CORPORATE GOVERNANCE SYSTEM
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Corporate Governance System
The Company has chosen to adopt the "Company with Audit and Supervisory Committee System" because it enables the Board of Directors to strengthen its auditing and supervisory functions and to further enhance the effectiveness of corporate governance.
The outline of the corporate governance system is as follows.
Outline of the corporate governance system
- (1) Board of Directors
- The Board of Directors shall consist of six Directors (excluding the Audit and Supervisory Committee Members) (one of whom shall be an Outside Director) and three Directors on the Audit and Supervisory Committee (two of whom shall be Outside Directors). It meets regularly once a month and as needed as a body to formulate and execute management policies and strategies for the entire Group, to decide on important matters, to decide on the execution duties of Officers, and to supervise the execution status.
The Board of Directors strives to share information on management policies and business execution, to ensure that the control function is working, and to strengthen supervision.
- (2) Audit and Supervisory Committee
- The Audit and Supervisory Committee regularly receives reports from the Internal Audit Department on the status of implementation of internal audits and the results thereof, and has a system in place to instruct necessary investigations for additional audits as necessary, as well as to audit the status of execution of duties by Directors in cooperation with the Financial Auditor.
The two Outside Directors who are members of the Audit and Supervisory Committee consist of one lawyer and one certified public accountant, and they strengthen the supervisory function from their areas of expertise, including making recommendations from the legal and accounting perspectives.
The full-time Audit and Supervisory Committee Members also attend important meetings such as the Management Meeting and request reports from the business execution departments as necessary to gather information on the status of business execution.
- (3) Nomination and Compensation Committee
- In order to ensure objectivity, fairness, and transparency, decisions on the nomination of candidates for directors, the appointment and dismissal of senior management, and the compensation of directors and senior management are approved by the Board of Directors after deliberation by the Nomination and Compensation Committee (chaired by an Outside Director), the majority of whom are Outside Directors.
- (4) Management Meeting
- The Management Meeting is composed of Managing Directors and above, the General Manager of the General Accounting and Control Division, and the General Manager of the General Affairs and Human Resources Division, and meets once a month. The meeting reviews and deliberates on a wide range of important matters, including matters to be discussed at meetings of the Board of Directors, and requests the attendance of the managers of the departments in charge as necessary to ensure an efficient and flexible business execution system.
- (5) Internal Audit
- In order to improve the quality of the company-wide organization, the Company has established an Internal Audit Department to ensure thorough compliance and strengthen internal business auditing. As for internal audits, the Internal Audit Department (8 members) conducts operational and accounting audits of the Company and its subsidiaries. Internal audits are conducted as regular audits based on the annual plan, and as necessary, special audits are conducted on matters specially assigned by the Chairperson and the President. The results of the audits are reported to the Chairperson and the President at monthly audit report meetings with the attendance of full-time Audit and Supervisory Committee members.
With regard to important accounting and financial matters detected through internal audits, we provide information to the General Accounting and Control Division and the Financial Auditor, and strive for mutual cooperation by obtaining guidance and advice.
In addition, events identified through audits of each business unit are reported to the Board of Directors for enlightenment and improvement.
- (6) Financial Auditor
- The Company has contracted with KPMG AZSA LLC to audit the Company's financial statements under the Companies Act and the Financial Instruments and Exchange Act, and is constantly aware of the need for timely and appropriate disclosure, including receiving guidance on important matters on a case-by-case basis. Audit results are reported to the Board of Directors.
As for the mutual cooperation between the Audit and Supervisory Committee and the financial audit, the Audit and Supervisory Committee members attend the audit by the Financial Auditor in a timely manner.
- (7) Liability Limitation Agreement
- The Company has a contract with Directors who are not executive Directors to limit their liability for damages as provided for in Article 423, Paragraph 1 of the Companies Act in accordance with the Company's Articles of Incorporation and the Companies Act. The maximum amount of liability for damages under the said agreement is the amount specified in Article 425, Paragraph 1 of the Companies Act.
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