Corporate Governance System

Nabtesco is conducting business by promoting transparent business management and maintaining high ethical standards, as well as ensuring the observation of laws and regulations, so that Nabtesco Group can increase corporate value in a sustainable manner and become a company capable of winning the trust of stakeholders.

Given the content of business operations covered by our group and their characteristics, our company has adopted an executive officer system and an in-house company system as a means of expediting decision-making and clarifying who is responsible for executing certain business operations. As a means of controlling these systems, we have established corporate governance under which the Board of Directors, Audit & Supervisory Board Members/the Audit & Supervisory Board and Accounting Auditors have been set up to clearly divide the functions of business execution; managerial decision-making and supervision; and the supervision of management.

In addition, our company has established the Management Committee, an organization tasked with carrying out the deliberation of important issues relating to executing the business operations of the company and its group companies. Audit & Supervisory Board Members are supposed to attend a meeting sponsored by the Management Committee. This committee will deliberate over important issues to be discussed at the Board of Directors and clarify focal points, before presenting these issues to the Board of Directors. The prior deliberations are meant to promote appropriate decision-making and enhance the efficiency of decision-making at the Board of Directors.

By improving and reinforcing the corporate governance systems mentioned above, we will maintain expeditiousness and flexibility in business execution, strengthen our overall corporate governance, and clarify where responsibility lies, thus realizing efficient and transparent business management, which is considered helpful in enhancing the corporate value of the Nabtesco Group.

For the Board of Directors to perform effectively fulfill its roles and responsibilities, it consists of members who are selected in consideration of diversity, including their work experience, areas of specializations, gender, internationality and age.

When nominating candidates for directors, the Board of Directors nominates, appoints and select persons who are capable of contributing to the development of the Nabtesco Group and the sophistication of its management as executives based on their work experience and abilities. The Board of Directors also selects from inside and outside the company and among those who have outstanding personal qualities, expertise and abilities, exhibit advanced professionalism and strong ethics, and can demonstrate abundant experience as a director.

Nabtesco makes it a rule that at least one-third of its directors be independent outside directors who can give advice and supervise management to help increase the corporate value in a sustainable manner and on a medium- to long-term basis.

All independent outside directors are well experienced, have versatile knowledge, can take a broader view on behalf of the various stakeholders of the company, and can meet Nabtesco’s Criteria for the Impartiality of Outside Directors and Outside Audit & Supervisory Board Members.

The Audit & Supervisory Board Members organically combines the robust independence of outside members and the advanced information collection ability of internal members so that it may fulfill its roles and responsibilities effectively.

The Audit & Supervisory Board Members organically combines the robust independence of outside members and the advanced information collection ability of internal members so that it may fulfill its roles and responsibilities effectively.

All independent outside Audit & Supervisory Board members shall meet Nabtesco’s Criteria for the Impartiality of Outside Directors and Outside Audit & Supervisory Board Members.

Nabtesco conducts a yearly analysis and evaluation of the effectiveness of the Board of Directors based on self-evaluations of directors to improve its function.

Also, in FY2023, self-assessment was conducted by all Directors and Audit & Supervisory Board Members by way of anonymous questionnaires, and the effectiveness of the Board was evaluated through discussions at the Board of Directors meeting based on the results including the summary and analysis by outside attorneys-at-law. An outline of the results is shown below.

According to the results, the Directors believe that the number of members and the composition of the Board of Directors are appropriate and that unrestricted and constructive discussions took place in FY2023 as in the previous fiscal year. In FY2022, the number of independent outside directors was increased by one, resulting in independent outside directors coming to account for 50% of the total number of directors, which has promoted discussions from more diverse perspectives. Taking these points into consideration, the effectiveness of the Board is considered to be well-secured.

In FY2023, the Board of Directors allocated more time relative to the previous fiscal year to discussions on the business portfolio, business & global strategies and other important management issues for the realization of the Long-term Vision and engaged in more in-depth discussions on these issues in addition to those currently faced by the Board. The Board will further promote discussions on measures to increase the corporate value on a medium- to long-term basis.

With an eye toward the further enhancement of corporate governance, we will continue to work for the solution of related issues and to improve the functionality of the Board of Directors.