Internal Control | Corporate Governance

Basic Approach to Corporate Governance

Our Group defines corporate governance as a critical management issue for increasing corporate value through sustainable growth. The entire Group is actively committed to improving corporate governance.

As part of our Groupís corporate governance, we are enhancing internal control by proactively undertaking activities to advance compliance and risk management and we are expanding/strengthening the management oversight functions of our board of directors and the audit functions of our corporate auditors. These steps will enable us to construct a transparent corporate governance system worthy of the trust of shareholders and other stakeholders and fulfill our corporate social responsibilities, and will help us improve our corporate value through sustained growth.

Overview of Current Corporate Governance System

General Description of Governance Structure

To ensure fair and transparent company management, 2 outside directors attend board of directors meetings and there provide advice on company management. Fair and transparent procedures are also applied to nominate these outside directors and to determine their compensation. We have clearly delineated the management responsibilities of directors and sought to strengthen our management practices, and we have set the term of office for directors at one year and the maximum number of directors is set at 18 (11 as of June 30, 2016), so that we can flexibly construct the optimal management structure to correspond to changes in the business environment. An executive officer system has been introduced to permit rapid management decision-making and quicker execution of operations. The board of auditors and individual corporate auditors have also been given robust check-and-balance functions to help them monitor decision-making by the board of directors and the execution of operations by representative directors.

Items pertaining to outside directors

Our company has taken the steps necessary to ensure that 2 outside directors are assigned and permitted to provide needed insights on the agenda and deliberations of board of directors meetings so that they can contribute to appropriate corporate governance at our company and offer advice on our standards of conduct.

Efforts to strengthen the functions of corporate auditors

Corporate auditors attend board of directors meetings and other important meetings and audit directorsí performance of their professional duties, and full-time corporate auditors collaborate with the Audit Group, CSR Promotion Division, our companyís internal audit organization, and with accounting auditors in conducting audits of our company and our Group companies in accordance with all applicable laws, regulations and rules. The presence of 2 outside corporate auditors with a considerable level of knowledge in financial and accounting matters suitably ensures that the above functions are performed.

Relationships with stakeholders and timely disclosure

Aware of its mission to increase corporate value and meet shareholder expectations, the Group understands that it must fulfill its responsibilities with respect to employees, local residents, local communities, business partners, investors, and other non-shareholding stakeholders. Our company discloses information pertaining to management of the Group in a fair, timely and appropriate manner and in accordance with disclosure rules designed to help all stakeholders better understand and properly assess our Group, and with the approval of the Disclosure Committee comprising the President & CEO, the Executive Officer in charge of the Finance Division, and other members.

The Corporate Governance System

Schematic of Corporate Governance System

Corporate Governance Report filed with Tokyo Stock Exchange