Governance

The Hagiwara Electric Group is fully aware of the importance of corporate governance, and we are working to improve the transparency and soundness of our management. Compliance is at the heart of corporate governance. In all our business activities, not only do we strictly comply with laws and regulations, but we also act with the awareness that we are a member of society.

As a pure holding company, we have adopted the structure of a company with an Audit and Supervisory Committee. Our Board of Directors currently consists of six Directors (including two outside Directors, and excluding the Directors who are members of the Audit and Supervisory Committee) and three Directors who are members of the Audit and Supervisory Committee (including two outside Directors).
The three Directors who are on the Audit and Supervisory Committee constitute the Audit and Supervisory Committee, and one of those Directors is a full-time member of the Audit and Supervisory Committee. To ensure the effectiveness of corporate governance while enabling swift and agile business execution, we have introduced an executive officer system that clearly delineates the roles of decision-making and supervisory functions from those of business execution. Under this system, executive officers are responsible for executing operations according to their rank, and Directors are appointed from among executive officers at a certain level or above.
Our Directors (excluding the Directors who are members of the Audit and Supervisory Committee) attend monthly management meetings to discuss and report on the overall management of the Hagiwara Electric Group. The full-time Audit and Supervisory Committee member attends management meetings as an observer.
Furthermore, with the aim of cross-sectionally promoting overall initiatives for corporate governance and sustainability management at all group companies, we have established our Sustainability Committee, which is chaired by our Representative Director, President Executive Officer. The Sustainability Committee regularly verifies compliance and the appropriateness and effectiveness of internal control systems, and makes improvements and corrections regarding problem points. It also strengthens risk management and works on resolving various issues related to the SDGs and ESG.
With regard to external audits, we have signed an audit agreement with KPMG AZSA LLC, and they conduct accounting audits and internal control audits from an independent standpoint.

The Hagiwara Electric Group transitioned to a pure holding company structure on April 1, 2018. As a holding company, we have established a Board of Directors, an Audit and Supervisory Committee, and an accounting auditor, and each operating subsidiary has also established its own Board of Directors and auditors in order to achieve balance between management monitoring and business execution, as well as to ensure highly transparent management and improved agility of the Group as a whole.

The Hagiwara Electric Group appoints multiple outside Directors who maintain a certain distance from the execution of business operations. Our Board of Directors is composed within the scope defined by the Companies Act and our Articles of Incorporation, ensuring that it effectively fulfills its roles and responsibilities. The board is structured to maintain a well-balanced combination of knowledge, experience, and capabilities, while achieving both diversity and appropriate size.
The matrix of skills held by Directors is as follows.

The Company has established the "Appointment Standards and Independence Standards for Outside Directors", and appoints outside Directors who satisfy the criteria of these standards as independent officers.

In addition to the requirements for externality under the Companies Act, appointees shall possess a sincere personality, a high level of insight and capability, broad-ranging knowledge and experience and a record of achievements.

Of the outside Directors, outside officers who do not fall under any of the following items shall be determined to have independence.

Newly appointed Directors receive onboarding training, during which they are provided with essential legal knowledge and an explanation of their expected roles and responsibilities. In addition, we conduct annual compliance training for all Directors and offer opportunities to participate in external seminars and networking events to support the acquisition of necessary knowledge and a deeper understanding of their duties.
For outside Directors, we also provide explanations of the Company’s business operations, financial status, and other relevant matters as needed.

As a voluntary advisory body to the Board of Directors, the Company has established the Nomination and Remuneration Advisory Committee. The committee consists of two internal Directors and four outside Directors (including four independent outside Directors), ensuring that independent Directors form the majority. The committee deliberates on matters related to the nomination and remuneration of Directors that are referred by the Board of Directors, and provides recommendations regarding their appropriateness and other relevant considerations.
The Board of Directors makes decisions regarding the nomination and remuneration of Directors based on the recommendations provided by the Nomination and Remuneration Advisory Committee. The matters to be deliberated by the committee upon referral from the Board, as well as the composition of the committee members, are as follows.

The Audit and Supervisory Committee conducts audits covering the execution of duties by Directors, the overall status of operations related to group management, the accuracy of business reports and other disclosures, the appropriateness of audits conducted by the Accounting Auditor, and the effectiveness of the internal control systems. Regarding accounting audits, the Audit and Supervisory Committee holds quarterly meetings with the Accounting Auditor to facilitate mutual coordination through discussions, reporting, and information exchange—such as sharing identified risks during audit planning and audit results.
The full-time member of the Audit and Supervisory Committee collaborates with the Internal Audit Department by participating in internal audits. Additionally, the Committee convenes a monthly Audit Liaison Meeting, composed of Audit & Supervisory Board Members of group companies and the Chairperson of the Internal Control Committee, to gather information and enhance the audit environment.

The Company has established the following basic policy regarding the determination of the amount of compensation for officers or the methods of its calculation.

In addition, in order to exercise voting rights appropriately in accordance with the above standards, when considering whether to approve or disapprove proposals requiring careful consideration, the Company will obtain opinions from the relevant departments and, if necessary, engage in dialogue with the company issuing the shares.

Through dialogue with all our shareholders and investors, we hope to provide a better understanding of our company and solicit diverse opinions in order to increase management efficiency and transparency and increase our corporate value.

The Representative Director, President Executive Officer is responsible for interacting with investors at company briefings, and investor relations officers appointed by the Representative Director, President Executive Officer are generally responsible for conducting one-on-one meetings with investors.
Meetings take place online and by telephone with the aim of facilitating dialogue with a larger number of investors. Presentation materials and summaries of Q&A sessions are also published on the company website.
Feedback received through IR activities is passed on to the Board of Directors, management, and relevant departments as necessary in order to share and utilize that information.
Going forward, we shall endeavor to provide appropriate and fair information disclosure for all our shareholders and investors.

