Through the development of global corporate governance, the NSG Group will strive to become a company that operates with a spirit of openness and fairness.

The NSG Group’s Governance Structure

In all its business activities, the NSG Group places top priority on the enhancement of corporate governance, in order to establish relationships of trust with all stakeholders and promote CSR-oriented management. To this end, the Group is also reinforcing its governance structure to ensure fair and transparent business operations.

As part of its corporate governance structure, currently the Group operates a corporate auditor system. As of October 2007, the Group employs 12 directors (including two external directors) and 24 executive officers (including eight executive officers concurrently serving as executive officers). Following the launch of the global management structure, the Group created on October 1, 2007 the posts of Chief Executive Officer (CEO) and Chief Operating Officer (COO) to expedite the process of integration and globalization. NSG Group also employs five corporate auditors. Three of the five corporate auditors are external auditors, comprising one attorney, one auditor with experience as a director at other companies and one accounting specialist.

In fiscal 2007, the Board of Directors met 15 times and Board of Auditors meetings were held seven times.

The NSG Group has established structures such as the CSR Committee and the Compliance Committee with the aim of improving internal control over the execution of Group-wide operations. The Japanese SOX Act (J-SOX), formulated in 2006, stipulates internal control-related rules under the Financial Instruments and Exchange Law. In accordance with the law, in fiscal 2009, all publicly listed companies will be required to assess their internal control systems regarding the reliability of their financial reporting, as well as ensuring that such systems receive external audits. The NSG Group has been proactively engaged in preparatory processes for the implementation of J-SOX. In order to define the responsibilities and authority of the Board of Directors as well as executive officers, the NSG Group introduced an executive officer system aimed at improving management efficiency and speed. Together with this, the Group reduced the term of office for directors to one year. Furthermore, to increase transparency with regard to the compensation and selection of directors, corporate auditors and executive officers, NSG Group has established a Compensation Advisory Committee and a Selection Advisory Committee. With these efforts, the NSG Group will further develop its governance structure to effectively control operations worldwide.

Promotion of Compliance

The NSG Group strives to develop its compliance system and to raise awareness of this system among its employees, on the understanding that thorough compliance, including abiding by laws and social norms, is a minimum corporate social responsibility when pursuing continued business operations.

Developing the compliance system, the Group established the Compliance Committee in August 2002, with the director responsible for compliance serving as chairperson. To that end, the Group provides regularly scheduled compliance education based on the NSG Group Compliance Policy, monitoring the actual status of compliance in liaison with the Audit Office. In addition, compliance reporting and consultation contact points both inside and outside of Group offices have been set up to create a system for employees to report and consult on matters regarding compliance.

Response to Various Risks

The NSG Group has principal manufacturing operations in 27 countries around the world, with sales in 130 countries. The Group thus faces various risks with regard to its business activities and risk management is increasingly important to the Group's ongoing prosperity. Based on this understanding, the Group's Compliance Committee comprehensively identifies and controls Group companies' exposure to risks. For risks relating to the environment, workplace safety, disasters, product quality, information security and credit control that may cause a significant impact on the Group's business, each division sets out rules to control the relevant risks, depending on their significance. When a significant risk materializes, the division responsible for that risk category will address the risk by formulating an emergency response group under the Group's risk management rules and the basic risk control policy.

 

CSR Report 2007