Basic Views on Corporate Governance
The Oenon Group ("the Group") operates businesses based on biotechnologies derived from fermentation technologies in the Alcoholic Beverages, the Enzymes and Pharmaceuticals, and other fields, guided by its group corporate philosophy: "From the bounty of nature and with biotechnology as our base, we aim to help people find enjoyment and health through food."
The Group considers the provision of safe and secure products to customers its top priority. It conducts business activities in accordance with group-wide universal concepts-specifically, a focus on customers and a focus on profit-and concurrently pursues initiatives that contribute to "the co-creation of future value," while aiming to enhance the quality of its management and ultimately achieve sustainable growth and maximize corporate value for the Group over the medium to long term.
To enhance the quality of its management, achieve sustainable growth, and maximize corporate value, the Group ensures transparency and fairness in decision-making processes related to management, and accordingly works to establish a corporate governance structure that promotes timely and decisive decision-making.
Overview of Corporate Governance Structure and Reasons for Adopting This Structure
- 1Corporate Governance Structure of the Company for Group-Wide Management
The Group has adopted a pure holding company structure that clearly distinguishes between management oversight and execution functions, and established the following meeting bodies.
- （1）Overview of Corporate Governance Structure
- Medium-Term Management Strategy Committee
The Group in principle holds two meetings of the Medium-Term Management Strategy Committee per month with the aim of formulating its future strategic direction to achieve medium-term targets, outlining its ideal vision for the Group, and creating new corporate value. The Medium-Term Management Strategy Committee consists of the president & CEO of the Company, managers of the Corporate Planning Dept. and other separately nominated officers or employees of the Company or its group companies. The committee deliberates on topics such as medium-term management strategies and specific related policies.
- Conference of Group Management
The Group holds the Conference of Group Management with the aim of building consensus across the group (two meetings held for each division in FY2020). The Conference of Group Management consists of the president & CEO and directors of the Company, and separately nominated directors, officers, or employees of group companies. The meetings deliberate on group-wide specific measures and topics related to sales, production, and management as applicable to each division.
- CSR and Compliance Committee
The Group in principle holds two CSR and Compliance Committee meetings per year (two meetings held in FY2020) with the aim of supporting and providing guidance for effective implementation of CSR and compliance by all employees of the Company and its group companies. The CSR and Compliance Committee consists of the president & CEO and directors of the Company, and separately nominated directors, officers, or employees of group companies.
The committee deliberates on topics related to internal controls and compliance.
- Nomination and Remuneration Committee
The Company ensures the independence, objectivity, and accountability of Board of Directors functions related to matters such as the selection of director candidates and director remuneration, by providing appropriate opportunities for engagement and advice to outside directors, and it has established a Nomination and Remuneration Committee as a voluntary advisory body of the Board of Directors to further strengthen corporate governance.
The Nomination and Remuneration Committee consists of three members (representative director and two independent directors) selected by a resolution of the Board of Directors.
The Group has adopted a pure holding company structure that clearly distinguishes between management oversight and execution functions to ensure transparency and fairness in decision-making processes related to management, and to accordingly support timely and decisive decision-making. The execution of operations is fundamentally performed by Group umbrella companies. Oenon, as the holding company, formulates management policy, management strategy, and medium- to long-term management plans for the Oenon Group. In this manner, the Company plays the main role of indicating directions for the Group to take and providing monitoring and supervision to ensure that Group companies are being managed accordingly.
- （2）Reasons for Adopting This Structure
In accordance with its Group Company Management Regulations, the Company monitors and supervises the management of Group companies, engaging in advance deliberations with and receives reports from Group companies on important matters related to the execution of duties, and works to enhance governance.
- 2Governance Structure of the Company
The Company has adopted a "company with an Auditing Group and external auditors" governance structure, and established the following meeting bodies.
- （1）Overview of Corporate Governance Structure
- Directors and Board of Directors
The Company has established the Board of Directors to exercise management oversight functions. The Board of Directors supervises the execution of duties by the representative director and responsible directors. As March 23, 2021, the Board of Directors consisted of five members, including two outside directors. The Company in principle holds one board meeting per month. The Board of Directors makes decisions on matters specified in laws and regulations, matters specified in the Company's articles of incorporation, matters delegated to the Board of Directors by a resolution of the general shareholder meeting, and other important matters related to management. Decision-making for other matters regarding business execution is delegated to the representative director and responsible directors. The representative director and responsible directors report the results of decision-making related to delegated matters and corresponding implementation conditions to the Board of Directors.
- Auditors and Auditing Group
The Company has appointed auditors and established the Auditing Group to exercise management audit functions. All auditors conduct audits of the execution of duties by the representative director and responsible directors. As March 23, 2021, the Board of Directors consisted of three members, including two outside auditors. Auditors attend important meetings such as board meetings and the Conference of Group Management, express their views, and accordingly conduct audits of the execution of duties by the representative director and responsible directors.
- Auditing Dept.
The Company has established the Auditing Dept. as an internal audit department that is independent from business execution functions. The Auditing Dept. reports information to auditors for every internal audit of group companies, conducts internal audits based on requests of auditors, constantly coordinates with auditors by holding meetings as necessary and through other means, and accordingly plays a role in strengthening the audit functions exercised by auditors.
- External Auditor
The Company has appointed ERNST & YOUNG SHINNIHON LLC as its external auditor to exercise management audit functions. It has maintained an auditing agreement with and undergone audits by ERNST & YOUNG SHINNIHON LLC since the enforcement of the Act on Special Provisions on the Commercial Code Concerning Audits, etc. of Stock Companies.
The Company has adopted a “company with an Auditing Group” governance structure to ensure transparency and fairness in decision-making processes related to management. This structure provides two layers of oversight in the form of oversight over business execution by directors and audits by individual auditors.
- （2）Reasons for Adopting This Structure
Two of the Company’s five directors are outside directors, and two of its three auditors are outside auditors. Based on their strong expertise and extensive experience in corporate legal affairs, corporate management, finance, accounting, and other fields, the outside directors and outside auditors provide effective advice and recommendations to ensure transparency and fairness of decision-making processes related to management from an objective and neutral standpoint, and exercise appropriate governance functions with regard to business execution functions. In addition, the Company aims to expand and enhance its governance functions through coordination between the Auditing Dept.-an internal audit department that is independent from business execution functions-and its auditors.
Risk Management System
In accordance with its Group Company Management Regulations, the Company regularly or as deemed appropriate reports on necessary matters, including internal information and-given its characteristics as a holding company-decisions on, or the emergence of, important matters at group companies expected to have an impact on the management, businesses, financial standing, operating performance, or other aspects of the Group.
Accordingly, through the Conference of Group Management and routine business activities, the Corporate Planning Dep. aggregates information for important policy decisions. The Corporate Communication Dept. also promptly aggregates information on internal and external public relations, promotion, IR information and information related to other communication activities. Ultimately and from an internal control perspective, information is managed under the supervision of the Corporate Planning Dept.
Information aggregated through the aforementioned reports and communication undergoes inspection, checks, or other forms of verification by the Corporate Planning Dept., related sections and affiliated companies, and is subsequently reported to the officer in charge of information handling and the representative director and president & CEO. Matters that require a decision by the Board of Directors or need to be reported at board meetings are presented to the Board of Directors.
Furthermore, as necessary, the Company seeks the advice of outside experts with regard to appropriate checking and management of information.
The figure below provides an overview of the Oenon Group’s corporate governance structure.