Corporate Governance

Basic Views on Corporate Governance

At the Company, we believe that sound corporate activities based upon high ethical standards and fairness make a crucial part of our business philosophy, and thus we shall endeavor to strengthen corporate governance according to the principles stated below, ensuring the transparency and compliance across our management and operations as our fundamental objective:

1.
Strive to protect shareholders’ rights and ensure the equitable treatment of all shareholders
2.
Strive to appropriately collaborate with stakeholders other than shareholders
3.
Strive to ensure proper disclosure and transparency of information
4.
Strive to have the board of directors appropriately fulfill its roles and responsibilities, reflecting upon fiduciary duty and accountability to the shareholders
5.
Strive to have constructive dialogue with shareholders

Current Corporate Governance System

The board of directors shall make decisions on statutory matters and other significant items concerning the overall management, at the same time as being a body that supervises business execution undertaken by directors. The board of directors, consisting of eight directors including three outside directors, holds a meeting as required and has a system that enables swift and flexible management decision-making.

The Company also has an audit and supervisory board, appointing four members, of which two are outside members. The audit and supervisory board members attend a board of directors meeting and other important meetings, entrusted with the mission of ensuring the sound management of the Company and an increase in social trust. They also oversee corporate governance by reviewing business conditions, and going through sales reports from the directors and inspections on the operational and financial situation, as well as by examining important documents.

The Company will continue to further enhance its organizational system and mechanism primarily with its legal functions such as a general shareholders’ meeting, the board of directors, audit and supervisory board and accounting auditors. At the same time, it will work to ensure accountability by having swift disclosure of management and financial information and being actively involved in IR activities.

(Figure) Corporate Governance System

Corporate Governance Guidelines

The Company shall set forth the Corporate Governance Guidelines for the purpose of clarifying the basic views and the initiatives to be taken by it concerning corporate governance.

Corporate Governance Report

For details of the Company’s corporate governance, please refer to the “Corporate Governance Report” that we have submitted to the Tokyo Stock Exchange.

Independence Standards for Outside Officers

The Company has established “Independence Standards for Outside Officers” with the aim of clarifying standards for the independence of outside directors and outside audit and supervisory board members.

Status of outside directors and outside audit and supervisory board members

The Company appointed one outside director at the ordinary general meeting of shareholders held for the period ended in March 2014 in order to further enhance and strengthen its corporate governance. It subsequently added one director in April 2015 and another in June 2016, making the present total of three outside directors. The outside directors and outside audit and supervisory board members are elected according to the Independence Standards for Outside Officers set by the Company, ensuring the selection of those who do not pose any risk of a conflict of interests with the general shareholders, and who are unable to be significantly influenced by the management and are unable to significantly influence the management.

Reasons for appointment of outside directors

Name Reasons for appointment Participation in meetings of the Board of Directors (Period ended in March 2019) Number of times of attendance/meetings
Michiyoshi Mazuka Mr. Michiyoshi Mazuka, who held management posts at a global company and also served as a member of various advisory committees, possesses not only expertise as a business manager but also deep insight in corporate governance.
Therefore, we have appointed Mr.Mazuka as Outside Director, having determined that he is capable of providing beneficial advice to the management of the Company based on his experience and knowledge.
9/9 meetings
Toshitake Chino Mr. Toshitake Chino has expertise and experience as editor and company manager at Nikkan Kogyo Shimbun Ltd., a general information-management institution in industrial society, with newspapers being its core medium. Therefore, we have appointed Mr. Chino as Outside Director, having determined that he is capable of providing beneficial advice to the management of the Company based on his experience and knowledge. 9/9 meetings
Hidekazu Miyoshi Mr. Hidekazu Miyoshi has expertise in intellectual property rights, which he acquired through many years of service as a patent attorney, and experience as a business manager of a patent office.
Therefore, we have appointed Mr. Miyoshi as Outside Director, having determined that he is capable of providing beneficial advice to the Company’s management based on his experience and knowledge.
9/9 meetings

Notes:

  1. There is a contract between the Company and the outside directors that limits their liability for damages, stipulated in Article 423, paragraph 1 of the Companies Act to the extent of the amount defined in Article 425, paragraph 1 of the Act as the minimum liability amount, pursuant to the provisions of Article 427, paragraph 1 of the Act.
  2. Each outside director is an independent officer as defined in the provisions set forth by the Tokyo Stock Exchange, Inc.

Reasons for appointment of outside audit and supervisory board members

Name Reasons for appointment Participation in the audit and supervisory board meetings (period ended in March 2019) Number of times of attendance/meetings
Akira Takenouchi Mr. Akira Takenouchi is a lawyer familiar with legal affairs, and has broad experience and track record in the legal circle, including his position as President of TOKYO BAR ASSOCIATION. Therefore, although Mr. Takenouchi has never been directly involved in the management of a company, we have nominated him as a candidate for Outside Audit & Supervisory Board Member, having determined that he is an appropriate candidate capable of providing beneficial advice to the Company’s audit system based on his experience and knowledge. 8/8 meetings
Seiji Nishiura Mr. Seiji Nishiura, who served as district director of tax offices, etc., is well-versed in corporate taxation as a tax accountant and possesses high-level professional expertise in finance and accounting. Therefore, although Mr. Nishiura has never been directly involved in the management of a company, we have appointed Mr. Nishiura as Outside Audit & Supervisory Board Member, having determined that he is an appropriate candidate capable of providing beneficial advice to the Company’s management and its audit system based on his experience and knowledge. 8/8 meetings

Notes:

  1. There is a contract between the Company and the outside audit and supervisory board members that limits their liability for damages, stipulated in Article 423, paragraph 1 of the Companies Act to the extent of the amount defined in Article 425, paragraph 1 of the Act as the minimum liability amount, pursuant to the provisions of Article 427, paragraph 1 of the Act.
  2. Both of the outside audit and supervisory board members are independent officers as defined in the provisions set forth by the Tokyo Stock Exchange, Inc.

Cross-Shareholdings

  1. Policies regarding cross-shareholdings
    The number of shares of other companies that the Company holds shall be kept to the minimum necessary, and the Board of Directors shall annually assess whether or not to hold individual cross-shareholdings, closely examining whether the benefits and risks from each holding cover the Company’s cost of capital. Any cross-held shares, except for those that are deemed rational to continue to be held as a result of such assessment, will be sold.
  2. Policies regarding the exercise of voting rights associated with cross-held shares
    The Company will vote for an agenda that it considers will contribute to increasing the value of shares it holds, whereas it will vote against if it believes that such agenda may damage the value of shares, after examining the business policies and strategies of the companies invested in.

Stock Options

The Company issues share reservation rights to the executives of the Company and its subsidiaries as stock options. It does so in the hope that such rights will work as an incentive to further encourage and motivate them to enhance the consolidated performance of the Company, at the same time as improving the corporate value by providing them with interests that they can share with shareholders.

Adoption of Anti-Takeover Measures

Not Adopted