Governance

The Company has formulated “TaKaRa Group Challenge for the 100th,” our long-term management vision ending in the fiscal year ending March 31, 2026, which is the 100th anniversary of the Group’s foundation. The Challenge sets forth “Where the Takara Group wants to be (Vision)*” as well as management strategies and business strategies in order to achieve this Vision. 

 

The company believes that achieving this Vision will lead to the sustainable growth of the Group and an increase in corporate value over the medium- to long-term, and that what is required to effectively and efficiently realize this Vision is a corporate governance structure that ensures a transparent, fair, speedy and resolute decision making. At the same time, we also believe that to continue to be a trusted corporate group, we need a structure that respects the positions of stakeholders, including shareholders, customers, employees, creditors, and local communities, and enables us to make efforts in appropriate communication. 

 

The Company aims for sustainable growth and an increase in corporate value over the medium- to long-term by establishing a corporate governance structure based on the above policy, and will make efforts in accordance with the specific policies set forth in the Takara Holdings Corporate Governance Policy.

 

• Where the Takara Group wants to be(Vision)
  “Smiles in Life – Smiles are Life’s Treasures”
  The Takara Group is committed to enriching the homes, lifestyles, and lives of people around the world with smiles. Leveraging our expertise in the pursuit of delicious taste and innovative biotechnologies, we are a corporate group who safely and securely provide diverse value across the washu, Japanese food, and life science sectors.

As a holding company that manages a corporate group, Takara Holdings has decided that the following framework will be most appropriate for the Takara Group to ensure highly effective supervision and audits of corporate management. Hence, we have adopted a system of a Company with an Audit & Supervisory Board as our corporate governance structure.

 

・The Board of Directors makes important management decisions and supervises the execution of operations. The Board consists of executive Directors with highlevel of expertise and experience related to ourbusinesses and multiple independent external Directors with a wealth of experience and a broadview who are capable of offering advice and suggestions from the perspectives of all stakeholders including shareholders.

・ Audit & Supervisory Board Members with the knowledge of finance, accounting, and legal affairs, including independent external Audit & Supervisory Board Members with a wealth of experience and a broad view, comprise the Audit & Supervisory Board. Each Audit & Supervisory Board Member effectively exercises their function and authority to audit the execution of operations by Directors.

 

With these frameworks in place, external Directors and Audit & Supervisory Board Members monitor, supervise, and offer advice on Directors’ business management and performance of duty according to their roles and functions from their independent and objective standpoint, thereby providing highly effective supervision.

(As of Jun 29, 2023)

From among those who meet certain criteria, persons who are deemed to be best suited from the viewpoint of mutually complementing the execution of operations and enhancing supervisory functions are appointed as Directors, regardless of gender, nationality, career, and age, among others, by taking into account the candidates’ skills, knowledge, experience, and specialization. This way we ensure the diversity necessary for the Board of Directors as a whole. Currently, three of our seven Directors are external Directors, and two of our Directors are women. 

The term of office for our Directors is one year in order to respond promptly to changes in the management environment and to ensure the clarity of Directors’ management responsibilities.

A skills matrix of the Board of Directors is presented in “Expertise and Experience of Directors (skills matrix)” below.

Takara Holdings evaluates the effectiveness of the Board of Directors, primarily its operational aspects annually.
Please refer to the attached file about the summary of the results of the evaluation in fiscal 2023.

Takara Holdings appoints individuals with the knowledge of finance, accounting, and legal affairs as Audit & Supervisory Board Members in order to ensure functions necessary to perform the roles and responsibilities of the Audit & Supervisory Board Members and Audit & Supervisory Board. Currently, of the five Audit & Supervisory Board Members, three are external Audit & Supervisory Board Members, and three have extensive knowledge about finance and accounting.

Takara Holdings has established criteria for independent officers, which are more rigorous than those specified by the Tokyo Stock Exchange, and it designates all of the external officers who are deemed to be independent by meeting these criteria as independent officers. Currently, a total of five officers are designated as independent officers. They are External Directors Masako Tomotsune, Tomoko Kawakami, and Takao Motomiya, and External Audit & Supervisory Board Members Toshihito Yamanaka and Akiko Yoshimoto.

To ensure the independence and objectivity of the Board of Directors’ functions regarding the nomination of Director candidates and Director compensation, Takara Holdings has established the Nomination and Compensation Committee with a majority of independent external Directors under the Board of Directors and ensures their appropriate participation.

