Corporate Governance

Basic policy on corporate governance

In our understanding, corporate governance is a basic corporate management framework in the relationships among various stakeholders. The Company’s stakeholders include shareholders, customers, employees, business partners and local communities, and above all it believes that maximizing the benefit to the shareholders is the most important corporate responsibility.

Our corporate governance is a system under which a “Plan-Do-Check-Action” cycle is implemented regarding the validity (efficiency), legality, and appropriateness of disclosure contents including accounting information with regard to business execution aimed at maximizing the benefit to the shareholders and other stakeholders.

Overview of our corporate governance

The Company believes that clear separation of “management oversight” from “business execution,” delegation of significant authority in business execution and ensuring transparent management, are vital to an effective and efficient operation of the management system. The Company has been working to strengthen its governance system by setting up a “Nominating and Compensation Committee” and “Business Audit Committee” in the Board of Directors and introducing an “executive officers system.” On June 22, 2004, it officially transitioned to a “company with committees, etc.” based on the Act on Special Measures for the Commercial Code on the Audit, etc. of Stock Company (“company with Nominating Committee, etc.” under the revised Companies Act promulgated on May 1, 2015).

Management Structure

Management oversight

Board of Directors It determines the management basic policy, appoints/dismisses executive officers, and resolves matters especially important in corporate management.It is composed of seven directors, of which three are outside directors.
Nominating Committee It decides on proposals for appointment/dismissal of directors and executive officers.
It is composed of three directors, including two outside directors.
Compensation Committee It decides on compensation for individual directors and executive officers.
It is composed of three directors, including two outside directors.
Audit Committee It audits business execution by directors and executive officers and decides on proposals for appointment/dismissal of the accounting auditor.
It is composed of four directors, including three outside directors. To add a professional perspective, corporate lawyers, accounting auditors, and officers of the parent company responsible for information systems are also in attendance as observers.
It also audits the compliance study status in offering new products and launching new businesses, etc.
Internal Audit Office It is independent from the business execution divisions and performs internal audits of the Company.
It operates in close cooperation with the Audit Committee regarding internal audit systems and scope of audits.

Business execution

Representative executive officers / executive officers It executes businesses delegated by the Board of Directors.
Two Representative executive officers, three Senior Managing Executive Officers and one Managing Executive Officer
Executive
Committee
It is composed of six executive officers and resolves important matters on business execution delegated by the Board of Directors.

Internal audit

In the corporate governance processes, the internal audit assumes an important function of evaluation (audit) and correction (improvement plan). At the Company, two types of internal audits as described below are conducted in order to establish a process whereby non-conformities are discovered and improvement actions thereto are swiftly taken through effective internal audits.

(1) Internal audit by Internal Audit Office
This is an internal audit conducted by the “Internal Audit Office” which has been set up as an independent body from the business execution divisions, with auxiliary function to the Audit Committee stipulated by the Companies Act. It directly audits the status of business execution and legal compliance of the business execution division. In addition, in cooperation with external auditors such as audit firms and system auditors, it verifies the reasonableness of the Company’s accounting and appropriateness in its system operation.

These audit and verification results are reported to the Audit Committee and, where necessary, business improvement orders are issued to the business execution division.

(2) Audit by Audit Committee
Through verifying audit reports of the Internal Audit Office and attending the important meetings of the Company, it audits the legality and appropriateness of business execution conducted by the Company’s directors and executive officers, as well as the reasonableness of the accounting auditor’s audit.

The audit results are reported to the Board of Directors after the review by the Audit Committee and, where necessary, business improvement orders are issued to the business execution division.