Our Company has established the "Corporate Governance Policy" in order to fulfill our social responsibility to our stakeholders, pursue our Company's sustainable growth, and increase our corporate value over the medium to long term.
This document has been translated from a part of the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.
Corporate Governance Policy
Chapter 1. The General Principles of the Policy
This "Corporate Governance Policy" aims to fulfill our social responsibility to our stakeholders, pursue our Company's sustainable growth, and increase our corporate value over the medium to long term by outlining our fundamental approach to corporate governance.
2. Fundamental Approach to Corporate Governance
Our Company positions corporate governance as a critical management issue in order to gain the public's trust as a company striving to increase our corporate value through efficient and responsible management. Our Company strives to strengthen corporate governance as described in this Policy in order to improve transparency and sound management.
Chapter 2. Relationship with Stakeholders
1. Relationship with Shareholders and Investors
(1) Securing the Rights of Shareholders
Our Company will provide a setting where all shareholders, including minority owners and overseas shareholders, can easily exercise their rights and ensure that all shareholders are treated equally.
(2) Shareholder’s Meetings
Our Company will promote adequate environmental arrangements, including the following components, to enable shareholders to exercise their rights in an appropriate manner because our Company recognizes that Shareholders' Meetings are opportunities for constructive dialogue with shareholders.
- Our Company will make every effort to deliver early convening notices of Shareholder Meetings (aiming for 3 weeks prior to the Meeting).
- Before the day it is sent, our Company will post the convening notice's contents on both our website and the website of the Tokyo Stock Exchange.
- Our Company will provide a setting that makes it possible to exercise voting rights electronically.
(3) Policy on Dialogue with Shareholders
Our Company has established the following policy regarding the development of systems and initiatives to promote constructive dialogue with shareholders.
- The Corporate Planning & Administration Division of our Company is designated as the point of contact for dialogue with shareholders. Under the direction of the Executive Officer in charge, the Corporate Planning & Administration Division facilitates the dialogue. Senior management, Directors (including Outside Directors), and members of the Audit and Supervisory Committee may also have the opportunity to speak with shareholders as needed.
- Our Company works to improve information disclosure on our website and in our business reports in order to give shareholders clear and useful information.
- The contact department reports to senior management and the Board of Directors on shareholder requests and opinions that are found important to the management of our Company.
- Our Company shall strictly regulate insider information when engaging in dialogue with shareholders in compliance with the rules governing the prevention of insider trading.
(4) Capital Policy
Our Company will make the appropriate investments for sustainable growth while taking into account ways to strengthen its financial position in order to maintain a solid management foundation. The fundamental policy of our Company is to keep shareholders' equity at a level that is sufficient for us to conduct business, and to increase corporate and shareholder value in accordance with its medium-term management plan, which was released in March 2021.
(5) Policy on Cross-Shareholdings
・Policy on Cross-Shareholdings
From the standpoint of maintaining and strengthening business relationships with the issuing company and facilitating financial activities, our Company takes Cross-Shareholdings into consideration. After carefully analyzing the financial condition, corporate governance of the issuing company, and cost-effectiveness of holding the shares, our Company decides whether to hold the shares.
・Aim and rationale for Cross-Shareholdings
In accordance with the above policy, the Board of Directors evaluates the appropriateness of Cross-Shareholdings on an annual basis from the perspectives of (1) their business relationships with our Company, (2) their financial condition and corporate governance, and (3) the dividend yield from the issuing company.
・Exercise of Voting Rights Related to Shares Held as Cross-Shareholdings
When deciding how to exercise the voting rights of the shares that our Company holds in cross-shareholdings, we carefully consider the medium to long term shareholder interests of the issuing company as well as its suitability for the purposes for which our Company holds the shares.
(6) Related-Party Transactions
In the event that our Company engages in related-party transactions, the Board of Directors shall ensure that such transactions will not harm the interests of our Company or the common interests of shareholders. In addition, our Company shall disclose such transactions in its annual securities reports and other documents.
2. Relationship with Employees
In order to be a company that continuously creates innovation and social value, our Company believes it is essential to diversify our internal human resources and conduct our business by utilizing a variety of values. In addition, our Company positions " Diversity & Inclusion" as an important business strategy and promotes initiatives to diversify its core human resources, such as encouraging the appointment of women and mid-career employees to management positions.
An Audit & Supervisory Committee member and members of the Audit Office who are independent of management make up our Company’s whistleblower contact point. In order to ensure that our employees can submit information without fear of adverse treatment, our internal regulations specify the anonymity of informants and the prohibition of disadvantageous treatment.
3. Relationship with Society
In order to increase our corporate value over the medium to long term, our Company believes that it is essential to respond to sustainability issues, such as social and environmental concerns. Through our CSR policy, our Company provides businesses that help solve sustainability-related problems.
