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We promote construction and maintenance of business management systems as priority items which can cope with a change of the management environment quickly, while we improve business transparency for the purpose of effectiveness and efficiency of business operations, reliability of the financial statements, the compliance of the relevant laws and ordinances.
Audit and Supervisory Committee
The Board of Directors has a "function of decision-making" and a "function of oversight of business execution." This allows for prompt and accurate managerial decision-making and business execution. In order to ensure sound monitoring of the Board of Directors, we appoints six outside directors, who are expected to provide advice on overall management from an objective and professional angle as outside directors. Of the six outside directors, four serve as Audit and Supervisory Committee members. Of the directors, six are appointed as independent directors. We have adopted the current system, as we judge that sound corporate governance is ensured as a company with the Audit and Supervisory Board.
An amendment to the Articles of Incorporation to grant the transfer to a company with the Audit and Supervisory Board was resolved on the 49th Annual General Meeting of Shareholders on June 24, 2020, when our Company transferred from a company with the Board of Auditors to a company with the Audit and Supervisory Board. This aims to further enhance the corporate governance of the Company by strengthening the monitoring functions of the Board of Directors and implementing stronger oversight.
Audit and Supervisory Committee
We have adopted the corporate auditor system over a company with committees. Our company's Audit and Supervisory Board consists of one chairman and three members (which includes a tax accountant who has a distinguished level of knowledge in the field of finance and accounting). All of the four members are outside directors. All of the four directors serving as Audit and Supervisory Board members have been designated as Independent Directors/Auditors as defined by the Tokyo Stock Exchange. We request their election as they are expected to draw on their professional and outsider perspectives to enhance the audit system of our company. The Audit and Supervisory Board holds monthly meetings in order to enhance our Company's audit system. They also hold Auditor Liaison Committee meetings, which includes the Group companies regularly to ensure the sharing of information and raise the overall level of the Audit and Supervisory Board.
Board of Directors
The Board of Directors, composed of the Representative Director, Executive President who chairs it, seven directors and four directors serving as Audit and Supervisory Board members, holds monthly meetings. We ensure that our corporate governance is a management system that functions properly by always having an auditor attend these meetings and actively state his/her valid opinion from the perspective of supervisor/auditor of corporate management. Of the directors, six are outside corporate directors.
Executive Officer System
Our company has introduced the executive officer system to clarify the division of responsibilities between management supervision and business execution. Under this system, we are working to strengthen the supervision of business execution by the Board of Directors, while ensuring the soundness and efficiency of management by expediting decision-making. The number of executive officers who do not hold concurrent positions as directors of our company is six.
Group Executive Committee
The Group Executive Committee, composed of the Representative Director, Executive President, who chairs it, five directors, two Audit and Supervisory Committee members, six executive officers, 12 division/general managers, presidents or officers of subsidiary companies, or division managers designated by directors,etc., holds monthly meetings, where each department gives performance reports and considers future measures centered around budget control.
Legal Matters
We have concluded an advisory contract with several law firms and have established a system to receive timely advice and guidance on all legal issues.
Risk Management Committee
The "Risk Management Committee," composed of the Representative Director, Executive President who chairs it, five directors, five executive officers, two division managers, one senior managers and the Secretariat, holds monthly meetings to discuss and check the progress of countermeasures concerning risks that may adversely affect our business development.
The Nominating and Compensation Committee
We have established the Nominating and Compensation Committee where outside directors constitute a majority of its membership as a voluntary advisory body to the Board of Directors in order to appoint and dismiss senior management, nominate director candidates and to further enhance enhance its corporate governance by strengthening the independence, objectivity and accountability of the Board of Directors' functions relating to the compensation, etc. for senior management and directors. The Nominating and Compensation Committee consists of three members (Representative Director, Executive President who chairs it and two outside directors).
System to Ensure the Proper Operation of Our Subsidiary Companies
We dispatch our executive officers to our subsidiaries as corporate auditors, establishing a system in which important matters of our subsidiary companies are reported to us through the executive officers.
