Investor Relations

Messages from Outside Officers

I have continued to offer advice and recommendations, drawing on my long experience in R&D and in international collaboration with various institutions. In particular, in FY2025 I emphasized the importance of Transformative R&D, and over the past year discussions on its implementation have made clear and steady progress. During the intensive year-end management planning sessions, all directors held extensive discussions. We reviewed the allocation of research themes across major laboratories and redesigned the structure to accelerate new product creation. In healthcare and life sciences, fields where paradigm shifts can readily occur, we have established a clear policy of pursuing faster development, openly exploring possibilities, and promoting innovation through collaboration with other companies.

I also feel that the effectiveness of the Board of Directors has further improved over the past year. After regular Board of Directors meetings, we now hold open discussion sessions, and our commitment to formulating recommendations and policies through active exchanges of views has become clearer. For the selection of officer candidates, we will continue to place importance on the continuous development of management talent capable of contributing to the enhancement of corporate value over the medium- to long- term, as well as on a transparent appointment process.

While our disclosure practices remain highly transparent, further improvement will require greater visibility into the process of our discussions regarding medium‑ to long‑term portfolio transformation, as well as enhanced disclosure of our sustainability initiatives. Strengthening disclosure in English is also essential in light of the growing share of overseas business and rising interest from overseas investors.

Our corporate slogan is “WHERE IT ALL BEGINS.” With this in mind, the Board places particular importance on discussions to further develop existing business areas, enhance marketing capabilities, and promote the development of new products with a view to 2030. Speed in R&D, agile decision‑making, and sound judgment that accounts for geopolitical and supply‑chain risks are also required. From a global perspective, I will continue offering recommendations on the direction of R&D, the promotion of talent appointments, and our approach to M&A.

One year has passed since I assumed the role of Outside Director. At regular Board of Directors meetings, in addition to reports on measures to achieve business plan targets and short-term execution measures in each business division, I would like us to continue working toward further enhancing the provision of information and strategic discussions aimed at addressing the fundamental issues facing Group management.

I have also come to recognize that the Group has a well-established value creation framework, a strong financial foundation, and a solid R&D base that supports our core technologies. However, there remains room for improvement in cultivating a culture that accelerates execution speed through dynamic collaboration involving both internal and external stakeholders.

Drawing on insights gained through my experience in business management, technology development, and talent development, I will continue to raise issues and offer proposals from different perspectives to contribute to the Group’s resilient growth strategy, which enables the Group to overcome unpredictable changes in the business environment.

Although the effectiveness of the Board of Directors is regularly evaluated and the results are shared as appropriate, the question is how to translate these results promptly into prompt and concrete improvements. The key points identified must be listed, followed by concrete action to address the fundamental issues.

The Nomination and Remuneration Advisory Committee engages in objective and specific discussions on remuneration matters, but its discussions on nomination matters remain limited to those based on internal proposals. To enhance the committee’s transparency and effectiveness, I believe it is also necessary to consider the appropriate composition of the committee and to engage in discussions with management talent, including potential next-generation leaders.

To enhance corporate value across the Group, it is essential to establish a more robust medium- to long-term strategic design and execution framework. Externally, we must maximize stakeholder expectations through SR and IR activities; internally, we must strengthen communication between management and frontline teams to heighten awareness and maximize execution capabilities.

With “proactive governance” constantly in mind, I will continue to offer advice and recommendations that support the development of a growth foundation capable of taking on future challenges.

Two years have passed since I assumed the role of Outside Audit & Supervisory Board Member in June 2024. During this time, in addition to attending Board of Directors meetings, I have conducted on‑site audits at plants, laboratories, subsidiaries, and other sites away from the head office, primarily to assess organizational governance and employees’ awareness of compliance.

One strength of our organizational structure is that laboratories, plants, and head office functions are positioned as peer units, each operating with a strong sense of ownership with its members actively taking initiative. However, I have expressed concerns that this structure may hinder the effectiveness of the second line of defense within our internal control system. Management has also recognized this as an issue and has responded swiftly through organizational changes and revisions to roles and responsibilities. Going forward, I intend to verify the effectiveness of these measures.

The operation of the Board of Directors continues to be improved based on the results of effectiveness assessments conducted by external organization. Recent enhancements include the provision of more extensive information to outside officers and allocating time for questions prior to Board of Directors meetings, steps that have improved the support provided to outside officers and enriched discussions at Board of Directors meetings.

From the perspective of a certified public accountant, I find no concerns regarding the Company’s current financial condition. It has been supported by strong performance with high profit margins over the past several years, and the equity ratio remains high. The accounting treatment of R&D activities and capital expenditures presents no issues. However, with regard to the M&A transactions currently being planned, I intend to closely monitor financial discipline and the governance framework for maintaining it.

To achieve the medium‑term business plan, discussions involving greater business risks, such as new product development and M&A, both of which are key targets that must be achieved by 2030, are expected to increase. I will continue to provide advice on finance, accounting, and post‑M&A organizational governance, while identifying and raising concerns about potential risks.

A research‑driven company like Nissan Chemical, one that has cultivated advanced technological capabilities over a long history, at its core, critically depends on appropriate risk‑taking in investment in intellectual property and new business development, as well as the assessment of the medium‑ to long‑term effectiveness of such initiatives. I believe that Outside Audit & Supervisory Board Members are expected to provide supervisory and advisory functions that maintain a balance between “proactive governance,” which supports management’s determined pursuit of new challenges, and “defensive governance,” which verifies whether management decisions are made through lawful procedures and on a reasonable basis.

Maximizing corporate value over the medium- to long- term requires the trust of all stakeholders, including investors. To earn that trust, I will audit the Company’s management from an objective and independent standpoint, grounded in the legal insight and specialized governance expertise I have developed over the years, to help ensure sound governance with a high degree of transparency. For the Board of Directors to fully exercise its functions and conduct effective oversight, appropriate information sharing and objective verification processes are indispensable. By rigorously examining the compliance framework and internal controls from an independent standpoint, I will help prevent corporate risks from materializing and contribute to maintaining and strengthening a sound management oversight structure. I will also continue to monitor whether risk management and compliance frameworks do not become mere formalities, but instead function effectively across the entire Group.

I strongly identify with the slogan set forth in the Company’s medium‑term business plan: “To be an Enterprise that Faces Challenges toward the Future through Value Cocreation.” To support this important challenge, I hope to create an environment—through ongoing dialogue—in which management can confidently pursue new value creation, while maintaining the perspective required of an Audit & Supervisory Board Member. Through the Board of Directors and the Audit & Supervisory Board, I will work to foster a governance framework characterized by integrity, openness, and resilience, so that investors can follow the Company’s medium- to long-term growth journey with genuine anticipation.

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