Governance | NPC incorporated

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Corporate Governance

I. Basic Policy Regarding Corporate Governance and Corporate Attributes

1. Basic Policy

NPC Incorporated (the Company) fulfills its social responsibility to all stakeholders, including shareholders, employees, customers as well as local communities, by taking initiatives in maximizing corporate value, enhancing business management systems with greater transparency and prompt response to business environment changes, and thoroughly complying with laws and regulations. In particular, the Company has set the "NPC Code of Conduct" and continuously informs this of all directors and employees. In addition, the Company keeps every board member and employee fully informed to comply with laws and regulations as well as Company Rules and Regulations.

[Reason for not implementing principles of Corporate Governance Code]
The Company has been implementing 5 basic principles of the Code.


2. Corporate Attributes

Stock Exchange Listings and Market Classification Mothers Market of the Tokyo Stock Exchange
Fiscal Year-end August
Industry Machinery
Number of Employees at the End of Fiscal Year 2021 (Consolidated) 100 or more and less than 500
Net Sales at the End of Fiscal Year 2021 (Consolidated) Less than 10 billion Japanese yen
Number of Consolidated Subsidiaries at the End of Fiscal Year 2021 Less than 10

III. Status of Implementation of Measures Related to Shareholders and Other Stakeholders

1. Measures Toward Revitalization of the General Meeting of Shareholders and Facilitation of Exercise of Voting Rights
 Supplementary Explanation
Prompt Delivery of Convocation Notice for General Meeting of Shareholders Measures are taken to promptly deliver the Convocation Notice, with the objective of delivery 3 weeks prior to the meeting date. As soon as the preparation finishes, the Notice is disclosed on the homepages of the TSE and the Company in advance of the delivery.
Setting the General Meeting of Shareholders on dates which fall outside those when other companies are holding their General Meeting of Shareholders Since the fiscal year of the Company ends in August, it is considered possible to set dates which fall outside those when other companies are holding their General Meeting of Shareholders.
Providing English Convocation Notice (Summary) Summarized Convocation Notice translated into English is provided on the Company's homepage.
Other Since fiscal year 2008, Conference for Shareholders is held after the General Meeting of Shareholders, for the purpose of IR and interactive communications between shareholders and the Company. However, Conference for Shareholders was not held for FY2020 due to COVID-19.

II. Overview of Business Management Organization and Other Corporate Governance Systems Related to Managerial Decision-Making, Business Execution, and Management Supervision

1. Items Related to Organization Structure and Operations, etc.
Form of Organization Company with the Board of Auditors

■ Directors

Number of Directors in the Articles of Incorporation 7
Term of Directorship in the Articles of Incorporation 2 years
Chairman of the Board of Directors President of the Company
Number of Directors 5
Election of Outside Directors Elected
Number of Outside Directors 2
Number of Outside Directors Appointed as Independent Directors 2

■ Auditors

Establishment of the Board of Auditors Established
Number of Auditors in the Articles of Incorporation 4
Number of Auditors 3
Cooperation between Auditors, Accounting Auditors and Internal Auditing Department

The auditors and the Internal Auditing Department cooperate with the accounting auditor by exchanging information and opinions as required concerning the findings of audits conducted by the accounting auditor. Further, the accounting auditor holds a report meeting to conduct a hearing concerning the results of quarterly review and of the fiscal-year-end audit.
The auditors cooperate with the Internal Auditing Department through mutual coordination, such as information sharing, in an endeavor to conduct effective audits. Upon formulation of annual audit plans for auditor audits, any issues highlighted by such internal audits shall be made the subject matter of audits as needed, so as to effectively utilize the cooperation with internal audits.

Election of Outside Auditors Elected
Number of Outside Auditors 2
Number of Outside Auditors appointed as Independent Directors 2

■ Independent Director

Number of Independent Directors 4

■ Incentives

Incentive Policy for Directors Other

The restricted stock remuneration plan has been introduced as mid- to long-term incentives for Directors excluding Outside Directors, aiming at improving sustainable corporate value of the Company and sharing profits with our shareholders.

■ Directors' Remuneration

Disclosure Status of Remuneration of Each Director Remuneration of each director is not disclosed
Policy for deciding Remuneration of Each Director and/or the Calculation Method Selected
Disclosure of Policy for Deciding Remuneration of Each Director and/or the Calculation Method

The Company pays base remuneration and restricted stock within the limitations of the remuneration approved by the General Meeting of Shareholders.

