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Corporate Governance
Basic policy (updated)
The group has established its management vision: “We observe the spirit of the law, perform business transactions through free and fair competition, and contribute to customers, clients, shareholders, employees, communities, society, and the global environment through our transparent and highly ethical management values.” Under this management vision, the company has made it a basic policy to thoroughly incorporate compliance awareness, gain the trust of all stakeholders, aim to become a corporate group that grows and develops in a healthy manner, and realize fair and highly transparent management.
Items concerning functions, such as the execution of duties, audits and supervision, appointments, determination of remuneration, and other issues (updated)
| 1. | The Board of Directors and Directors | |
| The Board of Directors, which consists of ten directors, including one outside director, meets once a month with additional meetings as and when required. The Board of Directors shall make decisions regarding Taikisha Group’s management policies, items stipulated in laws and articles of incorporation, and important management matters, as well as monitor and supervise the execution of duties by each director and corporate officer. In addition, an outside director was appointed in June 2008 in order to revitalize debate and ensure the transparency of decision-making in the Board of Directors, and strengthen the supervisory function of the Board of Directors over directors and corporate officers. Furthermore, in June 2009, the company decided to shorten the tenure of directors from two years to clarify their management responsibilities in each fiscal year and one year in order to establish an agile management framework that quickly responds to the rapidly changing business environment. |
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| 2. | Corporate Officer System | |
| The company adopted the corporate officer system in April 2007 in order to clarify the responsibilities and authorities in corporate management and the execution of duties, as well as revitalize the Board of Directors and speed up the decision-making process through reduction of the number of directors. Corporate officers (tenure: one year) are appointed through a resolution of the Board of Directors and execute their duties based on management policies decided by the Board of Directors. | ||
| 3. | Management Meeting | |
| Management Meeting was established in order to streamline company group management. These meetings, which consist of ten directors (including one outside director) and three full-time corporate auditors, are generally held once a month with additional meetings as and when required and serve as a decision-making body that deliberates management issues for Taikisha Group in a thorough and timely manner based on management policies formulated through a resolution of the Board of Directors. An outside corporate auditors attend the Management Meeting from time to time and present their opinions from an objective and neutral standpoint. Important matters to be discussed in the Management Meeting shall be submitted to the Board of Directors for final decision. |
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| 4. | The Management Ethics Committee and Corporate Compliance Committee | |
| The Management Ethics Committee and Corporate Compliance Committee were established to monitor compliance. The Management Ethics Committee, which consists of the President as committee chair, the Directors, and the General Manager of the Internal Audit Office, shall generally meet once each month to consider and respond to compliance issues relating to overall business at the Company from a management perspective. Corporate Auditors shall attend Management Ethics Committee meetings and offer an independent perspective in order to ensure the effective monitoring of management issues. The Corporate Compliance Committee, which consists of the president as committee chair and is composed mainly of members of the Management Ethics Committee, shall generally meet every other month to examine the status of compliance with laws and articles of incorporation. |
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| 5. | Risk Management System | |
| Regarding risk management of Taikisha Group, the Company shall, in accordance with the Risk Management Rules, establish the Risk Management Committee to identify risks in an integrated fashion and to implement effective and efficient risk management. The Committee shall establish basic policies, responsibility systems, operations and other necessary measures for risk management of Taikisha Group, and shall keep all persons involved informed about the establishment and implementation. Regarding risks associated with operations, such as quality control, safety control and compliance, assigned to each department, each department shall identify and prioritize the risks, draft specific measures against the risks and report to the Risk Management Committee. Each department shall implement internal rules and regulations, and shall keep all persons involved inform about the details of the implementation. On the assumption of situations in which measures should be taken to respond to exposed potential major risks (hereinafter referred to as crisis), the Company shall establish the Crisis Management Committee for the purpose of crisis response and daily crisis management. In the event that crisis breaks out, the Crisis Management Committee shall organize the crisis management team or establish the crisis task force to respond to the crisis under the supervision of the Crisis Management Committee. |
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| 6. | The Board of Corporate Auditors and Corporate Auditors | |