Compensation for Directors and Audit & Supervisory Board Members is determined based on the Rules for Compensation of Officers approved by the Board of Directors within the range of the amount for each based on resolutions at the general shareholders’ meeting. Compensation for Directors is determined by the Representative Director and President delegated by resolution of the Board of Directors, upon deliberation by the Nomination and Compensation Committee; while compensation for Audit & Supervisory Board Members is determined by deliberation by the Audit & Supervisory Board Members. Revisions to the Rules for Compensation of Officers relating to Directors are based on resolutions by the Board of Directors, while revisions relating to Audit & Supervisory Board Members are subject to consultation with the Audit & Supervisory Board Members.

 

Compensation for executive Directors consists of a fixed amount of compensation in accord with the Director’s title and role, plus performance-linked compensation to enhance incentive, while compensation for external Directors and Audit & Supervisory Board Members consists of a fixed amount of compensation only, taking their role into consideration. 

 

The amount of performance-linked compensation for each executive Director is determined based on the amount of performance-linked compensation paid for the previous fiscal year and each of their performance evaluation points of the previous fiscal year. 

 

The performance evaluation points for the previous fiscal year is calculated using consolidated operating income as the primary evaluation indicator. This is because consolidated operating income is positioned as the most important management indicator.

In our Group, the Company and Group companies may strategically hold shares of the companies that have business relationships with individual companies in the Group. Such strategic holding of shares shall be implemented only if the Board of Directors of the Group company intending to purchase said shares acknowledges that the shareholding is reasonable as a means of business alliance, maintenance and enhancement of transaction, etc., and in view of the benefits and risks. With regard to the individual shareholdings, the Board of Directors shall annually judge whether to continue to hold shares through the examination in terms of the contribution to the achievement of continuous growth of the Group and an increase in its corporate value over the medium- to long-term, and will disclose the results of its judgement.

The Company sold two stocks in total by the end of the fiscal year ended March 31, 2023: one of the eight stocks designated as considered for sale (including stocks for which a portion of our holdings are eligible for sale) at the Board of Directors’ meeting held on April 27, 2022, and one stock additionally designated as considered for sale during the fiscal year. The Company also reviewed the appropriateness of continuing to hold all the cross shareholdings held by the Company and its subsidiaries as of March 31, 2023 at the Board of Directors’ meeting held on April 27, 2023. It was decided to proceed with the consideration of the timely sale of 9 stocks designated as considered for sale out of a total of 79 stocks (7 stocks of financial institutions, 20 stocks of suppliers & companies that receive orders, 38 stocks of customers & retailers, and 14 stocks of other related parties). 

As a holding company, Takara Holdings has established the “Rules and Regulations for Overseeing Group Companies” that specify matters necessary to manage the Group companies. We require these companies to regularly report on their business activities while ensuring that they maintain their uniqueness and autonomy, and to discuss material matters with us before making any decisions or report decisions to us as soon as they are made. This way we support their appropriate risk-taking while supervising their execution of operations.
We have meeting bodies in place as described below in order to ensure that operational decisions are made and information is delivered properly and promptly.

 

• The Group Strategy Committee meets at least six times a year as a rule to discuss material matters related to the overall management of the Takara Group, review each Group company’s performance, and report updates on activities.
• The Takara Shuzo Strategy Committee and the Takara Shuzo International Strategy Committee each meet once a month as a rule to hold preliminary discussions on material matters, including the matters to be resolved at the Boards of Directors of Takara Shuzo Co., Ltd. and Takara Shuzo International Co., Ltd., report on these matters, and provide updates on relevant activities.
• The Takara Bio Coordination Committee meets once a month as a rule to make an ex post facto report on material matters including the matters resolved at the Board of Directors of Takara Bio Inc., which is a listed subsidiary of Takara Holdings, as well as updates on relevant activities.
• Each of the other subsidiaries holds the Strategy Committee and the Consultation and Coordination Committee four times a year as a rule to hold preliminary discussions on material matters, including the matters to be resolved at the Board of Directors of each of these subsidiaries, report on these matters, and provide updates on relevant activities.

As of June 29, 2023, Takara Holdings is the paren company of Takara Bio Inc. (Tokyo Stock Exchange Prime Market; Securities code number: 4974, hereinafter referred to as “Takara Bio”), holding 60.93% of the voting rights of Takara Bio.

