To respond to the changing times and improve sustainable corporate value, Toyobo has established the policies of (1) ensuring timeliness and accuracy in decision-making, (2) ensuring transparency in management, and (3) emphasizing fairness. Based on these principles, we are working to strengthen group governance, as well as our risk management and compliance structures.

Board of Directors' Meeting and Executive Officer System
We instituted a system of corporate officers at the end of June 2005, and clearly separated decision-making and supervision, which is handled by the Board of Directors, from business execution, which is handled by corporate officers.
  Decision-making and supervision functions are performed by the Board of Directors, who make decisions on management policies, management plans and other important matters relating to the execution of operations, and supervise directors and executive officers in regard to their respective duties. The Board of Directors consists of 10 directors (one of whom is an outside director). Each and every director excluding the Chairman and the outside director concurrently serves as a corporate officer to realize quick and accurate decision-making, in consideration of the diverse and specialized nature of Toyobo's businesses.
  For execution functions, the President and Chief Operating Officer serves as the chief executive officer, and convenes monthly and presides over the Board of Corporate Executive Officers. The Board of Corporate Executive Officers, which consists of corporate officers holding responsible posts, makes decisions on matters relating to the execution of operations delegated by the Board of Directors. In addition to the meetings of the Board of Corporate Executive Officers, the President and Chief Operating Officer convenes monthly meetings of the Board of Corporate Officers, consisting of all corporate officers, and general managers and corporate officers present reports regarding the execution of operations.

Corporate Auditor System and Accounting Audits
There are two full-time corporate auditors and two part-time corporate auditors who are outside auditors. They attend meetings of the Board of Directors and other important meetings and give their opinion as necessary. In addition, the Board of Corporate Auditors receives auditing plans and reports from the accounting auditors and regularly meets with them to exchange information. Toyobo has retained KPMG AZSA & Co. as its financial auditor in accordance with the Corporate Law. The Board of Corporate Auditors receives documents and information in response to the auditing plan and auditing results. Corporate auditors and financial auditors are enhancing mutual cooperation through regular meetings to exchange information.

Internal Control System
The Internal Audit Department has been established to monitor the effectiveness of internal controls, and conducts internal auditing encompassing group companies on the basis of an annual schedule. One member of the Internal Audit Department's Audit Group serves concurrently as a staff member assigned to the corporate auditors. The person in this role reports the results of internal audits to corporate auditors and exchanges information with them. Toyobo is currently creating an internal control structure for financial reporting based on the Financial Instruments and Exchange Law to be implemented from fiscal 2009.

Strengthening of Group Governance
Toyobo Group companies were reorganized in October 2003 for each of Toyobo's business divisions to ensure our system of group management enables governance to function more effectively. In January 2005 Toyobo established the Group Management Office, and introduced a cross-organizational structure for governance of group companies. Toyobo's corporate auditors cooperate with the auditors of consolidated subsidiaries through the Group Corporate Auditor Coordinating Committee and other structures to enhance the auditing of the internal control structure of the entire Group.

Determination of Director Compensation
Policies regarding compensation and other benefits for directors and other executives are reviewed by the Advisory Board on Executive Rules and Regulation, which includes committee members from outside the company, which issues a report to the President and Representative Director. The president, in accordance with the authority granted by the Board of Directors, determines the amount of compensation within the limits decided by the General Shareholders' Meeting.

We have the CSR Committee headed by the President to control total risk management. The respective types of risk are undertaken by a number of committees chaired by corporate officers. Together, Global Environment and Safety Committee, Product Liability Prevention / Quality Assurance Committee, Compliance Committee, Export Reviewing Committee, Internal Control Committee, Information Committee, and Research and Development Committee handle the various risks facing the Toyobo Group as a whole.

As for the compliance structure, we have the Compliance Group, which was established in the Law Department, strives to enforce strict compliance. In addition, we have opened a whistle-blowing hotline, the Compliance Inquiring Counter. To this end it has created the Toyobo Corporate Action Guidelines and Toyobo Corporate Codes of Conduct, which it distributes to all employees.