Ongoing Improvements to Corporate Governance

Ongoing Improvements to Corporate Governance

1. Formulation of the Group Code of Conduct and adoption of measures to raise awareness

Taking advantage of the opportunity posed by the adoption of the Group Vision 2030, the DyDo Group formulated a new Group Code of Conduct designed to ensure that all Group employees conduct themselves in accordance with a consistent set of decision-making standards that transcend national borders and the frameworks of existing businesses so that the Group Philosophy and Group Vision can be realized. In addition to distributing the new code to employees in the form of a DyDo Group Compliance Handbook designed to serve as a guide for day-to-day operations, we’re working to raise awareness of the code by offering nationwide training sessions that encourage employees to think about what it means in the context of their own work responsibilities.

Group Code of Conduct

2. Revision of the IR Policy

The Group is working to build trust by putting in place structures that allow it to communicate actively through dialog with all stakeholders and to bring that feedback to bear on its management. We revised the IR Policy to comply with the introduction of fair disclosure rules in March 2018 by clarifying our approach to promoting constructive dialog and improving the fairness of information access.

Disclosure Policy

3. Evaluation of Effectiveness of Board of Directors

At DyDo, we have been evaluating the effectiveness of the board of directors since FY2016.

Method of analysis and evaluation

In order to analyze and evaluate the effectiveness of the Board of Directors, during the period between December 2019 and March 2020, all directors and auditors carried out a self-evaluation survey, and individual interviews were carried out by the Secretariat of the Board of Directors.
After that, at a meeting of the Board of Directors that was held on March ,13, 2020, in addition to analyzing the results of the self-evaluation surveys, and in an attempt to enhance awareness regarding present problems, constructive discussions were held regarding these matters and future efforts to realize a higher level of effectiveness for the Board of Directors.

Evaluation items

The self-evaluation survey form included items addressing the following major topics so that respondents could review the effectiveness with which the Board of Directors deliberated and dealt with issues identified through the evaluation of its effectiveness during the previous year:

  • (1)

    Board agenda and operations

  • (2)

    Status of discussions of medium- and long-term issues in light of Group Mission 2030

  • (3)

    Future issues in light of the Corporate Governance Code

Overview of Analysis/Evaluation Results

On the basis of the outcome of discussions regarding the analysis of the results of the self-evaluation surveys,the Board of Directors of the company came to the conclusion that “the Board of Directors is functioning effectively.”

[Status of improvements related to deliberations by the Board]

  • The Board has embraced an agenda that goes beyond mere reporting of results by encompassing a consideration of operations. Time dedicated to discussions of companywide business strategy, companywide resource allocation, and management of key measures (PDCA) increased compared to the previous year.

  • In formulating Group Mission 2030, the Board worked to address constraints on the amount of time available for regular Board meetings by taking steps to ensure an adequate amount of time for discussions, including by holding extraordinary Board meetings and meetings designed to facilitate exchanges of views.

  • Outside directors were provided with information about important discussions in advance, including risk analysis results and the information about the viability of business plans (purchase prices) for proposed investments.

Challenges for the Future
  • (1)

    Concerning the composition of the Board over the medium and long term, it will be necessary to continue considering appointing an even more diverse group of directors in response to the development of the Company’s business strategy and changes in society.

  • (2)

    Concerning materials provided to the Board, there remains room to improve the resources offered to directors, for example by better clarifying key issues in order to further stimulate discussion.

  • (3)

    Concerning the operation of the Board, it will be necessary to enhance opportunities for reporting to, and deliberation by, the Board with regard to important management issues as we seek to increase our corporate value over the medium and long term, including in the hiring and training of human resources, the strengthening of the foundation of our Domestic Beverage Business, and the expansion of our operations in the healthcare domain.

  • (4)

    Concerning deliberation of important issues, it will be necessary to enhance opportunities for directors, operating officers, and outside officers to communicate about operations apart from regular meetings of the Board, which are necessarily subject to time constraints.

  • (5)

    We will also study how to strengthen management structures to reflect the growing importance of international businesses for future growth.

4. Formation of an Advisory Board

We have formed an Advisory Board consisting of roughly three outside experts not currently serving as outside directors or corporate auditors as a voluntary mechanism to further enhance its corporate governance.
In addition to offering assessments and advice from an objective perspective concerning issues that demand a high level of specialized knowledge, for example investment decisions related to the orphan drug business, the Advisory Board, which will advise the president, is intended to further boost the transparency of the Company’s management by incorporating outside perspectives into the execution of strategy, for example by offering advice concerning management issues faced by the Group.
Going forward, DyDo Group Holdings will strive to realize sustained growth and increase its corporate value over the medium and long term through the ongoing improvement of its corporate governance.

5. Establishment of a Group ESG Committee

Reflecting its commitment to resolve social issues through its businesses, the Group is striving to strengthen initiatives that address ESG issues, to realize sustained growth, and to increase its corporate value over the medium and long term.

ormation of an Advisory Board

6. Establishing an Internal Reporting Liaison Independent from Management

We have established an internal reporting liaison called the "DyDo Compliance Hotline," and we are working to ensure awareness about it among group employees.
If there is a violation of laws, regulations, in-house rules, or social norms, or a risk of such a violation, we ensure that the employees of our group (employees, temporary workers based on the Worker Dispatch Act, and part-timers) and employees of business partners of our group, can directly communicate that information without fear of negative repercussions. In addition to our internal risk management department, we have set up an outside law office as a liaison since January 2017, thus enabling actions such as reporting to either an internal or external contact.