Basic Approach to Corporate Governance

The Togami Electric Group recognizes that increasing corporate value over the medium to long term for shareholders, customers, and society requires swift decision-making and transparency in management. We undertake measures that lead to these outcomes.
The group is also aware that, as a member of society, the fundamentals of corporate governance lie in compliance. We engage in business activities in full compliance with applicable laws, regulations, and the articles of incorporation. We adhere fully to societal norms.

Corporate Governance Structure

Togami Electric operates an audit and supervisory committee with three appointed directors (one internal director and two external directors) who serve as committee members. The goal of this structure is to strengthen the supervisory functions of the board of directors by conducting audits from a legal perspective. This ensures all actions taken are appropriate and further strengthen the company’s corporate governance.

The board of directors consists of eight members, including the three audit and supervisory committee members. Regular board meetings and extraordinary meetings are held as needed to discuss and decide on important matters.

As a supplementary body to the board of directors, an Executive Committee consisting of directors (excluding audit and supervisory committee members), directors who also serve as full-time audit and supervisory committee members, and executive officers is convened on a weekly basis.

An Internal Audit Office exists as a body reporting directly to the President & CEO. The President & CEO issues instructions and orders to the Internal Audit Office regarding internal controls and receives reports from them.

Togami Electric retains Yasunaga Legal Professional Corporation as its legal advisor.

Internal Control System

Basic Approach to the Internal Control System and Its Implementation Status

In accordance with the Regulations for Enforcement of the Companies Act, Togami Electric has set forth the following basic policies regarding the internal control system for Togami Electric Group and its subsidiaries.
Togami Electric implements the Togami Electric Group Internal Control System in accordance with the following policies building a more efficient system through continuous reviews and improvements.

1．System to ensure that the directors and employees of Togami Electric and its subsidiaries carry out their duties in full compliance with laws, regulations, and the articles of incorporation

Togami Electric and its subsidiaries comply in good faith with all laws, regulations, the articles of incorporation, the Togami Electric Group Corporate Code of Conduct, and the Togami Electric Group Compliance Regulations. Togami Electric and its subsidiaries engage in business activities with utmost respect for social norms, based on the firm recognition that compliance is fundamental to corporate governance.
To ensure the effectiveness of the system, the Internal Audit Office audits each department’s management system and business processes for legality and appropriateness based on applicable laws, articles of incorporation, and other regulations. It reports regularly to the Board of Directors and to the Audit & Supervisory Committee. The Internal Audit Office serves as liaison to the Administration Division and provides internal communications and employee training on compliance, as necessary.
A hotline system has been established in accordance with the Togami Electric Group Whistleblowing Regulations to allow employees and directors, including Audit & Supervisory Committee members, to report suspected legal violations without fear of reprisal. Close liaisons with legal advisors are maintained.

2．System for storing and managing information related to the execution of duties by directors

Information related to the execution of duties by directors is recorded and stored as documents or electronic media in accordance with document management regulations. All directors, including Audit & Supervisory Committee members, can inspect these documents at any time.

3．Regulations and systems for managing risk of loss to Togami Electric and its subsidiaries

Togami Electric and its subsidiaries actively anticipate the potential risks of loss arising from compliance violations, environmental issues, disasters, quality deficiencies, and overseas production and sales problems. We strive to prevent such risks in advance.
In cases of an emergency with significant potential impact on management arises, or appears highly likely, a crisis management team is formed immediately. The director in charge will enable swift action, including consultations with legal advisors and other external parties.

4．System to ensure efficient execution of duties by directors of Togami Electric and its subsidiaries

Togami Electric and its subsidiaries hold Board of Directors meetings when appropriate. The Executive Committee, composed of executive officers and others, convenes on a weekly basis to ensure that duties are executed efficiently and to allow directors to monitor the execution of these duties. The Audit & Supervisory Committee members selected by the committee attend each meeting to monitor the execution of duties from the perspectives of corporate governance and compliance.
The medium-term business plan forms the basis for the execution of duties. Performance is routinely checked against the plan, with revisions made where necessary.

5．System to ensure the appropriateness of operations of Togami Electric and its subsidiaries

The director in charge of affiliated companies instructs each group company to comply strictly with the Togami Electric Group Corporate Code of Conduct and the Togami Electric Group Compliance Regulations and to establish internal control systems. Each group company assigns a person responsible for internal control, who works in coordination with the Togami Electric Internal Audit Office to ensure the legality and appropriateness of management systems and business processes throughout the Togami Electric Group.
Togami Electric and its subsidiaries resolutely confront any anti-social forces or organizations that threaten the order and safety of civil society, refusing to respond to unreasonable demands and taking a bold stance in accordance with the spirit of the Togami Electric Group Corporate Code of Conduct.

6．System for reporting on matters related the duties of directors and employees of Togami Electric subsidiaries

To the greatest extent possible, autonomy is given to subsidiary companies, taking into account the uniqueness of their business practices and management efficiency. Subsidiaries regularly report to Togami Electric on their business activities and consult with the company when necessary depending on the urgency and importance of issues.

7．System to ensure the reliability and appropriateness of financial reporting

Togami Electric and its subsidiaries recognize maintaining and improving the reliability of financial reporting is a key responsibility under the Financial Instruments and Exchange Act and the Togami Electric Group Corporate Code of Conduct. Thus, a system for financial reporting is used to ensure the reliability and appropriateness of financial reporting.
The effectiveness of this system is evaluated periodically to ensure ongoing improvement.

8．Matters concerning directors and employees who assist the Audit & Supervisory Committee in its duties, their independence from other directors, and the effectiveness of instructions provided to such directors and employees

The Board of Directors and the Audit & Supervisory Committee discuss and choose employees who should assist the committee in its duties. Such employees are appointed from within the Internal Audit Office.
When assisting the committee, these employees report directly to the Audit & Supervisory Committee and maintain their independence from directors who are not Audit & Supervisory Committee members.
The effectiveness is periodically evaluated to ensure ongoing improvement.

9．System for reporting to the Audit & Supervisory Committee by directors and employees of Togami Electric and its subsidiaries, and to ensure that those who report are not treated disadvantageously

Directors and employees of Togami Electric and its subsidiaries report promptly to the Audit & Supervisory Committee on incidents that might result in significant damage to the Togami Electric Group, such as serious legal violations or violations of the articles of incorporation. These events and other important compliance-related matters are reported to the hotline.
The Audit & Supervisory Committee may also request reports from directors and employees of Togami Electric and its subsidiaries whenever necessary.
Directors and employees who report to the Audit & Supervisory Committee are safeguarded from reprisal and disadvantageous treatment from filing reports.

10．Other systems to ensure effective audits by the Audit & Supervisory Committee

Audit & Supervisory Committee members attend Board of Directors meetings, regular Executive Committee meetings, and other important meetings to stay abreast of key decision-making processes. They request, when necessary, explanations regarding business activities from the directors and employees.
The Audit & Supervisory Committee exchanges information with the company’s accounting auditor (Ernst & Young ShinNihon LLC) and with legal advisors, seeking advice when needed to ensure effective audits.
Should the Audit & Supervisory Committee request the prepayment or reimbursement of expenses related to the execution of its duties, such requests shall be promptly processed unless deemed unnecessary for the performance of duties.