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 nominating committee and the remuneration 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 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 company ensures adequate independence of the two external Audit & Supervisory Board Members, who have a wealth of knowledge and experience in their compliance,risk manegement or CPA.Audit & Supervisory Board Members including outside Audit & Supervisory Board Members attend the Board of Directors meetings, allowing them to monitor and verify the decision-making of the Board and fulfillment of the Board's obligation to supervise the execution of duties by each Board Director.Moreover, the Audit & Supervisory Board Members receive regular reports from Board Directors,Audit & Supervisory Board Members, and other personnel of major subsidiaries and conduct hearings, as necessary, to audit the execution of duties by the Board Directors of the Company.

The Audit & Supervisory Board meets once a month, in principle. At the meeting, the Audit & Supervisory Board Members decide on the audit policy, plan, and other matters, receive quarterly briefings and reports related to the earnings results from the Independent Auditor, and exchange information and opinions with the Independent Auditor as necessary.The Audit & Supervisory Board receives briefings from Board Directors on individual case 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 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

The certified public accountants who executed the audit duties of the Company are Tomoyasu Maruyama, Masayuki Yamada and Kazuyuki Oeda, who belong to Deloitte Touche Tohmatsu LLC. None of the certified public accountants executed the audit duties for more than seven consecutive years. From the 33rd fiscal year, Ichiro Nakayama has been replaced by Tomoyasu Maruyama as the engagement partner. The assistants for the audit duties of the Company consist of a total of 123 assistants, comprising 56 certified public accountants and 67 assistant certified public accountants.

[Note]
  • *
    The contents of this page are based on information contained in Corporate Governance Report which was revised on June 25, 2019.