In order to establish the "Kyudenko Brand" that is supported and trusted by stakeholders including shareholders, customers and local community, and to realize appropriate and efficient corporate management, the Company upholds the "enhancement of corporate governance" as one of its important management issues, and accordingly will work to thoroughly ensure compliance with laws, regulations and corporate ethics, earnestly work to sustainably improve corporate value, and fulfill its corporate social responsibility.
Kyudenko Corporate Governance System
The Company adopts the organizational form of a company with an Audit & Supervisory Board under the Companies Act and establishes a system where the Audit & Supervisory Board, a body independent from execution of operations, monitors and oversees the Board of Directors and Directors. By introducing the Executive Officer system, we separate the "decision-making and oversight function" and the "execution of operations function" of the Board of Directors to reinforce corporate governance as well as to practice efficient and speedy management. In addition, the Executive Officers who execute operations are conferred with necessary authorities to draw a clear line between the "oversight responsibility" of Directors and the "execution responsibility" of Executive Officers. The Company also aims to enhance corporate governance by building an "internal control system" aimed at securing and maintaining the harmony of risk management, efficiency, and compliance in operations.
The Company established the corporate governance system and internal control system as illustrated below. In addition, the Company submits Corporate Governance Reports to the Tokyo Stock Exchange and discloses reports based on Enforcement Rules for Securities Listing Regulations.
Kyudenko Corporate Governance Guidelines
The Company and Group companies aim for (1) sustainable growth and long-term increase of our corporate value through the realization of our Corporate Philosophy, (2) support and trust by stakeholders including shareholders, customers and local community, and (3) realization of appropriate and efficient corporate management. Consequently, we established the Kyudenko Corporate Governance Guidelines, and we will continue to work to realize the best possible corporate governance.
Initiatives for the Corporate Governance Code
For sustainable growth and medium- and long-term increase of corporate value as a listed company on the Tokyo Stock Exchange, the Company has been promoting enhancement of corporate governance by compliance with each principle of the Corporate Governance Code set forth in the Securities Listing Regulations by the Tokyo Stock Exchange and disclosing the contents of our initiatives. Our initiatives are as follows.
Outside Directors/Audit & Supervisory Board Members
The number of Directors of the Company is 13, of which three are elected as Independent Outside Directors. The Independent Outside Directors, as directors who do not engage in the execution of operations, give advice on management policies and management improvement, oversee management and conflict of interest, and reflect opinions of stakeholders to the Board of Directors. In addition to legal requirements, the Company established and discloses its own "Independence Standards for Outside Directors/ Audit & Supervisory Board Members", and the Independent Outside Directors are selected based on the Independence Standards.
The number of Audit & Supervisory Board Members is five, of which three are elected as Outside Audit & Supervisory Board Members. Outside Audit & Supervisory Board Members account for more than half of Audit & Supervisory Board Members. Although independence is not required for Outside Audit & Supervisory Board Members, the independence is evaluated if necessary based on the "Independence Standards for Outside Directors/Audit & Supervisory Board Members".
In order for Outside Directors/Audit & Supervisory Board Members to properly execute their roles and operations, the holding of concurrent positions as officers of other listed companies shall be limited to the minimum extent, and their concurrent positions are described in the Corporate Governance Report and notice of general meeting of shareholders. The Company has entered into an agreement with all Outside Directors and Outside Audit & Supervisory Board Members to limit their liability for damages pursuant to Article 423, Paragraph 1 of the Companies Act to the amount stipulated by laws and regulations.
For Outside Directors/Audit & Supervisory Board Members and "Independence Standards for Outside Directors/Audit & Supervisory Board Members", please refer below. The Company submits "Independent Directors/Auditors Notifications" to the Tokyo Stock Exchange based on Enforcement Rules for Securities Listing Regulations.
Basic Policy for Internal Control System Establishment
According to the Companies Act and Ordinance for Enforcement of the Companies Act, the Company established a system to ensure (1) compliance with laws, regulations, and the Articles of Incorporation in the execution of duties by Directors, (2) proper company operations, and (3) appropriate operations by the Company itself and the corporate group companies.
Kyudenko Charter of Behavior
To co-exist with stakeholders and fulfill its corporate social responsibilities, based on corporate governance, the Company upholds its "Corporate Philosophy" that targets contribution to society through the creation of a comfortable environment as well as sustainable growth of Kyudenko. In addition, the Company thoroughly notifies the employees that our corporate activity is based on the premise of valuing human rights and compliance with relevant laws and regulations and international rules in the Kyudenko Charter of Behavior.