Basic Philosophy on Corporate Governance
Corporate Governance Structure
The company adopts the system of a company with Audit and Supervisory Committee, in order to work for swifter decision-making and execution of management, and to establish a system that we can focus on discussion such as corporate strategy, etc. in meetings of the Board of Directors, by the Audit and Supervisory Committee that a majority of members consists of outside directors, which is responsible for audit and supervisory of legality and validity of business execution, and delegates authority of meetings of the Board of Directors to decide business execution to directors.
The company appointed five directors (total includes one outside director; directors on the Audit and Supervisory Committee are excluded) and four directors who are Audit and Supervisory Committee members (total includes three outside directors).
The Board of Directors meets at least once a month, and in addition to monitoring and supervising the execution of business by the company, also makes decisions on important matters related to management of the company. Regarding analysis of differences between monthly budgets and actual results, the Board of Directors gives instructions and guidance based on reports toward achieving planned goals.
The Executive Committee, consisting of executive directors, meets at least once a month. The committee discusses the decisions of the President and Representative Director in order to facilitate the smooth execution of business while avoiding excessive concentration of authority.
Additionally, the company has established a Nomination and Compensation Committee as an advisory body to the Board of Directors, and has established a system to further strengthen corporate governance. Specifically, selection of director candidates and distribution of compensation will be determined by a decision of the Board of Directors after deliberation and reporting by the Nomination and Compensation Committee, the members of which include all outside directors.
Furthermore, the company has introduced an executive officer system with the purpose of realizing more efficient management and swifter decision-making. Management Committee meetings with executive directors, full-time Audit and Supervisory Committee members, executive officers, etc. are held at least once a month. These meetings are held to report on and discuss important matters relating to management of the company, and to promote mutual understanding of the current state of the management of the company. The contents of these meetings are disclosed and communicated to all employees. The Compliance and Risk Management Committee is composed of executive directors, full-time Audit and Supervisory Committee members, executive officers, etc., and meets when meetings of the Management Committee are held in order to establish systems for compliance and risk management and check progress in this regard.
MORESCO Group: Corporate Governance Structure
Internal Control Systems
1. Basic stance and status of establishment of internal control systems
The company has resolved to establish systems to ensure that the execution of duties by directors complies with laws, regulations, and the company's articles of incorporation, and to ensure the integrity of other business carried out by the company. The basic policy regarding these matters is defined below as the "Basic Policy Regarding Establishment of Internal Control Systems."
1System to ensure that execution of duties by directors and employees complies with laws, regulations, and the company's articles of incorporation
- We will establish the MORESCO Corporate Behavior Charter as the basis of our compliance systems and will continue to ensure that legal compliance is the basis of all corporate activities.
- We will establish a Compliance and Risk Management Committee (chaired by the President and Representative Director and composed of executive directors, full-time Audit and Supervisory Committee members, executive officers, etc.) to oversee overall compliance, and promote the establishment of compliance systems.
- In order to promote compliance, we will provide training and other guidance so that directors and employees can each perceive compliance as a personal responsibility and conduct business operations accordingly.
- The Audit and Supervisory Committee and the Internal Audit Department will work together to examine compliance systems, identify any problems with laws and regulations, the company's articles of incorporation, and/or internal regulations, and report to the Compliance and Risk Management Committee. The Compliance and Risk Management Committee will regularly review compliance systems, and will endeavor to identify problems and make improvements.
- An internal reporting system has been established, with "Internal Reporting System Regulations" that clearly state that employees of the company or its subsidiaries will not be treated unfairly if they become aware of and report an act that is suspected to be improper under laws, regulations, the company's articles of incorporation, or internal regulations. Employees, etc. who treat such reporters unfavorably will be handled in accordance with the Employment Regulations. Additionally, the presence or absence of any such reports will be reported to the Compliance and Risk Management Committee.
2System for storing and managing information related to execution of duties by directors
- We will appropriately store and manage the following documents (including electromagnetic records) related to execution of duties by directors in accordance with laws and regulations and the Regulations for Management of Important Documents.
- Minutes of General Meetings of Stockholders and related materials
- Minutes of meetings of the Board of Directors and related materials
- Minutes of Management Committee meetings and related materials
- Other important documents related to execution of duties by directors
- Information management will be handled in accordance with the Information Security Policy, Regulations for Management of Confidential Information, and Basic Policy on Protection of Personal Information.
3Regulations and other systems for managing the risk of loss
- We will promote the establishment of systems based on the Risk Management Policy, with the aforementioned Compliance and Risk Management Committee as the primary promoting body, identify risks concerning the company and its subsidiaries, and take appropriate risk countermeasures.
- To prepare for risks that may seriously affect the management of the company, we will establish an emergency response headquarters under the direction of the Chairman of the President and Representative Director, in accordance with the Crisis Management Regulations, and take the necessary measures to minimize losses due to the occurrence of such risks.
4System to ensure efficient execution of duties by directors
- Regular meetings of the Board of Directors will take place at least once a month, with the purpose of making decisions on important matters and supervising the execution of business by directors.
