Management
Corporate Governance
- Corporate Governance System
- Outside Directors
- Outside Audit & Supervisory Board Members
- Officers' Remuneration Committee
- Internal Control System and Operational Audit
- Tax Policy
- Operation of Group Companies
- Employee Initiatives
The company considers corporate governance to be an important management task, and focuses on the following points:
- ・Developing an efficient organization and internal rules
- ・Ensuring management transparency
- ・Strengthening internal controls
- ・Disclosing information timely and accurately
Corporate Governance System
The Board of Directors consists of 9 members, of whom 5 are
Outside Directors with a wealth of corporate management experience and exceptional
insight.The company discusses and decides the execution of operations at the Board of Directors'
Meeting and the Managing Directors' Meeting, which are each held at least once a month. The
Board of Directors deliberates and makes resolutions on important management matters,
including decisions on basic
principles of the company and matters requiring resolution by law and the Articles of
Incorporation. The Managing
Directors' Meeting deliberates and makes decisions on general business matters (excluding
matters to be discussed at
Board of Directors meetings) in order to ensure prompt and efficient execution of business
operations.
In addition, we listen to individual opinions from Outside Directors on the overall
effectiveness of the Board of Directors on an annual basis, and the Outside Directors
evaluate whether our Board of Directors has maintained its effectiveness. This also allows
us to obtain valuable opinions on such issues as "board meetings agenda and further enhancement of discussions" and " responsibilities and roles of outside officers” etc.As stated above, the Board of Directors is functioning properly. In addition, the results of
the self-evaluation and analysis of the Board of Directors show that the effectiveness of
the Board has been maintained as a whole, and that it is fulfilling its functions
sufficiently.
The company has adopted an Audit & Supervisory Board system. The Audit & Supervisory Board
is composed of 4 members, including 3 Outside Audit & Supervisory Board Members.
The Audit & Supervisory Board shall make decisions on matters such as audit policies and plans, the status of establishment and operation of internal control systems (including confirmation of the status of internal control of the corporate group), the selection, dismissal, or non-reappointment of the accounting auditors, consent regarding their compensation, etc., and the content of the audit report.
The Audit & Supervisory Board Members attend the Board of Directors' Meetings, Managing Directors'
Meetings, and other important internal meetings. In addition, they audit the business
execution of the directors and corporate officers through web conferencing audits and other investigations of
business
sites and subsidiaries, and reviewing the reports submitted by the directors and employees
on the status of the execution of their duties.
The Audit & Supervisory Board Members also
receive reports and explanations on financial audits from the accounting auditors and
exchange opinions with them on a quarterly basis. Furthermore, they regularly receive
reports and explanations regarding the status of internal audits from the Auditing
Department and exchange opinions.
In addition, Shin-Etsu Chemical has an executive
officer.
Corporate Governance System at Shin-Etsu Chemical
As of June 29, 2023
- ※Sustainability Committee, Risk Management Committee, G Committee, etc.
Directors' specialties and areas of involvement
As of June 29, 2023
Outside Directors
The company welcomes 5 Outside Directors for the purpose of boosting the advisory and supervisory functions of management from an independent perspective. We have received advice on growth strategies and the enhancement of governance from Outside Directors. We believe these points are important for our continued sustainable growth.In June 2023, we invited Mariko Hasegawa as an Outside Director which aims to contribute to the sustainable development of human society and its quality improvement. By further promoting diversity in the Board of Directors, we aim to further enhance the diversity of perspectives and link this to the evolution of management and business.
Outside Director List
As of June 29, 2023
Toshihiko Fukui
Former Governor, the Bank of Japan;
President, The Canon Institute for Global Studies;
Outside Director, Kikkoman
Corporation
>Outside Director Message
Hiroshi Komiyama
Former President, The University of Tokyo;
Chairman, Mitsubishi Research Institute, Inc.
>Outside Director Message
Kuniharu Nakamura
Chairman, Sumitomo Corporation;
Outside Director, NEC Corporation
Michael H. McGarry
Chairman, PPG Industries, Inc.
