As the organizational structure of our Company under the Companies Act, we have adopted the form of a company with an Audit and Supervisory Committee.
We have an Audit and Supervisory Committee in which Outside Directors with independence and neutrality make up a majority of Members, and delegate a substantial portion of the Board of Directors’ authority for business execution to Directors. Doing so allows us to separate the oversight and execution of business and engage in speedy decision-making.
Basic policy on the composition of the Board of Directors
Directors who are not the Representative Director, Management Executives (President & CEO, Vice President & Executive Officer, Senior Executive Officer, Senior Managing Executive Officer, or Managing Executive Officer), or Audit and Supervisory Committee Members are appointed with comprehensive consideration of the Balance of the Board of Directors overall and whether candidates possess the knowledge, experience, and capabilities required to satisfy diversity.
Candidates for Directors who are Audit and Supervisory Committee Members are appointed based on comprehensive judgment of whether the candidates possess sufficient knowledge to properly perform the duties of Members of the Audit and Supervisory Committee. In particular, we include one or more persons who possess sufficient financial and accounting knowledge.
We also strive to appoint Outside Directors with independence and neutrality to at least one third of Director positions.
Concepts concerning the functions of the Board of Directors and independence
Outside Directors are Directors who are personally and financially independent from the Company and who fulfill the requirements for independent officers established by the Tokyo Stock Exchange, as well as the requirements for outside directors set forth in the Companies Act. Outside Directors make efforts to achieve excellent corporate governance by providing counsel from perspectives differing from those of other Directors. As necessary, they may request submission of internal company materials or explanation and reporting of internal company information from other Directors, Executive Officers, or employees.
Audit and Supervisory Committee Members bear the role of working to establish an effective corporate governance system by overseeing and auditing the execution of duties by Directors. The Audit and Supervisory Committee composed of those members conducts verification of the content of reports received from Directors, Executive Officers, employees, Accounting Auditors, and other parties, as well as investigation of the status of the Company’s business and assets. The Committee enacts necessary measures in a timely manner, including the provision of counsel, recommendations, and other opinions to Directors and suspension of the actions of Directors.
Composition of the Board of Directors
The Board of Directors invites two Outside Directors (including two Directors who are Audit and Supervisory Committee Members) for inclusion among its six Directors (including three Directors who are Audit and Supervisory Committee Members), from whom the Board receives candid comments from an external perspective and opinions of benefit to the Company’s management based on the individuals’ abundant experience. By doing so, we are making efforts to enhance the impartiality of our management and strengthen functions for the oversight of decisionmaking and execution of duties by business executives.
Delegating important decisions on business execution to the Representative Director, President & CEO in accordance with the provisions of the Articles of Incorporation and resolutions by the Board of Directors enables swift decision-making in management and agile business execution, and allows the Board of Directors to focus on the oversight of business executives.
The Audit and Supervisory Committee is composed of two Outside Directors and one Internal Director. The Internal Director, as Standing Audit and Supervisory Committee Member, serves as Chair of the Committee.
We have also established the Audit and Supervisory Committee Office, with one dedicated staff person and one staff person concurrently holding another position.
This office supports auditing work and smooth execution of duties by the Audit and Supervisory Committee.
The Company has also established a Nomination and Compensation Committee under the Board of Directors to deliberate on proposals for director appointment and compensation. This Committee is chaired by Representative Director, President & CEO Tsuyoshi Ando, with Outside Directors Nanpei Yanagawa and Takashi Nakamura as Members.
As a decision-making body for execution of management by the President & CEO, we have established a Management Conference to deliberate company-wide basic management strategy and its execution. The Management Conference is composed of Standing Directors, Executive Officers, and Company Presidents. The Corporate Ethics Committee, chaired by the Chief of Legal Governance, is composed of corporate ethics managers in the Group. It manages corporate ethics activities across the Group, enforces corporate ethics education for directors and employees, and works to prevent violations. We have also established a whistleblowing system as a means of directly providing information on legally suspect actions, and ensure that no disadvantage befalls whistleblowers.
The Special Committee is composed of experts including university professors, attorneys, and certified accountants who have no affiliations with the Company. Our Large-scale Purchase Rules (an anti-takeover defense measure), which clearly and specifically indicate procedures that takeover proposers should take prior to executing specific acts of purchase, in principle require judgment by the Special Committee on decisions regarding whether to implement specific measures, to exclude arbitrary decisions by the Company’s Board of Directors.
Moreover, to promote sustainability management by which our Group seeks to improve the sustainability of our business through consideration of the sustainability of the environment, society, and economy, we established the Sustainability Committee as a Group-wide organization in June 2021.(See the Spotlight page for details.)