Corporate Governance

Tokyo Seimitsu is a company with an audit and supervisory committee under the Companies Act.
For dealing with matters that do not fall under the criteria for submission to the Board of Directors, the Company has adopted an Executive Officer System to speed up the decision-making process by delegating a large amount of authority to the Head of each company after defining their scope of duties and authority in accordance with the relevant regulations of the Company. In addition, the Executive Management Meeting strives to share information and enhance deliberations across company divisions. In addition, various cross-company committees such as the Risk Management Committee and the Compliance Committee have been established to examine and monitor material issues from various perspectives to make appropriate decisions. 

Currently, our Board of Directors is composed of six directors not served as Audit and Supervisory Committee members (two of whom are external directors) and four directors served as Audit and Supervisory Committee members (three of whom are external directors). The board is chaired by the chairman. The Board of Directors convened 16 times in fiscal 2024.

The Board of Directors deliberates on important matters related to management as stipulated by law, the Articles of Incorporation, and the Board of Directors Regulations, as well as monthly, periodic, and annual business results, and supervises the execution of business by each director. 

*¹ Retired on June 23rd, 2025  *² 12 meetings held after Ms. Takayama’s appointment

Our Audit and Supervisory Committee is composed of one internal Audit and Supervisory Committee member and three external Audit and Supervisory Committee members. The internal Audit and Supervisory Committee member has extensive experience in our HR-related departments and has been engaged in company management as a director. Serving as a Compliance Committee member and an Internal Control Committee member, this member has knowledge of legal affairs, risk management, personnel and labor affairs, and human resource development. The External Audit and Other Committee consists of individuals who, as attorneys, possess advanced expertise in international legal compliance and deep insight into intellectual property; individuals who, through many years of experience in corporate management, have been involved in promoting CSR initiatives and ESG activities as well as compliance and risk management, and possess deep insight into corporate governance; and individuals who, as certified public accountants, have extensive experience and a high level of expertise in finance and accounting.

They audit the Company’s business execution, account processing, asset management, etc. throughout the year by attending the Board of Directors and other important meetings, hearing about the status of business execution, and reviewing important approval documents in order to check for legal violations, breaches of fiduciary duty, and other kinds of misconduct. Also, the Audit and Supervisory Committee exchanges opinions with the Audit Dept., which is an internal audit organization, and the accounting auditor on the audit system to determine whether there are problems in auditing, as well as issues and other matters on an as-needed basis, in an effort to enhance the effectiveness of audits. At the same time, the committee receives regular reports on findings and related information from internal audits conducted in accordance with the annual audit plan.

For the status of audits, see the Securities Report.

*¹ Retired on June 23rd, 2025  *² 10 meetings held after Ms. Takayama’s appointment

We have the Nomination and Compensation Council in place as a voluntary committee for the purpose of clarifying the independence, objectivity, and accountability of the Board of Directors’ functions, especially in nomination of directors and director compensation. The council consists of directors serving as Audit and Supervisory Committee members and external directors. Independent external corporate directors are in the majority (now all five members are independent external corporate directors) on the council, helping to realize deliberations fully independent from management.

The Company has in place an executive officer system to make speedy decisions on product development planning to respond quickly and flexibly to market trends. In addition to supervising the progress of business plans at regular monthly meetings of the Executive Management Meeting and Executive Officers’ Meeting, the Executive Officers’ Meeting aims to share information across the Company and enhance Executive Officers’ Meeting deliberations.

In selecting Directors of the Company, regardless of individual attributes such as gender and nationality, persons with superior dignity, ethics, and insight are selected, and are well versed in corporate management and the Company’s business, or persons with extensive experience in their respective fields of expertise. External Director candidates are those who are capable of fulfilling the function of supervising management from an independent standpoint outside the Company and providing advice on the Company’s corporate activities based on their abundant experience and deep insight.

Ages current as of the end of June 2026/Independent External Corporate Director: ◎ Female: 〇 Foreigner: ●
Note: This matrix represents the areas in which we expect each Director to have more expertise and play a more active role, based on their experience and other factors. This matrix does not represent all the knowledge and experience of each person.

