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Corporate Governance

Overview of Corporate Governance

  1. 1Details on corporate organs
    Following the capital restructuring by the new partners in the form of a consortium of companies led by Bain Capital in January 2023, Proterial laid out a policy of utilizing the new partners’ financial strength, knowledge, and expertise within the Company’s management to make large-scale investments and implement reforms in response to changes in the market environment. For the purpose of more prompt and flexible decision-making and execution of management strategies based on this policy, during January 2023 the Company shifted from a Company with Nominating Committees, etc. system to a Company with Audit & Supervisory Board. The details of each organ are as follows.
    1. aThe Board of Directors is an organ with purposes to make decisions on the Company’s business execution and supervise the execution of duties by Directors and Executive Officers, and holds the authority to decide matters provided in the Articles of Incorporation of the Company and the Board of Directors Rules as well as in laws and regulations.
      The Board of Directors consists of the following six Directors (as of June 29, 2023).
      Representative Director,
      Sean M. Stack
      Representative Director,
      Kazuya Murakami
      Director,
      Yuji Sugimoto
      Director,
      Masashi Suekane
      Director,
      Joseph Robbins
      Director,
      Hidemi Moue
    2. bThe Auditors abide by the audit policies established by the Audit & Supervisory Board, and attend the Board of Directors and other important meetings, for example, in order to audit the execution of duties by the Directors. The Auditors consist of the following three individuals (two of whom are Outside Auditors), who together form the Audit & Supervisory Board (as of January 5, 2023).
      Auditor
      Kenichi Nishiie
      Auditor
      Shunsuke Nakahama (Outside Auditor)
      Auditor
      Yuriro Ogawa (Outside Auditor)
    3. cAlong with introducing an Executive Officer System, the Company established the Executive Committee to ensure that the Representative Director, who consecutively serves as President and CEO, makes decisions on and executes business operations in compliance with laws and regulations and the Articles of Incorporation, as well as more efficiently.
      Important matters regarding decisions on business operations delegated to the Representative Director, who consecutively serves as President and CEO, by the Board of Directors are first deliberated by the Executive Committee, which is composed of Executive Officers ranked Managing Executive Officer or above. Following these deliberations, the President and CEO makes a decision. The Executive Officers consist of the following 15 individuals (as of October 1, 2023).
      Chairman, President & CEO
      Sean M. Stack
      Executive Vice President
      Kazuya Murakami
      Managing Executive Officer
      Tony I. Cha
      Managing Executive Officer
      Yutaka Nakashima
      Managing Executive Officer
      Hisaki Masuda
      Executive Officer
      Ryoichi Aita
      Executive Officer
      Randy Ahuja
      Executive Officer
      Yoshihiro Anmo
      Executive Officer
      Katsura Ishikawa
      Executive Officer
      Toru Taniguchi
      Executive Officer
      Natsuki Tokubuchi
      Executive Officer
      Kenji Minegishi
      Executive Officer
      Hajime Murakami
      Executive Officer
      Motohide Mohri
      Executive Officer
      Toru Yamamoto
  2. 2Status of Outside Directors and Officers
    Among the Audit & Supervisory Board Members, Shunsuke Nakahama and Yuriro Ogawa serve as Outside Auditors. Mr. Nakahama is also an Outside Auditor for EVIDENT CORPORATION. Although the Company engages in product transactions, etc., with EVIDENT CORPORATION, the trading value is minimal. Furthermore, Mr. Nakahama and Mr. Ogawa are partners at Bain Capital Private Equity (Japan), LLC. As the parent of the Company, K.K. BCJ-52 is a fully-owned subsidiary of K.K. BCJ-51. Bain Capital Private Equity, LP, and the investment funds to which it provides investment advice; the funds which Japan Industrial Partners, Inc., manages, operates, and provides information to; and the funds operated by Japan Industrial Solutions Co., Ltd., indirectly hold all shares in K.K. BCJ-51.