| The Company has five corporate auditors, including three outside corporate auditors. Among them is Mitsuru Sano, a Corporate Auditor who has been engaged in accounting operations within the Company for many years, including serving as the General Manager of the Finance and Accounting Dept., and has a respectable degree of knowledge regarding financial and accounting matters. Corporate auditors review important documents, including internal approval documents, and attend major meetings, including the Board of Directors and Management Meeting, in order to understand important decision-making processes and the execution of duties in the company and group companies, as well as to collect information about the current decision making process for important matters from each department and provide advice and recommendations for operational improvement and other issues as and when required. Regarding business offices and affiliates in Japan and abroad that are considered important for consolidated management, the Company, in cooperation with the Internal Audit Office, shall conduct on-site investigations based on the audit plan. Corporate auditors shall receive reports from the Internal Audit Office and Accounting Auditors regarding their audit plans, execution of duties, audit results, and other issues on a periodical and as-needed basis, and may request further examination and explanation of these issues as and when required. Furthermore, audits by the Corporate auditor related to the internal control system have been conducted based on these audit results, reports from the internal control department, investigation into each department, and other factors. each corporate auditor report all audit activities to the Board of Corporate Auditors in order to share information. |
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| 7. | Internal Audit | |
| The company has created the Internal Audit Office in order to review and evaluate operational accuracy and adequacy in Taikisha Group and improve the management efficiency and profitability of Taikisha Group. The independence of the internal audit is ensured by positioning the Internal Audit Office under the direct control of the President, and the effectiveness of internal audits is ensured by appointing the corporate officer level or higher to the General Manager of the Internal Audit Office and securing the necessary personnel (seven staffs). The Internal Audit Office shall conduct audits on the execution of duties and compliance with laws within departments based on the audit plan, report audit results to the president, make recommendations regarding those results, and conduct follow-up audits on recommended items to confirm whether the matters have been improved or not. Results of this audit, have reported to the auditors. In addition, the Internal Audit Office shall conduct evaluations of the effectiveness of operations for internal control over Taikisha Group’s financial reporting based on the Financial Instruments and Exchange Act. |
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| 8. | Accounting Auditors | |
| Two certified public accountants who conduct the accounting audits for the company are Yoshimi Nakai and Hiroaki Kagami, who belong to Audit Corporation, A&A Partners. Both auditors have been conducting audits for four years. Assistants involved in the company’s accounting audit operations consist of five certified public accountants and nine other staff members. |
Basic Ideas Regarding Internal Control Systems
Taikisha has decided on a Basic Policy for the Establishment of Internal Control Systems at the board of directors' meeting in order to implement an efficient and proper corporate system by establishing, reviewing, and continuing to improve internal control systems, reaffirming the fact that the biggest management risk is the violation of laws, to thoroughly remind all employees of the observance of the laws and ordinances, and to translate these issues into action. We believe that it is important for all divisions, executives and regular employees, and consolidated subsidiaries of Taikisha Group to further improve internal control systems and thoroughly practice the relevant duties based on this basic policy.
We stipulated a Code of Conduct for Taikisha at the board of directors' meeting in September 2005 as a system to oversee the observance of the laws and articles of incorporation, and introduced an internal reporting system for violations of laws by executives and regular employees. In addition, we installed a Corporate Compliance Office operated mainly by the Administrative Management Headquarters, in order to ensure appropriate implementation of the decisions above. Furthermore, Corporate Compliance Committee and Corporate Compliance Department were installed at the Administrative Management Headquarters in April 2006 to further strengthen the operations of the Corporate Compliance Office. The Corporate Compliance Department plans and implements employee education on activities related to the compliance of the laws and ordinances, and examines the introduction of measures for the observance of laws in order to prevent violation of those laws. The Corporate Compliance Department routinely receives instructions on appropriate compliance-related activities from several corporate lawyers, and has introduced a system to consult those lawyers for advice if any problems related to compliance occur.
With respect to risk management, each division formulates rules, operating instructions, manuals, and other regulations regarding risks pertaining to its duties, and routinely reminds the relevant employees of those rules.
Although Taikisha supervises the performance of the directors of all subsidiaries within the Taikisha Group on a regular basis through tight-knit capital ties, and personal and business relationships, and conducts required audits and offers the necessary advice and instructions to them, those subsidiaries plan to further improve their own internal control systems in accordance with Taikisha's recent improvements.
We have also installed an Internal Audit Office for further monitoring, which is directly under the President's command. The office conducts required audits in collaboration with auditors and the board of corporate auditors.
Pattern Diagram of Corporate Governance
