Corporate Governance

Fundamental Policy

Our fundamental policy for corporate governance is to strive to ensure sound and transparent corporate management and achieve swift and effective decision-making in order to meet the expectations of our stakeholders, achieve sustainable growth, and enhance our corporate value over the long term through the implementation of our Management Principles, which consists of four pillars: Respect for the Individual, Creating a Meaningful Company, Coexistence and Co-prosperity, and Contribution to Society.
The Company has adopted a Board of Corporate Auditors System, with a corporate governance structure based on that for a Company with a Board of Auditors as defined in the Companies Act of Japan. The Board of Corporate Auditors consists of four Corporate Auditors, of whom four are Outside Corporate Auditors. They actively attend not only meetings of the Board of Directors but also other important meetings concerning business execution, as part of a structure the Company considers effective for constantly auditing the status of management and performance of duties.

Corporate Governance Code

Explanation of Reasons for Not Applying Individual Principles of the Corporate Governance Code

The Company applies all the General Principles of Japan's Corporate Governance Code.

Supplementary Principle 2.4.1 Ensuring diversity in appointing core personnel, etc.

The Company recognizes that securing a diverse workforce is an important issue. Accordingly, the Company is promoting the hiring of women and non-Japanese as new graduate hires, while actively recruiting mid-career hires and promoting them to management positions. At present, the percentage of women and non-Japanese who are candidates for management positions is small, and the Company will continue to strengthen recruitment and career development support in order to expand the pool of candidates. In addition, the Company discloses the status of its personnel development policy and personnel arrangements on its website, and plans to deliberate on disclosing voluntary and measurable goals by June 2022.

Supplementary Principle 4.1.3 CEO succession planning

The Board of Directors of the Company recognizes that succession planning for the CEO position is an important matter, and the President and CEO assumes the central responsibility for the planning and training of successors. In addition to supervising the execution of business at the Board of Directors meetings, Outside Directors attend other important meetings to understand and oversee the competencies of the succession candidates and provide necessary advice to the President and Representative Director regarding the development of the candidates.

Principle 4.2 Roles and responsibilities of the Board of Directors
Supplementary Principle 4-2-1 Design of management remuneration system

Directors remuneration consists of fixed base remuneration, bonuses linked to each fiscal year's business results, and retirement benefits to be paid at the time of retirement, taking into consideration the responsibility of Directors for increasing the Group's corporate value over the medium to long term as well as for improving performance in each fiscal year. Regarding bonuses for Directors, the Board of Directors resolves the details of the proposal to be submitted to the General Meeting of Shareholders, after comprehensively taking into account the business results for each fiscal year (approximately 4% of net income) and the degree of achievement of the annual business plan, and refers the proposal to the General Meeting of Shareholders for approval. The Company grants retirement benefits to Directors upon their retirement in accordance with the standards prescribed in the Company's Rules for Directors, subject to approval by the General Meeting of Shareholders. At present, the Company does not employ a system of remuneration linked to medium- to long-term business results or remuneration in the form of Company shares, but will consider appropriate remuneration for Directors from various angles in the future.

Supplementary Principle 4.3.3 Procedures for dismissal of the CEO

Currently, the Company does not have evaluation criteria or procedures for dismissal of the CEO. In the unlikely event that a member of the Company's senior management commits an act that violates or may violate laws and regulations or the Articles of Incorporation, or if any other event occurs that makes it difficult for a member of the Company's senior management to perform his or her duties properly, the Board of Directors will discuss the reasons for the dismissal in a timely manner, including for cases where the dismissal is proposed by an Outside Director. In addition, the Company will examine the establishment of more objective, timely, and transparent procedures from various angles going forward.

Supplementary Principle 4.10.1 Establishment of committees in cases where Independent Outside Directors do not constitute a majority of the Board of Directors

The number of Independent Directors does not constitute a majority of the Company's Board of Directors; however, even without establishing optional advisory committees, in view of the number of Board of Directors members, their composition, and the state of communication, the Company considers that it already receives appropriate involvement and advice from Independent Directors.

