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Governance Initiatives

Corporate Governance

Basic approach to corporate governance

We recognize that the Company is expected to continually increase corporate value, and that we must fulfill our responsibilities to and earn the trust of all stakeholders, including shareholders. In line with this understanding, we see improving corporate governance as an important management issue. As well, we place the highest priority on fair and transparent management, maintain a business management system for quick and effective decision-making, and reliably communicate our management intentions. In these ways, we are working to enhance corporate governance.

Corporate governance structure

  1. Overview of the corporate governance structure
    • The Board of Directors is the highest decision-making body for business execution. It includes six directors (excluding directors who are Audit and Supervisory Committee members) and three outside directors who are Audit and Supervisory Committee members. The Board of Directors meets monthly to decide management policies, to review legal and other important issues, and to supervise the performance of directors’ duties.
    • The Board of Directors appoints executive directors and executive officers who are responsible for business execution. If necessary, executive officers are asked to attend Board meetings to ensure that management decisions are communicated reliably and that business execution is carried out promptly.

      [Chairman]
      Toshiya Takeuchi (President and Representative Director)
      [Members]
      Akio Takeuchi (Chairman and Representative Director), Takahiko Watanabe (Director), Clay Eubanks (Director), Osamu Kobayashi (Director), Hiroshi Yokoyama (Director), Minoru Kusama (Outside Director, Full-time Audit and Supervisory Committee Member), Akihiko Kobayashi (Outside Director, Audit and Supervisory Committee Member), Michio Iwabuchi (Outside Director, Audit and Supervisory Committee Member)

    • The Audit and Supervisory Committee consists of three outside directors, one of whom is a full-time Audit and Supervisory Committee member. In principle, the Audit and Supervisory Committee meets once a month. In addition, the committee members attend important meetings, such as Board of Directors meetings, and audit the performance of directors' duties as well as the operation of internal control systems.

      [Chairman]
      Minoru Kusama (Outside Director, Full-time Audit and Supervisory Committee Member)
      [Members]
      Akihiko Kobayashi (Outside Director, Audit and Supervisory Committee Member), Michio Iwabuchi (Outside Director, Audit and Supervisory Committee Member)

    • The Nomination Advisory Committee and the Remuneration Advisory Committee, both voluntary advisory bodies to the Board of Directors, each have four directors (one internal director and three outside directors). These committees deliberate on the nomination, dismissal, remuneration, etc. of directors based on an inquiry from the Board of Directors and submit their recommendations to the Board of Directors. The Board of Directors considers the advisory committees' recommendations when making decisions.

      Nomination Advisory Committee
      [Chairman]
      Minoru Kusama (Outside Director, Full-time Audit and Supervisory Committee Member)
      [Members]
      Toshiya Takeuchi (President and Representative Director), Akihiko Kobayashi (Outside Director, Audit and Supervisory Committee Member), Michio Iwabuchi (Outside Director, Audit and Supervisory Committee Member)

      Remuneration Advisory Committee
      [Chairman]
      Minoru Kusama (Outside Director, Full-time Audit and Supervisory Committee Member)
      [Members]
      Toshiya Takeuchi (President and Representative Director), Akihiko Kobayashi (Outside Director, Audit and Supervisory Committee Member), Michio Iwabuchi (Outside Director, Audit and Supervisory Committee Member)

    • We formulate business plans for every business execution department based on our management plan. In addition, every business department periodically reports on the implementation of these business plans. The following is an outline of our corporate governance structure.
      Corporate Governance Structure
      Corporate Governance Structure
  2. Other matters related to corporate governance

    [Status of internal control systems]
    To ensure that the execution of duties by directors and employees conforms to all laws and regulations as well as the Articles of Incorporation, and that the Company's social responsibilities are being fulfilled, we established our Corporate Philosophy, Code of Conduct, Compliance Regulations, and Compliance Manual, and we have appointed compliance officers to make certain that directors and employees are systematically informed.

    [Status of risk management system]
    For risk management, we have established the Risk Management Regulations and have appointed a risk management officer for each risk, and we maintain a system for understanding and managing risks.

    [System for ensuring the effectiveness of operations in Group management]
    For the Group's management, to ensure the effectiveness of operations at subsidiaries, we make certain that the directors and employees of subsidiaries are carefully informed of the Corporate Philosophy and Code of Conduct established by Takeuchi Mfg. In addition, we established the Group Supervision Rules as well as a system where the home office approves important aspects of the execution of the duties by subsidiaries’ directors, and we periodically receive reports on the status of their execution of duties.

Status of internal audits and audits by the Audit and Supervisory Committee

The Audit Office, under the direct control of the president, is independent from business departments. In this office, three full-time employees audit the business operations and the risk management of the business departments of the home office and all subsidiaries, then instructs them on any necessary improvements. The Audit Office also exchanges information with the accounting auditors on internal audits and accounting audits, and cooperates with them.

Audits by the Audit and Supervisory Committee are conducted by three outside directors based on an annual audit plan. When conducting audits by the Audit and Supervisory Committee, the committee regularly exchanges information with the accounting auditors and works with the internal auditing department by receiving reports from them.