In principle, the Board of Directors consists of members who have a wealth of knowledge, experience and qualification in specialized fields including our business, or members who have a wealth of knowledge and experience not only in the business field of our company but also in overall corporate management or industrial society, etc.
| Maximum Number of Directors Stipulated in Articles of Incorporation | 20 |
|---|---|
| Term of Office of Directors | 1year |
| Chairperson of the Board of Directors | President and Representative Director |
| Number of Directors | 12 |
| Appointment of Outside Directors | Appointed |
| Number of Outside Directors | 6 |
| Number of Outside Directors Designated as Independent Directors | 6 |
| Name | Audit and Supervisory Committee Member | Independent Director | Supplementary Explanation of Conforming Items | Reason for Selection as Outside Director |
|---|---|---|---|---|
| Yukiko Takenouchi | ○ | ----------- | Over many years, Ms. Yukiko Takenouchi has engaged in corporate management and actively offered lectures and consultation on promoting female advancement. To reflect her wealth of experience in our company's management and the promotion of diversity, we requests her election as Outside Director. Her independence is sufficiently assured, as she has no potential conflict of interest with general shareholders as defined by the Tokyo Stock Exchange and meets our company’s “Criteria for Independence for Outside Directors.” | |
| Hiromi Kitagawa | ○ | ----------- | Ms. Hiromi Kitagawa has advanced academic knowledge on information management with an objective perspective as an outsider to this industry. To reflect her perspective and knowledge in our company's management, we request her election as Outside Director. Although candidate for Outside Director Ms. Hiromi Kitagawa has not been directly involved in corporate management, the Company has judged that she will appropriately execute the duties of Outside Director due to the above reasons. Her independence is sufficiently assured, since she has no potential conflict of interest with general shareholders as defined by the Tokyo Stock Exchange and meets our company’s “Criteria for Independence for Outside Directors.” | |
| Masatoshi Miyazaki | ○ | ○ | Until April 2017, Mr. Masatoshi Miyazaki had served as Managing Executive Officer of Tfas Co., Ltd., which maintains a business relationship with our company worth several million yen per year as a sales commission from vending machines that have been installed inside our company by Tfas Co., Ltd. and that worth several hundred thousand yen as a cloud service fee provided by our company to Tfas Co., Ltd. However, our business with Tfas Co., Ltd. accounts for an extremely small percentage of the sales of Tfas Co., Ltd. and our company. It has been judged that there are no special interests between our company and the candidate. | To reflect his many years of experience in business execution and corporate management in the audit of our company's management, we request his election as Outside Director (serving as Audit and Supervisory Board Member). His independence is sufficiently assured, since he has no potential conflict of interest with general shareholders as defined by the Tokyo Stock Exchange and meets our company’s “Criteria for Independence for Outside Directors.” |
| Yusuke Ichikawa | ○ | ○ | Our company has a business relationship with MST Insurance Service Co., Ltd., where Mr. Yusuke Ichikawa had worked until March 2020. However, the Company’s business with MST Insurance Service Co., Ltd. accounts for an extremely small percentage of the sales of MST Insurance Service Co., Ltd. and the Company. It has been judged that there are no special interests between our company and the candidate. | He is well versed in administrative work and has extensive experience and achievements regarding business management as well as advanced knowledge in corporate governance. The Company believes that he will contribute to enhancing the audit and supervision of our company from an objective and professional perspective, and requests his election as Outside Director (serving as Audit and Supervisory Board Member). Although candidate for Outside Director Mr. Yusuke Ichikawa has not been directly involved in corporate management, we have judged that he will appropriately execute the duties of Outside Director due to the above reasons. His independence is sufficiently assured, since he has no potential conflict of interest with general shareholders as defined by the Tokyo Stock Exchange and meets our company’s “Criteria for Independence for Outside Directors.” |
| Yoshihiko Tashita | ○ | ○ | ----------- | To reflect Mr. Yoshihiko Tashita's extensive experience cultivated for many years as a management executive of another company in the same industry in the audit and supervision of our company's management, we request his election as Outside Director (serving as Audit and Supervisory Board Member). His independence is sufficiently assured, since he has no potential conflict of interest with general shareholders as defined by the Tokyo Stock Exchange and meets our company’s “Criteria for Independence for Outside Directors.” |
| Kiyoko Asai | ○ | ○ | ----------- | To reflect Ms. Kiyoko Asai's advanced expertise and experience cultivated as a tax accountant in the enhancement of the supervision of our company's management, we request her election as Outside Director (serving as Audit and Supervisory Board Member). Her independence is sufficiently assured, since she has no potential conflict of interest with general shareholders as defined by the Tokyo Stock Exchange and meets our company’s “Criteria for Independence for Outside Directors.” |