The Board of Directors decides the calculation method of base remnueration, taking into consideration of social standards, the Company's business results, balance between employees' salaries, etc. while the Company's CEO decides the amount.

As to the restricted stock, which is for Directors excluding Outside Directors, the Board of Directors decides the amount, taking into comprehensive consideration of various factors including level of individual contribution to the business results of the previous fiscal year, etc.    

Support System for Outside Directors (Outside Auditors)

The General Affairs Department provides support for outside directors and outside auditors on matters related to respective duties. The outside directors and auditors attend the Board of Directors' meeting with meeting agendas as well as related materials previously distributed to them. In the Company, all important matters are introduced and reported at the Board of Directors' meeting, thus all important matters are communicated to the outside directors and auditors.

2. Items related to Functions of Business Execution, Audit and Supervision, Nominations, and Decisions on Remuneration, etc. (Overview of the Current Corporate Governance System)

The Board of Directors of the Company is made up of 5 directors (including 2 outside directors) and holds meetings once a month or more to engage in management policies, business planning decisions, as well as to confirm the status of business execution and thorough compliance with laws and regulations.

The Board of Auditors of the Company is made up of 1 standing auditor and 2 part-time auditors, and holds meetings once a month or more. Each auditor attends the Board of Directors' meeting to inspect the status of deliberations and provide objective and impartial opinions on overall management or on particular issues. As the outside auditors appointed as directors, Teruaki Kakimoto attended 93.75% and Hiroyuki Shinbo 100% of the Board of Directors' meetings respectively in the fiscal year 2019. In addition, auditors receive debriefings from accounting auditors, conduct hearings on the status of execution of duties from directors, and also attend important meetings apart from the Board of Directors' meetings such as management meetings, general managers meetings, etc. to provide objective and impartial judgments and opinions under the system, which enables auditors to inspect the execution of duties by directors.

Under the support system for the auditors, the General Affairs Department provides support for matters related to audit duties, and upon requests by auditors, employee(s) who assist their duties shall be assigned. In addition, assignment, transfer, assessment and reprimand of the employee(s) shall be performed with consideration of the auditors' opinions in order to ensure the independence of the employee(s) from directors.

As for the election status of an auditor who holds financial accounting knowledge, the Company elects Hiroyuki Shinbo, certified as a tax accountant and a public accountant, as an outside auditor.

As for the election status of the outside auditors, it is confirmed that the 2 outside auditors do not have any personal relationship, business relationship nor any other interests including shareholdings with the Company from the past to present. Also, it is confirmed that there is no conflicting interests between shareholders and the outside auditors.

The Internal Control Committee is chaired by the President & CEO, and comprised of the directors and the managers of the relevant departments. It has been strengthening the internal control system and the risk management system.

As for the internal audits, the Internal Auditing Department (1 internal auditor) and conducts internal audits on the status of business execution of all Company divisions including overseas subsidiaries based on the "Internal Auditing Regulation". The Internal Auditing Department formulates annual internal audit plans with an approval from the president and audits whether the business activities of each division are being implemented in compliance with laws and various regulations. In addition, specific indications and assistance are pointed out in order to improve the operation situation and operational efficiency. Additionally, efficient internal audit procedures are in performance by cooperating with the auditors and accounting auditors, receiving appropriate advices.

With regards to accounting audits, an audit contract is concluded with Ernst and Young ShinNihon LLC based on the Financial Instruments and Exchange Law (Article 193-2-1) and corporate law. The certified public accountants who execute the audit duties of the Company are Yukiyasu Yamakawa and Kenji Sato. In addition, 13 certified public accountants and 13 others are in assistance of the duties.


3. Reason for Adopting the Current Corporate Governance System

The current system is adopted as it fully secures the objectivity and neutrality of management surveillance system and is also enhanced by electing 1 director and 2 auditors from outside the company, against the Board of Directors, a decision-making body of the Company.