Status of accounting audits

For accounting audits, we have concluded an audit agreement with Deloitte Touche Tohmatsu LLC and are audited based on this agreement.

Risk management

We have set up risk management rules to maintain a management system for preventing risks that could occur in our business operations and to respond to risks that have occurred.

Risks that could influence investors' decisions

Shown below are issues related to Takeuchi Group's business operations and accounting that could have an important influence on investors' decisions.
Forward-looking statements are based on the Group's judgement as of the date of submission of the annual securities report (May 28, 2020).

(1) Exchange rate fluctuations
(2) Fluctuations in raw material prices
(3) Natural disasters, etc.
(4) Economic and market conditions
(5) Competition
(6) Credit management
(7) Securing and developing human resources
(8) Environmental regulations
(9) Other official regulations, etc.
(10) Geographical concentration of production sites
(11) Product quality
(12) Information security and intellectual property rights

Business continuity plan (BCP)

We have written the BCP Manual (the General Affairs Department is in charge) that has prepared us to maintain business continuity.

Procedure after BCP activation
Procedure after BCP activation
Disaster recovery scenarios
Disaster recovery scenarios

Information security

We believe that it is our social responsibility to protect information assets, and we are working to strengthen information security, focusing on the following:

  • Prohibiting anyone from storing or removing any internal documents outside the company
  • Preventing data loss and falsification
  • Prohibiting all unauthorized access

Stakeholder engagement

Through dialogues and joint initiatives with stakeholders, we demonstrate the importance of stakeholder engagement. In this way, we grasp stakeholders' opinions, requests, and concerns, then use that information for management.

Our main stakeholders are the customers we provide products and services to; suppliers who support our production; shareholders and investors who are directly affected by the results of our business activities; employees working in the Takeuchi Group; and local communities. In addition, there are administrative bodies for compliance, such as local governments and supervisory ministries, and industry-academia-government collaboration and industry groups for information gathering and sharing necessary for business activities. Furthermore, we believe that the younger generation—children and students—are important stakeholders because they have the potential to become members of the Takeuchi Group in the future as well as being "treasures of society."

Main opportunities and points of contact for dialogue with stakeholders
Stakeholders Main opportunities for dialogue and joint activities Main points of contact for dialogue
Customers
  • Daily Sales Activities
  • Distributor's meetings
  • Sales training
  • Maintenance service training
  • Sales department
  • Subsidiaries
Suppliers
  • Daily procurement activities
  • Production briefing
  • Purchasing Department
  • Quality Department
  • R&D Department
Shareholders and investors
  • General Meeting of Shareholders
  • Business report (Shareholders' newsletter)
  • Briefing for investors (large and small)
  • Telephone interviews
  • Corporate Planning Department
Employees
  • Interviewing based on the position description chart
  • Labor-management roundtable
  • Internal whistleblowing system
  • Kaizen suggestion system
  • Employee fellowship (softball and bowling tournaments)
  • Club activities
  • Company newsletter
  • General Affairs Department
  • Personnel Department
Local Community
  • Participation in local events
  • Joining in neighborhood associations and participation in their activities
  • General Affairs Department
  • Subsidiaries
Local governments and supervising ministries
  • Dialogue with local government officials
  • Dialogue with ministries and agencies
  • General Affairs Department
  • Personnel Department
  • Corporate Planning Department
  • Subsidiaries
Industry- Academia -Government Cooperation
  • Participation in Industry-Academia-Government Collaboration Activities
  • Personnel Department
  • R&D Department
Next generation (children, students, etc.)
  • Factory tours (elementary schools, etc.)
  • Internship acceptance
  • Career development support
  • Personnel Department
Industry Associations
  • Membership in industry associations and participation in their activities
  • Sales Department
  • General Affairs Department
  • Subsidiaries

*All stakeholders are important, and we do not prioritize one stakeholder group over another.

Organization Memberships (Domestic)
Classification Organization name
Business Organizations Nagano Employers' Association
Nagano Economic Research Institute
Sakaki-machi Commerce and Industry Association
Togura Kamiyamada Commerce and Industry Association
The Tokyo Chamber of Commerce and Industry
Industry Associations Safety Association of Construction and Loading Vehicles
Japan Machinery Center for Trade and Investment
Japan Construction Equipment Manufacturers Association
Japan Construction Machinery and Construction Association
Industry-Academia-Government Cooperation Sakaki Industry-Academia-Government Cooperation Institute
Educational Research and Development Association of Nagano Prefectural Institute of Technology
Technology Promotion Association of National Institute of Technology, Nagano College
Technology Exchange Nagano Institute of Invention and Innovation
Sakaki Technology Exchange Institute
Japanese Standards Association
The Institution of Professional Engineers, Japan
Other Organizations Sakaki-machi Council for the Promotion of Human Rights and Social Integration Education of Companies
Sakaki-machi International Exchange Association
Sakaki-machi Council for the Promotion of International Industrial Research
Koshoku Labor Standards Association
Koshoku Employment Security Association
Minaminagano Koshoku Welding Engineering Society
Koshoku-Area Cooperative Society
Nagano Industrial Relations Research Association
Nagano Prefecture Driving Safety Manager Association (Chikuma branch)
Nagano Association for Conserving Environment
Nagano Supporting Future Generations Prefectural Assembly
Nagano Social Insurance Association
Nagano Probation Association
Association for the Welfare of the Visually Impaired
Japan International Trainee & Skilled Worker Cooperation Organization
Practical Seminars for the Preparation of Disclosure Documents
Financial Accounting Standards Foundation
Organization Memberships (Overseas)
Area Organization name
United States American Rental Association (ARA)
Associated Equipment Distributors (AED)
Association of Equipment Manufacturers (AEM)
United Kingdom Construction Equipment Association
Northwest England Japanese Companies Association
France FICIME (Federation of International Mechanical and Electronic Companies)
SEIMAT affiliated at FICIME (Union of International Companies of Public Works Equipment, Building and Lifting, Handling)
China Qingdao Japanese Association
Huangdao Japanese Association

