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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 seven outside directors, who are expected to provide advice on overall management from an objective and professional angle as outside directors. Of the seven outside directors, four serve as Audit and Supervisory Committee members. Of the directors, seven 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.
The Company has adopted the Company with an Audit and Supervisory Committee system. We have also introduced the executive officer system, under which the Board of Directors is responsible for making management decisions and supervising business execution and executive officers carry out the business.
Audit and Supervisory Committee
The Company has adopted the Company with an Audit and Supervisory Committee system. The Audit and Supervisory Committee of the Company is chaired by Yusuke Ichikawa who is a full-time Audit and Supervisory Committee Member, and consists of Tetsuro Tsuboya, Noriko Suzuki, and Hiromi Nakagawa. All of the four members are outside directors. All four Outside Directors who are Audit and Supervisory Committee Members are designated as Independent Officers in accordance with the rules of the Tokyo Stock Exchange, and they are appointed with the expectation that their professional views and external perspectives will be utilized in the audit system. 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 of the Company is chaired by Tomomichi Saeki who is Representative Director and Executive President, and composed of Naokatsu Uchida, Katsuyuki Imai, Shinichi Koyama, Hidenao Negishi, Yukiko Takenouchi, Hiromi Kitagawa and Masao Kurokawa who are all Directors, and Yusuke Ichikawa, Tetsuro Tsuboya, Noriko Suzuki and Hiromi Nakagawa who are all Audit and Supervisory Committee Members. The Board meets regularly once a month. In addition, Audit and Supervisory Committee Members actively and effectively express their opinions from the standpoint of monitoring and supervising management, and strive to ensure that corporate governance functions properly. Yukiko Takenouchi, Hiromi Kitagawa, Masao Kurokawa, Yusuke Ichikawa, Tetsuro Tsuboya, Noriko Suzuki and Hiromi Nakagawa are Outside Directors.
Executive Officer System
The 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 Executive Officers Meeting is held once a month. The executive officers who do not concurrently serve as directors of the Company are Mikio Ito, Hiroyoshi Sakamoto, Keizo Hirae, Hiroyuki Kondo, Kazuhiro Ishibashi, Joji Ishita, Masahiro Shiga, Satoshi Ema, Naotaka Minorikawa, Toshiyuki Hirose, Keita Magori, and Yoichi Okamoto.
Group Management Meeting
The Group Management Meeting is chaired by Tomomichi Saeki who is Representative Director and Executive President, and composed of Naokatsu Uchida, Katsuyuki Imai, Shinichi Koyama and Hidenao Negishi who are all Directors. and Yusuke Ichikawa who is Audit and Supervisory Committee Member, and Mikio Ito, Hiroyoshi Sakamoto, Keizo Hirae, Hiroyuki Kondo, Kazuhiro Ishibashi, Joji Ishiwata, Masahiro Shiga, Satoshi Ema, Naotaka Minorikawa, Toshiyuki Hirose, Keita Magori, and Yoichi Okamoto who are all Executive Officers, and Noboru Sakai, Koichi Hanada, Masahiro Kimura, Hidemi Nakano, Nozomi Kigami, Katsumi Sano, Naoaki Takahashi, Yoshihiro Okumori, Takashi Yoshikawa, Ken Takenouchi, Takahiro Aikawa, Toshio Yabu, Yoshiko Miyakawa, Toshio Takeno, and Hiromitsu Okubo who are Division Managers or General Managers, and 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 is chaired by Tomomichi Saeki who is Representative Director and Executive President, and composed of Naokatsu Uchida, Katsuyuki Imai, Shinichi Koyama and Hidenao Negishi who are all Directors, and Mikio Ito, Hiroyoshi Sakamoto, Keizo Hirae, Hiroyuki Kondo, Kazuhiro Ishibashi, Joji Ishiwata, Masahiro Shiga, Satoshi Ema, Naotaka Minorikawa, Toshiyuki Hirose, Keita Magori, and Yoichi Okamoto who are all Executive Officers, and Masato Ogiso who is General Manager and Hiroshi Takano who is senior manager and the Secretariat, holds monthly meetings to discuss and check the progress of countermeasures concerning risks that may adversely affect our business development.
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 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 is chaired by Tomomichi Saeki who is Representative Director and Executive President, and composed of Naokatsu Uchida, Yukiko Takenouchi, Hiromi Kitagawa and Masao Kurokawa who are all Directors.
System to Ensure the Proper Operation of Our Subsidiary Companies
We dispatch our 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.
