Tokyo, February 12, 2002 -- Teijin Ltd., one of Japan's leading producers of synthetic fibers, chemicals and pharmaceuticals, will from April 2003 set up a holding company and spin off different businesses into separate companies.
The decision, made at a meeting of the board of directors on February 12, is to be presented to shareholders at the general shareholders' meeting due to take place in June. The creation of the holding company will constitute the final stage in a series of organizational reforms introduced to establish a global-standard corporate governance structure and boost competitiveness.
Teijin first introduced a nine-group management structure in April 2001. Splitting the group's activities up into nine separate operations in this manner has been instrumental in allowing a group-wide reinforcement of management activities. With Teijin's new plans to spin off the textile fibers business, the industrial fibers business and the medical & pharmaceuticals business, each business group will become a completely self-contained entity.
Teijin itself will therefore take on the role of a holding company, responsible for formulating management strategy and group-wide policy issues to ensure that operations are conducted in an appropriate manner. The holding company will also conduct dialogue concerning matters of relevance to all group members and will aim to continue to increase corporate value by providing guidance and support for all group activities. It will also serve as the listed entity on stock exchanges.
To summarize, the Teijin Group will adopt the holding company system to enhance transparency, ensure fairness, and accelerate decision-making at Teijin's management. At the same time, the move will allow the Company to improve competitiveness, thereby making consistently profitable growth an integral part of management policies.
Background:
The Teijin Group has three ongoing management policies; to achieve consistently profitable growth, to reinforce global operations, and to strengthen group management. Based on these policies, the Company has commenced the reform of its corporate structure and is also working to boost profitability.
Management systems have been a particular focus of reform, aiming to enhance transparency, ensure fairness and accelerate decision-making. The Company has already made significant headway in this area, establishing an Advisory Board, introducing a corporate officer system, reinforcing the supervisory function of the Board of Auditors and introducing a consolidated management structure based on the business group system.
The decision to adopt the holding company system is the next step along this path and it is the conviction of Teijin's management that the holding company system will take group management in the most appropriate direction.
By creating a holding company that oversees, supervises and is responsible for all operations, Teijin aims to make concrete improvements in several key areas. These include enhancing consolidated group management, boosting corporate value and aiding business restructuring. Furthermore, the competitiveness of individual business segments is predicted to show significant improvement. This will be accomplished by creating self-contained business operations with the freedom of movement to introduce compensation, benefit programs and other internal systems that best match their individual needs. Taking this step will improve management efficiency and cost structures, more clearly define corporate responsibilities, and accelerate decision-making. It will also enhance transparency and objectivity in financial reporting.
Finally, the adoption of the holding company system will also advance business restructuring.
Function of the New Holding Company
The new holding company will primarily be concerned with overseeing and supervising group management. Other roles will include corporate R&D geared to ensuring the development of essential core and cutting-edge technologies, and the nurturing of new business areas. More specifically, responsibilities will include the following: making and implementing group-wide strategy and policy; overseeing group functions; PR and IR activities; corporate R&D for basic and advanced technology; and researching, planning and developing new markets and industries.
Group Operating Structure
Developing balanced yet self-contained business operations will require the introduction of a carefully tailored operating structure. Accordingly, Teijin has reached the decision to restructure in the following manner.
The holding company board of directors will function as the board of directors for the entire group, and will be responsible for making decisions on crucial strategy and policy matters. Overseeing and supervising business from a shareholder's perspective will be another duty of the board.
The CEO Management Committee at the holding company will be positioned as the controlling body for the activities of the entire group. With the Board of Directors limiting itself to vital strategy and policy matters as mentioned above, the CEO will be ceded more authority in order to allow greater speed in decision-making.
Nine business groups will be established within the holding company, each of which will encompass all the companies whose operations are relevant to that group. Individual group managers will be responsible for activities within their group, and will, as a general rule, act as president of the major company within each group.
1) The following chart outlines the organization of the Teijin Group.
<The Teijin Group post holding company system introduction>
Corporate Governance
Introducing new levels of transparency, fairness and speed to group management is a key priority for Teijin. To this end, external directors will join the holding company's board of directors,
the advisory board will be further developed to reinforce group management, and advise on how the board of directors is compensated, evaluated and nominated. Group auditors will also be developed to improve group auditing. In addition, the authority of the Chief Executive Officer will be increased to facilitate quicker decision-making.
Schedule for Spinning off of New Companies
Textile Fibers Business Group
In accordance with previously formulated plans, Teijin will establish TEIJIN FIBERS LIMITED, a new wholly owned subsidiary on April 1, 2002. The new company will assume responsibility for the polyester polymers, polyester fibers, and polyester textiles business prior to the adoption of the holding company system.
Industrial Fibers Business Group
On the date of adoption of the holding company system on April 1, 2003, Teijin will transfer businesses to two wholly owned subsidiaries, one that operates the aramid fibers business and one that operates the industrial fibers business. (The company names are as yet undecided). (Company to be set up using the corporate divestiture system.)
Medical & Pharmaceutical Business Group
Before April 1, 2003, Teijin will establish an as yet unnamed wholly owned subsidiary. Teijin will secure permission to transfer its pharmaceutical and home healthcare businesses to this company in advance to ensure a smooth transition. The transfer itself is due to take place on April 1, 2003. (Company to be set up using the corporate divestiture system.)
Other Issues Relating to the Adoption of the Holding Company System
Employees
All employees (including union members and administrative staff) will be transferred to their respective new companies in April 2003. Management intends to introduce new personnel systems based on existing systems, but catering more carefully to the individual characteristics of each business area. Management will conduct negotiations with labor representatives as appropriate.
Assets
As a general rule, assets pertaining directly to a specific business will be transferred to that new company, thereby enabling each company to operate as a self-contained business unit. In those cases in which assets are not easily divisible between business groups, the holding company will retain control. This will also be true when holding company control is ruled to be in the best interests of the group as a whole.
Holding Company Expenses
The holding company's operating expenses will be covered by dividends, interest received, and revenue from loan guarantees and rent.
For further information, please contact:
Public Relations & Investor Relations Office
Teijin Limited
Tel: +81-3-3506-4055 / Fax: +81-3-3506-4150
E-mail: pr@teijin.co.jp
Outline of Teijin Limited
| 1. Name |
Teijin Limited |
| 2. Established: |
June 17, 1918 |
| 3. Address: |
1-6-7, Minami-Hommachi, Chuo-ku, Osaka |
| 4. Capital |
70.787 billion yen (as of March 31, 2001) |
| 5. Representative: |
Toru Nagashima (President and COO) |
| 6. No. of employees: |
22,256 (consolidated, as of March 31, 2001) 5,216 (non-consolidated, as of March 31, 2001) |
| 7. Sales: |
761.4 billion yen (consolidated, for the period ending March 31, 2001) 272.7 billion yen (non-consolidated, for the period ending March 31, 2001) |
| 8. Scope of business: |
Business activities mainly relating to synthetic fiber, chemicals, and medical treatment. Conducts global activities together with group companies through business bases in Japan and in more than ten countries worldwide. |
# # #
|
|
