Corporate Governance
As a global company operating in various countries and regions, Toyota Industries seeks efﬁcient management
while maintaining and enhancing the fairness and transparency of its corporate activities.

Basic Perspective of Corporate GovernanceToyota Industries strives to enhance the long-term stability of its corporate value and maintains society’s trust by earnestly
fulﬁlling its social responsibilities in accordance with its Basic Philosophy. To that end, Toyota Industries strives to further enhance
its corporate governance in its efforts to maintain and improve management efﬁciency and the fairness and transparency of its
corporate activities.

division regularly to monitor and follow the status of theirbusiness execution. At meetings of the Management
Council, directors, managing ofﬁcers and audit &supervisory board members convene to report and conﬁrm
the monthly status of business operations and share overall
deliberations at Board of Directors meetings and othermanagement-related information.
In addition, issues pertaining to human resources,quality, production, procurement and technologies are
discussed at the corresponding functional meetings. We
have also put in place committees to deliberate on more
speciﬁc matters, such as CSR, the environment and exporttransaction controls. These functional meetings andcommittees discuss important matters and action themes inrespective areas.

Corporate Governance Structure
Implementation Structure
Toyota Industries convenes monthly meetings of the Boardof Directors to resolve important management matters andmonitor the execution of duties by directors. We also
appoint outside directors who have a wealth of experienceand knowledge concerning business management. They
attend meetings of the Board of Directors and give opinions
and ask questions as deemed necessary. Through thissupervisory function of outside directors, we ensure thelegality and validity of the Board’s decisions as well as
directors’ execution of duties from an objective perspective.
The Management Committee, which is composed of
directors above the executive vice president level as well as
relevant directors, managing ofﬁcers and audit & supervisoryboard members, deliberates on a variety of issues
concerning important management matters such as our
corporate vision, management policies, medium-termbusiness strategies and major investments.
Toyota Industries has a divisional organization system,with signiﬁcant authority delegated to each businessdivision. For especially crucial matters, however, we haveestablished the Business Operation Committee to enable
the president to meet with the heads of each business

Audit & Supervisory Board System
Toyota Industries has adopted an audit & supervisory board
system. Two full-time audit & supervisory board members
and three outside audit & supervisory board members
attend meetings of the Board of Directors to monitor the
execution of duties by directors. At the same time, meetingsof the Audit & Supervisory Board are held once a month todiscuss and make decisions on important matters related toauditing. The full-time audit & supervisory board members
carry out auditing by attending primary meetings andShareholders’ Meetings
Selection/
Dismissal

Selection/
Dismissal

Reporting
Cooperation

Selection/
Dismissal

Audit &
Supervisory Board

Independent Auditors
Board of Directors

Reporting
ReportingAppointment/
Monitoring

Monitoring
Monitoring

Discussion/
ReportingPresident
Accounting
Audit

(

Management
Committee
Deliberates on importantmatters frommanagement’s perspective

Directives

Business Operation
Committee

Management
Council

Follows up on theexecution ofbusiness operations

Reports on andconfirms execution ofbusiness operations) (Discussion/ Directives
Reporting) (ReportingDirectives

Directives)

Reporting(monthly)

ReportingDirectives
Reporting
Reporting

Functional
Meetings*1
Committees*2
Policies*1: Functional
Meetings*2: Committees

Human Resources

CSR

Quality

Environmental

Audit &
Supervisory
Board
OfficeProduction

Export Transaction
Controls

Monitoring

Procurement

Safety and HealthTechnologies

Profit Improvement

Audit Dept.

Reporting Internal Reporting
Audit

Directors/Managing Officers

These entities deliberate andfollow up on issues in respective areas.

receiving reports directly from directors. Additionally, we
have assigned dedicated personnel, while audit &supervisory board members monitor the legality andefﬁciency of management through collaboration withindependent auditors and the Audit Department.

Appointment of Independent Director and
Audit & Supervisory Board Members
As a publicly listed company, Toyota Industries strives
to ensure the fairness and transparency ofmanagement. Following the Securities Listing
Regulations stipulated by the Tokyo Stock Exchange
and Nagoya Stock Exchange, respectively, to further
enhance our corporate governance Toyota Industries
has appointed as independent members ofmanagement two outside directors and two outside
audit & supervisory board members who are deemed
to have no conﬂicts of interest with our shareholders.