Principle 4.11 Preconditions for ensuring the effectiveness of the Board of Directors and Board of Corporate Auditors

The current Board of Directors is composed of nine Directors, all of whom are men and Japanese nationals. However, the Company believes that the Board of Directors is composed of Executive Officers who are familiar with the Company's business, and Outside Directors who have abundant experience and knowledge outside the Company and can effectively fulfill their roles and responsibilities. In addition, the Company's policy is to appoint candidates for Directors on the basis of their knowledge, experience, and abilities, regardless of nationality or gender, as long as they are deemed to have sufficient qualifications. Although the Company has not appointed any female Directors or Corporate Auditors at this time, it has appointed one female Director and one female Executive Officer for each of its subsidiaries in 2021, and plans to gradually increase diversity in the future. Furthermore, the Company currently has one Corporate Auditor who has worked for a financial institution in the past and one who is concurrently serving as an Executive Officer in charge of accounting at another company, and both Corporate Auditors have considerable knowledge of finance and accounting.

Supplementary Principle 4.11.1 Disclosure of the Board of Directors’ approach to overall balance, diversity, and size, as well as skills, etc.

The Company's Articles of Incorporation stipulate that there shall be no more than 15 Directors. In appointing Directors, taking into account the nature of the Company as a corporate group providing technology and skills globally, the Company's basic policy is to appoint Executive Officers having specialized skills and knowledge in general business administration, manufacturing, development, sales, financial accounting, etc., while appointing Outside Directors having a wealth of management experience in other companies, industries, or countries, etc. The Company plans to disclose the Skill Matrix in the Convocation Notice for Fiscal 2021 , which is scheduled to be sent in June 2022. All four of the Company's Independent Outside Directors have management experience at other companies.

Supplementary Principle 4.11.3 Analysis and evaluation of the effectiveness of the Board of Directors

The Secretariat of the Board of Directors conducts interviews of Directors and Corporate Auditors, and improvements are carried out as applicable based on evaluations and studies together with the Board Chairman. The Company will carefully consider the matter of disclosing the results of the evaluations.

Disclosure Based on Corporate Governance Code Principles

Principle 1.4 Cross-Shareholdings

It is the Company's policy to hold shares deemed to help raise the corporate value of the Group in the mid to long term, in overall consideration of business strategy and transaction relations. The policy on exercising voting rights related to strategically held shares is to decide whether to use such rights based on whether this will help raise the mid- to long-term corporate value of the entity whose shares are held.

Principle 1.7 Related Party Transactions

In case transactions are to be carried out with related parties, deliberation and decision by the Board of Directors are required, and Directors having a conflict of interest are prohibited from exercising voting rights on the matter. Moreover, all Directors and Corporate Auditors are periodically required to confirm in writing whether or not they have transactions with related parties.

Principle 2.6 Roles of corporate pension funds as asset owners

The Company has both defined-benefit and defined-contribution pension plans. With respect to asset management (including selection of investments, exercise of voting rights, etc.) for the covenant-type defined-benefit pension plan, the Company formulates the basic investment policy, selects asset management institutions that are expected to appropriately fulfill their fiduciary responsibilities, including stewardship activities, and entrusts the management of the assets to these institutions. In addition, the department in charge of the asset management of the Company requests regular reports from the relevant asset management institutions and verifies their investment performance and systems. With respect to the defined-contribution pension plan, the Company provides eligible officers and employees with educational opportunities related to asset management institutions and investment products as appropriate.