Chapter 3. Corporate Governance Structure
1. Corporate Governance System
Our Company has adopted the institutional structure of a company with an Audit & Supervisory Committee in order to increase management transparency and mobility through improving the audit and supervisory responsibilities of the Board of Directors and the corporate governance system.
2. The Board of Directors
(1) Roles & Responsibilities of the Board of Directors
The Board of Directors develops management strategies based on the management philosophy, decides on business execution, and supervises each Director's execution of their duties. The Board of Directors makes decisions regarding matters governed by laws and the Articles of Incorporation, as well as important business issues. In accordance with internal regulations, the Board of Directors delegates decisions on specific policies, plans, etc. related to business execution to the Management Meeting, the President, or the Director in charge, depending on the level of importance.
(2) Composition of Board of Directors
The Board of Directors shall be large enough to enable flexible decision-making and maintain diversity among its members. In addition, our Company shall strengthen the auditing and supervisory functions of the Board of Directors by appointing several independent Outside Directors.
(3) Conducting the Board of Directors Meeting
The Board of Directors Meeting is conducted in the following manner in order to encourage discussion:
- In principle, Board of Directors Meeting materials shall be provided to Directors at least three (3) business days before a meeting, and Directors shall carefully review the materials in advance.
- The Board of Directors shall prepare an annual schedule of Board of Directors Meetings and include regular topics for discussion in the annual schedule.
- The Board of Directors shall set an appropriate number of agenda items at each meeting to ensure that there is sufficient time for discussion of each agenda.
- The Secretariat Office and other related departments shall provide information and materials as necessary to promote transparent, fair, prompt, and active decision-making for Directors.
(4) Effectiveness Evaluations of the Board of Directors
The Board of Directors shall analyze and evaluate its effectiveness as a whole and disclose the summary result.
3. The Audit & Supervisory Committee
(1) Roles & Responsibilities of the Audit & Supervisory Committee
The Audit & Supervisory Committee, which is made up of experts and experienced professionals in management, law, finance, and accounting, shall make appropriate decisions from an independent and objective standpoint. The Audit & Supervisory Committee shall actively exercise its authority and provide appropriate opinions to management.
(2) Relationship with Accounting Auditor
The "Auditing Standards" and the "Accounting Auditor Appointment Standards" are the criteria that the Audit & Supervisory Committee specifies for the appointment and reappointment of Accounting Auditors. The Audit & Supervisory Committee shall confirm the Accounting Auditor's independence and professionalism.
(1) Appointment of Directors
Candidates' selection as Directors will be based on a wide range of factors, including personality and views expected of senior management as well as knowledge, experience, and capability to properly carry out the responsibilities required of each position. Candidates may come from the Company or from outside. After consulting the Nomination and Compensation Committee, the Board of Directors shall nominate candidates for the position of Directors based on the Committee's conclusions.
(2) Roles & Responsibilities of the Independent Outside Directors
Our Company shall appoint a number of Independent Outside Directors to ensure a system to supervise management from an independent and objective standpoint. Independent of management and controlling shareholders, the Independent Outside Directors shall actively express their opinions about management policies, management improvements, and other important decisions of the Board of Directors based on their knowledge and experience.
(3) Independence Standards for the Independent Outside Directors
At the appointment of the Independent Outside Directors, the Board of Directors shall determine their independence in accordance with the independence standards established by the Tokyo Stock Exchange.
(4) Concurrent Directorships in Other Companies
In the event that the Directors also serve as Directors of other listed companies, the Board of Directors shall ensure that their roles and responsibilities as Directors of our Company are properly carried out. The status of concurrent positions shall be disclosed annually in the Business Report.
(5) Remuneration of the Directors
The only remuneration for the Directors (excluding the members of the Audit & Supervisory Committee and the Outside Directors) shall be a basic remuneration determined by their roles and positions, prorated over a 12-month period, and paid on a monthly basis. However, when a major decline in business performance or other factors make it inappropriate to pay the usual amount of the basic remuneration, the remuneration shall be reduced.
The only remuneration for the members of the Audit & Supervisory Committee and the Outside Directors shall be a basic remuneration determined by their respective roles, prorated over a 12-month period, and paid on a monthly basis.
The Board of Directors shall consult the Nomination and Compensation Committee on the draft proposal before determining the amount of remuneration for each of the Directors and shall adopt a resolution based on the Committee's conclusion.
(6) Directors’ Training Policy
When new Directors are appointed, our Company shall offer them the opportunity to engage in external seminars in order to ensure that they can successfully carry out their duties. After that, our Company will continue to offer and assist with opportunities for current Directors to obtain the relevant knowledge as necessary. Such expenses shall be covered by our Company.
Amended on June 29, 2022