Internal Control System
In accordance with the Corporation Law of Japan, in May
2006 Toyota Industries’ Board of Directors adopted the
Basic Policies for the Establishment of an Internal Control
System (Basic Policies) to ensure compliance, risk
management as well as the effectiveness and efﬁciency ofbusiness operations by incorporating these policies into
each business segment’s annual policies and day-to-day
routine management. The CSR Committee, at its meeting
held in March, assesses the progress made in implementing
the Basic Policies in the year under review and determines
actions for the coming year, including reviewing theimplementation structure and enhancing day-to-day
operational management.
A revision was made to the Corporation Law of Japan in
fiscal 2015 (enforced in May 2015), further requiring
companies to set up and upgrade a system to ensure thefairness of their operations and effectiveness of auditor duties.
Accordingly, we reviewed our Basic Policies, and the revised
policies have been adopted by the Board of Directors.
Furthermore, based on the Financial Instruments andExchange Law (so-called Japanese Sarbanes-Oxley Act
n Internal Control Assessment System (Based on J-SOX)
Internal control activities undertaken by eachdepartment and consolidated subsidiary(Establishment and operation of internal controls)

Annual financial report

Internal Control Report

Review of internal
Improvement of Detection ofcontrols byinternal controls deficiencies Audit Department

Toyota Industries Report 2015

Four Pillars of Compliance Activities
We believe that compliance means both adhering to laws
and regulations and observing ethics and social norms. In
order to ensure compliance, it is vital that each and every
employee has an awareness of compliance.
Under the strong leadership of top management, we
promote compliance throughout the Toyota Industries
Group, including consolidated subsidiaries in and outside
Japan, by formulating a Code of Conduct and thoroughly
informing employees together with checking and monitoring
compliance.
n Four Pillars of Compliance Activities

4

3

2

1

Checking
andMonitoring

Thoroughly
Informing
Employees

Formulating
rules

Leadership/
Organization

CSR selfassessment

Education on
relevant laws
and regulations

Employee Codeof Conduct

Declaration by
the presidentInternal rules

Compliance
Committee

Audit

Manuals

Establishment and Reinforcement of
Implementation Organization
To promote compliance throughout the Toyota Industries
Group, we have established the Compliance Subcommittee(led by head manager of the corporate headquarters*) as asubordinate organization to the CSR Committee. Every year,
the subcommittee formulates an action policy and conductsa follow-up check on the progress of corresponding
activities twice during that year.
In fiscal 2015, we held Compliance Officer Conferencesat each region across the world in an effort to further
enhance compliance within the Toyota Industries Group.

Internal Control Audit Report

Subsidiaries/Affiliates

20

Compliance*As of March 31, 2015

Business Divisions/In-House Company/Departments(As of June 11, 2015)
Toyota Industries’ Corporate Governance Reports are available at: http://toyota-shokki.co.jp (in Japanese)(J-SOX)), we have established and appropriately operated
an internal control system to maintain the reliability ofﬁnancial reporting. The system’s status and progress arereviewed by the Audit Department and audited byindependent auditors. We determine which Toyota Industries
Group companies fall within the scope of J-SOX based on
the degree of impact on the reliability of ﬁnancial reporting.
We determined that our internal controls over ﬁnancial
reporting as of the end of ﬁscal 2015 were effective, andaccordingly, submitted an Internal Control Report in June
2015. The report was reviewed by independent auditors andjudged fair in their Independent Auditors’ Report.

Audit on internal controls by independent auditors

21

n Organization for Promoting Compliance
CSR Committee
Report activities

Give directives
Compliance Subcommittee

Departments in charge of legal compliance: 12
Supporting department: 1

Toyota Industries
Corporation

Consolidated
subsidiaries in Japan

Consolidated subsidiaries
outside Japan

Compliance committees

Compliance officers

Activities in China
In China, we held a Presidents Conference, in which
presidents from all bases in the country attended. They
confirmed the anti-bribery regulations and the introduction of
the leniency system under antitrust laws.
We also held a Compliance Officer Conference in China,
with the participation of compliance officers from five bases.
They shared information on the progress of their respective
compliance-related activities and exchanged opinions
concerning the revision to the Corporate Code of Conduct,
which is used as conduct guidelines across all bases in China.