Principle 3.1 Full Disclosure

  1. (1) Company objectives (e.g., business principles), business strategies, and business plans The Company defines Management Principles, Strategies, and Mid-Term Business Plans and discloses these on the Company website.
    Management Principles
    Strategies and Mid-Term Business Plan
  2. (2) Basic views on corporate governance These are given in this report under “Basic Views on Corporate Governance, Capital Structure, Corporate Attributes, and Other Basic Information 1. Basic Views.”
  3. (3) Policies and procedures for determining remuneration of Officers Regarding base remuneration, the Company determines a fixed amount considered reasonable within the total amount of remuneration approved by the General Meeting of Shareholders, taking into account the duties of each Officer. Regarding bonus amounts, the Company makes a payment proposal, taking into account business results (current net income) for each business year and the degree of achievement of the annual business plan, and refers the proposal to the General Meeting of Shareholders for approval. The Company grants retirement benefits to Officers upon their retirement in accordance with the standards prescribed in the Company's Rules for Officers, subject to approval by the General Meeting of Shareholders.
    The amount of remuneration is disclosed in this report under “Business Management Organization and Other Corporate Governance Systems regarding Decision Making, Execution of Business, and Oversight 1. Organizational Composition and Operation [Remuneration for Directors]” and in annual security reports.
  4. (4) Policies and procedures for nominating Directors and Corporate Auditors When newly appointing or reappointing Directors, the Representative Director nominates candidates based on an overall assessment of their knowledge, experience, skills, and expertise, and after obtaining approval by the Board of Directors, their appointment is referred to the General Meeting of Shareholders for approval.
    In appointing Corporate Auditors, recommendations are made by the Board of Directors, their appointment is discussed and agreed to by the Board of Corporate Auditors, and the appointment is referred to the General Meeting of Shareholders for approval.
    In appointing Outside Directors and Outside Corporate Auditors, an overall assessment is made of the human, equity, and business relationships of the Company with the candidates themselves and with their affiliated company or organization, and candidates are appointed when it is considered that they can fulfill their required functions and roles from an independent standpoint.
  5. (5) Explanations with respect to the individual appointments and nominations of Director and Corporate Auditor candidates When Director and Corporate Auditor candidates are referred to the General Meeting of Shareholders for approval, their career briefs are submitted along with reference materials for determining their abilities and experience, and reasons for nominating candidates for Outside Directors and Outside Corporate Auditors are disclosed in reference materials.
  6. (6) Policies and procedures for the dismissal of senior management
    In the event that a member of the Company's senior management commits an act that violates or may violate laws and regulations or the Articles of Incorporation, or if any other event occurs that makes it difficult for a member of the Company's senior management to perform his/her duties properly, the Board of Directors will discuss the reasons for the dismissal in a timely manner, including for cases where the dismissal is proposed by an Outside Director.

Supplementary Principle 3.1.3 Sustainability initiatives

In formulating its mid-term business plan, the Company identifies items related to the promotion of sustainable management, personnel development, and investment in research and development, and discloses the details of these items. In addition, the Company has created a sustainability page on its website to show its basic approach and to provide more details.
The Company will continue to promote its activities and improve the level of information disclosure with the understanding that sustainability initiatives are an important management issue.

Supplementary Principle 4.1.1 Scope of delegation to management

Matters requiring resolution in the Board of Directors are prescribed in accordance with the law, the Articles of Incorporation, and Board of Directors regulations, and their actual execution is the responsibility of Executive Officers.
With the Company having adopted an Executive Officer System, the Executive Officers under the direction of the President and Representative Director carry out operations in accordance with their decision-making authority prescribed in the Authority Rules, for the sake of prompt decision-making.

Principle 4.9 Independence Standards and Qualification for Independent Directors

In appointing Independent Directors, an overall assessment is made following determination of the applicability of each item of the independence standards set by the Tokyo Stock Exchange. The details are disclosed in the Independent Officers Notifications submitted to the TSE and in this report under “Business Management Organization and Other Corporate Governance Systems regarding Decision Making, Execution of Business, and Oversight 1. Organizational Composition and Operation [Directors].”

Supplementary Principle 4.11.2 Status of concurrent positions held by Directors and Corporate Auditors

The status of concurrent Directors and concurrent Corporate Auditors is disclosed in the General Meeting of Shareholders convening notices, in business reports, and in securities reports, etc.

Supplementary Principle 4.14.2 Training policy for Directors and Corporate Auditors

To enable Directors and Corporate Auditors to obtain the knowledge and information necessary for fulfilling their roles, the Company provides opportunities to take outside training courses in such matters as business administration and the Companies Act, to attend important conferences that will enhance their understanding of the business, to tour main facilities, and to visit subsidiaries, with the expenses in each case borne by the Company.

Principle 5.1 Policy for Constructive Dialogue with Shareholders

Seeing shareholders and investors as important stakeholders, the Company accepts the responsibility as a listed corporation to promote the establishment of mechanisms encouraging constructive dialogue.
To this end, the Company assigns an Executive Officer to be in charge of investor relations, and in close cooperation between the IR Division and other related divisions, actively carries out activities within a reasonable scope. Specific activities include financial results briefings for institutional investors, company briefing sessions for individual investors, plant tours for shareholders, holding of small-group or individual meetings with institutional investors, and making effective use of the Company website, through these and other means seeking to enhance communication with shareholders and investors.

