Nifco's Corporate Governance

Fundamental policy of corporate governance

Our company has continued to grow based on the Nifco Spirit, which has been cultivated since its founding in 1967 and has a "challenge spirit" and "creativity" at its core. Based on this history, and with the determination to move forward to a further stage of growth, we have once again established our company's Purpose/Mission/Values as follows.
Starting from the "My Purpose" that each employee has, by fulfilling our Mission through our company's Values and realizing our company's Purpose, we will grow sustainably while maintaining the uniqueness of Nifco and we aim to become a company that continues to be trusted by all stakeholders, including employees, customers, shareholders, investors, users, partner companies, and local communities.

■Purpose Sparking Innovation by fastening small insights with Technology for a better world
■Mission Generate excitement as a creative company
■Values Overcoming Challenges Continuous Breakthroughs Open Communication Innovative Collaboration 

We consider it necessary to respond to the drastically changing social and economic environment flexibly and appropriately by strictly enforcing compliance and implementing appropriate risk management. At the same time, we believe it important to thoroughly disseminate and practice such principles.
Based on the above philosophy, we endeavor to fully implement corporate governance as a priority issue, and to promote reinforcement of Group management.

Nifco's Corporate Governance

(1) Brief explanation of the organizations within the company

Our Company is an Audit and Supervisory Committee Company.
There are eight directors (five of whom are external directors), three of whom are audit and supervisory committee members (two of whom are exteral directors).
Five of the eight directors on the board of directors are from outside the organization so that they can bring new perspectives and opinions differing from those within the company which can then be reflected and used in management.
In addition, our company has an executive officer system for the purpose of ensuring a clear awareness and effectiveness of the management decision-making and supervisory functions as well as the business execution function.
Furthermore,　in the past, we had established the Sustainability Committee as an advisory body to the Board of Directors, while the Risk Management Committee, the Compliance Committee, and the Information Security Committee were positioned on the executive side. Starting in fiscal 2025, the Compliance Committee and the Information Security Committee were abolished, and their functions were integrated into the Risk Management Committee. Both the Sustainability Committee and the Risk Management Committee are now positioned on the executive side.

We will explain the function of the board of directors, the audit and supervisory committee, and outside auditor as follows.

1) Board of Directors

In addition to the matters stipulated by law to be resolved by the Board of Directors, in view of the importance and nature, etc. of the business strategy and business plan formulation, the Company conducts deliberations and resolutions by the Board of Directors on matter recognized as being appropriate to be resolved by the Board of Directors.
Moreover, the management Executives of the Company are delegated to make decisions on the execution of individual
operations, based on the direction of the business strategy and business plan formation, etc. resolved by the Board of Directors.
In pursuit of speedy management, management assigns Executive Officers who are dedicated to the execution of individual operations, where the authority for the execution of operations is transferred from Directors, in order to promote acceleration of the decision-making.

2) Audit and Supervisory Committee

The audit and supervisory committee is responsible for auditing and supervising the execution of duties by the directors on the board of directors and other committees in accordance with the audit and supervisory committee’s standards.
Unlike conventional auditors, directors who are also members of the audit and supervisory committee have voting rights on the board of directors.
By giving a director in charge of auditing greater authority than a conventional auditor, we will enhance the auditing and supervisory functions of the company and further strengthen corporate governance.
The Audit & Supervisory Committee is cooperating with the accounting auditor and the internal audit department by explaining the audit plans and exchanging questions and answers at the committee meetings.

3) Outside Auditor

Our company is subject in a fair and legal manner to accounting audits conducted by KPMG AZSA LLC, which acts as the outside auditor of our company under the audit contract.
To increase the independence, objectivity, and transparency of the procedures for determining compensation, the nomination, compensation, and governance committee, run by the chairman and the majority of committee members acting as independent outside directors, was established as an advisory body to the board of directors.

(2) Corporate Governance Framework

(3) Basics of the internal control systems

We have passed resolutions on the following items to ensure that the execution of duties by directors is in compliance with laws, regulations and, the articles of incorporation and to ensure other systems are in place to assure the appropriateness of business operations.

1. System to ensure that the execution of duties by directors and employees complies with laws, regulations, and the articles of incorporation.

2. System for the storage and management of information related to the execution of duties by directors

3. Regulations and other systems for managing the risk of loss

4. System to ensure the efficient execution of duties by directors

5. System to ensure appropriate operations within the Nifco Group

6. System concerning directors and employees who are to assist the audit and supervisory committee in its duties, matters concerning the independence of these employees from the directors, and matters concerning the execution of instructions concerning such employees

7. Systems for employees and directors, excluding those who are on the audit and supervisory committee, to report to the aforementioned committee

8. System to ensure that audits by the audit and supervisory committee are conducted effectively

In the event that anti-social forces approach, such forces will be blocked and eliminated under the supervision of the risk management committee without responding to unreasonable demands, etc.
We have also concluded a memorandum of understanding with our business partners involving the strict adherence to exclude antisocial forces from any business relationship.

(4) Reason for choosing the current system of corporate governance

At the board of directors meeting held on June 24, 2021, the company resolved to amend the articles of incorporation regarding the transition to a company with an audit and supervisory committee, and the company officially transitioned on the same date from a company with a board of auditors to a company with an audit and supervisory committee.
This is to enhance the auditing and supervisory function of the board of directors and further enhance corporate governance by making members of the audit and supervisory committee, who are responsible for auditing the execution of duties by directors, members of the board of directors and granting them voting rights on the board of directors.
In addition, the Company considers management strategy, finance/capital policy, global business, legal/risk
management, IT/DX, and sustainability as important areas for its sustainable growth. It has established a system
where External Directors, who possess extensive experience and skills in each field, supervise management policies
and business execution from a fair and impartial standpoint. Moreover, two External Directors who are Audit and
Audit & Supervisory Committee Members with specialized knowledge and experience as certified public
accountants and lawyers, as well as full-time Inside Directors who are Audit and Audit & Supervisory Committee
Members with knowledge of internal affairs, conduct audits in cooperation with the Accounting Auditor and the
Audit Department. Through these supervisory and audit functions, the Company believes that the appropriateness
of business operations is ensured, and thus has adopted the current system.