Conduct and have been working to instill an awarenessamong their employees.
Simultaneously, to prevent significant risks of bribery
and violations of antitrust laws, we have formulated
corresponding regulations and been undertaking activities
to familiarize employees with these regulations.

among employees and create an environment in which
employees foster compliance consciousness on their own.
n Example Topics of e-Learning Materials
Compliance
Environment (water quality and waste)
Courses started up to
fiscal 2014

Response to bribery risk
In fiscal 2015, Toyota Industries formulated the Global Guidelines
on Bribery Prevention applicable to Toyota Industries itself and its
Group companies. Particularly, in countries with a high risk ofbribery, each base has developed internal rules in accordancewith the applicable laws in respective countries and been
conducting activities to familiarize employees with them.

Prevention of bribery
Insider trading regulations
Courses establishedin fiscal 2015

Participants of Compliance Officer Conference held in Europe

Formulation of Code of Conduct andDissemination
Toyota Industries has formulated and distributed to
executives and all employees the Toyota Industries
Corporation Employee Code of Conduct, which serves asconduct guidelines that should be observed by employees,
and has been providing familiarization training. At
subsidiaries in and outside Japan, compliance officers(outside Japan) and compliance committees (in Japan) aretaking a leading role in the formulation of their own Code of
Conduct matched to their respective business lines andcorporate cultures. Toyota Industries’ 33 consolidated
subsidiaries in Japan and 71 consolidated subsidiaries
outside Japan have already created their own Code of

Copyrights
Japan’s subcontracting law
Sexual harassment

We have put in place a system to conduct a check and review
before and after employees of Toyota Industries contact
competitors. We are also familiarizing all employees that they areprohibited from any acts that may possibly constitute a violation of
antitrust laws and monitoring employees’ awareness and behavior
on a periodic basis.

Participants of Presidents Conference in China

Japan’s Personal Information Protection Law
Compliance hotline

Response to risk concerning antitrust laws

Activities in North America and Europe
We held Compliance Officer Conferences in North America
and Europe, with participation of compliance officers from
18 bases and 32 bases, respectively, in each region.
At both conferences, participants deliberated on preventive
measures to two significant risks of bribery and cartel
formation, as an increasing number of companies haverecently been charged with being involved in such practices.
They also exchanged opinions on the structure andoperation of external hotlines planned to be introduced in
North America and Europe, taking into account the actual
conditions at respective bases.

Traffic safety

Abuse of power in the workplace, etc.

† Provided to all employees. Additional courses are under consideration.

Checking and Monitoring Compliance

Thoroughly Informing Employees about
Applicable Laws and Regulations
Toyota Industries provides required legal knowledge toemployees according to their job ranks or positions,familiarizing them with the initial responses that should be
followed upon the occurrence of a problem and educatingthem on risk management. To new or young employees, inparticular, we provide easy-to-understand guidance on“what to do” and “what not to do” in order to improve theircompliance awareness based on laws and corporate ethics,
using the Toyota Industries Corporation Employee Code of
Conduct as an instructional material.
Since fiscal 2014, we have been disseminatinge-learning materials on one specific theme every month inorder to cultivate a deeper understanding of compliance

In order to monitor the status of compliance, we request
internal departments and Toyota Industries Group
companies in and outside Japan to perform a complianceself-assessment. If any items are found to be insufficient in aself-assessment, Toyota Industries’ responsible department
in charge of legal compliance will provide support for
improvement through auditing and other activities.
We also operate a compliance hotline that allows
employees and their families to seek advice on compliancerelated matters without being exposed to negative
consequences, as well as to ensure early discovery and theprevention of issues. This compliance hotline is cited in the
Toyota Industries Corporation Employee Code of Conduct,
and we also create leaflets and posters to inform ouremployees of the service.

n Compliance Education Provided (As of March 31, 2015)
n Compliance Ofﬁcers (outside Japan) and Compliance Committees (in Japan) (As of March 31, 2015)
Regional
representativecompliance officer
for Europe

