Kyudenko Corporate Governance System
System for execution of operations and oversight function of the Board of Directors
The Company adopts an Executive Officer system where the Board of Directors determines important matters and oversees the execution of operations, while the Executive Officers engage in the execution of operations based on decisions made by the Board of Directors.
The Articles of Incorporation stipulate that the number of Directors of the Company shall be 15 or less; the election of Directors shall be adopted by a majority vote of the shareholders in attendance who hold one-third or more of the voting rights of shareholders entitled to exercise voting rights; and such election shall not be made by cumulative voting. The Company has three Outside Directors, who are designated as Independent Directors.
The Company, in principle, holds a meeting of the Board of Directors every month, and also has established the Remuneration Advisory Committee and Nomination Advisory Committee, consisting of Directors including Independent Outside Directors, as an advisory body to secure transparency in decision-making and independence and objectivity of functions of the Board of Directors. The Management Meeting, which was set up as a sub-organization of the Board of Directors, is held once a week to discuss the process and details of the management judgments concerning matters which require prior discussion and matters on important business execution to be deliberated at the meetings of the Board of Directors.
A Compliance Committee and Internal Control Committee were also established to supplement the functions of the Board of Directors. The Meeting of Branch Office General Managers was established as a body to make reports on the execution of operations, raise management issues, discuss measures to be taken, and facilitate the sharing of information concerning the management policy and plans, and is held 11 times a year.
Remuneration Advisory Committee
In order to ensure transparency in decision-making, and independence and objectivity of the functions of the Board of Directors, the Company established a Remuneration Advisory Committee consisting of three or more Directors including Independent Outside Directors to prepare a "proposal to be submitted to shareholders' meeting concerning revision of total annual remuneration for Directors and total annual remuneration for Audit & Supervisory Board Members", which is submitted to the General Meeting of Shareholders upon resolution by the Board of Directors. The Committee also deliberates on "determination of individual annual basic remuneration for Directors", "assessment and revision of the incentive portion of remuneration for Directors", "revision of individual annual basic remuneration for Executive Officers by position" and "assessment and revision of target management regarding the incentive portion of remuneration for Executive Officers", which are submitted to the Board of Directors.
Nomination Advisory Committee
In order to ensure transparency in decision-making, and independence and objectivity of the functions of the Board of Directors, the Company established a Nomination Advisory Committee consisting of three or more Directors including Independent Outside Directors to stipulate matters on the nomination of candidates for Directors and Audit & Supervisory Board Members and dismissal of Directors, election of the Director to whom representative authority is granted, and election and dismissal of Executive Officers, and the Committee submits the contents of its stipulations to the Board of Directors.
System of audit by Audit & Supervisory Board Members
Audit & Supervisory Board Members attend the Board of Directors meetings and other important meetings to express objective and fair opinions for overall management, and continuously conduct validation audits, including audits on legality in the execution of operations by Directors and the appropriateness of risk management measures, in accordance with audit policies and plans stipulated by the Audit & Supervisory Board. They also study the status of operations and assets of the subsidiaries to monitor and supervise the overall Group. The Audit & Supervisory Board receives reports on important matters for audit to be discussed or resolved, and the Board meets at least every three months in principle, and whenever necessary. The Audit & Supervisory Board has three Outside Audit & Supervisory Board Members, and all these members are designated as Independent Audit & Supervisory Board Members. The Company selects Audit & Supervisory Board Members with an abundance of knowledge of accounting and finance.
The Auditors' Office was established to assist duties of Audit & Supervisory Board Members and the Audit & Supervisory Board, and designated employees are assigned to the Office so that efficient audit activities by Audit & Supervisory Board Members can be conducted. The Audit & Supervisory Board receives advanced notice on personnel transfers of designated employees from the Director responsible for human resources, etc., and may request changes to the designated employees by submitting the reason.
The Company has concluded an audit contract for accounting audits with Ernst & Young ShinNihon LLC. There is no special interest between the Company and Ernst & Young ShinNihon LLC or the Engagement Partners.
The Company has also concluded an audit contract for internal control pursuant to the Financial Instruments and Exchange Act.
The Business Management Division that is responsible for conducting internal audits, reviews and evaluates whether management activities of each department/division are performed according to the management policy, and audits whether such activities are appropriately processed according to internal rules such as regulations, administrative authority, and manuals to report the audit results to the Internal Control Committee chaired by Representative Director and President. The Directors in charge, etc., who receive the report of the internal audit results formulate and submit measures for improvement to the Board of Directors, etc., as necessary.
The Business Management Division not only gives advice and recommendations to audited bodies but also requests the submission of reports for improvement measures and conducts follow-up audits as necessary.
The Compliance Committee was established to determine the basic policy and activities for compliance, prepare plans, confirm the implementation method, and discuss measures, etc.
The Business Management Division serves as the division in charge of compliance to formulate and amend Compliance Regulations and manuals, continuously conduct compliance education, and manage and operate a compliance desk that allows officers and employees to make reports directly.
Information received at this compliance desk is investigated, analyzed and organized, and then reported to the Compliance Committee chaired by the Representative Director and President as well as the Board of Directors.
The "regulations on Compliance Committee administration" provide for confidentiality of provided information and personal information concerning information providers and parties contacting the compliance desk for consultation. In addition, the regulations prohibit unfair treatment of information providers or parties contacting the compliance desk for consultation.
The Regulations on the Protection of Personal Information were also established with a basic policy which encourages active and proactive initiatives by clarifying procedures for the protection of personal information, ensuring a responsible system and offering education for employees in line with the "Act on the Protection of Personal Information", "Basic Policy on the Protection of Personal Information", "Cabinet Order to Enforce the Act on the Protection of Personal Information", and guidelines by ministries and agencies.