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Corporate Governance

The system of corporate governance

1. Outline of the system of corporate governance

In order to accelerate speed and heighten transparency of managerial activities and also to enhance corporate value, our company recognizes the issue of constructing a solid system of corporate governance that reflects the shareholders' point of view to be one of the important issues of management.
To address this issue, after 67th annual meeting of stockholders held on June 24, 2005, EIKEN CHEMICAL became a company with a committee governance structure and separated the management into two functions, namely, the function of management of business and the supervising function. Important matters concerning the basic policy of the management are decided through deliberations of the board of directors, and the management of business is carried out quickly and smoothly based on bylaws and regulations following the appropriate chain of command.

2. Reason for adopting the system of corporate governance

By adopting the committee governance structure, our company strives to ensure the ability of executives to make managerial judgments and conduct the management of business quickly and smoothly. Also, at the board of directors and the three committees (the nominating committee, the remuneration committee, and the audit committee), the efficiency of the management of business is continuously supervised, enabling a high level of transparency and fairness of management.

3. Current state of internal control system development

As a code of conduct ordaining the behavior of executives and employees so as to make it in accordance with laws, ordinances and articles of association, as well as in accordance with social norms, our company has established "Business Codes of Practice" and "Compliance Regulation", which shall be used combined with "Job Function Regulations", and in order to improve the effectiveness of the regulations further, we are regularly performing in-house training of the personnel.
Moreover, in order for the members of the audit committee to appropriately identify the current situation of the business processes, they attend important meetings such as meetings of the corporate management committee; they also participate in the regularly held joint sessions with the auditors and receive reports from each department, thus being able to verify the level of attained effectiveness of the supervision and auditing of the internal control system. Besides, in order to promote thoroughness of compliance, we have also created an internal report system.

4. Current state of risk management system development

As a unified risk management system which can appropriately recognize, evaluate and respond to risks including compliance problems, EIKEN CHEMICAL established the Risk Management and Compliance Committee and the Risk Management and Compliance Promotion Committee that is its subordinate office that implements the policies on the level of individual departments, and the two continuously identify and manage risks, promoting observance of corporate ethics, laws and regulations. Moreover, the Director in Charge of Risk Management, whose responsibility is to supervise risks on the company-wide basis, based on the relevant regulations is maintaining the system of prompt and appropriate communication of information and emergency plan system ready to cope with emergencies as they arise.