  3. 3Internal Control System Development Progress (including development progress regarding systems intended to ensure the appropriateness of operations by the Company’s subsidiaries)
    The Company resolved its basic policy on the internal control system pursuant to the Companies Act at a meeting of the Board of Directors, and is now implementing this system. The details of this basic policy are as follows:
    1. 1Systems to Ensure the Compliance of the Execution of Duties by the Company’s Directors with Laws and Regulations and the Articles of Incorporation
    2. 2Systems for the Retention and Management of Information Related to the Execution of Duties by the Company’s Directors
    3. 3Rules and Other Systems for Managing the Risk of Loss of the Company and its Subsidiaries
    4. 4Systems to Ensure the Efficient Execution of Duties of Directors of the Company and Directors of its Subsidiaries
    5. 5Systems to Ensure Compliance of Employees of the Company as well as Directors and Employees of its Subsidiaries in Executing Their Duties with Laws and Regulations and the Articles of Incorporation
    6. 6Systems for Reporting Matters Relating to the Execution of Duties by Directors of Subsidiaries to the Company
    7. 7Other Systems to Ensure Appropriate Operations of the Company as well as the Corporate Group Consisting of the Company, its Parent Company and Subsidiaries
    8. 8Matters concerning Employees to Assist with the Duties of the Company’s Audit & Supervisory Board Members
    9. 9Matters to Ensure the Independence of Employees Referred to in the Above Item (8) from Directors, as well as the Effectiveness of Instructions of the Company’s Audit & Supervisory Board Members Given to the Said Employees
    10. 10Systems for Reporting to the Company’s Audit & Supervisory Board Members and Systems to Ensure Prohibition of Disadvantageous Treatments of a Person Who Made Such Reports
    11. 11Matters Concerning the Policy on Prepayment or Reimbursement Procedures and Other Treatments of Expenses or Debt that Are Incurred in the Course of Executing the Duties of the Company’s Audit & Supervisory Board Members
    12. 12Other Systems to Ensure the Effective Execution of Audits by the Company’s Audit & Supervisory Board Members
  4. 4Risk Management System Development Progress
    Each Executive Officer identifies and analyzes business risks including changes in political, economic and social situations, currency fluctuations, rapid technological innovations, as well as changes in customer needs, examines measures against such risks, and reviews these measures whenever necessary through discussions at the Board of Directors, the Audit & Supervisory Board, the Executive Committee and other meeting bodies. In addition, the Company avoids, prevents and manages the risks by ensuring each site of the group companies develop systems to immediately share information of materialized risks relating to compliance, antisocial forces, investments, finance, procurement, the environment, disasters, safety, quality, human rights, information security, export control, legal affairs, etc. with respective business divisions in charge, as well as ensuring each corporate administrative division prepare internal rules, guidelines, etc., conduct education and enlightenment activities, preliminary checks, audits on business operations, etc. and cooperate with the relevant internal business divisions. Moreover, the Company established the Risk Management Committee as an organ to summarize various business risks surrounding the Group and contingency plans for those risk, and to evaluate their coverage and weighting in an effort to strengthen the risk management capabilities of the Group. In addition to ongoing formulation of, training for and review of BCPs assuming large-scale of earthquake etc., the Company established a safety confirmation system for confirming the safety of employees and their families via the internet in the event of a disaster.
    Regarding misconduct related to quality, the monitoring function for quality compliance risk did not function adequately, and it was unable to fully grasp the possibility of misconduct or the occurrence of misconduct as a problem, which we believe is one of the main factors for misconduct continued. Therefore, the Company has put forward strengthening monitoring related to quality compliance as one measure to prevent recurrence, and will implement the following: (1) in addition to the first line of defense, which is the internal control system for sales, development, design, and manufacturing, also review the second line of defense, which is internal audits (integrity audits) by the Corporate Quality Assurance Division, and conduct audits of the Corporate Quality Assurance Division by the Internal Auditing Office, which is the third line of defense, (2) establish a process whereby the Audit & Supervisory Board expresses opinions regarding the results of the aforementioned audits by the Corporate Quality Assurance Division and the Internal Auditing Office in (1), and in the event that improvement is required, follow up on how improvement was carried out, and establish an operational system for confirmation from an objective point of view, and (3) regarding details of risk management activities conducted by the Corporate Quality Assurance Division and Chief Quality Officer (CQO), information will be regularly shared among management executives, the suitability and necessity of cross-divisional measures will be discussed, and made the subject of internal audits.