Policy on Determining Compensation Amounts for Directors and Calculation Methods
Compensation, etc. for respective directors of our company is determined by comprehensively considering the status of execution of duties, results achieved in each fiscal year and contribution, etc. The upper limit on total compensation for directors (excluding directors serving as Audit and Supervisory Board members), set by a decision made at the General Meeting of Shareholders held on June 24, 2020, is ¥270 million per annum (excluding the portion of employee’s salary for directors who concurrently serve as employees. The maximum number of directors prescribed in the Articles of Incorporation is 15. The current number of directors is eight as of the submission date of this report.). The upper limit on total compensation for directors serving as Audit and Supervisory Board members, set by such decision, is ¥40 million per annum (The maximum number of Audit and Supervisory Board members prescribed in the Articles of Incorporation is five. The current number of Audit and Supervisory Board members is four as of the submission date of this report.). Policy on determining compensation amounts for directors and calculation methods are determined by the Representative Director, Executive President who has been delegated by the Board of Directors within the limits set by the resolution of the General Meeting of Shareholders after comprehensively considering the status of execution of duties, results achieved in each fiscal year and contribution, etc. In April 2020, we established the Nominating and Compensation Committee as a voluntary advisory body to the Board of Directors in order to strengthen the independence, objectivity and accountability of the directors' functions relating to the compensation for senior management and directors as well as to further enhance its corporate governance. Matters regarding compensation,etc. are determined by the Representative Director, Executive President by fully considering reports by the the Nominating and Compensation Committee. Compensation,etc. for each Audit and Supervisory Board member is determined by mutual consultation among the Audit and Supervisory Board members within the limits set by the resolution of a General Meeting of Shareholders based on the full-time or part-time status and allocation of duties.
The total amounts of compensation, etc. paid to directors/auditors during the fiscal year ended March 2020 were as follows
Total amount of compensation,etc. paid to 10 directors: 155 million yen (Of which, the total amount paid to two outside directors: nine million yen)
Total amount of compensation,etc. paid to four auditors: 24 million yen (Of which, the total amount paid to four outside auditors: 24 million yen)
（Note）
We have not established the division responsible for supporting outside directors at present. The officers in charge, however, provide outside directors with prior explanations and materials as required. Although we have not established the division responsible for supporting outside directors serving as Audit and Supervisory Board members, Audit and Supervisory Board members other than standing members are provided with necessary information including that on the operation of the Board by standing Audit and Supervisory Board members as required.
[Supplementary Principles 1-2-4 Exercise of Voting Rights by Shareholders at General Meetings of Shareholders]
Although we have introduced the exercise of voting rights over the Internet, the convocation notice is not translated into English. However, we publish annual reports and quarterly financial statements in English. Going ahead, we will consider publishing convocation notices in English, taking into consideration the growing rate of oversees investors.
[Principle 1-4 Cross-shareholdings]
＜Policy for Cross-shareholdings＞
With an aim to ensure smooth operation of our company and maintain and strengthen business relationships with its customers, we hold the shares of other companies as cross–shareholdings only when necessary, while comprehensively considering the medium- to long-term economic rationality and the future outlook of the companies. With a view to reduce cross-holdings, we regularly review the purpose of holding, risks and investment returns of each stock as well as its policy for cross-shareholdings based on changes in business environment .
＜Standards for Exercising Voting Rights Relating to Cross-shareholdings＞
In exercising voting rights related to cross-shareholdings, we check each proposal and makes a judgement on whether to approve or reject it from the perspective of whether said proposal complies with our company's policy for cross-shareholdings and will lead to an increase in corporate value based on comprehensive consideration of said investee's management policy and strategies. We will discuss each proposal,etc. with issuing companies as required.
[Principle 1.7 Related Party Transactions]
For transactions involving a conflict of interest or competition with our company, we have established an appropriate monitoring system, which requires all directors to report such transactions to the Board of Directors without delay and obtain its approval in accordance with the Rules of the Board of Directors. The Standards for Audits by Audit and Supervisory Board members require such transactions by directors to be monitored and examined. In the event of a violation or a suspected violation of such obligation, the Audit and Supervisory Board is required to take necessary measures such as providing advice and recommendations to such director.