Europe:37 companiesn Employee Code of Conduct

Compliance officer
in China

Toyota Industries

Wang Xinxing

Andreas Lundh

North America:
18 companies

Asia: 13 companies

FY2013Compliance officer
in North America

Employee Code of Conduct

Sheena Seger

April 2014

Toyota Industries Corporation

Executive training

Rank-based (clerical,
technical) training

T R Nagaraj

Australia: 1 company

South America:
3 companies

Toyota Industries Report 2015

Ongoing initiative

Promoted training on quality, safety, the environment, labor, management ofconfidential information, export transactions, subcontracting and antitrust laws

Ongoing initiative

Training for affiliatedPromoted group training via executive training seminars, subcontractor safe work
training and public relations division training, and through visits to dealers

companies

FY2016

Conducted training for newly appointed executives and legal seminars for executives★9,900 employees participated ★12,000 employees participated ★12,000 employees participated

Consolidated
subsidiaries in
Japan

22

FY2015Training by function

Japan: 33 companies

Compliance officer
in India

FY2014★2,400 employees participated★2,800 employees participatedOngoing initiative★2,400 employees participated

Conducted training on the Code of Conduct, safety, etc.
Ongoing initiative★16,100 employees participated ★15,400 employees participated ★20,200 employees participated23

Management of Conﬁdential
Information
Basic Perspective

Basic Perspective

We recognize that the personal information of customers,
employees and business partners as well as information
concerning our technologies and sales activities are assetsthat need to be protected. Accordingly, we are making ourutmost efforts to safeguard conﬁdential information andstrengthen its management as one of the CSR areas.

Based on the Basic Policies for the Establishment of anInternal Control System in compliance with the Corporation
Law of Japan, Toyota Industries is working to strengthen
regulations and a structure to promote risk management.
We regard the following aspects as the basics of risk
management and implement initiatives accordingly.
(1)	Incorporating measures to prevent and reduce potential
risks into daily routines and following up on the progressof implementation(2)	Ensuring quick and precise actions to minimize theimpact on business and society when a risk becomesapparent

Implementation Structure
Toyota Industries has set up the Information Security
Subcommittee (led by a director in charge of generaladministration*1) as a subordinate organization to the CSR
Committee to promote proper management of conﬁdential
information, taking appropriate actions against the leakageof conﬁdential information and complying with the Unfair
Competition Prevention Act and the Act on the Protection of
Personal Information.
To thoroughly implement the initiatives adopted by thesubcommittee, we appoint information security managers*2
and information security administrators*3 at eachdepartment. We strive to raise awareness about information
security among their staff by holding workplace meetingsand conducting self-checks regarding their information
security practices.
n Activity Examples

Activities up to fiscal 2014
Activities by Toyota Industries• Reviewing rules for management of confidential information• Rank-based group education• Restrictions on taking photographs on company premises•	Attaching a security cable with a lock to all PCs to prevent
unauthorized removal off the premises• Restricting the copying of electronic data on recording media•	Monitoring email correspondence
Activities in collaboration with other Toyota Group companies•	“All Toyota Information Security Awareness Month” activities in
May and October to raise employee awareness and conduct
auditing by checking off-the-premises removal of personal
computers and recording media
New activities in fiscal 2015
•	Requiring employees to sign a confidentiality agreement uponretirement•	Reinforcing checks on the history of electronic data being taken
off the premises upon retirement, etc.

Our consolidated subsidiaries in and outside Japan also
appoint respective information security managers andinformation security administrators. We have also developed
common guidelines concerning management of conﬁdential
information and follow up on their activities on a periodic basis.
*1: As of March 31, 2015
*2: Head of each department*3: A person within the department, appointed by the head

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Risk Management

Toyota Industries Report 2015

Implementation Structure
Business divisions and other departments at the Head
Ofﬁce develop and promote annual action policies that
integrate measures to prevent and control risks related toquality, safety, the environment, personnel, exporttransactions, disasters and information security. Progress is
assessed and followed up by each functional management
entity such as the CSR Committee and the Environmental
Committee. At the same time, functional departments at the
Head Ofﬁce such as those responsible for quality, safety andthe environment formulate rules and regulations andmanuals from a Group-wide perspective, including
consolidated subsidiaries. By conﬁrming and following up on
the progress through operational audits and workplaceinspections, they provide support for raising the level of risk
management at each business division and consolidated
subsidiary.
We have also formulated the Crisis Response Manual,
which defines our initial response to a problem or a crisis.
This manual lays out basic rules to be followed when a risk
becomes evident and a problem or crisis occurs. The aim isto ensure quick reporting to top management, perform an
accurate assessment of the impact on society and businessactivities and minimize damage through appropriate actions.
During fiscal 2015, we conducted a review of the manual
to enforce more Group-wide efforts. Specifically, the review
included clarifying responsibility and authority between
Toyota Industries and its Group companies based on theassumption that a problem or crisis occurred at a Group
company.