Corporate Governance Structure

The Company employs the Board of Corporate Auditors System and its corporate governance structure is based on that for a Company with a Board of Auditors pursuant to the Companies Act of Japan.

1. Board of Directors, Execution of Operations, and Supervision

  1. (1) The Board of Directors consists of eight Directors, Three of whom are Outside Directors. Three of the Outside Directors are Independent Officers who are free of conflict of interest with general shareholders and whose designation is deemed mandatory by the Tokyo Securities Exchange.
    Outside Directors, in light of their experience and insight into company management, supervise the Company's management from their perspectives independent of Executive Officers.
  2. (2) The Company introduced an Executive Officer system in June 2003 to reinforce supervision of operation execution and to accelerate decision-making. As a result, functions of the Board of Directors, including strategy formulation, decision-making, and supervision, are clearly separated from the business execution function of Executive Officers.
  3. (3) Important matters and issues related to operation execution are deliberated at the monthly meeting of executive officers.

2. Board of Corporate Auditors

  1. (1 The Board of Corporate Auditors consists of four Corporate Auditors, of whom two are Outside Corporate Auditors. Two Outside Corporate Auditors is an Independent Officer who is free of conflict of interest with general shareholders and whose designation is deemed mandatory by the Tokyo Securities Exchange.
  2. (2) Corporate auditors attend not only meetings of the Board of Directors but also other important meetings related to management and execution in accordance with the audit policies and allocation of duties determined by the Board of Directors and thus are able to constantly audit situations of management and execution.

3. Other

The Company established the Advisory Committee to the Board of Directors consisting of experts from Japan and overseas and receives advice on management issues regularly.

Click to enlarge image.

Internal Control Systems

1. Internal Control Systems

The Company has established fundamental policies on establishment of internal control systems, which are necessary to ensure that directors' execution of duties is in compliance with laws, regulations and the Articles of Incorporation and to ensure the appropriateness of other operations. In accordance with the fundamental policies, the Company will continue to ensure the appropriateness of operations and review the internal control systems with the aim of improving their effectiveness. For details, please refer to "Design of Internal Control Systems" below.

  1. (1) The Company introduced the executive officer system and has appointed an Executive Officer responsible for compliance and operational audit to reinforce internal control.
  2. (2) Initiatives are described below:
    1. The Company endeavors to ensure that all its employees respect corporate ethics. The Company defined the Charter of Corporate Behavior in April 2004 and established the Code of Conduct as a guide for implementing the Charter.
    2. In order to ensure that the purpose and the contents of the Charter of Corporate Behavior and the Code of Conduct are thoroughly communicated, the Company requires that everyone working at the Company participate in group training as part of initiatives to raise awareness throughout the Company. Also, the Company distributes a pocket-size booklet to each of its employees to ensure full awareness of the importance of legal compliance and corporate ethics.
    3. The Company maintains efficiency and effectiveness of the internal control systems and makes ongoing efforts to improve the internal control systems based on the Internal Control Manual that specifies the fundamental framework of internal control systems.

