Corporate Governance System

Outline of the Corporate Governance System

The outline of the Company’s corporate governance system is as follows:
(1) The Company has established the Board of Directors as an organization responsible for supervision and decision-making of important matters. As an audit organization, the Company has also established the Audit & Supervisory Board.
(2) The Company holds monthly meetings of the Board of Directors, where its members discuss and make decisions concerning important management matters, and supervise the execution of operations. By holding the monthly meetings, the Company seeks rational and efficient decision-making of its management. In 2015 the Company appointed one non-Japanese director with the aim of building a system that can respond well to continual changes in its global business.
(3) To ensure adequate supervision of the Company’s management, the Company has also appointed two outside directors who has sufficient knowledge and experience of corporate management. The outside directors are expected to offer advice and suggestions on the Company’s management from a long-term perspective, based on a broad view of the whole business world, a view that is unrestricted by the conventional framework of the Company’s viewpoint. Through the appointment of outside directors, the Company intends to enhance the management and supervisory functions of the Board of Directors.
(4) Concerning the internal audit, the Internal Auditing Office is engaged in periodic and occasional auditing activities, including but not limited to activities to verify the effectiveness and efficiency of the Company’s business, reliability of its financial statements, compliance with relevant laws and regulations, and conservation of corporate assets.
(5) Pursuant to the audit policies and the roles of auditors specified by the Audit & Supervisory Board, its members conduct rigorous auditing activities. Specifically, they attend important meetings, including those of the Board of Directors, hear reports on the Company’s business from directors and other responsible individuals, check important written resolutions and other papers, and investigate the Company’s business operations and the state of its assets.
(6) Accounting auditors conduct accounting audits and provide suggestions so as to improve the Company’s business operations.
(7) The annual remuneration for Directors and Audit & Supervisory Board Members is decided within the maximum total remuneration amounts for all Directors and all Audit & Supervisory Board Members, respectively, established by resolution of the General Meeting of Shareholders.
The amount of annual remuneration for each Director is decided by the Representative Director designated by the Board of Directors in accordance with certain standards, and the amount of annual remuneration for each Audit & Supervisory Board Member is decided through discussion by the Audit & Supervisory Board.

Diagram of Corporate Governance

State of Outside Officers

The Company has appointed two outside directors and two outside audit & supervisory board members.

Appointment of Outside Officers

Outside Director
Kazuo Ichijo
To ensure adequacy of the Company’s business operations, it has appointed Professor Kazuo Ichijo as an outside director in recognition of his career as a professor of international business strategies at a graduate school and his broad and deep knowledge of corporate management.

In light of the Independence Standards specified by Tokyo Stock Exchange, Inc. (TSE) and the Company’s own criteria for the independence of outside officers, the Company has appointed him as an independent executive and submitted the relevant notification to TSE.

Outside Director
Mitsuhiro Katsumaru
To ensure legality of the Company’s business operations, it has appointed Mr. Mitsuhiro Katsumaru as an outside director in recognition of his career as the Ministry of Justice and his broad and deep knowledge of compliance.

In light of the Independence Standards specified by Tokyo Stock Exchange, Inc. (TSE) and the Company’s own criteria for the independence of outside officers, the Company has appointed him as an independent executive and submitted the relevant notification to TSE.

Outside Audit & Supervisory Board Member
Gohei Matsumoto
To ensure adequacy of the Company’s business operations, it has appointed Mr. Gohei Matsumoto as an Outside Audit & Supervisory Board member in recognition of his expertise in taxation and accounting as well as his experience as a licensed tax accountant.

In light of the Independence Standards specified by Tokyo Stock Exchange, Inc. (TSE) and the Company’s own criteria for the independence of outside officers, the Company has appointed him as an independent executive and submitted the relevant notification to TSE.

Outside Audit & Supervisory Board Member
Kanako Nozue
To ensure adequacy of the Company’s business operations, it has appointed Ms. Kanako Nozue as an Outside Audit & Supervisory Board member in recognition of her expertise in law and legal affairs as well as her experience as a lawyer.

In light of the Independence Standards specified by Tokyo Stock Exchange, Inc. (TSE) and the Company’s own criteria for the independence of outside officers, the Company has appointed her as an independent executive and submitted the relevant notification to TSE.

To ensure objective judgment of the independence of outside directors and outside auditors, the Company has established its own criteria "The Outside Officer Independence Standards." The Company uses these standards along with the Independence Standards specified by Tokyo Stock Exchange, Inc.

Outside Officer Independence Standards

The Company’s Board of Directors has established the Outside Officer Independence Standards for outside directors and outside auditors (hereinafter collectively referred to as “outside officers”), as stated below.
(1) Outside officers shall be considered to be independent so far as none of the following conditions apply to them. (*1)
1. To be either a major shareholder of the Company (a shareholder who possessed 10% or more voting power at the end of the most recent fiscal year) or a person who actually executes the business (*2)
2. To be either a business partner for whom the Company is a major partner (*3) or a person who actually executes the business
3. To be either a major business partner of the Company or a person who actually executes the business
4. To be an accounting auditor (or an employee responsible for accounting audits) of either the Company or its consolidated subsidiaries
5. To be a lawyer, judicial scrivener, patent attorney, certified public accountant, licensed tax accountant, consultant, or any other individual who received payment or other properties exceeding 10 million yen from the Company in the most recent fiscal year, excluding remuneration for officers (in case of an organization, such as a corporation or union, any member of the organization that received from the Company a sum exceeding 2% of its annual income)
6. To be either a major borrowing customer of the Company (whose name is specified as a major borrowing customer in the Company’s annual report for the most recent fiscal year) or a person who actually executes the business
7. To be a recipient of a Company donation exceeding 10 million yen in the most recent fiscal year (in case of an organization, such as a corporation or union, any executive officer of an organization that received more than 2% of its annual income from the Company)
8. Any person applicable under any of items 1 to 7 during the last three fiscal years
9. Spouses or blood relatives within the second degree of kinship of the individuals (important individuals only) applicable under any of items 1 to 8
10. Spouses or blood relatives within the second degree of kinship of the persons who actually execute the business of the Company or its subsidiaries (in case of employees, only important persons)
11. Spouses or blood relatives within the second degree of kinship of the persons who actually executed the business of the Company or its subsidiaries during the last three fiscal years (in case of employees, only important persons)
12. Any persons who have other special circumstances that inhibit them from fulfilling their role as an independent outside officer, such as those who have the risk of a constant conflict of interest with the Company
13. The Company shall retain the right to appoint a person or persons applicable under any of the previous items as an independent outside officer, if the Company regards them to have the character and knowledge appropriate for an independent outside officer, provided that the Company explains to outside parties the grounds for selecting such persons as independent outside officers
*1. Investigation of candidates shall be within an economical and rational range.
*2. “Persons who actually execute the business” refers to individuals applicable to either of the following cases.
(1) Executive directors, executive officers, or any other officers who execute the business of a corporation or other organization
(2) Employees who execute the business of a company, employees who should fulfill the tasks specified by Article 598-1 of the Companies Act, or any other corresponding individuals
(3) Employees
*3. “A business partner for whom the Company is a major partner” refers to the party the transaction was with that exceeded 2% of the Company’s annual consolidated sales in the most recent fiscal year.
(2) Outside officers who have been judged to be independent pursuant to the Standards shall immediately notify the Company when they lose the independent properties.
Enacted on May 24, 2016