Basic policy on corporate governance

One of the most important management issues for TOMY Group today is maintaining the trust of our stakeholders, including shareholders and customers, while offering continual improvements in corporate value and building on sound and transparent management practices. We will make every effort to achieve this through enhancing corporate governance and continually improving internal control systems, including enhanced self-check functions, risk management and compliance system, even as we improve operational efficiency.

Structures in place for corporate governance

• TOMY Group has adopted an auditor system
• The Board of Directors consists of nine directors (including five outside members), and the Audit & Supervisory Board consists of four members (including three outside members).

System for the performance of duties by directors

1. A regular meeting of the Board of Directors is held once each month, while an extraordinary meeting of the said Board is held as deemed necessary. These meetings are used to determine basic policies and strategies for the TOMY Group as a whole, as well as to issue decisions concerning the execution of important business operations, audit and supervise operational execution and take other relevant steps.
2. The Each Officers Meeting (the “Jomu-Kai”) has been established and is held, in principle, at least once each month for the purpose of conducting the Group’s business operations and management in a smoother and more efficient fashion. The members of the Meeting engage in versatile decision-making on matters concerning the overall implementation of the Group’s business management.
   Matters resolved at the Each Officers Meeting are reported to the Board of Directors, as deemed necessary.
3. The Board Director Nominating Committee and the Remuneration Committee, composed of outside dDirectors and/or outside Aaudit & sSupervisory bBoard members, have been established as advisory bodies to the Board of Directors and are requested to provide proposals and counsel with regard to policies relating to matters such as Ddirectors’ , appointment and remuneration.
4. The Advisory Committee and the Financial Advisory Committee, composed of outside directors and/or outside audit & supervisory board members, have been established as an advisory body to the President and to the Chief Financial Officer, respectively. Both Committees are requested to render a broad range of counsel pertaining to the effectiveness of operational execution, the reliability of the TOMY Group’s financial affairs and other important matters.
5. The Executive Officer Assessment Committee, composed of full-time directors, has been established as an advisory body to the President and is requested to provide a broad range of counsel with regard to matters such as the Executive Officers’ assessment.
6. By delegating authority, among others, through the adoption of an Executive Officer system, TOMY Group has worked to speed up and streamline the execution of business operations in individual groups and divisions in charge, based on the policies, strategies and supervision of the Board of Directors.
7. A Medium-term Management Plan is established to clarify the basic strategies and management goals over the medium term, with specific measures implemented for the purpose of achieving those goals based on the Business Plan (Budget) for each fiscal year.

Auditing system

1. Upon the occurrence of matters capable of causing serious losses to TOMY Group (or the threat of the occurrence of such circumstances), the detection of illegal or dishonest actions perpetrated by officers or employees or other conditions requiring reports to the Audit & Supervisory Board, directors or employees shall promptly report upon the said situations to the Audit & Supervisory Board.
2. Audit & supervisory board members shall use attendance at regular important meetings, irregular meetings and other occasions to receive reports on management conditions, as well as the status of business performance, financial affairs, internal audit implementation, risk management, compliance and other matters.
3. It is prohibited for any officer or employee of the Group who made reports to audit & supervisory board members to be treated unfavorably on the grounds of his/her reporting, and officers and employees of the Company and Group companies shall be kept well-informed of the same.
4. A certain annual budget has been secured for expenses and other liabilities arising from the performance of duties by audit & supervisory board members.
   Audit & supervisory board members may charge the company they belong to for any expenses necessary for the performance of their duties, and the company will make payment accordingly.
   Audit & supervisory board members may consult Accounting Auditors and attorneys as needed, and the company they belong to will bear the related expenses.
5. To ensure that the audit & supervisory board members maintain a firm grasp of the status of important decision-making and operational execution, the audit & supervisory board members are allowed to attend meetings of the Board of Directors and other important conferences; access the minutes of meeting proceedings, circular memos for staff approvals and other documents concerning the execution of important business operations; and request explanations of such matters from directors or employees as deemed necessary.
6. Audit & supervisory board members (or the Board) engage in exchanges of opinions and information with accounting auditors and the Internal Control & Audit Group and the Group Companies’ audit divisions with regard to important themes pertaining to auditing and other matters, mutually collaborating to monitor the TOMY Group’s internal control conditions.
7. When deemed necessary by the Audit & Supervisory Board, employees may be assigned to assist with the duties of audit & supervisory board members. The assignment, reassignment and other matters concerning the employees assisting in the duties of the Audit & Supervisory Board shall be conducted with the prior consent of audit & supervisory board members, and such employees execute their operations under the directions and orders of the audit & supervisory board members to ensure the independence of such employees from directors.

Internal control system

One of the most important management issues for the TOMY Group today is maintaining the trust of our stakeholders while offering continual improvements in corporate value built on sound and transparent management practices. We will make every effort to achieve this through enhancing corporate governance and continually improving internal control systems.

