Our company recognizes that corporate governance is an important management issue for enhancing corporate value and increasing business transparency for all stakeholders, including shareholders, trade partners, employees, and local communities, and that fulfilling our social responsibilities meets our objectives of long-term performance improvement and sustainable growth.
We believe that we can fulfill our social responsibilities by making our corporate governance function properly and conducting our business activities with a high degree of fairness and transparency.
Our company is fully aware of the need for management oversight and monitoring functions to ensure the legality and appropriateness of its business activities, and will work to revitalize the management oversight function of the Board of Directors, strengthen the monitoring function of outside auditors, reinforce its compliance system, and ensure thorough information disclosure. Promoting the development and operation of a management governance structure centered on directors and auditors will make the company’s corporate governance work effectively.
Our company holds regular monthly meetings of our seven-person Board of Directors, and extraordinary meetings of the Board of Directors as necessary, in order to make prompt decisions regarding the execution of business operations. The Board of Directors deliberates on matters stipulated by the law and our Articles of Incorporation, as well as important management policies and matters related to the execution of important business operations.
Our company has established the three-person Board of Auditors as part of its corporate organization in order to strengthen the auditing of our management. The Board of Auditors meets monthly, in principle, in order to improve audits performed by the auditors. Auditors also attend meetings of the Board of Directors and offer their opinions as necessary, and full-time auditors attend important internal meetings and offer their opinions as necessary. The Board of Auditors works to maintain and strengthen our auditing function, and actively shares information with the audit corporation and internal audit staff to ensure close cooperation. Regarding full-time auditors, selected candidates are familiar both with our company’s business and with corporate governance, and are discussed at the General Meeting of Shareholders. As for outside auditors, selected candidates are deemed appropriate from a perspective of corporate governance, and are discussed at the General Meeting of Shareholders.
Our company has established the Management Committee, which meets at least once a month in principle, to discuss and make decisions on important matters related to business execution and to report on important daily operations. The Management Committee consists of full-time directors and executive officers who are appointed by the Board of Directors.
For internal audits, our company has established the Internal Auditing Department as an autonomous unit, and, in line with an annual internal audit implementation plan, one full-time person in charge of the Internal Auditing Department conducts audits on the efficiency of overall operations, effectiveness of internal controls, and compliance status, to cover the entire corporate group. Audit results are reported to the Board of Directors and the general managers of the relevant departments, based on which items requiring operational improvement are addressed. In addition, meetings are held with the audit corporation and corporate auditors as necessary to improve audit efficiency.
The Governance Committee deliberates on important matters concerning legal and other compliance, risk management, and so on in the Company's overall operations from the perspective of public interest as well as compliance with relevant laws, regulations and internal rules, and reports the details and results of its deliberations to the Board of Directors or the Management Committee.
In order to increase the transparency and supervisory functions of management, our company has established the Nominating Committee which is entrusted by the Board of Directors to perform the necessary deliberations for the appointment of directors and other matters.
In order to increase transparency and objectivity in setting the remuneration of directors, our company has established the Compensation Committee which, upon delegation by the Board of Directors, determines the remuneration of directors within the scope of the total amount of remuneration determined by the General Meeting of Shareholders.
In accordance with the provisions of the Companies Act, our company has established its "Basic Policy for Internal Control Systems" by resolution of the Board of Directors, and will work to develop and fully implement a system to ensure that the execution of duties by Directors complies with laws and regulations and our Articles of Incorporation, and other systems necessary to ensure proper operations in our company and the corporate group consisting of our company and its subsidiaries.
Specifically, we will pass and, as necessary, revise resolutions at meetings of the Board of Directors regarding the following: a system to ensure that the duties of directors comply with laws and regulations and our Articles of Incorporation; a system to manage the risk of loss; a system to ensure that the duties of directors are executed efficiently; a system to ensure proper operations in the corporate group consisting of our company and its subsidiaries; a system to ensure the reliability of financial reporting; matters concerning employees who assist corporate auditors and the independence of such employees from directors; a system regarding reporting to corporate auditors; other systems to ensure the effectiveness of audits by corporate auditors.
The state of development and operation of these internal control systems will be monitored and audited by corporate auditors and the Board of Auditors, the Compliance Department, the Internal Audit Department, etc., and we will strive to thoroughly implement and continuously improve these systems.
As for the compliance system for directors and employees, we have established a set of "Compliance Regulations" as well as the Governance Committee and the Compliance Department. These will deliberate on the overall compliance and risk management of our corporate group from the perspective of relevant laws and regulations as well as public interest, so that we can conduct our business activities profitably while being deeply aware of our corporate social responsibility and complying with the interests of society and laws and regulations.
In the "Basic Policy for Internal Control Systems", our company shall establish a system to ensure proper operations in the corporate group consisting of our company and its subsidiaries, and shall take necessary measures to ensure that this system is set up properly. To this end, we have established a corporate code of conduct applicable to the entire group, as well as a set of affiliate management regulations, which provide guidance and supervision such as by requiring the approval and reporting of important matters related to the execution of duties. Financial information from subsidiaries shall also be reported monthly to the Board of Directors of our company.
In addition, our company’s auditors and Internal Audit Department will audit the key business operations of subsidiaries to ensure that they comply with laws and regulations and our Articles of Incorporation, and report the results to the Board of Directors of our company.
Each audit functions as a check on the soundness of corporate management through coordination and mutual complementarity and, based on a formulated audit plan, audits are conducted as described in 2. Corporate Auditors and Board of Auditors and 4. Internal Audits, which give a basic explanation of the company's organization.
The Compliance Department will take the lead in appointing a risk manager in each department to collect and share information on business execution and other matters in order to promptly identify and prevent risks.