2. Investors Relations Activities

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 Supplementary ExplanationExplanation by Representative
Establishment of Disclosure Policy Disclosure Policy is established and disclosed on the Company's homepage.
Disclosure Policy
Holding Regular Briefing Sessions for Individual Investors Briefing sessions for individual investors are held as required according to arrangements by securities firms, etc. Factory tours for individual investors are also held at the Matsuyama Factory. Yes
Holding Regular Briefing Sessions for Analysts and Institutional Investors Activities are conducted twice a year as standard; following fiscal term's results and the second quarter financial results. Further, in addition to briefing sessions, Company information and performance explanations in the form of individual interviews are also provided as required and IR activities are conducted continuously with the objective of creating stable shareholders. Yes
Homepage Publication of IR Documents Apart from the disclosure of materials designated by law, press releases are promptly published on the Company's homepage. Also, the information of briefing sessions for individual investors is updated on [IR Calendar] page regularly.
Investor Relations
Establishment of IR-related Department General Affairs Department is responsible for IR. The persons in charge are as follows:
Takashi Takimoto at General Affairs Department
3. Measures to Respect the Position of Stakeholders
 Supplementary Explanation
Internal Rules Stipulated for Respecting the Position of Stakeholders The "NPC Code of Conduct" has been established, stipulating respect for the position of stakeholders, and is made prevalent through continuous communication with all board members and employees.
Implementation of Environmental Activities, CSR Activities, etc. CSR activities are disclosed on the Company's homepage, etc.
Formulation of Policies on Information Provision to Stakeholders IR-related information is released through the Company's homepage, based on the policy stated in the "Investor Relations Activity".
Other The Company has no female board members currently, however, the Company has appointed 2 female managers (about 5.7 percent of all the managers).

IV. Establishment of internal Control System

1. Fundamenal Position and Framefork on Internal Control System
1. Framework to ensure that officers and employees of the Company and its subsidiaries, in execution of their duties, comply with the applicable laws and the Company's Articles of Incorporation
  • In order to ensure that corporate activities are predicated on adherence to the applicable laws, the Company's Articles of Incorporation and social ethics, the president will thoroughly communicate with officers and all the employees on an ongoing basis.
  • The Company establishes the "Internal Control Committee" for which the president assumes ultimate responsibility, and which operates broadly across the group so as to build, maintain, and improve in a compliance risk management framework.
2. Matters pertaining to maintenance and management of information concerning directors in execution of their duties
  • Information concerning directors in execution of their duties must be maintained in accordance with the "Rules and Regulations for Document Management." Directors and auditors shall be entitled to access such documents when necessary.
3. Regulations and other framework pertaining to managing risk of losses
  • Total control of the risk management of the Company and its subsidiaries shall be executed by the "Internal Control Committee" specified in Item 1 (2) above, which shall improve its framework of group-wide risk management.
4. Framework to ensure the efficiency in the execution of directors' duties
  • As a basis of the framework to ensure directors in executing their duties efficiently, the Company will hold the Board of Directors' meeting once a month, and hold an Extraordinary Directors' Meeting when necessary so as to make prompt decisions regarding important issues.
  • In relation to execution of duties based on decisions at the Board of Directors' meeting, responsible persons and their responsibilities shall individually be specified in accordance with the "Rules and Regulations on Organization."
  • The Company shall establish mid-term and annual management plans, as well as policies for business execution and numerical targets. In addition, each division will work to achieve their goals and conduct reviews on a regular basis.
5. Framework to ensure the appropriateness of business activities carried out by the corporate group comprising the Company and its subsidiaries
  • With regard to the management of subsidiaries, such management shall be performed in accordance with the "Rules and Regulations on Management of Affiliated Companies," and departments specified in the "Rules and Regulations on Management of Affiliated Companies" shall work closely with the "Internal Control Committee" to improve group management.
6. Matters concerning auditors' request for assigning assistants to support their duties
  • Upon requests by auditors, employee(s) who assist their duties shall be assigned. Assignment, transfer, assessment and reprimand of employee(s) shall be performed with consideration of the auditors' opinions in order to ensure the independence of such employee(s) from directors.
7. Framework to facilitate communication with auditors by directors and employees and other reporting, and framework to promote effective execution of auditors' auditing activities
  • Directors and employees shall notify auditors about important issues which affect work or business performance of the Company and its subsidiaries, and make reports without delay in cases in which they have known the facts of violation of the applicable laws or the Company's Articles of Incorporation or dishonest act in relation to performance of duties, or facts that cause damage to the Company or its subsidiaries. Auditors shall be entitled to request directors and employees to make reports.
  • Auditors shall be entitled to attend the Board of Directors' meeting as well as meetings of the Company and its subsidiaries when necessary to identify the state of business performance, and request explanations from directors and their employees.
  • Auditors shall exchange opinions with the president on a regular basis to foster communications, and strive to exchange information with accounting auditors and the Internal Auditing Department to ensure effectiveness of auditing of the Company and its subsidiaries.
8. Framework to ensure that individuals who have made reports to the Audit & Supervisory Board as described in 7 above will not be put at a disadvantage as a result of such reports
  • Every effort shall be made to ensure that directors and employees of the Company and its subsidiaries, who make reports to a member of the Audit & Supervisory Board, will be protected and not be treated unfavorably as a result of the report given.
2. Other Items related to the Corporate Governance System
The Company, setting prompt, accurate and fair information disclosure as basic policy, proactively discloses significant information regarding its business and financial conditions, following the "Financial Instruments and Exchange Act" and Tokyo Stock Exchange's "Securities Listing Regulations". In addition, the Company has established the "Regulations for Insider Information". By performing complete control of insider information as well as building company structure for enhancing its reliability and transparency under the regulation, the Company maintains and strengthens the reliability in society.
The Group's Timely Disclosure System
  • a.Information-handling officer is appointed for the purpose of controlling insider information.
  • b.ach employee works on preventing internal and external information leakage, as well as strictly controling insider information.
  • c.Each managing director is expected to promptly inform the president and the Information-handling Officer when an important incident takes place.
  • d.Information-handling Officer shall take the prescribed procedure and disclose the insider information, when it is confirmed necessary in the meeting with the president and other officials.
  • e.The Company proactively discloses corporate information, which is likely to affect investor's investment decisions. The Company fully understands that timely and appropriate disclosure is the foundation of healthy security markets. Furthermore, the Company attempts to always stand on the side of investors and operate prompt, accurate and fair disclosure.
2. Fundamental Position on Elimination of Antisocial Forces