[Principle 2-6 Fulfilling the Function of Owner of Corporate Pension Assets]
The defined-benefit corporation pension assets are jointly managed by Human Resources Department, Accounting Department and Finance Department. We assign qualified persons responsible for asset management and regularly share information with investment institutions while monitoring the status of asset management.
[Principle 3.1 Full Disclosure]
[Supplementary Principle 4-1-1 Roles and Responsibilities of the Board of Directors]
In accordance with the Rules of the Board of Directors, the Board of Directors makes decisions on matters prescribed in laws and regulations and the Articles of Incorporation as well as on basic matters regarding business execution while supervising the execution of duties by directors. With regard to the execution of each business, the Rules of the Board of Directors, the Rules of Division of Responsibilities and the Rules of Delegation of Authority stipulate the details clearly.
[Principle 4-9: Independence Standards and Qualification for Independent Outside Directors]
Outside directors must fulfill the independence criteria defined by the Tokyo Stock Exchange and the "Independence Standards for Independent Officers"prescribed by our company. We appoint persons who are expected to provide appropriate advice and supervise management from an objective and neutral position by making use of his/her expert knowledge and experience,etc. in various fields. Our company's "Independence Standards for Independent Officers" are stated inⅡ-1. "Independent Officers: Other Matters Regarding Independent Officers."
[Supplementary Principle 4-11-1 Preconditions for Ensuring the Effectiveness of the Board of Directors and the Audit and Supervisory Board]
In order to effectively perform the roles and responsibilities of the Board of Directors and perform swift decision-making, the number of directors is limited. In principle, the Board of Directors consists of members, who have a wealth of knowledge, experience and qualification in various fields including that of our company, or members who have a wealth of knowledge and experience not only in the business field of our company but also in overall corporate management or industrial society, etc.
[Supplementary Principle 4-11-2 Preconditions for Ensuring the Effectiveness of the Board of Directors and the Audit and Supervisory Board]
Important concurrent positions held by directors are disclosed upon the occurrence of such event.
[Supplementary Principle 4-11-3 Preconditions for Ensuring the Effectiveness of the Board of Directors and the Audit and Supervisory Board]
We have conducted questionnaire surveys targeting directors since the fiscal year ended in March 2017. The results are analyzed and reported to the Board of Directors. In the fiscal year ended in March 2020, we evaluated the effectiveness of the Board of Directors as a whole through a questionnaire conducted on 13 officers including outside directors and outside auditors. The result of the evaluation was reported to the regular meeting of the Board of Directors held in April 2020.
The result of the analysis indicates that the effectiveness of the Board of Directors has been fully secured. As future tasks, however, some comments were made on the need of "distribution of materials and explanation before deliberation", "a framework for sharing results of dialogue with shareholders with the Board of Directors" and "design of a compensation system for the management." The comments were shared as future tasks for the Board of Directors to enhance its effectiveness.
[Supplementary Principles 4-14-2 Training for Directors and Auditors]
In order to fully understand the Group, outside directors must receive explanations by the executive officers in charge, etc. on our company's businesses, finances and organization, etc. in a timely manner when assuming their positions. Directors must be provided with necessary information from within our company or external institutions, etc. on economic conditions, industry trends, finances and accounting, compliance, etc. to fulfil their roles of supervision and auditing of our company's management.
[Supplementary Principles 5-1 Policy for Constructive Dialogue with Shareholders]
We clearly defines its "IR policy" and publishes the basic policy, standards for information disclosure, methods of information disclosure and quiet period,etc. In order to contribute to the sustainable growth and middle- to long-term enhancement of corporate value, the Company holds dialogue with shareholders and investors, to a reasonable extent.
Our company has put its IR system in place by establishing the Business Strategy/IR Office as a department responsible for IR activities and appointing the director in charge of such department as the director responsible for IR activities. Information on our company's performance and financial conditions, etc. is appropriately and timely disclosed to stakeholders including shareholders and investors by the director responsible for IR activities, in full collaboration with the Business Planning Department, General Affairs Department, Accounting Department, Human Resources Department and business divisions, etc.