On April 1, 2002, Takara Bio was spun off from the parent company as a wholly owned subsidiary to take over Takara Holdings’ biomedical business unit. Subsequently, the ratio of voting rights held by Takara Holdings was reduced to its current level through third party capital increase by Takara Bio, public subscriptions, the issuance of bonds with stock acquisition rights, and other corporate actions.

As of the end of March 2023, the Takara Group consists of Takara Holdings that is a holding company, 61 subsidiaries, and two affiliates. Takara Bio is positioned as the subsidiary specializing in life science to promote the Biomedical Business for the Group. Takara Bio is not a competitor of the Takara Group’s any other segment, and has only limited dealings with Takara Holdings.

＜Views and policies concerning the Group’s management＞

• Based on our corporate philosophy, which is “Contributing to the creation of a vital society and a healthy lifestyle through our fermentation technology and biotechnology in a way that achieves harmony with nature,” the Company and the Group benefits society by unlocking new potential in the culinary, lifestyle, and life science fields through our fermentation technologies for traditional Japanese sake and our cuttingedge innovation in biotechnologies and by continuing to create new value.
• The Company believes that achieving the vision in the long-term management plan, “TaKaRa Group Challenge for the 100th,” which will end in the fiscal year ending March 31, 2026, the 100th anniversary of the Group’s foundation will lead to an increase in corporate value of the Group as a whole.
• To achieve the vision, the Company’s basic approach is to respect the independence of each Group company, and have each company increase the speed of its management through independent management and pursue business outcomes to the utmost extent. The Company also believes it is important to integrate the business plans of each company for the overall optimization of the Group and to decide on the effective allocation of management resources such as funds and personnel by continuously identifying and analyzing the status of business execution.
• This is a system that consolidates management resources and aims for growth in three business segments:
  Takara Shuzo, which handles our domestic business, Takara Shuzo International Group, which handles our international business, and Takara Bio Group, which handles our Biomedical Business. We have clarified the division of roles between the business companies that give undivided attention to promoting above businesses and the Company, which strongly supports the business of each company and leads the overall management of the Group.

 

＜Significance of having a listed subsidiary＞

• Takara Bio is a growing enterprise of great promise in the Group. We believe that having Takara Bio in our business portfolio is extremely important for maximizing the Group’s corporate value in the future.
• We also believe that Takara Bio needs to have its own means of financing in order to further accelerate growth of our Biomedical Business. Moreover, to hire and train talented employees and further advance the management of Takara Bio, we believe it is vital to maintain Takara Bio as a listed subsidiary.

 

＜Measures to ensure the effectiveness of the governance system of the listed subsidiary＞

• The Takara Bio Corporate Governance Policy stipulates that one-third or more of directors at Takara Bio (three out of nine as of the date this report is filed) must be independent external directors with no vested interest in Takara Bio or the Company. Hence, we believe that we have a system in place for protecting the rights of akara Bio’s general shareholders and ensuring independent decision-making. Furthermore, three of the five Audit & Supervisory Board members at Takara Bio are independent external Audit & Supervisory Board members.
• In addition, for the purpose of protecting the interests of Takara Bio’s minority shareholders, Takara Bio deliberates and considers matters related to important transactions and acts in which the interests of the Company or its subsidiaries conflict with the interests of Takara Bio’s minority shareholders, in a special committee composed of three or more independent members, including external directors. Takara Bio advises and recommends the results to the Board of Directors of Takara Bio.
• The Company has established the Rules and Regulations for Overseeing Group Companies from the viewpoint of consolidated business administration. The objective of these Rules and Regulations is to ensure that our Group companies maintain their uniqueness and autonomy while the corporate value of the overall Group is maximized. We apply the said Rules and Regulations to Takara Bio and receive reports on matters resolved at Takara Bio’s Board of Directors and other actions, while we do not require Takara Bio to request a prior approval from us on the matters to be resolved by its Board of Directors. Hence, Takara Bio runs its business independently.
• The following personnel have concurrent positions at the Company and Takara Bio as of the date this report is filed.
  - Mutsumi Kimura (Representative Director and President of the Company and Director of Takara Bio)
  - Koichi Nakao (Director of the Company and Representative Director and President of Takara Bio)
  Mutsumi Kimura was invited by Takara Bio based on the judgment that his experience and knowledge gained through his management of Takara Bio in the past would be useful to Takara Bio. Koichi Nakao was invited by the Company from the perspective of consolidated management under the Company’s holding company structure, and not for the purpose of the Company controlling Takara Bio.