In the documentation of the "NPC Code of Conduct," the Company clearly and comprehensively instructs all officers and employees regarding rejection of relations with antisocial forces, for the purpose of observation of laws, protection of the environment, and fulfillment of the Company's ethical responsibility.

Employees who detect any suspicions as to this policy should not take action on their own but immediately report the matter to the manager of Administration Department or the president, and in the event of discovery of any related problems, action shall be taken as an organization in consultation with corporate lawyers and/or the police.

In regard to partners in transactions, an internal system is established whereby Company divisions mutually perform checking prior to the start of transactions as well as on an ongoing basis, through credit investigating institutions and newspaper article searches etc., and through gathering of information from regional companies etc.

Through operational procedures documentation, the Company defines anticipated risks and strategies for avoidance, and strives to recognize, detect, and eliminate risk in its daily operating activities.


V. Other

1. Implementation of Takeover Defense
Adoption of the "Countermeasures (Takeover Defense) against Large-scale Purchases" Not adopted
Supplementary Explanation None


NPC Code of Conduct


The Company sets "NPC Code of Conduct" as a standard of action for all directors and employees, and keeps them fully inforamed to comply with it.

Also, we enhance our comploance with related laws, rules, and internal rules through dissemination and effective control.


Employee Education on Compliance

We regulary implement employee education on compliance.


Internal Reporting

We established a reporting contact office for compliance and risk control to provide proper protection to reporters. 



Stakeholder Engagement 

To continue their business, companies are required to clarify their engagement not only with direct stakeholders such as shareholders, employees, and customers, but also with broader surroundings such as environment and local communities.

We recognize that we are a member of the society that is supported by these stakeholders and endeavor to be a reliable company that responds to the social needs for our sustainable growth.  



Health and Safety of Employees

We established and comply with company standards of health and safety of emplyees for safe performance of duties without acceidents, as well as internal rules on health and safety of empolyees for realize a comfortable work environment.

We maintain and enhance the safe and healthy work environment for all the employees through internal system established according to the requirement by related laws.

Currently, remote work and reduction in working hours at the office are introduced due to the spread of COVID-19.

Employees are allowed to receive vaccination during the working hours.


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