Compliance system

1. TOMY Group Code of Conduct has been established to clarify that all officers and employees in the organization must not only comply with existing laws and ordinances, but also strive to fulfill their social responsibilities through the implementation of sincere and fair corporate activities. These rules are accompanied with thorough efforts to achieve the widest possible understanding of this stance on the part of officers and employees.
2. To both enhance and achieve greater thoroughness for the TOMY Group’s compliance system and risk management system, an arrangement has been adopted in which the Risk/Compliance Committee, which is chaired by a Representative Director and composed of outside Directors and/or outside Audit & Supervisory Board members, has been established to deliberate on important issues concerning risk and compliance, and report upon the results of those discussions to the Board of Directors.
3. The Internal Control & Audit Group, an organization under the direct control of the Representative Director, audits the status of compliance in the Company and Group and reports on the results to the Representative Director and the Audit & Supervisory Board as deemed necessary.
4. TOMY Group will have no relationships of any kind with anti-social groups or organizations that threaten social order or the sound activities of TOMY Group, while systematic responses shall be mounted with a firm stance against unreasonable demands and similar situations.
5. In the event of emergencies, including a planned large-scale purchase of shares of TOMY, the Board of Directors will establish a special committee composed of independent outside Directors and/or outside Audit & Supervisory Board members registered as independent officers. The Board shall respect the special committee as much as possible, including the committee’s assessment and consideration of the large-scale purchase, and its recommendations as to the necessity for the initiation of countermeasures against the purchasers, etc., and determine a response policy.

Risk management

1. The Risk/Compliance Committee and the Internal Control Group have been established as the organizations assigned to coordinate all areas of risk management, thereby creating a company-wide risk management system integrated with the internal control system.
2. To deal with the occurrence of unexpected circumstances, Risk Management Task Forces are promptly established, with prompt and precise actions taken to minimize losses and damages and effective measures devised to prevent recurrences of such situations.
3. The Safety & Quality Assurance Division has been established as an organization to deal exclusively with product safety, with efforts being advanced to strengthen the process of offering outstanding products that can be used with confidence.
4. We respond to social issues and corporate ethics matters related to sustainability primarily through the Sustainability Promotion Division.

System regarding information management

1. Information pertaining to the performance of duties by directors shall be recorded and preserved in document or electromagnetic media form, in accordance with the TOMY Group’s internal guidelines.
2. The Information Security Basic Rules have been determined pertaining to the management of information, with measures devised to ensure the reliable protection of information assets, including personal information.
3. By strengthening the disclosure system, TOMY Group is aiming to speed up information disclosure and establish more transparent management.

Group business management

1. As a general rule, one or more of TOMY’s officers or employees are appointed as part-time directors or part-time audit & supervisory board members of the TOMY Group companies. In this capacity, these part-time directors and part-time audit & supervisory board members engage in monitoring and supervision of the appropriateness of the execution of business operations at each such company, thereby striving to strengthen the risk management and compliance system of the TOMY Group as a whole.
2. With regard to the TOMY Group management system, a department has been established to oversee Group company management. This department acts in accordance with the TOMY Group’s internal rules and guidelines in advancing management and guidance activities in response to the characteristics and conditions of each Group company.
3. Group-wide related rules have been prepared with regard to compliance, risk management, information management and other areas, with efforts made to foster awareness of compliance throughout the entire Group and establish a risk management system that reflects company-wide perspectives, while such systems are being monitored by the Risk/Compliance Committee and the Internal Control Group.
4. Each Group company reports the progress of its profit plan and other matters at the Group’s Monthly Briefing Session, which is held regularly on a monthly basis.

Ensuring financial report reliability

1. To ensure the reliability of financial reports, a specific internal control system has been established for the purpose of preparing pertinent regulations and the effective and appropriate submission of internal control reports in accordance with the Financial Instruments and Exchange Act.
2. The conformity with the Financial Instruments and Exchange Act and relevant laws and regulations is ensured by constantly verifying whether the internal control system works appropriately and correcting deficiencies if needed.

Corporate Governance Report 20230626.pdf（525KB）

Please see Corporate Governance Report submitted to the Tokyo Stock Exchange for details on TOMY’s corporate governance.

Policy for determining the amount of officers’ remuneration

Basic policy regarding remuneration for directors

1. It should be a system that is effectively linked to corporate performance and the medium- to long-term growth of corporate value, and one that allows such value to be shared with shareholders
2. It should be a system that maintains compensation levels that are determined based on comprehensive consideration of those of other companies
3. It should be a system determined through a process that is objective and transparent to stakeholders

Policy for determining the amount of remuneration for directors

1. The amount and other conditions of remuneration for individual directors are deliberated by the Remuneration Committee, which is chaired by an outside director and composed of outside directors and/or outside audit & supervisory board members, and determined based on reports submitted to the Board of Directors.
2. The compensation amount of each audit & supervisory board member is determined through discussions among the members within the total amount of remuneration determined by resolution of the General Meeting of Shareholders.

Composition and structure of remuneration for directors

1. The remuneration of directors (excluding outside directors) is made up of fixed basic compensation, performance-linked compensation provided as officer bonuses and stock-based compensation provided as non-monetary remuneration.
2. For officer bonuses, a cash bonus calculated based on the level of achievement of consolidated performance indicators is paid.
3. The stock-based compensation stock option system was eliminated and performance-linked stock-based compensation was introduced by a resolution of the 70th Annual Shareholders Meeting.
   The performance-linked indicator is consolidated ROE as specified in the Medium-term Management Plan.
4. From the perspective of their roles, and in the interests of independence, outside directors are paid only basic compensation.
   The details are disclosed in the Securities Report for the 72nd Period.