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Corporate Governance and Compliance

Guided by our Corporate Vision, we at Kaneka aim to fulfill our corporate social responsibility and achieve good corporate governance, which will allow us to provide shareholders and investors with sustained corporate growth and improved corporate value over the medium and long term, while maintaining good relationships with our stakeholders, including our customers, the communities where we operate, our business partners, and our employees.

K KANEKA
J JAPAN
W WORLDWIDE

Corporate Governance Structure

  

(1) Basic Principles of Corporate Governance

The Board of Directors, on behalf of the shareholders, is responsible for the company's sustainable growth and for increasing corporate value in the medium to long term through efficient and effective corporate governance. The Board of Directors exercises its oversight functions on overall management to ensure fairness and transparency, as well as appoint management positions, evaluate and determine remuneration, evaluate serious risks and determine strategies to counter them, and make the best decisions on important business operations.

(2) Corporate Governance Structure

We currently have two independent external directors and two independent external auditors. Since both the overseeing of business operations by the Board of Directors and auditing by the Board of Auditors are functioning well, Kaneka has chosen to be a Company with Board of Auditors under the Companies Act.
The Board of Directors makes resolutions on important matters related to the management of the Kaneka Group after deliberation by the Management Committee, which includes the president. There are at most 13 board members. Of these, two are independent external directors to strengthen the oversight function. Directors serve for a period of one year to clearly define management responsibilities.

(3) Internal Audit

Auditors and the Board of Auditors, on behalf of the shareholders, are responsible for ensuring healthy and sustainable corporate growth, and for establishing a structure with good corporate governance that can gain social trust by checking on the performance of directors in regard to their duties. The Board of Auditors comprises four members, two of whom are independent external auditors in principle, and performs audits in coordination with the Accounting Auditor and the CSR Division's Internal Control Department. Auditors are given a space to periodically exchange views with the president, and monitor the state of business operations at least once a year, by attending key meetings of the Board of Directors and those of the Management Committee, which decides on the implementation of important matters, and division head meetings.
Moreover, independent external director's meetings are held and an appointment and remuneration advisory committee will be created as an ad-hoc committee to make full use of independent external directors.
Kaneka has adopted the executive officer system to separate the oversight function of directors from the implementation function of business operations, which also facilitates decision-making and clearly defines roles. The Board of Directors decides on key management strategies and business operations of the entire Kaneka Group, while executive officers handle business operations in their respective areas of responsibility.
Division heads, as well as executive officers appointed by the Board of Directors, exercise extensive authority over daily operations. However, directors handle several divisions to ensure overall coordination and hold monthly division head meetings to enable the directors and auditors to directly hear progress reports from each division head. The Internal Control Department of CSR Division evaluates the effectiveness of internal control and conducts an internal audit.

(4) Corporate Governance and CSR

Chaired by the president, the CSR Committee was established to ensure that we adhere to laws and regulations, are accountable to our stakeholders, and are engaged in activities that contribute to sustainable social progress. The CSR Division was created in April 2015 as a division that directly reports to the president to reinforce CSR initiatives.

■ Corporate Governance Structure

Corporate Governance Structure

Compliance

  

Compliance with relevant laws and regulations is important to our corporate management as well as to all directors and employees at the Kaneka Group.
Our corporate Intranet provides ready access to our Compliance Guidebook, which provides a clear explanation of our Ethical Code of Conduct as well as the laws and regulations to be observed by all of our directors and employees. Additionally, a variety of training sessions and meetings, and activities of the Compliance Subcommittee ensure that we strictly adhere to our compliance policies.

The compliance online course for all employees, launched in 2014, was also conducted during fiscal 2015, and in fiscal 2016 it will be extended to Group companies in Japan.
Training sessions on the Antimonopoly Act are conducted regularly with all of our managerial officers involved in sales, purchasing, and business development, all of whom are required to submit a pledge. Additionally, CSR evaluation audits were carried out for all Group companies in Japan, the U.S. and Europe. We also started site visits of Group companies in Japan for antitrust-related training.
Moreover, we set up compliance consultation hotlines both internally and with outside law firms in order to answer inquiries from those within the Group. We strive to respond quickly to provide a rapid resolution to any concerns that may arise.

A compliance training session
A compliance training session

■ Basic Policy on Our Internal Control System

Systems for ensuring proper execution of duties by the Board of Directors and employees adherence with laws, regulations and articles of incorporation.
(1) Appointment of a minimum of two independent external directors to strengthen the supervisory function of the Board of Directors.
(2) Establishment of an Appointment and Remuneration Advisory Committee as an advisory committee to the Board of Directors in order to ensure sound corporate governance practices.
(3) Facilitation of an independent external director's meeting, comprised of independent external directors and independent external auditors, to discuss corporate governance-related matters, and to report to the Chair of the Board of Directors any issues and improvement measures.
(4) Establishment of the CSR Committee, chaired by the president, to lead our CSR efforts and Responsible Care activities.
(5) General responsibility of the Compliance Subcommittee, which falls under the CSR Committee, to oversee the Group's corporate ethics and compliance programs and procedures; including coordinating programs; monitoring progress; verifying business compliance, establishing and operating appropriate consultation and creating a whistleblowing mechanism.
(6) Consolidation of special bodies to oversee programs to address company-wide issues, including the subcommittees under the CSR Committee, namely the Safety & Human Health Subcommittee, the Earth Environment Subcommittee, and the Product Safety Subcommittee.
(7) Relevant internal regulations to ensure compliance with laws; and education and training programs, self-checks and audits to ensure such regulations are fully understood and complied with.
(8) Implementation of strict measures to ensure that the Group as a whole has absolutely no relationship with any anti-social elements, as well as to reject any illegal or improper demands. In addition, we established an in-house office that is responsible for the collection and management of relevant information and that cooperates with external organizations, including the police, to undertake and strengthen measures to prevent the influence of any anti-social elements.
(9) Undertaking of the necessary monitoring activities by the Internal Control Department to ensure the reliability of financial reporting, as well as put in place internal controls over financial reporting.
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