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About Square Enix Group

Corporate Governance

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(as of November 8, 2019)

ⅡBusiness 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)In an effort to enhance its corporate governance, the Company transitioned to a Company with an Audit & Supervisory Committee following a resolution passed at its 38th Annual Shareholders' Meeting held on June 22, 2018. The establishment of an Audit & Supervisory Committee comprising only outside director works to strengthen the Company's auditing and supervisory functions over its management.
Moreover, in order to clarify the separation between management and execution, the Company will strengthen the monitoring functions of the Board of Directors by staffing it primarily with outside directors. Meanwhile, the Company has established an organization to increase the efficiency and speed of operational execution by dictating in its Articles of Incorporation that the Board of Directors can empower directors to make decisions regarding the execution of key operational matters while concentrating operational execution authority in its Representative Director.
The Company has 5 directors (excluding those who are members of the Audit & Supervisory Committee), 3 of which are outside directors, and 3 directors who are members of the Audit & Supervisory Committee, all of which are outside directors, with 1 being full time. The Company designates all of its outside directors as independent directors as defined by the Tokyo Stock Exchange.
As a general rule, meetings of the Board of Directors are convened once a month, and deliberations and exchanges of opinions between the individual directors brings greater vitality to the management of the Company while also serving to sufficiently enhance the checking and balancing function that directors play for one another.

Meetings of the Board of Directors were held 16 times in the fiscal year ended in March 2019, and attendance by the individual directors was as follows:

Yosuke Matsuda (President and Representative Director) 100.0% (16/16)
Yukinobu Chida (Director) 100.0% (16/16)
Yukihiro Yamamura (Outside Director) 93.7% (15/16)
Yuji Nishiura (Outside Director) 100.0% (16/16)
Masato Ogawa (Outside Director) 100.0% (13/13)
Ryoichi Kobayashi (Outside Director, Standing Audit & Supervisory Committee Member) 100.0% (16/16)
Ryuji Matsuda (Outside Director, Audit & Supervisory Committee Member) 100.0% (16/16)
Tadao Toyoshima (Outside Director, Audit & Supervisory Committee Member) 100.0% (16/16)

(2) As a general rule, the Audit & Supervisory Committee meets once a month and based on the Audit & Supervisory Committee Standards and in light of the status of the development and operation of internal control systems, audits the legality and appropriateness of directors' execution of their duties, in coordination with the internal control functions.
The Company employs Ernst & Young ShinNihon LLC as its accounting auditor.
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 Konno

・Support team for accounting audit duties

 11 certified public accountants; 19 others

The Audit & Supervisory Committee 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.
The Board of Directors and Internal Control Committee are provided with reports on such audits as appropriate.
The Company has 6 outside directors. No special interests exist between the Company and its outside directors.
Reporting and exchanges of views regarding coordination between outside directors and the Internal Audit Department and auditing firm take place as appropriate at meetings of the Board of Directors, the Audit & Supervisory Committee, Internal Control Committee, and other relevant bodies.


(3)In order to ensure the objectivity and transparency of decisions made regarding executive remuneration and candidates for director positions, the Company has at its discretion established a Remuneration and Nomination Committee comprising outside directors and the President and Representative Director. This committee makes decisions regarding the Basic Policy on the Executive Officer Remuneration System, the individual remuneration amounts for directors (excluding Directors who are Audit & Supervisory Committee Members), and the Guidelines on the Nomination Criteria for Directors.


(4)Based on the stipulations of Article 427(1) of the Companies Act, the Company has entered into an agreement with its outside directors 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

In an effort to enhance its corporate governance, the Company transitioned to a Company with an Audit & Supervisory Committee following a resolution passed at its 38th Annual Shareholders' Meeting held on June 22, 2018. The establishment of an Audit & Supervisory Committee comprising only outside director works to strengthen the Company's auditing and supervisory functions over its management.
Moreover, in order to clarify the separation between management and execution, the Company will strengthen the monitoring functions of the Board of Directors by staffing it primarily with outside directors. Meanwhile, the Company has established an organization to increase the efficiency and speed of operational execution by dictating in its Articles of Incorporation that the Board of Directors can empower directors to make decisions regarding the execution of key operational matters while concentrating operational execution authority in its Representative Director.


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