System of Corporate Governance

The Company has a management structure in which the Board of Directors has the function of making management decisions and supervising business execution, thereby enabling appropriate management decisions and prompt business execution. The Company has adopted a company-with-audit-committee system to realize prompt and decisive management decision-making and execution under the appropriate supervision of the Board of Directors by enabling the Board of Directors to broadly delegate its authority for business execution decisions to the Directors.

Board of directors

In principle, the Company's Board of Directors holds an ordinary meeting on the second business day following the third Monday of each month, and extraordinary meetings are held as necessary to make important management decisions.
The term of office of directors who are not members of the Audit Committee is set at one year in order to improve the efficiency of decision-making, to reflect management policies in business activities promptly, to promptly respond to changes in the business environment, and to clarify management responsibility in each fiscal year.
Mr. Naohisa Fukutani was appointed as the first independent outside director at the regular board meeting on May 23, 2018.

Major items resolved and reported at Board of Directors meetings

Attendance at Board of Directors' Meetings and Audit & Supervisory Board Meetings and Shareholdings

Board Diversity

With the aim of enhancing corporate value, the Company's directors are selected from among candidates with diverse and specialized knowledge and experience in management, legal and compliance, finance and accounting, M&A and finance, IT business, global, governance, human resources and organization, etc. The Company's Board of Directors consists of four directors (including two outside and independent directors and one foreign national) and three directors who are Audit & Supervisory Committee members (including two outside and independent directors and one foreign national). As a Board of Directors, we believe that the diversity of personnel and the balance of knowledge, experience, and abilities are well considered and at a level that maintains a high level of decision-making ability. The reasons for the appointment of outside directors are disclosed in the Notice of Convocation of the General Meeting of Shareholders.

Corporate Officer

The Representative Director, the Director in charge of finance, and the Corporate Officer, who are appointed by the Board of Directors, share responsibility for business execution. The representative directors and directors in charge of business management of each group company, each of whom is a corporate officer of the Company, report on the status of business execution at the Group Management Committee chaired by the Group CEO, and the following group CxOs report on their respective responsibilities for the execution of group-wide strategies. The following Group CxOs report on their respective responsibilities with respect to the execution of the Group's overall strategy.
Chief Executive Officer,
Chief Finance Officer,
Chief Operating Officer,
Chief Business development Officer,
Chief Digital transformation Officer,
Chief Risk Management Officer,
Chief Legal Officer, and
Chief Human Resources Officer
 

The Group Management Committee discusses important issues with the aim of achieving sustainable growth and increasing corporate value through group management, and important matters are referred to the Board of Directors through the Group CEO and Group CFO.

Optional Committees

The Company's Board of Directors consists of a majority of three independent outside directors out of five directors, and the Company believes that the procedures are appropriately independent and objective. As part of efforts to further strengthen corporate governance, the Company established the Remuneration Advisory Committee as a voluntary advisory body by resolution of the Board of Directors on March 17, 2021, in order to enhance the independence, objectivity, and accountability of the compensation decision-making process for directors and executive officers who are also directors and audit committee members.

The Remuneration Advisory Committee consists of two independent directors and the Group CEO, and its chairman is selected from among the independent outside directors. The Remuneration Advisory Committee's agenda will include the following The Board of Directors shall respect the opinions of the Compensation Advisory Committee in making its decisions.
 

1. Policy for Determining Remuneration of Directors and Corporate Officers
2. Draft proposals on remuneration, etc. for directors, audit committee members, and corporate officers to be submitted to the General Meeting of Shareholders
3. Proposed Policy on Determination of Individual Remuneration of Directors and Corporate Officers to be Proposed to the Board of Directors
4. Proposed details of remuneration, etc. of individual Directors and Corporate Officers to be proposed to the Board of Directors
5. Other matters deemed necessary by the Board of Directors with respect to the preceding paragraph.

Independence of Outside Directors

The following independence criteria have been established for independent outside directors, based on the independence criteria stipulated by the Companies Act and financial instruments exchanges, and with a focus on ensuring the independence of those who serve as independent outside directors in terms of their substance. At Board of Directors meetings, outside directors actively provide opinions and advice from an objective and neutral standpoint, contributing sufficiently to constructive deliberations. Outside directors and outside Audit Committee members are considered to be independent if, as a result of an investigation to the extent reasonably possible by the Company, it is determined that none of the following items applies to them.

1. Any person who is currently, or has been for the past 10 years, an executive director, executive officer, corporate officer, employee, or servant of the Company or its subsidiaries or affiliates (collectively, the "Company Group").
2. Persons who directly or indirectly hold 10% or more of the total voting rights of the Company or their executive officers
3. Persons with whom our Group has major transactions (Note 1) or with whom our Group has major transactions (Note 1), or their business executors
4. A person who receives a large amount of money or other financial benefits (Note 2) in addition to remuneration as a director or executive officer in compensation for providing professional services to our Group as a consultant, lawyer, certified public accountant, certified tax accountant, etc.
5. Persons who receive donations or grants exceeding 15 million yen per year from our group or their executive officers
6. Persons belonging to an auditing firm that is the accounting auditor of the Group
7. Executives of companies to which the Group's executives are appointed as directors
8. Applicants who have met 2 to 7 above in the past 3 years.
9. Spouse or relative up to the second degree of kinship of a person falling under 1-8 above

Outside Director Naohisa Fukutani, Outside Director Jon Robertson, Outside Audit Comittee Board Member Chie Goto, and Outside Audit Committee Member Makoto Nakamura have been designated as independent officers in accordance with the provisions of the Tokyo Stock Exchange, and the Company has notified the Exchange of such designation.
 

Provide training for directors and audit committee members
In selecting candidates for directors and audit committee members, the Company considers whether they have character, experience, expertise, and broad insight, as well as experience and knowledge of the Group's businesses. We provide compliance education and other training by attorneys and others to enable them to acquire the knowledge necessary to perform their duties. The training policy is stipulated in the "Basic Policy on Corporate Governance.
 

Succession Planning
We recognize that the succession of the Chief Executive Officer is an important management issue for the Company, and the Board of Directors began discussing it in the fiscal year ending June 30, 2018. In the fiscal year ending June 30, 2019, we will further incorporate the knowledge of an outside consulting firm and study the development of a comprehensive succession plan.

The Company has adopted an audit committee system. The Audit Committee consists of three members: one director who is a full-time audit committee member and two directors who are outside audit committee members.
Audit Committee members attend meetings of the Board of Directors and other important meetings, hear reports from directors on the status of business operations, inspect important approval documents, and examine the status of operations and assets in each department. The audit report is prepared after reviewing the business report, financial statements, and supplementary schedules based on the results of the accounting audit during the fiscal year.

The Internal Audit Department, consisting of three internal auditors, monitors the Company's business activities from a fair standpoint and provides improvements and guidance to contribute to proper business execution and appropriate disclosure of financial information, and reports to the President based on the audit results. The internal audit department monitors the business activities of the Company from a fair standpoint and provides improvements and guidance to contribute to proper business execution and appropriate disclosure of financial information.

The Company has entered into an audit contract with Deloitte Touche Tohmatsu LLC to ensure the accuracy of financial figures and to strengthen information disclosure by establishing an appropriate financial reporting system.