System

General Meeting of Shareholders

In addition to the appropriate statutory disclosure and timely disclosure, Hodogaya Chemical strives to proactively provide shareholders and investors with relevant information, such as management strategies, in order to gain understanding of business activities.
It engages in constructive bilateral dialogue with shareholders in an effort to achieve effective corporate governance that can contribute to sustainable growth and increase corporate value.
Hodogaya Chemical also establishes measures to ensure shareholders can more easily attend the General Meeting of Shareholders, such as avoiding dates on which many companies hold meetings, early mailing of the Notice of Annual General Meeting of Shareholders, provision of the Notice of AnnualGeneral Meeting of Shareholders in English, and use of electronic voting (smart voting) and an electronic voting platform.

Board of Directors

To enable thorough discussions based on diverse opinions and prompt, rational decision-making, the Board of Directors consists of members that satisfy the extensive level of experience and education required by the Company. The deliberations for FY2024 are summarized in the table below, focusing on monitoring the progress of the Mid-term Management Plan SPEED 25/30, addressing issues in businesses showing delayed progress, and reviewing the status of sustainability initiatives.

Audit & Supervisory Committee

The Audit & Supervisory Committee audits the legality of business execution by Directors and Officers, appropriateness of the Company’s business operations, internal control, and financial status, etc., through attendance at important meetings and through timely and appropriate reporting. The Audit & Supervisory Committee also maintains close relations with the Financial Auditor to take necessary measures in relation to the audit work.

Key deliberations for FY2024

Approval of the audit plan and approval of audit compensation for the Financial Auditor.

• Review of internal controls and internal audit status.
• Oversight and evaluation of risk awareness and risk mitigation measures by the Risk Management Committee.
• Review of audits of affiliated companies, etc.
• Deliberation on the Financial Auditor’s audit reports.

Nominating & Compensation Committee

In order to strengthen the independence, objectivity, and accountability of the Board of Directors’ functions on matters of nomination and compensation, the Nominating & Compensation Committee serves as an advisory body to the Board of Directors and deliberates and submits reports to the Board of Directors on the election and dismissal of Directors and compensation of Directors. The Board of Directors respects the content of such reports.
An Outside Director serves as chairperson.

Key recommendations and opinions for FY2024

• Regarding the proposal for the Director election proposal made at the Annual General Meeting of Shareholders, we reviewed the background and skills of each candidate and reported that the proposal is reasonable.
• Concerning the remuneration of directors who are not Audit & Supervisory Committee members, we compared practices with major companies in Japan and reported that the proposal is appropriate in line with the policy for determining Directors’ remuneration.
• In selecting Executive Officers, department heads, and presidents of affiliated companies, we reviewed the detailed backgrounds of each candidate and conducted interviews, reporting that the proposals are reasonable.

Executive Officers

The Executive Officer system was introduced to (1) improve management efficiency, (2) enable quicker decision-making, (3) enhance functional specialization, (4) strengthen supervisory and monitoring functions, and (5) reinforce the overall management structure.
The President elects Executive Officers who meet these objectives to oversee the execution of operations in the company’s principal departments.

Accounting Auditor

Hodogaya Chemical has appointed Ernst & Young ShinNihon LLC as its Accounting Auditor. In addition to financial audits, the company also receives advice on accurate and fair accounting practices through audits of internal controls and other related activities.

Internal Control Department

Hodogaya Chemical has established an Internal Control Department, which continuously reviews and evaluates the status of the group-wide internal control systems required under the Companies Act and the Financial Instruments and Exchange Act, ensuring that existing business risks are kept at or below acceptable levels.
The Internal Control Department is also responsible for compliance and risk management.
It maintains and enhances the level of internal control across the Hodogaya Chemical Group and promotes various measures to ensure that business operations are conducted appropriately and efficiently.

Internal Auditors Department

In order to ensure its independence, Hodogaya Chemical has established an Internal Auditing Department that adopts a dual reporting system, whereby it reports the results of internal audits to the President and also directly to the Audit and Supervisory Committee.
Furthermore, the department serves as the secretariat of the Audit and Supervisory Committee, supporting its operations to maintain and enhance audit quality.