Organization Chart for the Company’s Corporate Governance System and Internal Control System
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 | 7 |
| Number of Outside Directors Designated as Independent Directors | 7 |
| 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.” | |
| Masao Kurokawa | ○ | －－－ | Mr. Kurokawa, after joining the Kanagawa Prefectural Government, served in important positions such as Vice Governor. In addition to possessing extensive knowledge and experience, he also has extensive personal connections particularly in local government circles. Accordingly, the Company has nominated him as a candidate for outside Director with the expectation that he will contribute to enhancing the corporate value of the Company. Mr. Kurokawa has never in the past been involved in the management of a company. However, the Company nominates him as a candidate for outside Director based on 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.” | |
| 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. But there is no special interest between Mr. Yusuke Ichikawa and the Company. | 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.” |
| Tetsuro Tsuboya | ○ | ○ | The company has a business relationship with NTT DATA NJK Corporation, where Mr. Tetsuro Tsuboya served as a Managing Director until June 2018. However, the Company's business with NTT DATA NJK Corporation accounts for an extremely small percentage of the sales of NTT DATA NJK Corporation and the Company. But there is no special interest between Mr. Tetsuro Tsuboya and the Company. | The Company expects Mr. Tetsuro Tsuboya to utilize his high level of professionalism related to finance systems and his abundant experience related to corporate management to audit and supervise the Company's management. Accordingly, the Company has appointed him as an outside director who is an Audit and Supervisory Committee 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." |
| Noriko Suzuki | ○ | ○ | ----------- | Ms. Suzuki has broad experience and insight related to working styles and career development for women as a university associate professor and lecturer, and the Company expects her to strengthen the audit and supervisory functions from an objective perspective. Accordingly, the Company has appointed her as an outside director who is an Audit and Supervisory Committee Member. Her 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." |
| Hiromi Nakagawa | ○ | ○ | ----------- | Ms. Nakagawa has been a certified public accountant in the United States and has a track record of providing accounting and tax consulting services to domestic and foreign companies, the Company has appointed her as a Outside Director who is an Audit and Supervisory Committee Member with the expectation that she will utilize her highly specialized knowledge and experience, and that she will contribute to strengthening the audit and supervisory functions of the Company’s management from a global perspective. Her 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." |
Disclosed Details on Policy for Determining Amount and Calculation Method for Remuneration
At the Board of Directors meeting, the Company decided on its policy for determining remuneration for individual directors.
In addition, the Board of Directors examined the compensation, etc. for each individual director (excluding directors who are Audit and Supervisory Committee members) in the relevant fiscal year and confirmed that the policies on deciding the compensation, etc. and the compensation, etc. that was decided on were consistent with the policies for making such decisions that had been resolved by the Board of Directors, and that the recommendations of the Nomination and Compensation Advisory Committee had been respected. The Board of Directors thus determined that these matters were consistent with the relevant policies for determining remuneration.
The policies for determining compensation, etc. for individual directors are as follows:
1. Basic Policy
The basic policy on compensation for the Company's director (excluding directors who are Audit and Supervisory Committee members) is that the compensation system shall be linked to shareholders' benefits so that compensation functions as an incentive to continuously improve corporate value, and that when deciding on compensation for individual directors, it shall be an appropriate level based on their respective work responsibilities. Specifically, compensation for managing directors consists of the base salary, which is their fixed salary, and stock-based remuneration, while directors and external directors who have supervisory functions and are not engaged in business execution are only paid a base salary, given their work.
2. Policy for Determining Amount of Base Salary (Monetary Remuneration) for Individuals (including policies related to decisions on timing and conditions for giving compensation, etc.)
The Company's base salary for its directors (excluding directors who are Audit and Supervisory Committee members) is the fixed salary paid every month, and is determined based on comprehensive consideration of their job responsibilities, performance in each fiscal period, extent of contributions, and other.
3. Policy for Determining Content of Non-Monetary Remuneration and Method for Calculating Amount and Figures (including policies related to decisions on timing and conditions for giving compensation, etc.)
Non-monetary remuneration, etc. consists of transfer-restricted stock, and the total amount of monetary remuneration paid to grant transfer-restricted accounts is no more than 100 million yen a year.
The specific allocation is determined based on a comprehensive consideration of operating income, net income, ordinary income, net sales, etc. in the short term, and ROE, share prices, market capitalization, etc. in the long term, and is reflected in compensation for the following fiscal period. The timing of the payment is decided by the Board of Directors every year in July, and allocations are made in August.