Design of Internal Control Systems

  1. Systems governing the storage and management of information relating to the execution of duties by Directors
  2. Regulations and other systems governing management of the risk of losses
    1. (1) The Company shall stipulate risk management rules, establish a Group-wide risk management structure in accordance with the rules and implement risk management.
    2. (2) The Company shall establish systems that enable appropriate response in accordance with the Code of Conduct, Crisis Management Rules, and Crisis Management—Code of Conduct in the Event of Crisis, in the event a risk should arise.
    3. (3) Responsibility and authority relating to risk management are segregated as follows:
      • The President and Representative Director shall have authority and responsibility for establishing risk management systems throughout the Group.
      • The Executive Officer responsible for corporate governance shall promote maintenance and improvement of risk management systems throughout the Group and manage the systems in accordance with the instructions and supervision of the President and Representative Director.
      • Executive Officers shall recognize the importance of identification, assessment, monitoring and management of risks with respect to the fields for which they are responsible and establish systems for clarification and management of risks.
  3. Systems ensuring the efficient execution of duties by Directors
    1. (1) The Company shall employ the executive officer system and separate functions of the Board of Directors, including strategy formulation, decision-making, and supervision, from the function of Executive Officers, namely execution of operations. The Company shall define the responsibility and authority concerning execution of duties in the Authority Rules to clarify responsibility, improve efficiency of decision-making, and accelerate decision-making.
    2. (2) The Company shall continuously monitor the situations of business operations and risks and ensure efficiency of duty execution by Directors and Executive Officers based on the following management control systems:
      • Board of Directors Meeting (decision-making of important management policies, monitoring of the progress of the mid-term business plan and the annual business plan: to be held monthly)
      • Executive Officers Meeting (reporting of the situation of Executive Officers' execution of operations and deliberation, deliberation and decision-making on execution of important management matters: to be held monthly)
      • President's Audit (direct audit by the president of Executive Officers' policies, targets, and progress of operation execution: to be conducted twice a year)
      • Business Process Innovation Meeting (deliberation on monthly business results, initiatives for business process innovation, etc.: to be held monthly)
      • Internal Audit (audit of appropriateness and efficiency of operations, accounting, quality, and environmental activities)
  4. Systems ensuring the execution of duties by Directors and employees in compliance with laws, regulations and the Articles of Incorporation
    1. (1) 「The Company shall ensure that everyone working at the Company complies with the Charter of Corporate Behavior and the Code of Conduct and enhance individuals' awareness regarding compliance.
    2. (2) The Company shall establish a system by which the President and Representative Director, the Chairperson and Representative Director, the Board of Directors, and the Board of Corporate Auditors receive reports on any unfavorable compliance-related eventuality and countermeasures via the Executive Officer responsible for corporate governance.
    3. (3) The Company shall establish a system for ensuring reliability and appropriateness of financial reporting and evaluate the design and operation of such system regularly.
    4. (4) As a system for ensuring (1), (2), and (3) above, the Company shall appoint an Executive Officer responsible for corporate governance and designate an organization (secretariat and internal auditors) to support the officer. The Company shall have them conduct internal audit to ensure appropriate execution of operations.
    5. (5) Adhering to the policies to ensure compliance with laws, regulations and norms, the Company shall not have any contact with antisocial forces or groups.
  5. Systems to ensure the appropriateness of operations throughout the Group consisting of the Company and its subsidiaries
    1. (1) The Company shall raise awareness of the Group companies' employees regarding compliance by striving to thoroughly communicate the Code of Conduct to them.
    2. (2) The Company shall establish an appropriate system for managing Group companies in accordance with the Rules for Management of Affiliated Companies.
    3. (3) The Company shall continuously monitor execution of operations of subsidiaries and risks by periodically holding Affiliated Companies Meeting.
    4. (4) The Executive Officer responsible for corporate governance and the organization (secretariat and internal auditors) supporting the officer shall periodically conduct operational audit of Group companies.
    5. (5) The Company shall promote personnel exchange between the Company and its subsidiaries in order to achieve close collaboration of the Group.
  6. Matters concerning employees who provide assistance to Corporate Auditors upon request
    If corporate auditors request that assistants be assigned to provide assistance to them, Directors shall assign appropriate employees as their assistants based on discussion with the Corporate Auditors.
  7. Matters concerning the independence of the employees described in 6. above from Directors
    Transfer of the employees who provide assistance to Corporate Auditors and their performance evaluation shall require the consent of the Board of Corporate Auditors.
  8. Systems of reporting to Corporate Auditors applicable to Directors and employees and other matters on reporting to Corporate Auditors
    1. (1) Corporate Auditors shall attend important meetings to gain important information on execution of duties by Directors and assistants.
    2. (2) Directors and assistants shall swiftly notify the Board of Corporate Auditors of matters that may have a material impact on the Group, in addition to matters designated by law.
    3. (3) Matters identified by internal audit shall be reported to the Board of Corporate Auditors by the Executive Officer responsible for corporate governance.
    4. (4) Directors and assistants shall provide necessary reports and information to the Board of Corporate Auditors in accordance with its request.
    5. (5) Whistleblower reports in the Company and subsidiaries are handled in accordance with the whistleblower system and reported to the (Board of) Corporate Auditors. Handling of the contents of the reports is managed from the standpoints of protecting status and personal information and ensuring the whistleblower suffers no disadvantage.
  9. Systems ensuring the effective implementation of other audits by Corporate Auditors
    1. (1) The Board of Corporate Auditors shall periodically meet with the Company's Accounting Auditors to exchange views.
    2. (2) If deemed necessary for auditing, the Board of Corporate Auditors may appoint lawyers, certified public accountants, or other external experts, in addition to internal staff.