Outside Director, United States Steel
Corporation
Mariko Hasegawa President of Independent Administrative Agency, the Japan Arts Council
Outside Audit & Supervisory Board Members
The company appoints 3 Outside Audit & Supervisory Board Members for the purpose of boosting advisory and supervisory functions on management from an independent perspective. They audit the company's management as experts in their respective fields from a broad point of view. Audits by the Outside Audit & Supervisory Board Members contribute to the company's compliance system.
Outside Audit & Supervisory Board Member List
As of June 29, 2023
Yoshihito Kosaka
Certified Public Accountant;
Representative partner, HIYU Certified TAX Accountant’s Corporation;
Outside Audit & Supervisory Board Member, ASTMAX Co., Ltd.;
Outside Audit & Supervisory Board Member, OXIDE Corporation
Mitsuko Kagami
Lawyer, Kagami Law Offices;
Outside Director, Medipal Holdings Corporation;
Outside Director, Sotetsu Holdings, Inc.
Hiroko Kaneko
Outside Director/Audit & Supervisory Committee Member, Mitsubishi
HC Capital Inc.
Outside Director, The Yokohama Rubber Co., Ltd.
Outside Director/Audit & Supervisory Committee Member, Kanagawa
Chuo Kotsu Co., Ltd.
Outside Audit & Supervisory Board Member, Development Bank of Japan Inc.
Officers' Remuneration Committee
The company established the Officers' Remuneration Committee to review and evaluate
the transparency and
validity in the process of determining Directors' remuneration, nominating candidates for
Executives, Directors, and
Audit & Supervisory Board Members, and others. The committee is chaired by Outside Director
Toshihiko Fukui and consists of 4 Directors, including 3 Outside Directors.
The committee is convened by regular meetings biannually and conference calls as required.
The committee reviews and
evaluates the remuneration of Directors, and deliberates on the nomination of candidates for
Directors and Audit &
Supervisory Board Members, and advises the Board of Directors.
Officers' Remuneration Committee Members
Chairman: Toshihiko Fukui
Member: Hiroshi Komiyama, Outside Director
Member: Michael H. McGarry, Outside Director
Member: Yasuhiko Saitoh, Representative Director-President
Internal Control System and Operational Audit
The company has formulated a "Basic Policy on Internal Controls" to help put in place
"structures to ensure that the execution of duties by Directors is fully compliant with
relevant legislations and the articles of incorporation, and structures to ensure the
appropriateness of business operations within the corporate group, which consists of its
subsidiaries, this corporation, and other corporate business," as stipulated by the
Companies Act and an Ordinance of the Ministry of Justice. Our internal control system is
structured and implemented in accordance with the above policy. We review it constantly and
endeavor to make it more appropriate and efficient.
The Auditing Department, which is a dedicated department, conducts operational audits of each department from the perspective of legality and rationality of business activities, and evaluates the status of development and operation of internal controls related to financial reporting from an independent standpoint. The results are reported directly to Directors, including the Representative Director, and Outside Audit & Supervisory Board Members.
Policy on tax payments and tax-related initiatives
In its business principle, the Group states that it strictly complies with all laws and
regulations and conducts fair
business practices. Each and every Group employee performs their daily work duties sincerely
based on this.
We believe that it is our social responsibility and one of our contributions as a company to
properly pay taxes for the
profits in accordance with the laws and regulations of the countries and regions in which we
operate. As part of our
efforts to this end, we strive to instill and raise awareness of tax compliance and provide
education, especially for
employees involved in tax affairs, to improve their tax knowledge and practical skills. For
important tax issues, we
consider the appropriateness of tax treatment while receiving appropriate advice from
experts, and strive to file
appropriate tax returns based on the laws and regulations of each country. We also place
importance on maintaining good
relationships with the tax authorities in each country by dealing with them in good
manner.
We do not engage in any
business activities for the purpose of tax avoidance.
The total corporate income tax paid in FY2022 was 266.8 billion yen for consolidated
companies.
