Nippon Sanso Holdings' Board of Directors has formulated the Principles of Corporate Governance, which provide
guidance on corporate governance. Realizing the Company's
sustainable growth and long-term increase in corporate value, and benefiting all stakeholders, including shareholders,
customers, employees, suppliers, and local communities, involves ensuring the fairness and transparency of
decision-making. Moreover, we are working to enhance corporate governance, believing that its essence lies in making
effective use of our management resources, and to increase the vitality of management through swift and conclusive
Measures to Strengthen Corporate Governance
||Reduced the number of members as provided in our Articles of Incorporation (from 20 or less to 15 or
less); reduced the number of directors (from 16 to 11); and appointed two independent outside directors to
||Established the position of Chief Compliance Officer (CCO) to ensure effective compliance Established the
Internal Controls Office to assist the CCO
||Established the Principles of Corporate Governance and disclosure policies
||Established the Advisory Committee on Appointments and Remuneration (consisting of the Chairman, President
CEO, and outside directors) to improve the transparency and objectivity of decisions regarding the
appointment and compensation of officers and other personnel
Introduced performance-linked executive compensation tied to the results of the medium-term management plan
as an incentive for medium-term growth
||Reduced the number of directors from 10 to seven (including two independent outside directors) to
establish further separation of business execution and supervision, as well as to strengthen the supervisory
function of the Board of Directors
Appointed a CCO and Regional Chief Compliance Officers (RCCOs) in North America, East Asia, Taiwan,
Southeast Asia, India, and Australia to strengthen the Group compliance system; established global
compliance management regulations, regarded as a unified Group standard; and held a meeting of the Global
Compliance Committee, attended by RCCOs under the GCCO to share information on the status of legal
compliance within the Group, the progress of legal actions, and other topics
||Established the Technical Academy to serve as an in-house training facility to provide education on
security and disseminate technology from the perspective of technology risk management
||Appointed RCCOs in Europe
||Appointed Thomas Scott Kallman (Chairman and CEO, Matheson Tri-Gas, Inc.), who is responsible for the Gas
Business in the United States, and Eduardo Gil Elejoste (Chairman and President, Nippon Gases Euro-Holding
S.L.U.), who is responsible for the Gas Business in Europe, as directors to strengthen our global management
structure for oversight and decision-making from more diverse perspectives
||Transitioned to a holding company structure and changed company name to Nippon Sanso Holdings Corporation
||Appointed an additional independent outside director (from two to three independent outside directors),
increasing the ratio of outside directors to one-third of the Board of Directors, and thereby diversifying
its composition and strengthening its supervisory function
||Appointed two additional independent outside directors (from three to five directors) to the Board of
Directors, increasing the ratio of independent outside directors to a majority, in order to diversify its
composition and strengthen its supervisory function
Evaluation of the Board of Directors' Effectiveness
Our Principles of Corporate Governance stipulate that the Board of Directors carry out an annual analysis and
evaluation of its overall effectiveness based on self-evaluations by each director, and make a summary of the results
public in a timely and appropriate manner. The Board of Directors continues to conduct analyses and evaluations of its
effectiveness and make constant efforts to enhance it. Based on the overview and results of the Board of Directors'
evaluation for FYE2023, the Board conducted the following main initiatives in FYE2024.
Corporate Governance Structure
Nippon Sanso Holdings' governance is characterized by rapid decision-making and appropriate allocation of management
resources. This is achieved by delegating authority to the operating companies in each of the four geographic hubs and
the Thermos business, which support an industrial gases business model that produces gases on the site of consumption.
As a group that has global business operations, supervision of management decisions and business execution requires a
multifaceted valuation of a wide range of risks based on expert knowledge informed by close contact with the front
lines. We have therefore adopted the “company with an Audit & Supervisory Board” corporate governance
which the Board of Directors is responsible for making decisions related to business execution above a certain scale,
including M&As and investments, and the Audit & Supervisory Board members themselves audit business
|Board of Directors
||Chairperson: President CEO
Composition: Nine directors, with a majority of five being independent outside directors. Two of the directors are non-Japanese and two are women.