Compliance

To improve management soundness and develop sustainably, we conduct corporate activities that obey all laws and social rules; that is, we see compliance as the foundation of management.

Basic Compliance Policy

To be trusted by customers and society, we comply with the letter and the spirit of the law, and we conduct corporate activities that follow social ethics and good sense.

We will work to strengthen compliance, as we have recognized compliance as a basic management policy.

Compliance system

We have appointed a compliance officer with the ultimate responsibility for compliance, and have established a system where directors report to the Board of Directors and the Audit and Supervisory Committee (or Audit and Supervisory Committee members) through the compliance officer in the event of a critical compliance issue.

As the department in charge, the Business Management Department conducts compliance-related work, and assigns compliance managers and other necessary personnel to each department. The Business Management Department also manages and supervises the state of compliance based on the Compliance Manual and establishes effective training systems for all employees, including executives. For audits, we set up an internal auditing department, which is independent of the Business Management Department, to audit the level of compliance.

Initiatives to instill the idea of compliance

Our Promises card

An Our Promises card is distributed in an easy-to-carry size to help instill the idea of compliance

Our Promises card

We distribute Our Promises cards, showing our Corporate Policies, Corporate Philosophy, and Code of Conduct, to all employees. To fulfill our corporate social responsibilities, we then ensure that they thoroughly understand the content and act responsibly and with good sense.

Compliance Manual

We published the Compliance Manual and distributed it to all employees, including executives. In January 2020, the manual was completely revised and redistributed to all employees.

Compliance Newsletter (monthly)

Compliance Newsletter (monthly)

Compliance education and training

We provide education and training to raise employees' awareness of compliance. Specifically, we hold compliance training sessions during new employee training and other internal training sessions, send out a compliance newsletter (12 times a year), test understanding (four times a year), and conduct follow-up training sessions (based on test results). In these ways, we work continually to bolster compliance.

In fiscal 2020, we held antiharassment training sessions for the company's managers, led by an external lecturer.

Record of compliance tests
Year of implementation Month Theme Number of respondents
2015 Feb. Insider trading -
Jul. Industrial Safety and Health Act. and the Labor Standards Act -
Oct. Mixing of business and personal affairs -
2016 Feb. Unfair Competition Prevention Act -
Jun. Abuse of authority (harassment) -
Aug. Business entertainment and gifts -
Nov. Overwork 437
2017 Feb. Compliance basics 436
May Terminology 448
Aug. Insider trading 450
Nov. Manners and morals 462
2018 Feb. Acting with integrity 457
May Dealing with harassment 447
Aug. Dealing with a breach of manners 438
Nov. Emotional control at work 442
2019 Feb. Road Traffic Act 444
May Business entertainment and gifts 489
Aug. Insider trading terms 484
Nov. SNS 483
2020 Feb. General compliance 466
May Abuse of authority (harassment) 520
Aug. Communications 517
Nov. COVID-19 pandemic morals 518
  1. A test is given to full-time employees of Takeuchi Mfg. (nonconsolidated), but not to temporary employees (standard part-time workers, part-timers, agency temps, seasonal employees, etc.).
  2. A five-question test is given once every three months.
  3. For those with poor test results (generally, three out of five or fewer correct answers), we hold video-based courses as a follow-up.

Preventing corruption

  • Guided by our Basic Compliance Policy, we prohibit all bribery of public officials in any country.
  • Our employment regulations and Compliance Manual prohibit employees from giving or receiving any money or goods to/from business partners, etc.
  • In fiscal 2016 and 2019, we tested the understanding of business entertainment and gifts.
Number of serious violations of laws and regulations related to compliance, etc., or punishments
Region Incidents known
2017 2018 2019 2020
Disciplinary action for bribery, corruption, or misconduct Japan 0 0 0 0
Outside Japan 0 0 0 0
Labor laws and regulations Japan 0 0 0 0
Outside Japan 0 0 0 0
Environmental laws and regulations Japan 0 0 0 0
Outside Japan 0 0 0 0
Fraudulent advertising, publicity, or labeling Japan 0 0 0 0
Outside Japan 0 0 0 0

* Outside Japan refers to the number of incidents uncovered at subsidiaries in the US, the UK, France, and China.