Governance

FSG transitioned to a “Company with a Nominating　Committee, etc.” (then called “Company with Committees”) as　early as 19 years ago in June 2004. As of April 13, 2023, only 90 of the listed companies in Japan have adopted for this system.

The purposes for adopting the system are as follows: (1) Strengthen the governance of the Group as a whole; (2) Improve the transparency of management for shareholders and investors;(3) Clarify the business execution roles of each Group company and the Group’s management, and improve the efficiency and quality of the Group’s strategy; and (4) Implement strategies with a broader perspective by making active use of the abilities of outside directors and increasing the speed of change.

The Nominating Committee considers and makes decisions on the appointment and dismissal of director and executive officer candidates in light of the standards for appointment with the aim of contributing to the establishment of appropriate management systems for the Group.

The Remuneration Committee considers and decides the basic remuneration and incentives and evaluation items on the remuneration of directors and executive officers with the aim of making the Group’s management more transparent. The Nominating Committee and the Remuneration Committee are composed of one inside director and three outside directors.

The Audit Committee has been established to secure legitimate, appropriate and efficient operations of the Group, which means operations based on the annual policy and medium- to long-term management policy. The Audit Committee is composed of three outside directors.

The Board of Directors consists of six directors, including three independent outside directors (as of the close of the General Meeting of Shareholders held in June 2023). Diversity of the members is also taken into consideration. The inside directors are highly experienced in different fields: overall corporate management, including management strategies, managing a business company of the Group, and operating overseas businesses.
Each of the three outside directors has extensive knowledge as a lawyer, certified public accountant, safety, disaster prevention and manufacturing manager, mainly in the technology development area, and a senior executive of a publicly traded company. One of the six directors is a woman. Although all of the directors are Japanese nationals, they have extensive knowledge, experience and capabilities in a broad range of areas, including overseas business experience.
In FY2025, the Company reduced the maximum number of directors specified in Article 17 ("Number of Directors") of its Articles of Incorporation from 15 to 10 in order to align with its current business development and scale. We will strengthen the Group's corporate governance by constantly reviewing our governance system.

All FSI directors respond to an annual questionnaire survey regarding the self-assessment of the Board of Directors' effectiveness. The board then deliberates on the survey results and issues to be addressed.
The surveys and deliberations conducted in April 2023 and April 2024 referred to the Japanese Ministry of Economy, Trade and Industry's Guidance for Collaborative Value Creation 2.0, which was revised in August 2022, and focused on eight items of guidance regarding governance given in the Guidance. The opinions of the board members on the assessment of the board's current status and issues to be addressed were summarized. Specifically, the board reflected on its efforts and assessment of each of the following items and identified and discussed the issues to be addressed: (1) Division of roles and functions between the board of directors and top management, (2) Ensuring the strength of the board, (3) Skills and diversity of CEOs and top management, (4) Skills and diversity of outside directors, (5) Monitoring strategic decisions, (6) Shareholder return and reinvestment policies, (7) Compensation policies, and (8) Reviewing board effectiveness and identifying priority items.
In FY2024, the board did not conduct a questionnaire survey on the directors' self-assessment of effectiveness. Instead, board members engaged in specific individual improvement activities for their individual issues based on the results of the previous self-assessment.

FSG has established the Group Risk Management Rules, which define its basic policy and management systems to address the various risks that may arise in the course of business. The Group Risk Management Rules not only provide for a disaster prevention system and a crime prevention and security system but also define the organizational structures and roles of the Group Risk Response Headquarter and the Regional Risk Response Headquarter as crisis management bodies in the event of an emergency, accident, or incident.

In ordinary times, FSG's basic framework for risk management requires that potential risks be periodically identified and located on (regional and Group-wide) risk maps according to their level of impact on management and likelihood of realization and that systems be established to address those risks, based on the risk maps. Each year, we use risk maps to share risk awareness and constantly consider responses to these risk events (avoidance, transfer, reduction, acceptance, etc.) and implement action plans in order to improve the Group's risk responsiveness.

