FOCUS

6Toyota Industries in Focus

Corporate GovernanceWith the aim of creating fair and sound management, Toyota
Industries strives to enhance the transparency of its
management through prompt disclosure of accurate information
to its shareholders and other stakeholders.
Following amendments to Japan’s Commercial Code,publicly listed Japanese companies are now allowed to selectbetween a “Company with Committees” system — U.S.-style,committee-based corporate governance — and the traditional“Corporate Auditor/Board of Corporate Auditors” system. Toyota
Industries has opted to retain the traditional system, as theCompany believes this system adequately ensures that theBoard of Directors will properly execute their duties.

Decision-Making Structure
Toyota Industries’ Board of Directors, Management Committee
and Business Operation Committee ensure effective and efficientdecision-making with regard to matters deemed to have aThe main decision-making bodies of Toyota Industries are
the Board of Directors, Management Committee andBusiness Operation Committee. The ManagementCommittee and the Business Operation Committee are
Toyota Industries’ independent creations to raise theefficiency and speed of management and decision-making.
Of all the issues deliberated on by the Managementsignificant impact on shareholders’ interests as well as important
issues affecting business operations. The Board of Directors
generally convenes once a month, and deliberates on andresolves important management matters, such as those requiredby the law. As of June 22, 2004, the Board of Directors
consisted of 30 directors, including one external director.
Toyota Industries’ corporate auditors strictly monitor theexecution of duties by board members by means of attending
meetings of the Board of Directors and expressing their opinions
when necessary.
Toyota Industries has adopted a divisional system. Inprinciple, authority for the execution of business operations intheir respective divisions is delegated to division managers.
Strategic decision-making and the establishment of divisionaland corporate targets are discussed and resolved by theManagement Committee and other deliberative bodies. Whennecessary, cases are put before the Board of Directors.

Committee and Business Operation Committee, issues
stipulated in Japan’s Commercial Code and Board Rules
are presented for discussion by the Board of Directors.
Barring matters resolved at the Shareholders’ Meeting, allimportant management matters stipulated in theCommercial Code and the Board Rules are discussed anddecisions are made by the Board of Directors.

Shareholders’ Meeting

Appoints

Reports toReports toAppoints

Corporate Auditors
Board of Corporate Auditors

Board of Directors
ChairmanPresident

Management Committee
The Management Committee deliberates on important mattersconcerning all aspects of management, such as company-wide
strategy and allocation of management resources. The Committee iscomposed of directors above the Executive Vice President level.
When he deems it necessary, the President calls in certain otherdirectors and managers.

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ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATIONMonitors

Business Operation Committee
The Business Operation Committee deliberates on importantmatters regarding each business segment. The Committee isattended by the President, directors in charge of corporate planningand directors assigned to oversee divisional operations (divisionmanagers, etc.).

Establishing an Internal Control System

As of June 22, 2004, the Board of Corporate Auditors wascomposed of five corporate auditors, including two standing
corporate auditors and three outside corporate auditors.
Appointed at the Shareholders’ Meeting, the corporate auditors
monitor execution of duties by board members. Their auditing
duties concern mainly business operations and accountingactivities. In undertaking operations audits, they investigate
whether ordinances and articles of incorporation are strictly
observed by the directors in the execution of their duties. The
corporate auditors must attend meetings of the Board of
Directors and give their opinions if necessary to prevent illegal or
improper resolutions from being adopted at these meetings.
When any violation of an ordinance or articles of incorporation ismade by a director or the prospect of such a violation isidentified, the corporate auditors must report this to the Board ofDirectors. Also, we have set up the Corporate Auditor’s Officewith specialist staff so that the corporate auditors are able toadequately execute their auditing duties.

In addition to the auditing activities performed by corporate
auditors, we strive to upgrade our internal control systemthrough measures that include audits of each department by theAudit Office and periodic autonomous audits by individualdepartments.

Strengthening and Upgrading Compliance
Code of Conduct Council
Toyota Industries considers compliance with the law to be thecornerstone of good corporate governance. As a good
corporate citizen, Toyota Industries has taken various measures
to ensure all employees execute their duties fairly and honestly inthe light of the law and corporate ethics. To undertake its
corporate activities appropriately and legally, Toyota Industries
established the Code of Conduct Council in the early 1990s.
In 1998, the Council published a guide for distribution to all
employees. This guide contains specific guidelines on good
conduct and compliance with the law. Chaired by an Executive
Vice President and attended by standing corporate auditors andthose above the rank of Managing Director, the Code of Conduct
Council convenes on a regular basis and when necessary. The
Council monitors overall corporate activities from the legal andcorporate ethics viewpoints, checks that employee conduct
conforms to the guidelines and encourages educationalactivities.
In parallel with these activities, the Legal Department, Global
Human Resources Department and Audit Office provide
employees with highly focused educational programs as well as
conduct internal audits.
For the purpose of early detection and quick handling ofimportant compliance-related information, we established acorporate ethics hotline — in addition to other such existing lines
and counseling desks — staffed by outside lawyers in
September 2003.
In addition, our “Basic Philosophy” and “Five Values,” which
serve as the basis of employee actions, clearly express action
guidelines and ensure that the Company is operated with ashared high ethical standard, from top management down.

Information Disclosure
Toyota Industries strives to adhere to the letter and spirit of thelaw in Japan and overseas, while conducting its corporate
activities fairly and transparently. Our disclosure activities are notlimited to providing only legally required information. Rather, we
proactively disclose information to fulfill our responsibility forproviding clear explanations to our shareholders and otherstakeholders, thus raising management transparency. In line withthese efforts, we disclose pertinent information to the public in atimely manner through such media as the Investor Relations
section of our Web site.

Toyota Industries in Focus

Corporate Auditors (Board of Corporate Auditors)

Toyota Industries intends to continue to explore ways ofachieving the best possible corporate governance, not onlythrough a legal framework but also through independent efforts.

http://www.toyota-industries.com/ir/

ANNUAL REPORT 2004 — TOYOTA INDUSTRIES CORPORATION

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