Corporate Governance System

Corporate Governance System

Governance system

Board of Directors

  • The Board of Directors consists of 11 directors, including four external directors, and their terms of office shall last until the conclusion of the Ordinary General Meeting of Shareholders held with respect to the final fiscal year ending within one year after election.
  • The Company’s Board of Directors conducts an analysis and evaluation of the effectiveness of the Board of Directors with the support of an independent organization once a year, for the purpose of working on continuously enhancing the effectiveness. This fiscal year’s analysis and evaluation took place between January 2020 and February 2020.
    Continuing from the previous fiscal year, the Board of Directors conducted a questionnaire survey and individual interviews this fiscal year for all of the Representative Directors, External Directors and Audit & Supervisory Board Members, and evaluated the separation of execution and oversight, group governance,succession planning, risk management oversight, the conduct of the board of directors meetings, and dialogue with stakeholders.
    The results thereof show that the Company’s Board of Directors “is effectively functioning overall.” In addition, it was confirmed that progress was made on the matters that were identified as needing improvement in the previous fiscal year’s evaluation.
    Meanwhile, it was confirmed at the Board of Directors meetings held in March and April 2020 that improvements would continue to be made in ESG and SDGs initiatives that were identified as having room for improvement in the evaluation for this fiscal year. The Company will continue to conduct evaluations of the effectiveness of the Board of Directors going forward in an effort to enhance effectiveness of the Board of Directors.
  • The nominating committee, the remuneration committee and the SDGs promotion committee are established voluntarily as advisory bodies to the Board of Directors. The nominating committee and the remuneration committee comprise the CEO and Independent External Directors to ensure independence of the committees. The SDGs promotion committee is headed by the representative director, president & CEO, who is the officer ultimately in charge of SDGs promotion. In addition, the risk management committee is established as an internal committee.
  • The agenda items for discussion in the Board of Directors are set forth in the Articles of Incorporation and the Board of Directors Rules. In addition, the Company has introduced the executive officer system with the aim of strengthening corporate governance and speeding up decision-making and execution.

The Company stipulates the maximum number of directors at 15 in the Articles of Incorporation. The Board of Directors elects director candidates who are considered the most suitable for the position, regardless of their nationality, ethnicity, gender, or age, based on discussions by the nominating committee. At present, there are 11 directors serving, all of whom have a wealth of knowledge and experience regarding business management. Four Independent External Directors have been elected, and they hold constructive and lively discussions at the Board of Directors meetings from diverse perspectives, including outside perspectives.

Audit & Supervisory Board Members and the Audit & Supervisory Board

The Audit & Supervisory Board consists of four members, two of whom are external members (two full-time members and two part-time members).
The Internal Audit & Supervisory Board members consist of one full-time member and one part-time member. The full-time Internal Audit & Supervisory Board member has extensive knowledge and experience in the fields of corporate governance and compliance accumulated through serving as an executive officer, CCO, and head of the General Affairs Division of the Company, as well as in corporate management accumulated through serving as the president of a Group company. The part-time Internal Audit & Supervisory Board member is a certified public accountant and has extensive knowledge and experience in accounting, including many years in charge of the accounting unit of SoftBank Group Corp. The external Audit & Supervisory Board members consist of one full-time member and one part-time member, both of which are fully independent. The full-time external Audit & Supervisory Board member has extensive experience in heading compliance and risk management divisions of a financial institution. The part-time external Audit & Supervisory Board member has extensive knowledge and experience as a certified public accountant.

The Audit & Supervisory Board members, including the external Audit & Supervisory Board members, attend Board of Directors meetings to monitor and verify the status of decision-making by the Board of Directors and the fulfillment of its supervisory duties over each director. They also audit the execution of duties by the directors, etc., as well as the directors and the Audit & Supervisory Board members of major subsidiaries, through regular interviews and other means.

The Audit & Supervisory Board establishes an audit policy, audit plan and priority audit items for each fiscal year. It meets once a month in principle, receives regular reports from each department related to the internal control system to confirm the status of the execution of duties by directors based on the priority audit items, and confirms the appropriateness of business execution. In addition, the Audit & Supervisory Board receives quarterly reports on the progress and results, etc. of audits from the Independent Auditor, and exchanges information and opinions with them. It also receives explanations of individual matters from directors, etc. as necessary.