To improve the performance of the Board of Directors, we assess its effectiveness and discuss future actions every year.

The Company conducts questionnaire surveys of all directors (including Audit and Supervisory Committee members) on the items listed below. After the summarized survey results and analysis results were reviewed by the internal and external directors, the Board of Directors held discussions to evaluate its effectiveness and consider future actions.

For preparing the questionnaire as well as compiling and analyzing the results of the questionnaire, we utilize external organizations to ensure transparency and effectiveness.

The questionnaire not only evaluates each item but also includes open-ended questions about the strengths of the Board of Directors and areas for improvement, and it seeks individual directors' reflections on their contributions to the board, along with any other comments and suggestions they might have.

Our Board of Directors is well-balanced, featuring members with a diverse range of knowledge and experience. It has a culture in place where external directors also actively and freely express opinions and ask questions from an independent standpoint, leading to lively discussions. Accordingly, the Board has determined that its effectiveness is generally ensured.
As part of our efforts to further enhance the discussions about medium- and long-term challenges, which was identified as an issue last year, we established a medium- and long-term strategy planning team and implemented improvements such as presenting its findings for discussion at the long-term strategy planning meeting. Regarding succession planning, we worked to increase opportunities for interaction between potential successors and external directors. We also advanced discussions on successor development plans within the Nomination and Compensation Council.
On the other hand, the following issues were identified through this survey.

To facilitate more in-depth discussions on our medium- to long-term management strategy, the Company’s Board of Directors will work to identify key strategic themes for discussion, establish the necessary frameworks for deliberation, and develop mechanisms for sharing information among directors. Regarding succession planning, the Board of Directors will continue and enhance its efforts to develop candidates and build relationships with them, while further deepening discussions within the Nomination and Compensation Council and other relevant organizations. As for global governance, the Board of Directors will seek to strengthen risk management by establishing robust oversight and monitoring systems.
We continue to keep our Board of Directors effective through these activities.

The Company has established policies and procedures for determining the amount of remuneration, etc. for directors in its “Basic Policy on Corporate Governance.” For details about the policy, compensation structure, etc., please refer to the Basic Policy on Corporate Governance.

Among the remuneration paid to directors responsible for business execution, the formula for restricted stock, which is a medium- to long-term incentive to share profits with shareholders, was revised to incorporate capital efficiency (ROE) in 2023 and revised to incorporate ESG score* in 2024.

The Company shall not be engaged in any transactions with Directors and/or major shareholders that may damage the interests of the Company or the common interests of the shareholders, as indicated in “(7) Related Party Transactions” in “2. Directors and Boards” of the Basic Policy on Corporate Governance. When a Director is intending to enter into a transaction with the Company for him/herself or for any third parties, the Director shall obtain prior approval of the Board of Directors according to the rules of the Board of Directors, and report important facts in that transaction at the board meeting. Terms and conditions for the transaction may be determined in the same manner as a transaction with third parties.

To identify any transactions involving a conflict of interest by Directors, the Company checks annually and regularly existence of such transactions (excluding director compensation) between the Company Group and Directors or their family members within the second degree of kinship.

When the Company is intending to enter transactions between the Company and major shareholders or other related parties, then it shall be approved in advance by personnel with authority commensurate with the importance and scale of the transaction in accordance with internal regulations determined by the Board of Directors.

The Board of Directors comprehensively examines whether shares held as cross-holdings are worthwhile based on risks and returns from the perspective of medium- to long-term economic rationality and qualitative considerations such as the purpose of holding those shares and the credit status. If this examination results in the judgment that it is not worthwhile to retain the cross-holdings, such holdings are reduced in principle. If it is determined that holding such shares will contribute to the improvement of medium- to long-term corporate value, they are retained. As a result of such deliberation, Tokyo Seimitsu sold 21 cross-shareholdings (including shares deemed to be held) for 8,781 million yen between April 2015 and March 2026.