Response to Possible Major Earthquake
We consider the occurrence of a major earthquake in Japanas one of the most signiﬁcant risks. Since fiscal 2011, we
have been implementing disaster prevention measures that
focus on three basic policies, namely placing maximum
priority on human life; placing top priority on the recovery of
local communities; and ensuring the quickest possible
recovery.

Furthermore, we divide these measures into the three
categories of “precautionary, pre-disaster mitigation,” “initial
response to be followed immediately after the disaster” and“restoration of production,” and are respectively making
Company-wide efforts.
In fiscal 2015, based on the results of a review of ourefforts in the previous fiscal year, we conducted disaster
drills in more realistic settings. We intend to continuously
upgrade our activities.

Disaster Prevention Structure
We have been reinforcing our disaster prevention structure
to enable smooth transition from the initial response stage tothe production restoration stage.
The Disaster Prevention Response Headquarters, led by
the executive vice president and consisting ofrepresentatives from the functional departments at the Head
Office, is responsible for collecting information from plants
and other relevant parties and making Company-widedecisions based on the information collected.
n Disaster Prevention Structure
Disaster Prevention Response Headquarters (Established in Kariya Plant)
Plant Response
Headquarters
Kariya Plant
Obu Plant
Kyowa Plant
Nagakusa Plant &Morioka Works
Takahama Plant
Hekinan Plant
Higashichita Plant
Higashiura Plant
Anjo Plant

Key Facility
e-Lab (information
systems headquarters)

Remote Sites

Educational Sites
Company dormitories
Company resort
facilities

Affiliated Companies

Suppliers

Tokyo Office
Toyota L&F Customers
Center (Chiba)
TMHG Training Center(Handa)Efforts to Cultivate Human Resources throughTraining
1. Training at Disaster Prevention Response
Headquarters
We conduct simulation training in which employees collectinformation on damages to both inside and outside thecompany premises, swiftly make decisions and disseminate
these decisions throughout Toyota Industries.
During fiscal 2015, assuming the occurrence of adisaster during nighttime and on a weekend
or holiday, we provided
training to members
selected from thefunctional departments
who live close to the
Head Office.
Disaster response meeting

2. Training at Plant Response Headquartersa) Walk-Through Drill
Based on the standard response procedures formulated byeach plant, we conduct genchi genbutsu (go and see foryourself) drills to confirm
supply storage locations
and usage procedures.
Members of each
Plant Response
Headquarters work toenhance our response todisasters by identifying
points that require
Confirming procedures to activate an
improvement or
emergency power generator
particular attention.
b) Tabletop Exercise
We provide training to the head (plant manager) andmembers of each Plant Response Headquarters to ensurethat we promptly make an initial response and offer support
to local communities in case of a disaster. In fiscal 2015, in
addition to drills forenabling quick disaster
response, we held
discussion sessions on
the theme of “thinking on
your own” to raiseawareness of eachmember for disaster
Checking internal disaster damage information
prevention.
3. Training for Restorationa) Power Restoration Drill
Each plant has developed procedures to restore power
supplies, including electricity and gas, which are essential inrestoring production activities. Starting from fiscal 2015,
each plant conducts
genchi genbutsu training
on a periodic basis.
Through the training weare identifying problems
and making
improvements to step up
our efforts to ensure
quick restoration
Drill to restore a primary power source
activities.
b) System Restoration Drill
The e-Lab, responsible for managing Toyota Industries’ dataservers, has created procedures to restore critical data aftera disaster. We conduct restoration drills jointly with Toyoda
High System, Incorporated, a consolidated subsidiaryengaged in development and operation of information
infrastructures and systems, and work to improve ourreadiness for quick restoration.
4. Training for Identifying Disaster Damage
Starting from fiscal 2014, we repeatedly conduct drills jointlywith our affiliated companies and suppliers in order tofamiliarize them with the use of IT tools to quickly identify thedamage status during a disaster.

25