We view the enhancement and enhancing of corporate governance with the aim of ensuring sound and efficient corporate management to be crucial in achieving sustainable growth. Based on this, we are building and maintaining fair and transparent management systems and organizational systems that can respond effectively to a changing business environment.

Additionally, Toyoda Gosei pursues consummate corporate governance by voluntarily implementing a range of policies in accord with the letter and spirit of the ideals and principles in Japan’s Corporate Governance Code, formulated by the Financial Services Agency and the Tokyo Stock Exchange.

Toyoda Gosei has chosen an audit and supervisory board company and set up the Shareholders’ Meeting, Board of Directors, Audit & Supervisory Board, and accounting auditors as statutory entities. We have also put in place internal auditors and other internal control systems including internal audits. The Board of Directors consists of ten directors and holds regular monthly meetings (extraordinary meetings held as needed), where matters prescribed by law or in the Articles of Incorporation and important matters such as strategies related to corporate management are reported and resolved.

A system of corporate officers is used to speed up decision-making and business execution. Furthermore, by introducing the Chief Officer System in June 2023 and transferring some of the president’s authority and responsibilities to the Chief Officers, we will cross over the boundaries of business and regional operation bases to manage priority functions on a global basis, thereby realizing highly strategic business execution and accelerating the speed of management. Additionally, in June 2024, we delegated part of the Board of Directors’ decision-making authority to the executive side. Through this, we aim to enrich the discussion of management strategies in the Board of Directors, establish new Special Execution Meetings on important matters, and enhance execution speed and autonomous management.

Moreover, for important business matters, decision-making meetings on important matters, General Managers’ Council and Management Council meetings are held monthly. Functional meetings and committee meetings relevant to key areas such as safety, quality, environment, technology, revenue, and personnel are also held as needed to ensure appropriate management decisions.

At the annual Shareholders’ Meeting, held on June 14, 2024, Mayumi Matsumoto, Takashi Wada, Masanori Furukawa, Shigeki Maeda, and Makoto Aou were appointed as outside directors.

For outside Audit & Supervisory Board members, we selected Chika Kako as a new member, joining incumbent members Hitoshi Kuwayama and Masahiko Yokoi, for a total of three outside auditors.

The Audit & Supervisory Board consists of five members and holds regular meetings. Members also attend important meetings such as Board of Directors’ meetings and audit each department and subsidiary, through which they fulfill their function of auditing corporate management. Accounting auditors are external auditors who combine auditing functions with a commitment to ensuring an independent and fair auditing system.

The Company uses the current system because audit, supervisory, and execution functions are well coordinated with each other under this structure, with legality and efficiency of the Company’s decision-making and business execution sufficiently ensured.

Also, in order to strengthen the supervisory function of the Board of Directors and to increase the objectivity and transparency of the decision-making process, we have established the Executive Appointment Committee and Executive Compensation Committee under the Board of Directors as non-mandatory advisory committees.

In accordance with the provisions of Japan’s Companies Act, Toyoda Gosei has formulated a Basic Policy on Establishing Internal Controls. Under this policy, we are striving to ensure appropriate operations by establishing internal control systems, which help us deliberate important matters, establish related rules and guidelines, and handle internal audits, compliance and risk management. Every year, the Board of Directors checks the status of establishment and operation of internal controls in an ongoing initiative to improve and reinforce them. In April 2023, we revised the basic policy with the aim of enhancing and operating internal controls, including those for subsidiary management. In addition, we established a Regulatory Compliance Office in June 2023 to further reinforce our regulatory compliance framework.

Regarding group management, to cultivate a healthy internal controls environment at Toyoda Gosei and its subsidiaries, all Group companies share its management philosophy. The Toyoda Gosei Group Charter for Business Ethics, a shared guideline for compliance, has also been instituted and expanded to subsidiaries. While respecting the independence of subsidiary management, we receive regular business reports from subsidiaries and set up systems to confirm the propriety and legality of subsidiaries’ businesses through advance approval reports. We also send non-executive directors and Audit & Supervisory Board members to key subsidiaries in a system to monitor and act as a check on their business execution.

Nominations of candidates for directors and Audit & Supervisory Board members are made after deliberation and reporting by the Executive Appointment Committee, followed by a resolution of the Board of Directors and a subsequent Shareholders’ Meeting.

The nomination policy for senior officer and director candidates is based on the candidate’s personal magnetism in terms of their ability to make accurate and prompt decisions after taking into account the balance of knowledge, experience, and capabilities of the management team and the Board of Directors as a whole.

The candidates are comprehensively nominated and appointed on the basis of their ability to fully comply with laws and corporate ethics.

• The following table shows each director’s and Audit & Supervisory Board (ASB) member’s expected field of specialty based on their past experience.
• The composition of our Board of Directors and Audit & Supervisory Board (ASB) as a whole takes into consideration the balance of knowledge, experience, and abilities, as well as diversity and number of members.

In 2012, Toyoda Gosei adopted a system of corporate officers and downsized its Board of Directors to nine directors from 23 as of 2011. It appointed its first outside director in 2015.

The Board currently comprises ten directors, five of whom are outside directors, accounting for 50% of the total number of directors. Two of the outside directors are women. The outside director appointments have increased the Board’s objectivity and diversity.

At the annual Shareholders’ Meeting, held on June 14, 2024, Mayumi Matsumoto, Takashi Wada, Masanori Furukawa, Shigeki Maeda, and Makoto Aou were appointed as outside directors.

For outside Audit & Supervisory Board members, we reappointed Chika Kako, who joins incumbent members Hitoshi Kuwayama and Masahiko Yokoi for a total of three outside auditors.

New outside directors Takashi Wada, appointed in June 2023, and Shigeki Maeda, appointed in June 2024, shared their candid perspectives on our ongoing corporate governance reforms and evaluations of the 2030 Business Plan, along with the key issues they have identified.

We have set up the Audit Division to handle internal audits. With the aims of achieving financial objectives and preventing misconduct and mistakes, internal audits are conducted across the overall business (including audits of functional departments) based on an internal auditing plan approved by management at the beginning of each term.

The results of internal audits are reported to management, and audited departments are given recommendations for improvements based on the audit results. The effectiveness of internal audits is increased by checking their improvement plans and results.

Each Audit & Supervisory Board member follows the auditing policy and audit plan established by the Audit & Supervisory Board when investigating the Company and subsidiaries. They attend the meetings of important deliberative bodies and committees including the Board of Directors, Special Execution Meeting on Important Matters, General Managers’ Council, and Management Council, listen to reports on business from directors and others, inspect financial statements and other important documents, and conduct on-site audits of offices and subsidiaries to audit the performance of duties by directors from the perspectives of ensuring legality and appropriateness, protecting assets and rights, and preventing loss. Moreover, a special department has been established to assist the Audit & Supervisory Board members’ audits.

The certified public accountants who performed the FY2023 accounting audit of Toyoda Gosei were Satoko Nakatani and Kosaku Kawahara of PricewaterhouseCoopers Japan LLC.

Audit & Supervisory Board members, internal auditing department personnel, and accounting auditors regularly meet to confirm their respective auditing systems, auditing policy, auditing plans, implementation status, and audit results. They cooperate in performing efficient and effective audits, contacting each other as needed to exchange ideas and share information.