4. Policy on Deciding on Percentage of Monetary Remuneration and Non-Monetary Remuneration, etc. Making Up Individual Directors' Compensation, etc.
The Nomination and Compensation Advisory Committee examines remuneration proportions by type for managing directors by objectively comparing compensation levels and the connection to performance using data on director compensation from an outside research organization in order to ensure objectivity and appropriateness. The Board of Directors (the representative director and executive president who is delegated in line with 5.) respects the recommendations of the Nomination and Compensation Advisory Committee, and the content of the compensation, etc. for individual directors is determined within the scope of the percentage of compensation by type laid out in these recommendations. The policy is that payment should be made at the optimal percentages so that shareholders and managers share the same interests and it contributes to the sustainable improvement of corporate value.
*Non-monetary remuneration, etc. consists of transfer-restricted stock.
5. Matters Related to Decisions on Content of Directors' Individual Compensation, etc.
Based on the resolution by the Board of Directors, the representative director and executive president is delegated to make decisions on the specific content of individuals' compensation. Authority over this decision extends to the amount of base salary for directors (excluding directors who are Audit and Supervisory Committee members) and the number of shares allocated to individuals as stock-based remuneration. The Board of Directors receives feedback and recommendations on the draft from the Nomination and Compensation Advisory Committee to ensure that this authority is exercised appropriately by the representative director and executive president. The representative director and executive president, having been given this authority, must make decisions in line with these recommendations.
6. Important Matters Related to Decisions on Content of Other Compensation, etc. for Individuals
All compensation, including fixed salaries and remuneration in the form of transfer-restricted shares, is subject to a claw back clause in which all or some of this remuneration is returned without compensation in the event that the director engages in inappropriate actions or violates laws during his/her tenure.
Compensation for directors who are Audit and Supervisory Board members consists only of the base salary. This is determined in discussion with directors who are Audit and Supervisory Board members, taking into account the division of responsibilities, with separate amounts for full-time and part-time directors, within the scope of the total compensation amount decided at the General Meeting of Shareholders.
The total amounts of compensation, etc. paid to directors/audit and supervisory committee members during the fiscal year ended March 2024 were as follows
Total amount of compensation, etc. paid to nine directors (excluding audit and supervisory committee members): 116 million yen (Of which, the total amount paid to four outside directors: 18 million yen)
Total amount of compensation, etc. paid to three directors (excluding audit and supervisory committee members) : 22 million yen (Of which, the total amount paid to three outside directors: 22 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.
[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 2-4-1 Ensuring Diversity in Promoting Core Human Resources, etc.]
We actively and continuously recruit and hire diverse human resources including women, foreign nationals, and midcareer hires, and we have taken measures to establish workplace environments where they can demonstrate their individual attributes and aptitudes and to develop the management team. We have set a target of increasing women in management positions from 8.2% today to 12% by March 2026, and have adopted a policy of hiring at least 40% women among hired recent graduates. For information on other initiatives, refer to the Company website (https://www.inet.co.jp/english/sustainability/social/diversity.html). Under the mid-term management plan, in addition to existing measures, we will implement a midcareer hiring strategy and reinforce education and training programs and their content to enhance human resource capabilities on all levels.
[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 3-1-3 Sustainability Initiatives]
Please refer to the Company’s website for information on our management strategies, sustainability initiatives, and other measures.
＜Investment in human capital and intellectual property＞
The Company establishes a Medium-term Management Plan, and bases its management strategy on a defensive approach that reinforces ties with the customer and an offensive approach that advocates breaking into new market areas and services. We strive to ensure that a customer-first commitment is shared by the entire Company, and propose added value, develop products and services with growth potential, invest in employees, and strive to improve tangible and intangible value. We make investments in our future, based on the Medium-term Management Plan, such as investments in our employees, who are the foundation of everything, data centers that are the core of our business models, and research and development that leads to differentiation and stronger competitiveness.
<Disclosures pursuant to the TCFD>
Please refer to the Company’s website for climate-related financial disclosures (disclosures based on TCFD recommendations).
https://www.inet.co.jp/sustainability/environment/tcfd.pdf (Japanese text only)
[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 4-10-1 Approach Concerning the Independence of the Nominating and Compensation Committees and their Authority and Roles]
We have appointed seven independent, outside directors to the Board. These directors do not constitute a majority of the Board, but each uses highly specialized knowledge and extensive experience, expresses opinions to the Board and individual directors, and gives advice as necessary. The outside directors actively engage in deliberations at Board meetings, and we have established fair and highly transparent systems. We established a Nominating and Compensation Committee in April 2020, of which a majority of the members are independent, outside directors, to incorporate independent and outside, objective opinions. As a result, the transparency, fairness, and objectivity of procedures relating to the appointment and removal of officers and officer compensation have increased.