2. Fundamental Policy concerning Elimination of Antisocial Forces

To ensure all employees are familiar with the above Charter of Corporate Behavior, group training is provided regularly as means of raising awareness, and a pocket-size guidebook is distributed to all employees. Regarding antisocial forces (crime syndicates, etc.), internal rules are laid out in the Company's Internal Control Manual and specific measures are taken to prevent influence by such groups. In addition, through collaboration with the police and Tokubouren, a public interest incorporated association within the Tokyo Metropolitan Police Department for preventing social violence, the Company receives information concerning antisocial forces and advice on how to respond appropriately to contacts.

Progress of Implementation of Risk Management Systems

  1. The Company defines risk management and preparedness for crisis in the Charter of Corporate Behavior and the Code of Conduct. The Company has also established Crisis Management—Code of Conduct in the Event of Crisis, which specifies steps to be taken in the event of a crisis, and is working to raise awareness throughout the Company.
  2. The Company has put in place risk management systems in accordance with the Crisis and Risk Management Rules to manage risks related to management and execution and deal with any crisis in a secure and responsible manner.

Internal Audit and Audit by the Board of Corporate Auditors

1. Internal Audit

  1. (1) The Executive Officer responsible for Corporate Governance and Risk Management (“Corporate Governance Officer”) and the Internal Control and Audit Office overseen by this Officer are in charge of conducting internal audits. The head of the Office and one Corporate Auditors conduct internal audits of the Company and its subsidiaries throughout the year based on the predetermined audit schedule.
  2. (2) With the Corporate Planning Division serving as Secretariat, President Audits are conducted twice each year, in which the President directly reviews the performance of duties by the persons in charge of each division. This arrangement makes it possible to monitor progress in carrying out the business plan and the status of risk management.

2. Audit by the Board of Corporate Auditors

  1. (1) Corporate auditors attend the Board of Directors meetings and other important meetings in accordance with audit policies and allocation of duties determined by the Board of Corporate Auditors. Corporate Auditors also conduct audit of execution of duties in general through investigation of the condition of assets.
  2. (2) Accounting audit of the Company is conducted by PricewaterhouseCoopers Aarata appropriately in accordance with the audit contract. The Company exchanges views with the Accounting Auditor about audit results and receives proposals for improvement.
  3. (3) The Board of Corporate Auditors collaborates with the Accounting Auditor. The Board of Corporate Auditors exchanges views with the Accounting Auditor about the audit plan, receives reports on audit results from the Accounting Auditor, discusses the audit results and evaluates the content of audit.

3. Collaboration between Internal Audits and Auditing by the Board of Corporate Auditors

The Board of Corporate Auditors collaborates with the Accounting Auditor, exchanging views about the audit plan, receiving reports on audit results, discussing the results, and evaluating the contents of audits. In addition, the Company has in place a system by which the Corporate Governance Officer reports matters identified in internal audits to the Board of Corporate Auditors. Moreover, regular communication takes place during the auditing process between the Accounting Auditor and Corporate Governance Officer. In such ways, the Company makes efforts to ensure information sharing and close cooperation among the Corporate Governance Officer, Board of Corporate Auditors, and Accounting Auditor.

Outside Directors and Outside Corporate Auditors

1. Outside Directors

With regard to corporate governance, the functions and roles of the Company's Outside Directors are supervision and creation of proposals concerning the Company's overall management from independent perspectives based on their experience and insight, so as to strengthen the Company's management systems and corporate governance structure.
The Company's Outside Directors are as follows:

Scroll table sideways to view.

