Summary of Corporate Governance

Source: Annual Report 2017

Fundamental Concept

The management philosophy of the Toho Gas Group is to attain steady growth and contribute to 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 shareholders, investors, individual customers, local communities, 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.

Organizations for Corporate Governance

Board of Directors, Management Committee

The Board of Directors of the Company comprises 10 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 and 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

Audit & Supervisory Board comprises five Audit & Supervisory Board Members, including three Outside Audit & Supervisory Board Members. Each Audit & Supervisory Board Member monitors the execution of duties assigned to Directors by attending important conferences of the Company including meetings of the Board of Directors, reading important statements submitted by them and visiting business offices related to the Directors. Each Audit & Supervisory Board Member also attends meetings of the Board of Audit & Supervisory Board Members, convened on a monthly basis, for information sharing. The Company has set up the Audit & Supervisory Board Members’ Office where full-time staffers have been deployed to assist Audit & Supervisory Board 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. Since the two Outside Directors and the 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 between shareholders, and these Outside Directors and Outside Audit & Supervisory Board Members. Under these circumstances, the Company designated them “independent directors,” as defined by securities exchanges.

It is judged that objectivity and neutrality have been warranted in the supervision of corporate management, as the supervising and auditing functions of the Company are working due to the respective roles being played by Outside Directors and Audit & Supervisory Board Members including Outside Audit & Supervisory Board Members.

Corporate Governance Organizational Chart