As our efforts to engage in dialogue with shareholders, we hold business briefings following the announcement of year-end financial results and financial results briefings for analysts and institutional investors biannually, where the President and Representative Director makes explanations to shareholders or has dialogue with shareholders.
The President and Representative Director, other management executives and the director responsible for IR conduct proactive IR activities such as holding private interviews with institutional investors or briefing sessions for individual investors as required, to a reasonable extent. Feedback from shareholders and investors received through dialogues is submitted or reported to the Board of Directors, etc. by the director responsible for IR as required . When engaging in dialogue with shareholders, we handle insider information with great care in accordance with the internal rules.
To promote the compliance of laws and ordinances as a part of the corporate governance, we founded the Compliance Room (current Risk Management Office) under the structural reform dated April 1, 2004.
As the first step, this reform embodied the compliance as indispensable for retaining and developing our company.
We advocate following compliance basic policies, observe them, and behave ourselves at all times based on "open and honorable spirit".
We acquired the PrivacyMark on December 3, 1999 and have been renewing our accreditation by passing continuing reviews since then. We are striving to continuously improve our personal information protection management system.
In addition, we consider initiatives for the “Personal Information Protection Act,” which was fully implemented on April 1, 2005, as a top priority and strive to deepen the understanding of the Personal Information Protection Act by hold e-learning training sessions every year for all our employees at our information center.
In the future, we will further enhance the content of our initiatives and continue our educational activities.
We reviewed sales management regulations and prevention of insider trading regulations etc., which was instructed to all employees throughout the nation so as to continuously awaken individual consciousness toward the risk management and legal compliance.
As for the insider trading, particularly, we distribute the booklet, "Insider trade regulation Q＆A", issued by the Tokyo Stock Exchange Co., Ltd. to all directors and employees including subsidiaries so as to promote their understanding and observance of the regulation contents.
Further, since 2008, in the compliance education program for new employee, we improved the content emphasizing the compliance and put emphasis on the observance of "I-NET Charter of Corporate Code" established in March, 2007 as well as the importance of the compliance.
The "Risk Management Committee," composed of the Representative Director, Executive President who chairs it, five directors, five executive officers, two division managers, and one senior manager, holds monthly meetings to discuss and check the progress of countermeasures concerning risks that may adversely affect our company’s business development.
Basic Policy on Establishment of Internal Control System
(1）System for ensuring compliance with laws and the Articles of Incorporation in the execution of duties by directors and employees of our company and its Group companies
We have established the "Charter of Corporate Code" in accordance with the management policy. The President and Representative Director repeatedly communicates the spirit of the charter to the directors and employees of our company and its Group companies in order to thoroughly establish compliance with laws and regulations as the basis upon which we conduct all our corporate activities.
The President and Representative Director appoints the director responsible for overall compliance and the Risk Management Office establishes, maintains and improves the compliance system.
The Internal Audit Office conducts audits from an independent standpoint and reports its results to the President and Representative Director.
We have established the Whistleblower Protection Rules as an internal notification system for reporting suspected non-compliance. In accordance with the Rules, we operate the internal notification system that allows directors and employees to report suspected non-compliance to our company through whistle blowing contact points. The status of reporting through the internal notification system is promptly reported to the Audit and Supervisory Board.
The Audit and Supervisory Board analyzes potential problems in the compliance system and reports its results to the Board of Directors. The Board of Directors regularly reviews the compliance system, identifies problems and makes improvements.
(2）System for retention and management of information pertaining to the execution of directors' duties
The President and Representative Director appoints a director responsible for retaining and managing information pertaining to the execution of duties by directors. Information pertaining to the execution of duties by directors is archived and managed in the form of paper or electronic means in accordance with the Document Management Rules. Directors may access these documents at any time in accordance with the Document Management Rules. The Document Management Rules and relevant rules should be reviewed and revised as required.
(3）Rules and other systems for loss risk management by the Company and its Group companies
Under the initiative of the Risk Management Office, we establishe the cross-sectoral Risk Management Committee chaired by the President and Representative Director to review the risks. The Risk Management Committee endeavors to improve and strengthen the risk management system by reviewing the Risk Management Rules, designating a department responsible for each risk category and managing risks for the entire Group exhaustively and comprehensively.