In order to enable accurate management decisions, we consider diversity in the composition of the Board of Directors in terms of skills and experience. The Board meets monthly in general to discuss important matters and receive reports on the status of NSHD’s businesses. The Board also supervises the execution of business by the President CEO.
|Audit & Supervisory Board（ASB）
||Composition: Four full-time members, including three outside members (two of whom are independent outside members)
The ASB is an independent body entrusted by the shareholders to audit the decision-making process of directors and the state of business execution by management. The board conducts its business in accordance with applicable laws, regulations, the Company’s Articles of Incorporation, and other rules. Each member of the Board engages in audit activities from a neutral and objective perspective, bringing their expertise to the audit process. The board conducts a detailed discussion of the results of its audit activities, making recommendations as necessary, and strives to ensure sound management. The Board conducts the following types of activities in accordance with audit policies and plans as determined by the board on an annual basis. (i)Attendance at important internal meetings (Board of Directors’ meetings, Management Committee meetings, etc.) (ii)Interviews with directors, executive officers, and other members of senior management. (iii)Inspection of important decision-making documents, etc. (ⅳ) Audits of Japanese and overseas group companies. The Board strives to improve the effectiveness of audits through close coordination with the Company’s internal audit division, internal control division, and accounting auditor. The board also engages in the regular exchange of information and opinions with outside directors. We have established an independent office for the Board. This office is staffed with full-time employees who assist members of the board in their duties and under their direction.
|Advisory Committee on Appointments and Remuneration
||Chairperson: Katsumi Nagasawa (independent outside director)
Composition: President CEO and five independent outside directors
The Committee receives requests for advice from the Board of Directors regarding the selection of candidates for directors and Audit & Supervisory Board members, appointment and dismissal of the President CEO and executive officers, selection of the successor to the President CEO, appointment and dismissal of the Chairperson and President in the significant directly owned subsidiaries and revision of internal rules regarding remuneration of directors. The Committee reports the results of its deliberations back to the Board of Directors. Since the majority of the members of the Committee are independent outside directors, it is able to ensure independence from the parent company in the appointment of management team members, thereby helping to ensure transparency and objectivity in the decision-making of the Board of Directors.
|Executive Management Committee
||Chairperson: President CEO
Composition: President CEO, executive officers, and members of the Audit & Supervisory Board
Based on the Group’s basic policies as determined by the Board of Directors, the Committee deliberates and makes decisions on important matters related to the execution of duties by the President CEO.
|Global Strategy Review Committee (In principle, once a year)
||Chairperson: President CEO
Composition: President CEO, executive officers, officers, members of the Audit & Supervisory Board and persons appointed by the Chairperson
Prior to the making of a resolution on the NSHD Group’s budgets for the next fiscal year, the Committee confirms the details of each operating company’s strategy and deliberates on the optimal allocation of resources across the entire Group. It also formulates the Group’s management strategy and manages its progress. Among items determined by the Committee, specific measures for technical risks are decided at Technological Risk Liaison Committee meetings and other meetings held between NSHD and each operating company, then deployed globally.
|Global Risk Management Committee (In principle, once a year)
||Chairperson: President CEO
Composition: President CEO, members of the Audit & Supervisory Board, Group CCO, executive officers, officers, the persons who are responsible for the regional risk management (operating company presidents etc.), and persons appointed by the Chairperson
The Committee deliberates on the selection of the Group’s material risks, matters related to countermeasures, basic policy on risk management for all Group companies, and matters related to regulations and plans.
* CCO: Chief Compliance Officer
|Global Compliance Committee (In principle, once a year)
||Chairperson: Group CCO*
Composition: Regional CCO* (Each region; Japan, North America, Europe, East Asia, Southeast Asia ＆ India, Australia, and Taiwan)
The Committee is convened in principle by the Group CCO to ensure the effectiveness of the Group’s compliance. At the meetings, the Compliance Promotion Policy and compliance promotion activities in each area are shared, and individual issues are discussed as necessary.
* CCO: Chief Compliance Officer
Relationship with the Parent Company
We concluded a basic agreement with our parent company, Mitsubishi Chemical Group Corporation (MCG), on May 13, 2014.
Under this agreement, MCG committed to respecting our autonomy, supporting and cooperating with us under the MCG Group
Management Regulations. In turn, we conduct all business functions independently, including management, finance,
sales, and research and development.
In situations where the interests of the parent company conflict with shareholders other than shareholders of the
parent company, the directors of Nippon Sanso Holdings act to avoid harm to the interests of the shareholders other
than the shareholders of the parent company. We have appointed five independent outside directors and two full-time
independent outside Audit & Supervisory Board members. These individuals oversee the Company to ensure there are
conflicts of interest between the parent company and shareholders other than shareholders of the parent company.