The following "Corporate Governance Report" has been submitted to the Tokyo Stock Exchange.

The Takara Group aims to achieve corporate philosophy; "Contributing to the creation of a vital society and a healthy lifestyle through our fermentation and biotechnology, emphasizing harmony with nature." 
In the process of realizing it, we perform business activities honestly and fairly under the Takara Five Values, which are the shared values of the Group.

 

1. We will comply with laws and regulations in Japan and overseas, fully recognize social ethics, and act with common sense and responsibility as a member of society.
2. We will work to lower environmental burdens, and contribute to the development of life science that values the dignity of life.
3. We will conduct sustainable business activities that are widely useful to society by pursuing profit through fair competition rather than pursuing profit in a manner contrary to these Action Guidelines.
4. We will comply with employment regulations, and will not engage in any unfair or dishonest practices in violation of employment regulations.
5. We will always draw a line between public and private matters, and will not pursue personal gain by using corporate assets, information, business authority, or position.

The Takara Group has established the Risk Compliance Committee chaired by the President of Takara Holdings and including all members of the Board of Directors of Takara Holdings in order to ensure trustworthy and fair corporate activities and is undertaking a reinforcement of the Group-wide risk management and compliance promotion structure. The Takara Group Compliance Code of Conduct is disseminated to all employees via the intranet and pamphlet distribution, and all Group companies are required to comply with the Code of Conduct in an appropriate manner and to take action in risk management to prevent serious compliance violations, including corruption, from occurring. In addition, Takara Group as a whole aims to fulfill its corporate social responsibility and enhance its corporate value. The Takara Group Compliance Action Guidelines are supervised by the director in charge, who reviews and revises their effectiveness.

To raise compliance awareness, Takara Group distributes monthly "Compliance Newsletters" on familiar compliance-related topics, and conducts monthly "e-learning" sessions, with a 100% participation rate.
We also provide annual training for each job level, including risk and compliance seminars for top management led by guest specialists, training sessions for new managers, and new employee training, along with annual group training based on Takara Group Compliance Action Guidelines for risk compliance leaders who promote workplace compliance education. The group training promotes understanding of the role of risk and compliance leaders, respect for human rights and prevention of harassment, prevention of fraud and corruption, and other important compliance-related topics as appropriate to the time of the year. Furthermore, based on these subjects that the group training deals with, the compliance leaders provide on-the-job training at their offices as part of our companywide compliance education.

 

Themes for e-learning for compliance training for employees (April-December 2023)

Anti-fraud and anti-corruption	SNS	Appropriate expense processing
Cyber Attack	Maternal Harassment and Power Harassment	LGBTQ
Information Management	Helplines	Moderate Drinking

We have put in place helplines as contacts for whistleblowers in the event that they have noticed any legal infringements, unfair practices, corrupt practices, violation of human rights or behaviors in violation of social ethics such as bullying and harassment. In addition to a contact inside the Company, we also have an external (i.e., third-party organization) contact point to maintain the anonymity of whistleblowers. We operate these helplines in accordance with Japan’s Whistleblower Protection Act and the Helpline Rules in order to ensure that whistleblowers do not receive disadvantageous treatment due to the reports they have made.
Our Group companies in overseas locations also have their local whistleblowing hotlines and have established and operate processes that allow their local employees to directly contact the helpline in Japan for reporting and consultation through a third-party organization.

The Takara Group strives to prevent the materialization of risks and to mitigate risks by thoroughly checking each workplace for any potential risks and taking preventive measures according to the findings. We also confirm the effectiveness of these measures against risks annually and review these measures if necessary.
We repeat these activities every year and report the results to the Risk Compliance Committee.

We have a Business Continuity Plan (BCP) in place based on the scenario of a large-scale earthquake and other emergencies. Specifically, in addition to taking such steps as ensuring electric power at our production sites through the introduction of private electricity generating equipment, enhancing the reliability of information dissemination, and preparing backup offices in case the regular offices are devastated, we ensure the effectiveness of our BCP by conducting emergency drills according to the plan.
Moreover, in the event of situations with a possibility of endangering life and limb or those that could seriously impact on corporate confidence or assets, we establish an Emergency Response Headquarters while cooperating with each department to take prompt and targeted action.
We will continue to improve the BCP.