The Internal Audit Office audits the status of risk management by each department and regularly reports its results to the Board of Directors.
(4）System for ensuring the effectiveness of the execution of duties by directors of our company and its Group companies
As a basic structure for ensuring the effectiveness of the execution of duties by directors, the Bord of Directors holds monthly meetings and extraordinary meetings as required.
The status of execution of duties by directors based on the resolution by the Board of Directors is reported by the director in charge to the Board of Directors and audited by the Audit and Supervisory Board and the Internal Audit Office in a timely manner. The monthly Department Head meetings are also held in order to ensure the effectiveness of the execution of duties by directors.
Mid-term management plans and single-year business plans for the entire Group are developed and company-wide targets are set. The Group Executive Committee, composed of division managers and those with higher positions of our company and its Group companies, holds monthly meetings, where the status of business execution is reported and measures and factors impeding the efficiency of business execution are analyzed and improved.
(5）System for ensuring operational appropriateness of the corporate group consisting of our company and its Group companies
Management of Group companies is conducted by the officer in charge in accordance with the"Affilicated Companies Management Rules.” The presidents of Group companies attend the monthly Group Executive Committee meetings and exchange information smoothly.
Directors of our company and its Group companies have the authority and responsibilities for the establishment and operation of the internal audit system for ensuring appropriate business execution by each division of our company and each Group company.
The Audit and Supervisory Board and the Internal Audit Office audit the Group management system regularly or as required and report its results to the Board of Directors.
In order to facilitate this, we establishe the Group Auditors Liaison Committee and the Internal Auditors Liaison Committee to share information.
(6）Matters regarding employees who assist the Audit and Supervisory Board; matters regarding such employees' independence from directors (excluding directors serving as Audit and Supervisory Board members); and matters regarding the ensuring of effectiveness of instructions given by the Audit and Supervisory Board Members to such employees
In cases where the Audit and Supervisory Board requests employees be appointed to assist it, the Board of Directors may appoint such employees from the Internal Audit Office or head office employees, in consultation with the Audit and Supervisory Board.
During the period of such employees' assisting the Audit and Supervisory Board, the right to command such employees is deemed to have been delegated to the Audit and Supervisory Board.
In order to ensure the effectiveness of instructions given by the Audit and Supervisory Board, with respect to the duties ordered to carry out by the Board, such employees may not accept instructions from directors (excluding Audit and Supervisory Board members) and the organization,etc. to which they belong. Transfers of such employees during such period may not be carried out without the consent of the Audit and Supervisory Board.
(7）System for ensuring that parties who have reported to the Audit and Supervisory Board do not incur unfavorable treatment as a consequence of such reporting
System for ensuring that parties who have reported to the Audit and Supervisory Board do not incur unfavorable treatment as a consequence of such reporting
(8）Procedures for pre-payment and reimbursement of expenses incurred in the execution of duties by the Audit and Supervisory Board members and matters regarding the policy on processing of other expenses and debt incurred in the execution of such duties
In cases where the Audit and Supervisory Board members claim pre-payment of expenses required for fulfilling its duties, we shall promptly provide pre-payment or reimbursement with respect to such expenses or debt.
(9）System for directors (excluding directors serving as Audit and Supervisory Board members) and employees of our company and its Group companies to report to the Audit and Supervisory Board; other systems for reporting to the Audit and Supervisory Board; and other systems for ensuring effective performance of audits by the Audit and Supervisory Board members
On June 24, 2020, we established regulations regarding matters to be reported to the Audit and Supervisory Board (matters designated by law, matters that may have a material impact on the management and performance of our company and its Group companies, status of implementation of internal audits, material violation of laws and the Articles of Incorporation and other matters). Directors (excluding directors serving as Audit and Supervisory Board members) and employees of our company must report matters set forth by the regulations to the Audit and Supervisory Board without delay.
Standing Audit and Supervisory Board members may attend Group Executive Committee meetings and other inhouse meetings and receive reports on important management information in a timely manner. In cases where the Audit and Supervisory Board finds it necessary, the Board may seek reports from directors and employees of our company and its Group companies at any time. The Audit and Supervisory Board regularly exchanges opinions with the President and Representative Director.
Business hours:
9:00 am - 5:30 pm
on weekdays