Furthermore, we have voluntarily established the Advisory Committee on Appointments and Remuneration*,
independence from the parent company in the selection of a management team. While parent company MCG is a holding
company, the Nippon Sanso Holdings Group and Mitsubishi Chemical Corporation, the main operating company of the MCG
Group, engage in transactions, totaling ¥7,058 million in FYE2023.
* This is a voluntary committee of the Company that advises the Board of directors on selection of
directors and Audit & Supervisory Board members as well as the appointment and dismissal of the Representative
Director, President CEO and other executive officers.
Appointment of corporate officers
We believe that for the Board of Directors to function effectively it must consist of a diverse team of directors who
have a broad range of knowledge and experience in corporate management. Therefore, we have defined the knowledge and
experience that play an important role in the management of our group and summarized them in the following skill
matrix. We will strive to further enhance the effectiveness of the Board of Directors while placing personnel with
these knowledge and experience in the right places at the right time. The Board of Directors requests the Advisory
Committee on Appointments and Remuneration for advice on the selection of candidates for director, and the committee
creates a list of candidates after giving consideration to the composition of the Board of Directors, the qualities
required of directors, and, for those who are to assume important responsibilities, their activities and achievements
as director to date. The list is submitted as a proposal to the Board of Directors. In addition, we have established
criteria for determining the independence of outside directors and corporate auditors, and selects as candidates for
directors and corporate auditors those who meet such criteria.
Remuneration for Officers
Remuneration for directors and Audit & Supervisory Board members is determined by resolution at the annual
Meeting of Shareholders in line with the total compensation limits for directors and Audit & Supervisory Board
members. The amount of remuneration for each director is determined in accordance with the remuneration standard
resolved at the Board of Directors by the Representative Director, President CEO, who is delegated by the Board of
Directors, while remuneration for each Audit & Supervisory Board member is determined by discussion among the
Supervisory Board members. We have established the Advisory Committee on Appointments and Remuneration, which
comprises multiple independent outside directors and the President CEO and is chaired by an outside director. The
committee deliberates the appropriateness of remuneration proposed after being consulted by the Board of Directors and
the Audit & Supervisory Board and reports the results of its deliberations to the Board of Directors and the Audit
Supervisory Board. Directors' remuneration consists of "basic monthly remuneration," which is fixed by rank,
"performance-linked bonuses," which is linked to business performance, and "non-financial KPI-linked bonuses," which
is linked to the achievement rate of lost time injury frequency rate and rate of receiving compliance training set
forth in the medium-term management plan, and the amount paid to each person reflects this. In addition, directors and
outside directors whose main duties are
as officers of subsidiaries are paid only the fixed basic monthly remuneration for remuneration as directors of Nippon
Remuneration for Audit & Supervisory Board members, including outside members, consists of base salary.
Developing the Next Generation of Leaders
We recognize that fostering the next generation of management personnel is an important issue in our Group governance
structure. The Advisory Committee on Appointments and Remuneration has been discussing a development plan for our next
generation of managers. Part of these discussions concerns the qualities required of the next generation of management
and policies for training. As the Nippon Sanso Holdings Group expands globally, we must develop human resources who
have experience not only in Japan but also overseas, and have a thorough knowledge of our business.
We are aware of the small number of female managers in our European operations, and have implemented an active
succession program for women to resolve this issue. In October 2020, each of the 15 participants in this 18-month
program was assigned a member of management, including the President CEO, as a mentor. Top managers offered their
mentees the benefit of experience, advice on overcoming challenges, and more. The program is designed to develop the
next generation of managers, and we intend to introduce the program to other regions based on our success in Europe.
Training for Top Management
Facing an even faster pace of global business, we offer ongoing management training programs to foster
decision-making skills reflecting the broad-based knowledge and insight required of our top managers. In November
2021, we conducted training for full-time directors, Audit & Supervisory Board members, and executive officers of
Nippon Sanso Holdings and Taiyo Nippon Sanso, designed to deepen their understanding of the latest laws and
regulations regarding corporate governance, and to reaffirm the importance of handling their practical operations in
accordance with the requirements of the internal control system (risk management) and laws and regulations, bearing in
mind specific recent instances of corporate misconduct.
Status of Compliance with the Corporate Governance Code
In addition, we have submitted a "Corporate Governance Report", describing the status of our corporate governance
measures as to the Tokyo Stock Exchange as follows. (The document below is submitted on November 15, 2023.)