting accounting audits of the Company are Atsushi Muramatsu and Nobuyuki Suzuki. (Because the number of years of continuous audit involvement is less than seven years, other information has been omitted.)
Rationale for Selection of the Current Corporate Governance Structure
Full-time corporate auditors (outside auditors and independent executives), in addition to attending meetings of the Board of Directors, the Full-time Executive Committee, and the Management Committee, also attend other important internal meetings in an effort to strengthen audit functions regarding business execution. The Board of Directors, the Full-time Executive Committee, and the Management Committee, as stipulated by internal regulations, determine the criteria for their respective decision-making regarding business execution, operate within these parameters, and conduct business based on these decisions. Consequently, the Company has determined they have it has a structure that adequately retains management check functions.
Basic Approach and Readiness Status Regarding Internal Control System
Based on a new corporate culture of “The Beneficial Company”, the Company is moving boldly forward with business activities guided by a basic policy that calls for transforming its mindset, systems and structures, conducting lean management, aligning vectors, and improving both sustainable growth and corporate value. To this end, we are addressing the following four fundamental issues:
(1) Continuous sales and profit expansion through market entrenchment and cultivation, (2) Promoting a lean management structure through “mind, technology and body” transformation, (3) Developing products and technologies that meet client’s needs and wants, and (4) Robust corporate governance.
Each division is breaking these four issues down into more detailed points that each will strive to effectively address.
Regarding the readiness status of the Company’s compliance structure, we have set up a Compliance Coordination Office, which serves as the secretariat for an established Compliance Committee. The Compliance Committee formulates the Company’s Conduct Charter and Code of Conduct and is responsible for promoting thorough awareness of the Company’s approach to corporate ethics and legal compliance among all employees. It is also responsible for related disclosure on the Company’s website. Also with respect to compliance, the Company developed and operates an internal reporting system for hearing reports and requests for consultations received through the Compliance Coordination Office and outside attorney lines (helpline contact points). The corporate auditors and the Compliance Coordination Office simultaneously and independently conduct audits as part of the Company’s internal control system.
Regarding the execution of duties, pursuant to internal regulations (regulations governing the division of duties, occupational systems, etc.), the Company has defined both occupational authority and decision-making processes, with a system in place that enables the appropriate and efficient execution of duties. In the event of changes to divisional duties, the Company has a system in which the Full-time Executive Committee deliberates key matters regarding changes to regulations governing the division of duties.
Regarding the readiness status of the risk management system, the Company has drafted “Regulations Governing Management-related Risk Management”. When management risks arise that could hinder achievement of the Company’s management objectives, regulations call for the establishment of a Risk Countermeasures Headquarters to formulate steps to counter risks. Where environmental risks are concerned, risk management is conducted based on an ISO 14001 environmental management system.
Concerning information management systems, pursuant to regulations governing document management, each division has an officer responsible for document management. Regulations stipulate the prescribed storage period for documents based on document type. For all relevant documents, the Company has a system for responding immediately to requests to view documents from directors and corporate auditors.
When necessary, the Company receives legal advice from advising attorneys regarding important matters.