The Oiles Group considers the strengthening of corporate governance to be a key management priority. We intend to develop a rational, sound, and highly transparent management system and organization through agile decision-making and delegation of authority in response to market changes. We also intend to implement necessary measures and to promote the Group’s development and enhance its corporate value.
At the same time, we recognize the importance of timely and appropriate disclosure to investors and other stakeholders and actively work to enhance management transparency.
"Corporate Governance Report" submitted to the stock exchange where the company is listed.
In order to enhance the supervisory role of the Board of Directors and improve the speed of decision-making by delegating authority to directors and operating officers, Oiles Corporation became a company with an Audit and Supervisory Committee in June 2024. The Board of Directors makes decisions on important management matters and supervises the execution of business by directors. As of the end of June 2026, the Board of Directors consisted of eight directors, including two female director (four of the directors are independent outside directors). The Audit and Supervisory Committee has created a system to collaborate with the accounting auditor and the Internal Audit Dept., which includes internal controls. In addition, one employee has been assigned to assist the Audit and Supervisory Committee in its duties.
Since June 2003, the Company has adopted an operating officer system to clarify the separation of the execution of business and supervision/monitoring in order to enhance the functioning of the Board of Directors through faster and more efficient decision-making regarding our management strategy. Moreover, since April 2023, we have appointed operating officers as heads of divisions. This clarifies the roles and responsibilities of directors and the executive departments, promoting enhanced management supervision and the flexible execution of business.
The table below indicates the areas of expertise and experience required for the Board of Directors to consider the management policies and strategies of the Oiles Group to contribute to continuous growth and improve medium- to long-term corporate value.
The Board of Directors consists of eight directors, and in principle meets every month. The Board of Directors determines management policies, important matters concerning management, and matters stipulated by laws and regulations and the Articles of Incorporation, and supervises the execution of business. Outside directors are appointed to provide advice on management policies and important matters based on their considerable experience.
The Audit and Supervisory Committee consists of three Audit and Supervisory Committee members, including two outside directors, and in principle meets once a month. The Audit and Supervisory Committee establishes its regulations and standards on auditing and other matters. It audits the directors’ execution of their duties and creates audit reports, thereby auditing management. Outside directors are appointed to draw on their extensive external experience and to enhance the objectivity and independence of auditing.
Attended by all directors, including independent outside directors, and operating officers. It is held once a month. The Management Meeting discusses important matters concerning the execution of business.
Attended by all directors, including independent outside directors, and operating officers. It is held twice a year, in principle (first half and second half of the year). The Sustainability Promotion Council, chaired by the President, discusses important sustainability issues such as environmental initiatives.
To enhance the functioning of the Board of Directors, the Company has analyzed and evaluated the Board's effectiveness annually since FY2015.
(1) Method for Analyzing and Assessing the Overall Effectiveness of the Board of Directors
The Board of Directors analyzed and assessed the overall effectiveness of the Board of Directors based on the results of the following questionnaire.
- Method: Signed questionnaire method
- Individuals evaluated: Directors in office as of the end of March 2026 (9 in total)
- Period evaluated: April 2025 to March 2026
- Items evaluated: Composition, effectiveness, operation, and discussion process of the Board of Directors, as well as systems for obtaining information and providing assistance, etc.
Overview of results for analyzing and assessing the overall effectiveness of the Board of Directors
In the FY2025 evaluation, we received high ratings for “Statements made by Outside Directors” in Effectiveness of Board of Directors and “Opinions given by Outside Directors” in Discussion Process of Board of Directors, and there continued to be a steady increase in proactive statements by Directors this year. Therefore, the effectiveness of the Board of Directors was found to have been maintained. However, opinions were raised regarding Director training and possible improvement in debate regarding medium- to long-term management priorities/growth strategy. We discovered that all Directors share a common understanding regarding the need to further improve the effectiveness of the Board of Directors. Therefore, we will implement the required measures as appropriate and improve and strengthen our corporate governance system even more by diligently addressing the issues that arise and fully considering opinions, so that we can enhance board effectiveness.
Nominating Committee and Compensation Committee
In October 2018, we adopted a voluntary Nominating Committee and Compensation Committee system. We established a voluntary Nominating Committee with a majority of independent outside directors to ensure the independence, objectivity, and transparency of nomination procedures of directors and operating officers. The Nominating Committee is chaired by an independent outside director. The Nominating Committee is consulted regarding and informed of nominees for directors and operating officers, and then nominees are appointed by the Board of Directors. Candidates for Directors are submitted in a proposal at the General Meeting of Shareholders. In addition, to ensure the effectiveness of the compensation system for directors and operating officers, a voluntary Compensation Committee is being established, with a majority of independent outside directors. The Compensation Committee is chaired by an independent outside director. As a result, the Compensation Committee is consulted on and informed of the composition and policies related to compensation, and then compensation is determined by the Board of Directors. In FY2025, the Nominating Committee met four times and the Compensation Committee met three times, and both operated appropriately.
Performance-based Stock Compensation System
Based on a resolution adopted at the 67th Ordinary General Meeting of Shareholders held in June 2018, we established a performance-based stock compensation system, the Board Benefit Trust (BBT), for directors excluding outside directors and operating officers in order to raise their awareness of contributions to improving the medium- to long-term business performance and increasing corporate value. Under the system, company shares are acquired through a trust that we have funded. Company shares and money equivalent to the market value of the shares are provided to eligible directors and officers through the trust. Based on a resolution made at the 73rd Ordinary General Meeting of Shareholders held in June 2024 to become a company with an Audit and Supervisory Committee, the compensation framework for directors (excluding outside directors) and operating officers under the previous system was abolished. A new compensation framework for directors (excluding outside directors) who are not members of the Audit and Supervisory Committee and operating officers was adopted. At the 74th Ordinary General Meeting of Shareholders held on June 27, 2025, it was decided to increase the maximum number of points per fiscal year that may be granted to directors and operating officers. This aims to further enhance the linking of the compensation of directors and operating officers to the Company's performance and stock value. Specifically, it increases the ratio of non-monetary compensation under this system within the guideline ratios for each type of compensation for directors who are not members of the Audit and Supervisory Committee (excluding outside directors).
Training for Directors and Operating Officers
At least once a year, the Company provides directors and operating officers with continuous training sessions given by outside experts regarding the latest corporate legal affairs and taxation.
Dialog with Shareholders
The President holds financial results briefings for analysts and institutional investors twice a year, after the interim financial results and full-year financial results are announced. Moreover, the director in charge of IR leads efforts to engage in a dialog with shareholders and investors. Opinions received from shareholders and investors are reported at Board of Directors meetings and Management Meetings and are utilized in corporate management.