Name Independent Officer Reason for Election
Haruhiko Yoshida true
  • It is considered that the Company's management systems can be further strengthened by receiving Mr. Yoshida's advices on the Company's overall management based on his profound experience, including international experience and insight gained through his career at Mitsui & Co., Ltd.
  • (Independent Officer)
    Mr. Yoshida is designated an Independent Officer because none of the criteria indicative of non-independence specified by the Tokyo Stock Exchange apply to him and he has a high degree of independence; it is therefore considered that there is no likelihood of conflict of interest arising between him and ordinary shareholders.
Shinji Sakai true
  • It is considered that the Company's management systems can be further strengthened by receiving Mr. Sakai's advices on the Company's overall management based on his profound experience, including international experience and insight gained through his career at the Toyota Group.
  • (Independent Officer)
    Mr. Sakai is designated an Independent Officer because none of the criteria indicative of non-independence specified by the Tokyo Stock Exchange apply to him and he has a high degree of independence; it is therefore considered that there is no likelihood of conflict of interest arising between him and ordinary shareholders.
Masanobu Nakamura true
  • It is considered that the Company's management sysytems can be further strengthened by receiving Mr. Nakamura's advices on the Company's overall management based on his profouond experience, including international experience and insight gained through his career at some major financial institutions.
  • (Independent Officer)
    Mr. Nakamura is designated an Independent Officer because none of the criteria indicative of non-independence specified by the Tokyo Stock Exchange apply to him and he has a high degree of independence; it is therefore considered that there is no likelihood of conflict of interest arising between him and ordinary shareholders.
Yoshio Fukuda true
  • Mr. Fukuda has a wealth of experience and insight relating to business management, as well as extensive international experience, gained through his career at Teijin Limited and the Teijin Group. Mr. Fukuda is selected as an Outside Corporate Auditor because it is considered that with his extensive knowledge of matters including strategic planning, establishment of joint ventures, and M&A, he can strengthen corporate governance across the internationally expanding Group from an independent standpoint.
  • (Independent Officer)
    Until 2016 Mr. Fukuda held management roles at Teijin Limited and the Teijin Group, and from 2016 until the present time he has served as an independent outside director at Toyo Construction Co., Ltd. However, there are no significant transactions between these companies and the Company, and Mr. Fukuda is designated an Independent Officer because none of the criteria indicative of non-independence specified by the Tokyo Stock Exchange apply to him and he has a high degree of independence; it is therefore considered that there is no likelihood of conflict of interest arising between him and ordinary shareholders.

2. Outside Corporate Auditors

With regard to corporate governance, the functions and roles of the Company's Outside Corporate Auditors are to strengthen the Company's audit systems from independent perspectives based on their experience and insight.
The Company's Outside Corporate Auditors are as follows:

Scroll table sideways to view.

Name Independent Officer Reason for Election
Yoshitsugu Yokogoshi true
  • The Company has appointed Mr. Yokogoshi as an outside corporate auditor due to his extensive management experience and broad insight developed through his tenure at a major banking group. He has also served as a full-time auditor at a major oil company, and has a wealth of experience in auditing operations and considerable knowledge of finance and accounting. We believe that he will strengthen the HDS Group’s corporate governance framework from an independent standpoint.
  • (Concerning Independent Directors)
    Mr. Yokogoshi was previously an executive officer of HDS’s main bank, but approximately 12 years have passed since his retirement. The Company did not invite him at the request of a financial institution, but rather at its own discretion, in order to utilize his extensive management experience and broad insight in auditing the Company, as well as his considerable knowledge of auding-related finance and accounting gained through his experience as a full-time auditor of a major oil company. Further, the Company has transactions with a number of financial institutions, and is not influenced by any particular financial institution in its management decision making. Moreover, the Company does not have any significant transactions with Cosmo Oil Co., Ltd. , where Mr. Yokogoshi served as a full-time corporate auditor, or other Cosmo Energy Group companies. Based on a consideration of all these factors, the Company has concluded that there is no conflict of interest with general shareholders and has registered him as an independent director.
Shigeto Ohashi  
  • The Company has appointed Mr. Ohashi as an outside corporate auditor owing to his rich experience and high level of insight gained during his tenure at Tokyo Aircraft Instrument Co., Ltd. , which is a development-oriented manufacturer similar to HDS. We believe that he will strengthen the Company’s corporate governance framework from an independent standpoint.
Eisaku Imazato true
  • The Company has appointed Mr. Imazato as an outside corporate auditor due to his abundant management experience and broad insight at a major securities company. We believe that he will strengthen the HDS Group’s corporate governance framework from an independent standpoint.
  • (Concerning Independent Directors)
    Although Mr. Imazato is a former executive officer at Mitsubishi UFJ Financial Group, Inc., the parent of HDS’s main bank MUFG Bank, Ltd., seven years have passed since his retirement. He was also an executive officer of a securities company with which the Company has a business relationship, but has already been retired for seven years. The Company did not invite him at the request of a financial institution, but rather at its own discretion, in order to utilize his extensive management experience and broad insight in auditing the Company. Further, the Company has transactions with several financial institutions and securities companies, and is not influenced by any particular financial institutions or securities companies in its management decision making. Moreover, the Company does not have any significant transactions with Marusan Securities Co., Ltd., where Mr. Imazato currently serves as an outside director. As such, the Company believes that Mr. Imazato’s appointment poses no risk of a conflict of interest with general shareholders, and has registered him as an independent director.
Takumi Yokoyama  
  • The Company has appointed Mr. Yokoyama as an outside corporate auditor due to his abundant management experience and high level of insight gained during his tenure at Koden Holdings Co., Ltd., a major shareholder of HDS, and its subsidiary, Koden Electronics Co. Ltd. Further, Mr. Yokoyama has considerable knowledge of finance and accounting, and we believe that he will strengthen the HDS Group’s corporate governance framework from an independent standpoint.

