To maximize the corporate value of our company, we recognize the improvement of corporate governance as an important task. To this end, we need to ensure transparency along with the improvement of management efficiency in our business operations.
Although we are a company with an audit and supervisory board, we proactively incorporate positive points from companies with a governance committee structure as well as an American type corporate governance structure. Keeping in mind the afore mentioned, we have adopted a strengthened management supervisor system as given below.
（1） The board of directors where external board members occupy a majority
The Representative Director-President decides on management policies and works to carry it out. However, on important matters, decisions are made after seeking approval from the board of directors. Furthermore, the execution of operations is monitored by the board of directors.
The company believes that in order for the board of directors to effectively make appropriate decisions on important matters and to conduct management supervision to executive directors who have the authority of representation, the board of directors needs to maintain their independence from the managers of the company. Therefore, we believe that external board members need to be a part of the board of directors as a representative of the stakeholder. In addition, even if there are external board members on the board of directors, if they are a minority in the board, it would be difficult to effectively conduct a supervisory role. Consequently, we believe that it is important to have the board of directors comprised by a majority of external board members.
All our external board members have an abundance of experience as business managers themselves in addition to being independent of our operations. As a result they are in a position to provide strict supervision to our operations. The majority of our board of directors are comprised of external board members that fulfill the afore mentioned requisites. From the standpoint that they do not directly engage in the execution of operations, they are able to have an objective view from which to supervise or provide advice.
Also, we appoint more than one person who has expert knowledge in law as our external director.
Of the eight directors in the company, five are outside directors. In addition, one(Representative Director) of the three executive directors is a woman that has taken office in June, 2012.
（2） Reinforcement of operation execution
When the majority of the board of directors is comprised of external directors, the board of directors will function exclusively in a supervisory function. For this reason, the company has established a Representative Board of Directors Meeting (referred to as “RDM” here after) that is the executive body responsible for the execution of operations. This RDM is comprised of the three executive directors.
In addition, for important duties, operating officers are appointed to assist the executive directors. Although these operating officers do not have management responsibilities, they assist in the execution of daily operations.
In executing our operations, the important decisions are made by the RDM and the execution of operations are conducted by the executive directors and operating officers comprise the executive office meeting (referred to as “EOM” here after). Separate from the EOM, there is the full-time board of directors (referred to as “MB” here after) which is made up of executive directors and operating officers tasked to mutually supervise as well as conduct information sharing in the execution of operations.
Of the three executive directors present, one (Representative Director) is a woman who took office in June 2012. The MB is comprised of three executive directors and three operating officers making it a total of six (5 males and 1 female) members.
（3） Reinforcement of the role of the auditor
In addition to the board of directors being comprised by a majority of external board members, the auditors as the entity appointed to oversee the duties of the directors according to the Companies Act, will monitor the legality and adequacy of management. The auditors, including the full time auditor are independent of the managers of the company and are all external auditors. Each member has a wealth of experience in business management or public administration and by having these members as auditors we have a system that is fully capable of efficiently monitoring the management of the company.
In addition we require that of the auditors, one or more have specialized knowledge of Finance or Accounting. All three of our auditors are external auditors (3 males and 0 females).
（4） Independence of external board members and external auditors
When selecting external board members and external auditors, we ensure that the requirements of the Companies Act as well as the independence standards in the U.S. are fulfilled. In general we require that the person does not have a stake in the company as a major shareholder or as a main business partner. As the representative of the general stakeholder, the role of the external board member and the external auditor is to pursue the improvement of corporate value as well as from the perspective of not being directly involved in the execution of operations, they are able to have an overall perspective that is objective for monitoring the relevance of management decision making. To this end, our external board members and the external auditors have an abundant knowledge and experience in different fields in addition to having deep insights into domestic and foreign, social and economic trends.
Furthermore, to have effective corporate governance in place we believe that the external officers have considerable career background and have a sense of duty and accomplishment in giving back to society to create a better future, where compensation would be a secondary interest. The reason for this is that with the experience that the external officers have the expectation is that they would bring with them a wealth of knowledge and experience as well as deep insight. Furthermore, since their career path is not at stake, they are less susceptible to the intentions of the managers of the company. In addition, if the external officer are beholden to the company for their livelihood, it would be difficult to oppose the intents of the managers of the company. However if the external officer were independent of the company, he would not be at the mercy of company control and would be able to monitor and supervise the company as a true representative of the stakeholders.
（5） Cooperation of the inspection function
In addition to the auditing of operations by the auditor, the accounts are audited by independent accountants, while internal auditing is conducted by the function that is in charge of internal audit that directly reports to the president and representative directors. In regards to being compliant with the laws, with guidance from legal advisors, we ensure that we are compliant with the laws.