The breakdown by region is as follows: Japan 128.6 billion yen, the U.S. 126.1 billion yen,
Europe 5.0 billion yen, and
Asia-Oceania 7.1 billion yen.
Operation of Group Companies
The company aims to develop the whole Group by supporting and respecting the autonomy of the Group companies. Group companies are managed based on the "Shin-Etsu Chemical Group Company Operational Regulations." The 99 consolidated subsidiaries conduct prior consultation and report on the following projects.
- (1) Prior consultation example
Capital increase or decrease, mergers, dissolutions, and amendments to the articles of incorporation
New business and capital investment plan
Transfer or acquisition of business
Appointment, dismissal, or transfer of officers and seconded executives - (2) Reporting example
Operations review
Financial results
Risk information identified by Group companies
Important information such as deficiencies in internal control Furthermore, by holding meetings that are attended by the presidents of our main Group companies at least once a year, we actively promote the sharing and exchange of information among Group companies.
Employee Initiatives
Ms. EH,
Corporate Governance department,
S.E.H Europe (UK)
1.Please tell us about your current responsibilities.
I work in the corporate governance department of SEH Europe. After joining, the company provided me the opportunity to study at the UK Corporate Governance Institute (UKICGI) for 4 years to become a Chartered Company Secretary and Governance Professional.
As a Senior Advisor, my primary responsibility is co-ordinating and reporting on the audits for the internal financial fraud control system (JSOX) under the Japanese Financial Instruments and Exchange Act. I am also responsible for ensuring the company is operating in a way that is legally and ethically compliant and in accordance with corporate regulations and Environmental, Social & Governance (ESG) initiatives. This involves monitoring and reporting on various areas such as modern slavery, anti-bribery and corruption, gender pay gap, data protection, and stakeholder relations. I have also been provided the opportunity to train as an auditor in other functions of the business such as quality and safety, which has allowed me to gain experience and better understanding of the company as a whole.
2. Please tell us about S.E.H Europe's corporate governance and overall ESG initiatives.
The Shin-Etsu Group is a member of the United Nations Global Compact and is committed to contributing to the United Nations Sustainable Development Goals (SDGs). We work with various stakeholders to promote our Basic Sustainability Policy. One area we are particularly committed to encouraging, supporting and promoting is activity that benefits the local community. Through our Healthy Working Lives Committee, we support career days at local schools and colleges to get students interested in our industry. We also donate to local food banks, help Ukrainian refugees, and assist with conservation of the land and wildlife on our site.
By regularly reviewing our sustainability framework, including our Corporate Code, Code of Conduct, Ethics and Compliance Statement, Modern Slavery Statement, Gender Pay Gap Analysis, and Promoting Diversity, we ensure that decisions are made in a manner that promotes high standards of business conduct and good governance.
3. Are there any issues in promotion of diversity?
Women in male dominated industries face a set of challenges that our male counterparts do not. Other minority groups can experience further challenges such as discrimination, stereotyping and micro-aggressive behaviors within the workplace. Awareness of these challenges has been increasing in recent years as we see a progressive shift in companies to adopt diversity initiatives and introduce inclusive policies and practices that support a diverse workforce to excel in their roles. However, the burden of implementing these new measures is disproportionately assigned to the minority groups rather than the entire workforce. We all have a responsibility to educate ourselves and others, to listen to diverse voices, recognise our own internal biases, and take action where improvements towards gender equality need to be made. I am confident that by maintaining pressure as a society, equality and inclusivity can be achieved.
4. What do you plan to focus on in corporate governance and sustainability initiatives in the future?
At a regulatory level, we have been noticing stricter auditing standards from our external auditors in the past couple of years. As the demand for enhanced auditing transparency is increased, this will involve more from us to meet the requirements.
As the demand for change from stakeholders increases, ESG will continue to be an important part of corporate governance strategies. While much of previous ESG attention has been concentrated on climate change mitigation and social initiatives, I think we will see a broadening of focus into governance plans.
The corporate governance landscape in the UK is constantly evolving so it is important to remain aware of key governance issues being discussed at the government level and prepare for upcoming changes before they occur.
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