- In order to further strengthen the functions of the Board of Directors and improve the efficiency of management, we will introduce a system of executive officers responsible for business execution functions, with Management Committee meetings held at least once a month. These meetings will be attended by executive directors, full-time Audit and Supervisory Committee members, executive officers, etc., who will discuss basic matters and important matters regarding execution of business.
- Regarding business operations, we will formulate medium-term management plans and plans for each financial year based on the future business environment outlook, and set company-wide goals. In each business division, we will formulate and execute concrete plans to achieve these goals.
5System to ensure proper business operations in the corporate group, i.e. the company and its subsidiaries
- Management items outlined by periodic reports and prior consultations on important projects will be defined by the Management Regulations for Affiliated Companies, and departments with jurisdiction over management of subsidiary companies will exercise overall management of these companies.
- The company's executive directors, executive officers, and members of the Audit and Supervisory Committee will be dispatched as directors or auditors of subsidiary companies. Directors will monitor and supervise the execution of duties by the directors of subsidiaries. Members of the Audit and Supervisory Committee will audit the business execution of subsidiaries. Additionally, the Internal Audit Department will conduct regular audits of subsidiaries.
- As a fundamental rule, subsidiaries will autonomously establish internal control systems based on the size, business characteristics, institutional specifications, and other company characteristics or distinguishing features, while also maintaining cooperation and information sharing with the company.
- The directors of subsidiaries will, regularly or as needed, report monthly and quarterly business results and other information about business execution at the company's Management Committee meetings.
6System concerning directors and employees who should assist with the duties of the Audit and Supervisory Committee, and matters regarding independence from other directors for such directors and employees
- If the Audit and Supervisory Committee requests the placement of directors and employees to assist the committee with its duties, this shall be arranged within reason following consultation with the committee.
- Independence from directors when making decisions on matters concerning personnel rights, such as appointments or transfers of such directors and employees, will be ensured by requiring the prior consist of the Audit and Supervisory Committee.
7System for directors and employees to report to the Audit and Supervisory Committee, system for other reports to the Audit and Supervisory Committee, and other systems to ensure that audits by the Audit and Supervisory Committee are conducted effectively
- Directors, employees, subsidiary directors/employees, and those who receive reports from them must immediately report any important matters that affect the business or performance of the company to the Audit and Supervisory Committee. In accordance with the Internal Reporting System Regulations, employees who make such reports must not be treated unfavorably.
- In order for full-time Audit and Supervisory Committee members to fully understand important decision-making processes and the status of business execution outside of meetings of the Board of Directors, these committee members are permitted to attend other important meetings, such as Management Committee meetings and meetings of the Compliance and Risk Management Committee, view key approval documents, contracts, and other important documents related to execution of business, and ask directors and/or employees for explanations of these as required.
- Under the independence and authority asserted through the "Audit and Supervisory Committee Regulations" and "Auditing/Supervision Standards of the Audit and Supervisory Committee," the Audit and Supervisory Committee will work to achieve audit results in close cooperation with the Internal Audit Department and accounting auditors, while also ensuring the effectiveness of audits.
- If the Audit and Supervisory Committee or a member of the committee requests advance payment or redemption of expenses necessary to perform audits, directors, etc. will comply unless the contents of the audit and/or funds required are unreasonable.
- In addition, the company will stablish necessary systems to ensure the effectiveness of audit by the Audit and Supervisory Committee.
8System for ensuring the reliability of financial reports
- The company will establish and operate internal control systems under the direction of the President and Representative Director, and establish relevant regulations to ensure the reliability of financial reports and effectively and appropriately submit internal control reports as stipulated by the Financial Instruments and Exchange Act.
- The company will ensure compliance with the Financial Instruments and Exchange Act and related laws and regulation through continuous evaluation of the proper functioning of internal control systems and making of necessary improvements.
9Systems for eliminating antisocial forces
- Under the MORESCO Corporate Behavior Charter, the basic policy of the company is to have no relationships of any kind with antisocial forces or groups that threaten the order and safety of civil society. The company aims to spread awareness of this basic policy among all directors and employees via the internal network, etc.
- We will respond resolutely to unreasonable demands and efforts by antisocial forces and groups in line with the Regulations for Countermeasures Against Antisocial Forces.
- The General Affairs Department will be the department responsible for responses to antisocial forces and groups. Any unreasonable demands or efforts by antisocial forces and groups will be immediately reported to this department, with organizational measures taken to centralize the response.
- The above department will maintain close cooperation with the police and other such bodies, and will promptly contact them in the event of any unreasonable demands or efforts by antisocial forces and groups in order to request appropriate guidance and support in a timely manner.
2. Basic philosophy and status of establishment of systems for eliminate antisocial forces
The company's basic philosophy regarding elimination of antisocial forces is outlined in "1. Basic stance and status of establishment of internal control systems." Please refer to this section. In line with this stance, the company has established Regulations for Countermeasures Against Antisocial Forces, etc., and is working to educate and inform on a group-wide basis in order to maintain a healthy relationship with society.
For other information relating to our corporate governance, please refer to the "Report on Corporate Governance."