Corporate Governance

(as of February 14, 2018)

Business Management Organization and Other Corporate Governance Systems Regarding Decision Making, Execution of Business, and Oversight in Management

2.Matters on Functions of Business Execution, Auditing, Oversight, Nomination, and Remuneration Decisions (Overview of Current Corporate Governance System)

(1)The Company’s corporate governance system is rooted in its nature as a Company with a Board of Auditors. By appointing outside auditors to at least half of its auditor positions, the Company works to strengthen oversight functions and maintain sound management. Furthermore, based on the objective criteria set forth in the Delegation of Authority Rules, the Board of Directors deliberates and makes decisions on not only those matters required by the Companies Act and other laws and regulations to be subject to approval by the Board of Directors, but also management plans, business plans, budgets, and other significant management matters as defined by the Delegation of Authority Rules. The authority for other matters of operational execution is delegated to the management in accordance with the aforementioned rules. In this way, the Company works to ensure the appropriateness and efficiency of management decision-making and operational execution.
The Company employs 6 directors (of which, 2 are outside directors) and 3 auditors (of which, 3 are outside auditors and one is a full-time auditor. As is the case with Companies with Nominating Committees, Etc., the tenure of the Company’s directors is 1 year.
As a general rule, the Board of Directors meets once monthly. These meetings serve as a forum for discussions and exchanges of views between the directors (including outside directors), thus significantly enhancing the system of mutual checks and balances and enlivening debate between directors. The forum also works to ensure the objectivity and transparency of management.
(2)As a general rule, the Board of Auditors meets once a month and engages in its accounting and business auditing duties based on the auditing plan. The auditors also attend Board of Directors meetings in order to audit the status of the execution of the directors’ duties.
Audits are reviewed by 3 auditors (of which, 3 are outside directors).
The Company employs Ernst & Young ShinNihon LLC as its accounting auditor under the Companies Act and its accounting auditor under the Financial Instruments and Exchange Act, undergoes accounting audits as an independent third-party, and works to ensure that Ernst & Young ShinNihon LLC can execute its duties smoothly. The following certified public accountants are responsible for the current fiscal year.
・Names of responsible certified public accountants
Designated Limited Liability Partners, Business Execution Partners: Kenichi Shibata, Hiroyoshi Konnno
・Support team for accounting audit duties
14 certified public accountants; 18 junior certified public accountants
The auditors and auditing firm meet at the timing of quarterly and full-year earnings (i.e., a total of 4 times per annum) to report and exchange views. In addition, they arrange forums for exchanging views as appropriate, and incorporate the results of such discussions into the performance of their auditing duties.
In addition, the Board of Directors, Internal Control Committee, and other relevant parties report as appropriate to the responsible parties in the internal control departments regarding such audits.
The Company has 2 outside directors and 3 outside auditors. No special interests exist between the Companyand its outside directors or outside auditors.
Reporting and exchanges of views regarding coordination between outside directors/auditors and the Audit Office and auditing firm take place as appropriate at meetings of the Board of Directors, Board of Auditors, Internal Control Committee, and other relevant bodies.
(3)The Company has at its discretion established a Remuneration and Nomination Committee as an advisory body to the Board of Directors with a membership that includes outside directors and the President and Representative Director. By making recommendations to the Board of Directors and the Board of Auditors on matters concerning the Guidelines on the Executive Remuneration System and the Guidelines on the Nomination Criteria for Directors and Auditors, the Remuneration and Nomination Committee works to ensure the objectivity and transparency of the executive remuneration system and the nomination criteria for directors and auditors. (4)Based on the stipulations of Article 427(1) of the Companies Act, the Company has entered into an agreement with its outside directors and outside auditors limiting liability for damages as defined under Article 423(1) of the same act.
Under the aforementioned agreement, liability for damages is capped at the higher of ¥10 million or the amount dictated by the relevant laws and regulations.

3.Reasons for Adoption of Current Corporate Governance System

By appointing outside directors, the Company significantly enhances the system of checks and balances between the directors and directly presents the interests of general shareholders to the Board of Directors. Moreover, by filling at least half of the Company’s auditor positions with outside auditors, the Company endeavors to enhance its oversight functions and maintain sound management. Furthermore, based on the objective criteria set forth in the Delegation of Authority Rules, the Board of Directors deliberates and makes decisions on not only those matters required under the Companies Act and other laws and regulations to be subject to approval by the Board of Directors, but also management plans, business plans, budgets, and other significant management matters as defined by the Delegation of Authority Rules. The authority for other matters of operational execution is delegated to the management in accordance with the aforementioned rules. In this way, the Company works to ensure the appropriateness and efficiency of management decision-making and operational execution.

Page Top

PDF