Based on the belief that it is essential to accurately deal with various risks that may have a significant impact on the management of the Hagiwara Electric Group, we are striving to develop and bolster our risk management system through measures that include identifying and preventing potential risks through communication with stakeholders and formulating measures to minimize damage in the event that risks materialize.

Based on control and administration by the Sustainability Committee, we have established the Risk Management Committee at our group with the aim of promoting company-wide risk management. The Chairperson of the Committee is appointed from among the members of the Board of Directors. The Risk Management Committee meets once every quarter, primarily composed of members appointed by the Chairperson, with participation from Audit and Supervisory Committee members and heads of the Internal Audit Department. The main activities and key matters discussed by the Risk Management Committee are reviewed by the Sustainability Committee, and depending on their significance, resolutions are made by the Board of Directors. This process ensures appropriate oversight and guidance by the Board.
In recognition of the importance of information security and disaster prevention/BCP (Business Continuity Planning), we have established cross-functional frameworks for individual initiatives. These frameworks enable the identification of risks and consideration of countermeasures from specialized perspectives. Through appropriate activities in each area and the organic collaboration between committees and departments, our group strives to comprehensively identify risks and implement appropriate measures to mitigate them, thereby enhancing the effectiveness of our overall risk management system.

The following 13 items have been identified as risks to the operations of the Hagiwara Electric Group, based on discussions at meetings of the Board of Directors of Hagiwara Electric Holdings Co., Ltd., and these countermeasures are defined.

We have established a Risk Management Committee with the aim of enabling accurate management and practical responses to various risks that may affect the Group’s business operations. In addition, we have formulated Risk Management Regulations and developed a comprehensive risk management framework. The Risk Management Committee identifies key risks and initiates efforts to mitigate them.
As part of the Business Continuity Plan (BCP), we conduct annual safety confirmation tests and evacuation drills for all employees. Furthermore, tabletop exercises and mobilization tests are carried out as needed for members of the Disaster Response Headquarters.
In terms of information security measures, we implement targeted email attack simulations, cyber incident response drills based on emergency scenarios, and enhanced security protocols in line with the introduction of remote work systems.

The Hagiwara Electric Group recognizes that ensuring information security is one of the most important issues the Group face, and we have established a basic policy on information security with the aim of protecting the Group's information assets.

Under the supervision and management of the Sustainability Committee, the Group has established a Group Information Security Committee, which discusses information security measures and matters to be considered, compiles measures to be implemented, and works to enhance risk management, etc. It also conducts information security training for all Group employees to ensure awareness and diligence regarding information security.

The Hagiwara Electric Group implements systemic measures such as antivirus and Endpoint Detection and Response (EDR), information security education for all Group employees, and targeted attack e-mail training. We raise the security awareness of each employee so that they can respond to cyber attack risks that become more sophisticated every day.

As a prerequisite for taking on challenges and reforming, all our group employees have a strong sense of responsibility as members of society and will ensure thorough compliance.

The Hagiwara Electric Group has established the Hagiwara Electric Group Corporate Code of Conduct and the Hagiwara Electric Group Corporate Code of Behavior as its basic policies for compliance, and it has established policies and guidelines for individual matters to ensure thorough compliance. (These include the handling of personal information, preventing harassment, revenue recognition accounting standards, subcontracting operations, and export license applications.)

Under the supervision and management of the Sustainability Committee, the Group has established an Internal Control Committee, which regularly examines the adequacy and effectiveness of compliance and internal management systems, improves and corrects problems, and works to enhance internal control and compliance-related risk management, etc. Furthermore, this committee implements compliance education for the employees of all group companies, and thereby works hard to ensure thorough legal compliance.

The Hagiwara Electric Group conducts a variety of training programs, including compliance training, for all Group employees in order to familiarize them with our policies and improve their understanding. We are also striving to strengthen our systems through complementary measures, such as our whistleblowing system and intellectual property checking management (to avoid the risk of patent infringement).

To strengthen our compliance framework, we have established a Corporate Ethics Hotline as part of our internal reporting system.
The reporting channel is operated by an external outsourcing provider, ensuring that any reports received are promptly communicated to the appropriate personnel within the Company. Reports can be made anonymously. Those responsible for investigating and addressing internal reports are required, under internal regulations, to strictly manage the content of the report, the investigation process, and any related evidence. Retaliation or any disadvantageous treatment against whistleblowers is strictly prohibited. In addition, the operation of this system is independently monitored by outside Directors to ensure fairness and transparency.

Our group has established and thoroughly communicated the Hagiwara Electric Group Corporate Code of Conduct, which states that we will conduct business activities in accordance with laws, social norms, and common sense, and that we will not engage with any individuals or organizations that may negatively impact social order or the sound operation of our business.
Furthermore, we have established the Anti-Social Forces Countermeasure Regulations and built a framework to eliminate anti-social forces, with the General Affairs Department serving as the designated contact point. We are a member of the Aichi Prefectural Council for the Elimination of Violence and actively participate in seminars. In addition, we collaborate with the Prefectural Police Headquarters and local police stations to gather information and take action against anti-social forces. All executives and employees are required to submit a written confirmation stating that they have no ties to anti-social forces. For new business partners, we mandate a pre-screening by the Legal Department before any negotiations begin, and we also conduct regular rolling checks to ensure continued compliance.
As a general rule, we require the signing of a Basic Transaction Agreement that includes clauses for the exclusion of organized crime groups and other anti-social forces when engaging in ongoing business relationships. Through this approach, we are actively building and operating a framework to eliminate anti-social forces from our business activities.