Nidec (6594) Investor update summary

Improvement Plan and Governance Reform

• A comprehensive improvement plan was submitted to the Tokyo Stock Exchange to address internal management, governance, and accounting issues, aiming for removal of the Security on Special Alert designation.

• The plan targets reforming systems, processes, and corporate culture, identifying six major causes of past issues and implementing corrective actions, including stricter internal audits, clarified responsibilities, and enhanced whistleblowing systems.

• A Corporate Reform Committee and Third-Party Committee were established to drive ethical standards, transparency, and compliance, with engagement of external experts and ongoing monitoring.

• The plan will be updated based on findings from the Third-Party Committee, with initial results expected by the end of February and further revisions as needed.

• All new M&A activities are frozen until governance reforms are complete, and future strategies will be discussed with a focus on transparency and portfolio-based analysis.

Corporate Culture and Leadership Changes

• Excessive pressure for short-term profits and a top-down culture were identified as root causes, prompting a shift toward long-term investment, open communication, and bottom-up planning.

• The resignation of the former chairman, now Chairperson Emeritus, was accepted; he no longer holds management responsibilities and is treated as a regular shareholder.

• Corporate culture reforms include a new Culture Transformation Lab, enhanced compliance education, and fostering an environment for transparent discussions and whistleblowing.

• Board composition and governance structures are under review, with efforts to diversify expertise and improve risk oversight.

• Human resources and performance evaluation systems are being revised to reduce short-termism and encourage ethical behavior.

Financial and Operational Status

• Despite governance challenges, order levels, production plans, and cash flow remain stable, with no major disruptions to operations.

• Overseas facility expansions in the US and India are proceeding on schedule, and there are no concerns about liquidity or borrowing capacity.

• Commitment line agreements have been concluded and communication with business partners disclosed.

• Financial reporting is delayed, with the next major update expected after the Third-Party Committee's report.