Governance

Our group is aware of our responsibilities to all its shareholders and stakeholders and is committed to transparent and honest management. We are working to strengthen and enhance corporate governance based on our basic approach of responding to social demands through prompt and decisive decision-making, improving corporate value, and increasing our reason for existing in society while adhering to an autonomous governance system that centers on the Board of Directors with fully functioning internal control, risk management, compliance, and disclosure control.

The company has established a management structure that enables accurate decision-making by the Board of Directors and proper supervision and monitoring of business execution by outside directors. Cooperation between the Audit & Supervisory Board and outside directors enhances the Board of Directors’ effectiveness by leveraging the information-gathering capabilities of outside directors. Further, corporate auditors work together to ensure the appropriateness of business execution by, for example, accompanying the Internal Audit Department in its audits.

The Board of Directors convenes once a month in principle. The Board of Directors also holds extraordinary meetings as necessary to make decisions on basic management policies, matters stipulated by law and the Articles of Incorporation, and important management-related matters, as well as to supervise the execution of duties by each director. Outside directors are appointed because we expect them to serve as a management supervisory body more independently, such as by utilizing their extensive business experience and providing advice from an objective and professional perspective. Furthermore, the Office of Directors term is set at one year to clarify their management responsibilities further and to flexibly establish an optimal management structure capable of responding to changes in the business environment. Additionally, management meetings are held as necessary to discuss essential management matters.
We have also introduced an executive officer system to separate management decision-making and supervisory functions from the business execution functions, thereby establishing a structure that enables us to respond quickly to changes in the business environment.

The Audit & Supervisory Board convenes monthly in principle, auditing the legality and appropriateness of the Board of Directors’ decisions and the execution of duties by each director. In line with the audit policy and audit plan established by the Audit & Supervisory Board, each corporate auditor constantly checks the decision-making process and content of decisions made by each director by attending meetings of the Board of Directors, Executive Committee meetings, and other essential meetings, inspecting important approval documents, and conducting interviews regarding the status of business execution, as well as visiting offices and subsidiaries of the company as necessary. Furthermore, the corporate auditors conduct exchanges of opinions with accounting auditors as needed, and they receive explanations and exchange views regarding the audit plan, audit implementation status, quarterly review results, and year-end audit (including internal control over financial reporting).

The Nomination and Compensation Advisory Committee, as an advisory body to the Board of Directors, deliberates on the selection and dismissal of directors, senior executive officers, executive officers, and on the policy and individual amounts of compensation, as well as on the appointment and dismissal of the presidents of consolidated subsidiaries, and reports to the Board of Directors.

The Audit Office conducts internal audits as an independent department from the business execution departments. In line with the internal audit regulations and the audit plan, it evaluates the internal controls of our company and group companies, reports the results to the President and Representative Director, and regularly reports to the Board of Directors and the Audit & Supervisory Board. Additionally, the Audit Office attends the opinion exchange meetings between the accounting auditors and the Audit & Supervisory Board members, working on coordinating and strengthening the audit system.

KPMG AZSA LLC (A limited liability audit corporation incorporated under the Japanese Certified Public Accountants Law) has been appointed as the accounting auditor by the Companies Act and the certified public accountant by the Financial Instruments and Exchange Act. The appointment and dismissal of the audit firm are judged based on the Audit & Supervisory Board’s regulations and audit standards.

The Internal Control Committee considers corrective measures for issues and strives to build and operate a more appropriate internal control system.
The CSR Promotion Committee formulates and manages policies related to CSR activities. We have established the Compliance Committee and Risk Management Committee. They report their activities to the Representative Director. In addition, the Compliance Committee has launched a compliance consultation desk using the internal reporting system. The department handles various risk factors in daily business operations appropriately addressed by the department in charge of risk management according to the Risk Management Regulations.

The Company designs the composition of its Board of Directors taking into view such matters as maintaining the right size for effective Board discussions, enabling the Board to exert its function, securing its diversity, and ensuring transparency and soundness of the members’ experiences. It is important that the members of the Board of Directors bring together diverse values to complement each other’s knowledge, experience and ability. Summarized below are the skills required to drive forward the Company’s Medium-to long-term Strategy and how they are met by the expertise and experience of each member.

• Name	Role	Independence (Outside officers only)	Corporate Management	Finance & Funding	Sales & Marketing	Global Experience	Manufacturing, Technology, Research & Development	IT & Systems	ESG & Sustainability	Personnel, labor Management & Human Resource Development
  Hidetoshi Horiuchi	Representative Director, President and Chief Executive Officer		〇		〇	〇			〇	〇
  Joji Oue	Representative Director, Executive Vice President		〇		〇				〇	〇
  Keiji Sako	Director, Executive Vice President		〇		〇	〇
  Yutaka Yamashita	Outside Director	〇	〇	〇	〇	〇			〇	〇
  Tomoko Sugaya	Outside Director	〇	〇	〇	〇				〇	〇
  Kentaro Masai	Outside Director	〇	〇			〇	〇		〇
  Koji Horitani	Outside Director			〇		〇		〇
  Kenichi Yamamoto	Outside Corporate Auditor （Standing Statutory Auditor）		〇		〇	〇			〇	〇
  Seiji Mitsui	Outside Corporate Auditor （Standing Statutory Auditor）	〇	〇	〇	〇				〇	〇
  Tsutomu Konomura	Outside Corporate Auditor	〇		〇		〇		〇	〇
  Toshiyuki Kawasaki	Outside Corporate Auditor	〇	〇	〇	〇	〇			〇