Fair Governance

Basic approach to corporate governance

Kansai Paint Group’s mission statement within our corporate philosophy is “we leverage superior technology to contribute to our Customers and Society, in a sustainable manner, with innovative Products and Services, through a competent workforce, built on a culture of Customer Focus, Integrity and Respect to our Stakeholders.”
We believe that increasing the satisfaction of our customers through the coatings business, which is the core business of the group, is the foundation and reason for the group’s existence, and that our commitment to contributing to society at large by enhancing the corporate value through the realization of customer satisfaction enables the group to contribute to its stakeholders including the shareholders, business partners, employees and local community.
Corporate governance is regarded as an important management task in order to realize continuous improvement of corporate value. In order to ensure that the concept of “profit and fairness”, the cornerstone of our corporate activities, is understood and acted upon by group officers and employees, we will work toward improved awareness through putting into effect various measures.

Corporate governance organization

The corporate governance organization shown below ensures management transparency and soundness.

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Corporate governance organization

Efforts to enhance the effectiveness of corporate governance
Kansai Paint considers the following important to enhance the effectiveness of its corporate governance.

Compliance promotion policy
To comply with laws and regulations and fulfill our corporate social responsibility, Kansai Paint has clearly set out conduct guidelines that make “profit and fairness” the cornerstone of corporate activities. We also continuously instruct our employees about each situation. We also have set up a consultation desk for reporting compliance violations both inside and outside the company, and appropriately deal with any reports through accurate information collection and disclosure.

Risk management policy
Kansai Paint established the Crisis Management Committee for the purpose of preventing and responding to risks that may have a significant impact on the group’s business operations. In addition, we have also established guidelines and constructed risk management systems to deal with a range of foreseeable risks. We shall administer and maintain these risk management systems to enable us to obtain various kinds of risk information at an early stage, alert employees to the situation if the need arises, understand the situation, and come up with the appropriate countermeasures.

Information management policy
To ensure the legality of the business activities of group companies and promote efficient operation, the company properly handles and collects necessary information and correctly records and retains the results. To increase the transparency of business activities, the company endeavors to disclose in an accurate and timely manner matters stipulated by laws and regulations, important information concerning business management, and information useful to society relating to business activities except for information recognized as trade secrets.

Corporate governance

Efforts to improve corporate governance
Board of Directors and Audit & Supervisory Board Kansai Paint continues working to improve its corporate governance while responding to amendments to laws and listing rules, as well as changes in social and economic environments. By doing so, we aim to help our group achieve sustainable growth and improve its mid-to long-term corporate values, as well as encourage coexistence and mutual prosperity between a range of stakeholders, including shareholders, employees, customers, business partners, and local communities.

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Corporate governance

Board of Directors and Audit & Supervisory Board
The Board of Directors is structured to ensure: an appropriate number of board members; a proper ratio of internal and outside directors; balance, among internal directors, of representation for production, sales, procurement, technology, and administration; and a broad scope of knowledge, experience, and expertise among outside directors. The Audit & Supervisory Board comprises internal members as well as independent, expert outside auditors.

Directors' list

Executive officer system
We have instituted an executive officer system to clarify job responsibilities by separating management decisionmaking and oversight functions from business execution functions and to establish a structure to respond speedily and flexibly to changes in the business environment.

Executive officers' list

Discretionary advisory Committees
We have established the following two discretionary advisory committees in order to enhance corporate governance.

Evaluation Committee
This committee consists of two representative directors, three outside directors and two outside audit & supervisory board members (chairman: outside director).

(1)Evaluating the board’s efficacy
The directors and audit & supervisory board members, who attend board meetings, were polled via a questionnaire, and the board’s efficacy evaluated based on the results. A number of points were identified as needing improvement from an outside director’s standpoint, and we will endeavor to make improvements in these areas so as to improve the efficacy of the board.

(2)Evaluating directors’ and executive officers’ performance in the preceding fiscal year, and deliberating on performance-linked compensation (cash and stock)
The committee deliberated on performance-linked compensation and executive compensation in the preceding fiscal year. Performance-linked compensation is calculated based on these deliberations.

Nomination Committee
This committee consists of three outside directors and two outside audit & supervisory board members (chairman: outside director). Prior to tabling the motion regarding the Election of Eight (8) Board Directors (second item of proposal) at the 156th Ordinary General Meeting of Shareholders, the board deliberated on the candidates proposed by the representative directors, agreed unanimously with the proposal, and resolved that the proposal should subsequently be tabled as is at the AGM.

Thorough compliance

Efforts to ensure compliance

Internal reporting system
We have established a hotline for internal reporting as part of a system enabling employees to make reports directly to the Compliance Promotion Committee rather than going through regular routes within the organization. In addition, this hotline is run independently from management, with the stipulation that whistleblowers are granted anonymity and protected from disadvantageous treatment.
In FY2019, we also established an external hotline, available for use by domestic group companies as well.

Distribution of a corporate ethics handbook
We distribute a corporate ethics handbook and continuously provide compliance education to improve employee awareness.

Compliance training
During training for new employees and managers, we continue to conduct a series of training sessions on overall compliance, as well as other training covering such things as competition laws and the prevention of corruption for members of the Business Division or those being posted overseas. In regard to insider trading in particular, we hold drives four times a year through our intranet to raise awareness and to deepen understanding.

Preventing corruption

Prevention of corruption/bribery
Our standards for the prevention of corruption and bribery are set out in our Codes of Behavior, as follows.

Code of behavior concerning compliance with the Anti-monopoly Law
This code of behavior prohibits acts of all kinds which conflict with the Anti-monopoly Law. It also states that we shall comply with not only this law in Japan but also the equivalent laws of other countries.

Code of behavior concerning dealings with business partners and other related parties
This code of behavior contains stipulations on how we conduct ourselves in line with commonly-accepted norms and social practices, declaring that we shall not engage in acts which are in conflict with laws and regulations on bribery, etc., such as refraining from giving gifts or entertaining staff from government offices or similar public organizations. It also states how we shall conduct ourselves in the same manner overseas, acting with an understanding of local customs, laws, regulations, etc.

We will continue holding compliance training with the goal of improving awareness among employees. Note that we have a completely clean record in this area, with not even a single legal violation involving bribery, etc.