[Supplementary Principle 4-11-1 Views on diversity of the Board of Directors
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.
In addition, we disclose a skill matrix for all directors in the notice of convocation of the General Meeting of Shareholders.
[Supplementary Principle 4-11-2 Concurrent Positions of Directors and Auditors
Important concurrent positions held by directors are disclosed upon the occurrence of such event.
[Supplementary Principle 4-11-3 Evaluation of the effectiveness for the Board of Directors
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 2024, we evaluated the effectiveness of the Board of Directors as a whole through a questionnaire conducted on 10 officers including outside directors and Audit and Supervisory Committee. The result of the evaluation was reported to the regular meeting of the Board of Directors held in April 2024.
The result of the analysis indicates that the effectiveness of the Board of Directors has been secured. However, some questionnaire respondents felt that there should be more opportunities to share opinions on management issues, DX strategies, and SDG and ESG strategies in Board of Directors meetings. Accordingly, we reported the need to consider further changes to operations in order to enhance the Board of Directors.
[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.
The Company has established the Corporate Strategy and Investor Relations Department as a department in charge of IR and has established an IR system which an executive officer in charge of IR.
Information on the company's performance and financial conditions, etc. is appropriately and timely disclosed to stakeholders including shareholders and investors by in charge of IR department, in full collaboration with the Corporate Strategy 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, senior management and the department in charge of IR hold individual meetings with institutional investors and corporate briefing sessions for individual investors as appropriate. The director in charge of IR provides feedback on the opinions of shareholders and investors by submitting proposals and reports to the Board of Directors as necessary. When engaging in dialogue with shareholders, we handle insider information with great care in accordance with the internal rules.
[Action to Implement Management that is Conscious of Cost of Capital and Stock Price]
We consider sustainably increasing the Group’s corporate value to be the primary focus of our management. We design management strategies based on the characteristics of our services and establish management plans that take these strategies into account. The Medium-Term Management Plan sets specific numerical targets for net sales, operating profit, and ROE, as well as the timeframe for achieving these targets. We will achieve the Medium-Term Management Plan numerical targets by steadily implementing the figures for each fiscal year.
With respect to the Group's cost of capital and profitability of capital, we determine the figures calculated under certain conditions. Internally, we have identified the cost of capital and return on capital for the Group in order to achieve an optimal allocation of management resources in terms of business portfolios, and have held discussions at Board of Directors and other meetings.
Based on the discussions to date, on March 15, 2024, we announced the status of our efforts outlined in the “Action to Implement Management that is Conscious of the Cost of Capital and Stock Price.”
Going forward, we will continue to consider this issue in order to formulate and implement a management plan that includes improvements in these management indicators.
As a member of a key industry that provides the public's information infrastructure, the Group has designated contributing to the development of a sound information society as I-Net's Corporate Behavior Charter, and in addition to building a compliance promotion system, the Group strives to provide education activities for officers and employees when needed, improve corporate ethics, and strengthen legal compliance.
Since obtaining the Privacy Mark on December 3, 1999, the Company has continued to pass the ongoing reviews and renewed its certification. The Company makes continuous improvements to its management system for the protection of personal information. Appropriately managing and protecting the personal information entrusted to us is the Company's social responsibility and a basic business activity. With this understanding, we regularly hold educational activities, such as giving training to all employees every year through e-learning to deepen understanding of the Personal Information Protection Law, and also take exhaustive measures to prevent the outflow of information outside the Company and to prevent leaks due to inappropriate access from outside the Company as we strive to protect personal information.
As independent entities, the Company and Group companies are working to improve the Group's business value by building a risk management system tailored to Group management policies and strategic targets and managing risk in accordance with characteristics that differ according to business types and risk type, based on their own responsibility. Group companies independently optimize risk types and definitions, based on company scale, characteristics, and operation type; build a risk management system and assess and monitor the different risks; and take countermeasures.
The Risk Management Division addresses the Group's risk management by working with the risk management and other departments of the respective companies, and identifying and sharing the risk management status and progress made on various measures by holding Group Risk Management Committees and taking other measures.
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.
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9:00 am - 5:30 pm
on weekdays