The Audit & Supervisory Board office has been established to support the duties of all the Audit & Supervisory Board Members, including the external members. The office comprises dedicated personnel who act under the directions of the Audit & Supervisory Board Members to gather information, investigate matters, and give other assistance.

Internal audits

The Internal Audit Department conducts internal audits of the overall duties of the Company as an organization directly under the CEO, and also conducts audits mainly of subsidiaries as a parent company. The Internal Audit Department mainly evaluates business compliance with laws and regulations and effectiveness of internal control, and reports the results of internal audits to the CEO and the Board of Directors of the Company while explaining them to the Audit & Supervisory Board Members.

Supporting System for External Directors and/or External Audit & Supervisory Board Members

The Company seeks to ensure that all officers, including the external Audit & Supervisory Board Members, can participate fully in the Board of Directors meetings having fully grasped the specific details of the agenda for discussion. The secretariat to the Board of Directors therefore provides them with materials for the Board of Directors meetings beforehand, including supplemental briefings and other information as required.

Cooperation among Audit & Supervisory Board Members, Independent Auditors and Internal Audit Departments

Cooperation between the Audit & Supervisory Board Members and the Independent Auditor

The Audit & Supervisory Board Members receive briefings from the Independent Auditor (Deloitte Touche Tohmatsu LLC) on the audit policy and audit plan, and exchange opinions. In addition to receiving reports on the main items to be audited and the method and results of audit, regarding the audit during and at the end of the fiscal year (including quarterly review), Audit & Supervisory Board Members cooperate with the Independent Auditor mainly by accompanying the Independent Auditor on the on-site audit and witnessing the audit.

Cooperation between the Audit & Supervisory Board Members and the Internal Audit Department

The Audit & Supervisory Board Members regularly provide opportunities to exchange information with the Company’s Internal Audit Department and Internal Control Division, cooperating organically with them including requesting them to conduct an investigation as necessary.
In particular, the Audit & Supervisory Board Members confirm the progress of the internal audit plan and exchange opinions with the Internal Audit Department every month such as by holding regular meetings attended by full-time Audit & Supervisory Board Members. In addition, the general manager of the Internal Audit Department reports the internal audit plan and results, among other matters, to the Audit & Supervisory Board Members semi-annually. Regarding the report of audit results to representative directors, materials are shared each time.

Cooperation between the Independent Auditor and the Internal Audit Department

The Independent Auditor receives briefings from the Internal Audit Department on the audit plan and, when necessary, on the results of internal audits and other matters. The Internal Audit Department receives regular briefings from the Independent Auditor regarding audit results and other matters. Moreover, both parties cooperate with each other as necessary by exchanging information and opinions, among other measures.

Reasons for Adoption of Current Corporate Governance System

The Company has established the Board of Directors as a decision-making body for important matters and an oversight body for the status of business execution. The Board of Directors also plays a role of steering management to improve the long-term enterprise value. At present, the Board of Directors consists of 11 directors, including four external directors, and makes management decisions following “appropriate investigation” and “thorough consideration.”
In addition, the Company has established the Audit & Supervisory Board to conduct efficient and effective audits regarding the status of execution of duties by directors. The Audit & Supervisory Board consists of four Audit & Supervisory Board Members, including two external Audit & Supervisory Board Members, and formulates the “audit policy,” “audit plan” and “audit method.” Audit & Supervisory Board Members carry out audit activities in accordance with this policy and plan.
Moreover, the Company has introduced the executive officer system to ensure clarification of the management supervisory function, strengthening the business execution function of the Board of Directors, and expediting management.
The current system is thus selected because the Company judges that its corporate governance is functioning effectively.

Status of audit by the Independent Auditor

(a) Name of the independent auditor

Deloitte Touche Tohmatsu LLC.

(b) Consecutive auditing period

19 years

(c) Certified public accountants who executed the audit duties of the Company

Designated engagement partners: Mr. Tomoyasu Maruyama, Mr. Masayuki Yamada, Mr. Kazuyuki Oeda

(d) Composition of assistants for the audit duties of the Company

30 certified public accountants and 62 others

[Note]
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    The contents of this page are based on information contained in Corporate Governance Report which was revised on June 26, 2020.