On the other hand, in the event of an emergency (when an incident occurs), a Group Risk Response Headquarter will be established at the regional and Group levels, as needed, to ensure a swift and appropriate response across the Group.
FSG has established a Group-wide emergency contact network to ensure that in the unlikely event of a risk event or incident, it is reported to management as quickly as possible depending on the impact and importance of the risk. Business chats are currently used as the form of communication. This enables us to quickly share information and risk awareness and respond and provide instructions swiftly, regardless of where incidents occur within the Group - both domestically and internationally - and regardless of where the management team members are located.

As a global firm, FSG has established and published the FSG Code of Ethics, positioning compliance, which is a prerequisite for business activities, as the most important management issue. The FSG Code of Ethics defines the universal values to be observed and followed by each director, executive officer, senior management member, and employee of FSG (hereinafter, "FSG Personnel") from a corporate ethics perspective as Ethical Standards and establishes a Code of Conduct to sincerely implement them.

FSI has in place the Group Compliance Committee to promote and support compliance management throughout the Group.
The Group Compliance Committee submits reports and deliberation requests on important issues related to compliance to the Board of Directors. The duties under the responsibility of this committee include devising and deciding on organizations and systems related to compliance; deliberating on the revision and abolishment of provisions in the FSG Code of Ethics; developing and finalizing compliance-related action plans for FSG as a whole; and monitoring the implementation of those action plans. Specifically, the committee establishes a Group Compliance Slogan and deliberates on and considers annual topics and initiatives while monitoring compliance-related issues.
Each region has also established a Compliance Committee to promote compliance management within the region.

FSG distributes Compliance Cards to all Group executives and employees for educational purposes. In FY2024, we created a video summary of the FSG Code of Ethics in the 11 languages of the countries where FSG companies are located and integrated it with our e-learning system. Additionally, we provided training to managers and other personnel on ethical conduct, diversity, equity, and inclusion (DE&I), harassment, and anti-bribery and corruption.
In addition to distributing Compliance Cards and holding training sessions and seminars, we engage in the following ongoing activities: raising awareness through Family Festivals and company anniversary celebrations, displaying awareness posters in workplaces, and publishing articles about compliance in our in-house newsletter.
Each year at the Family Festival, top management reminds employees of the phrase written on the Compliance Card: "Can you explain that judgment (action) of yours to your family (loved ones)?" This phrase means that the Company believes it is important to continue a style of open management that can be explained to one's family and supported by one's family.

To detect injustices, such as human rights infringements and harassment, as well as bribery and other compliance-related problems as early as possible and respond appropriately and promptly to them, we have in place a whistleblowing system (Consultation Hotline), which allows employees to report suspected cases directly to their company. Under this system, consultation requests and reports are accepted not only by the relevant in-house departments (including the Group Internal Audit Office) but also by external law offices and specialist companies.
The Consultation Hotline operates while ensuring complete confidentiality and preventing any disadvantageous treatment of whistleblowers. The system can be used anonymously. The status of acceptance of whistleblowing reports is regularly reported to the Group Compliance Committee, the Board of Directors, and the Audit Committee to improve Group compliance and risk management. In FY2024, we surveyed the operational status and actual implementation of whistleblowing systems in each region and reported and deliberated on the results at meetings of the Group Compliance Committee.
In order to quickly detect and understand issues that arise within the Group and take appropriate responses in a timely manner, we will continue to enhance our whistleblowing system and ensure its effectiveness.

The Company believes that the philosophy of corporate governance must penetrate not only the management team but also each employee. Awareness-raising activities are held by making the most of every possible opportunity so that employees will be able to understand the mission statement and the basic policy, and take appropriate action.
One example of such activities is the "Family Festival," which the Fuji Seal Group holds on the anniversary of the Company's foundation at each business location in Japan and the "Foundation Day Celebrations" abroad by inviting employees and their families.
This Family Festival dates back to 1985, when a festival was held concurrently with the establishment of the "Fuji Seal Employees Shareholding Association."

This festival serves as an opportunity for the employees' families to know and understand the Company's philosophy, history, products, workplaces and colleagues, not just to deepen friendships.Furthermore, the Compliance Card that employees always carry contains this phrase: "Can you explain that judgment (action) of yours to your family (loved ones)?" This phrase means that the Company believes it is important to continue a style of open management that can be explained to one's family and supported by one's family.