Summary of Corporate Governance

Source: Integrated Report 2018

Basic Concept

The management philosophy of the Toho Gas Group is to attain steady growth and contribute to the development of local economies by strengthening the supply of natural gas, an environmentally-friendly energy source known to have supply stability, as its business pillar, while attaching importance to winning trust from customers, local communities, shareholders, investors, corporate clients and employees working for the Group. Under this philosophy, the Group will reinforce its corporate governance in order to remain a corporate group which is always trusted by its stakeholders.

Corporate Governance Organization

Board of Directors, Management Committee

Our Board of Directors comprises nine Directors, including two Outside Directors. The Board of Directors is convened every month in accordance with the rules stipulated for the Board, and makes important decisions relating to the Toho Gas Group while supervising the execution of duties by Directors and Executive Officers.

The Company has adopted the Executive Officer System to strengthen the function of executive operations and to clarify responsibilities. The Company has also established the Management Committee to deliberate on important management issues, including important policy measures for each division and department, in accordance with the basic policy adopted by the Board of Directors and to manage the progress of each policy measure periodically.

Various committees have been set up to deal with cross-sectional issues under the chairmanship of the President or other Directors. Each committee is tasked with grasping relevant issues and monitoring the progress of activities being undertaken in response to these issues, with the results of its meetings submitted to the Management Committee for deliberation.

Audit & Supervisory Board

The Audit & Supervisory Board comprises five Audit & Supervisory Board Members, including three Outside Members. Each Audit & Supervisory Board Member monitors the execution of duties assigned to Directors by attending important meetings of the Company including meetings of the Board of Directors, reading important approval documents and visiting business offices. Each Audit and Supervisory Board Member also attends meetings of the Audit & Supervisory Board, convened on a monthly basis, for information sharing. The Company has set up the Audit & Supervisory Board Members’ Office where fulltime staff have been deployed to assist Members in the execution of their duties.

Outside Directors, Outside Audit & Supervisory Board Members

Outside Directors and Outside Audit & Supervisory Board Members are appointed for the purpose of strengthening the supervisory and auditing functions of the Company and ensuring the transparency and fairness of corporate management. Because the two Outside Directors and three Outside Audit & Supervisory Board Members have no special interest with the Company, it has been determined that no conflict of interest exists or will arise with shareholders. Consequently, the Company designated them “independent directors,” as defined by securities exchanges.

It is judged that objectivity and neutrality in the supervision of corporate management are guaranteed through operation of supervising and auditing functions of the Company under the respective roles played by Outside Directors and Audit & Supervisory Board Members including Outside Members.

Corporate Governance Organizational Chart

Establishment of Internal Control System

Toho Gas Group Board of Directors resolved to establish a system (internal control system) to ensure the appropriateness and effectiveness of business operations and based on this resolution, we strive to strengthen risk management and ensure thorough compliance. We review it as necessary based on changes in the business environment and other factors and confirm the status of its implementation at the Board of Directors Meeting each fiscal year. Details of the resolution and an outline of the status of its implementation over the past fiscal year are disclosed in our "Business Report" and can be viewed on our website (Japanese only)

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