3. Overview of Limited Liability Contracts with Outside Directors and Outside Corporate Auditors

The Company has concluded limited liability contracts with its Outside Directors and Outside Corporate Auditors under Article 423, Paragraph 1, of the Companies Act. The summary of such contract is as follows:

"In the event that an Outside Director or an Outside Corporate Auditor causes damage to the Company due to negligence of his/her duties, the maximum contractual liability of such Outside Director or Outside Corporate Auditor is set at the minimum figure specified in Article 425, Paragraph 1, of the Companies Act if he/she acts in good faith and is not grossly negligent."

Policy for Determining Officers' Remuneration and Amounts of Remuneration

1. Policy for Determining Officers' Remuneration

  1. (1) Officers' remuneration consists of base remuneration and bonuses, taking into account their responsibilities for increasing the Group's corporate value over the medium to long term and improving business results in each business year.
  2. (2) Regarding base remuneration, the Company determines a fixed amount considered reasonable within the total amount of remuneration resolved at the General Meeting of Shareholders, taking into account the duties of each officer.
  3. (3) Regarding bonuses, the Company makes a proposal for payment of bonuses, taking into account business results (amount of net income) for each business year and the degree of achievement of the annual business plan, and submits the proposal to the General Meeting of Shareholders to be resolved.
  4. (4) The Company grants retirement benefits to officers upon their retirement in accordance with the standards specified in the Company's Rules for Officers and a resolution at the General Meeting of Shareholders.

2. Amounts of Officers' Remuneration

Amounts of officers' remuneration for fiscal 2021 are as follows:

Total Amount of Remuneration by Officer Classification and by Type and Total Number of Officers

Scroll table sideways to view.

Officer Classification Total Amount of Remuneration (Thousand yen) Total Amount of Remuneration by Remuneration Type (Thousand yen) Number of Officers (Persons)
Base Remuneration Bonuses Retirement Benefits
Director (Excluding Outside Directors) 268,567
(53,002)
147,740
(45,002)
74,000
(8,000)
46,827
(-)
11
(4)
Outside Directors and Outside Corporate Auditors 89,291
(36,941)
62,110
(35,440)
-
(-)
27,180
(1,500)
8
(5)

Shareholding Information

The shareholding information for fiscal 2021 is as follows:

1. Investment shares held for purposes other than pure investment

Number of Issues: 6
Balance Sheet Value: 17,091,091 thousand yen

2. Investment shares held for purposes other than pure investment: issue, number of shares, balance sheet amount, and purpose of holding

Specified Investment Shares

Scroll table sideways to view.

Equity Number of Shares (Shares) Amount Recorded on the Balance Sheet (Thousand yen) Purpose of Holding
NACHI-FUJIKOSHI CORP 1,070,000 515,205 To strengthen business relationship
Mitsubishi UFJ Financial Group, Inc. 34,750 20,561 To maintain smooth financial transactions
Nanyo Co., Ltd. 17,600 29,867 To strengthen business relationship
Sumitomo Mitsui Financial Group, Inc. 189 757 To maintain smooth financial transactions
Nabtesco Corporation 3,265,000 16,520,900 Because the Company had a cooperative relationship until January 2021

This website uses cookies to improve convenience for users, to statistically understand how the site is used, and for other purposes. Please read the About cookies and, if you consent to the use of cookies, click the "Agree" button.

Agree