Improving corporate governance

Basic approach to corporate governance

As the business environment has been experiencing drastic changes due to the progress of deregulation, our company’s primary objectives in corporate governance are to “establish a management structure that allows quick and accurate decision-making” and “establish solid trust in society,” as a company that operates business mainly in the core industry, and we continue to work on improving corporate governance in accordance with the following basic policies in order to achieve these objectives.

[Basic policies on corporate governance]

1. 1.Ensuring shareholders’ rights and equality
   In order to ensure shareholders’ rights and equality substantially, our company continues our efforts to establish an appropriate environment, comply with the Companies Act, the Financial Instruments and Exchange Act, and other related laws and regulations, as well as the Securities Listing Regulations stipulated by the Tokyo Stock Exchange, and discloses information in a timely manner.
2. 2.Properly cooperating with stakeholders other than shareholders
   Our company recognizes that proper cooperation with customers, business partners, competitors, employees, and other various stakeholders, in addition to shareholders and investors, is indispensable for our company’s sustainable growth and enhancement of the medium/long-term corporate value, and we shall establish and put into practice the “Basic Compliance Policies” and the “Code of Conduct” to promote environmental conservation activities and social contribution activities for the realization of a sustainable society.
3. 3.Ensuring adequate information disclosure and transparency
   In addition to adequately disclose information in accordance with laws and regulations, our company shall also proactively disseminate information other than those required by laws and regulations, and strive to ensure transparency.
4. 4.Duties of the Board of Directors, etc.
   To achieve our company’s sustainable growth and enhancement of the medium/long term corporate value, the Board of Directors of our company formulates a medium-term management plan and an action plan for achieving the management plan, and directors continue to carry out their duties in accordance with these plans, under the fiduciary responsibility and accountability to shareholders. Moreover, we conduct appropriate risk-taking by establishing an internal control system and a risk management system. As a company with an Audit and Supervisory Committee, the Board of Directors meets regularly once a month and as necessary, where directors including 3 outside directors properly make decisions on important management matters and supervise the execution of duties by the directors. Furthermore, the Audit and Supervisory Committee, including 2 outside Audit and Supervisory Committee members, works closely together to carry out rigorous audits of decision-making by the Board of Directors as well as the execution of duties by the directors.
5. 5.Dialogue with shareholders
   In order to achieve our company’s sustainable growth and enhance the medium/long term corporate value, we actively work on promoting dialogue with shareholders and investors, providing information to shareholders and investors, and providing feedback on opinions and other matters from shareholders and investors.

Status of the internal control system and the risk management system

Our company ensures the legality and efficiency of our business operations under the “Basic Policy on the Establishment of Systems to Ensure the Appropriateness of Business Operations” established by the Board of Directors. At the Board of Directors meeting, directors consult on important matters related to the execution of the company’s business in a timely manner, report the status of the execution of duties on a regular or as-needed basis, and collect information and ensure communication within the company and the corporate group through the Group Executive Committee and other means, for proper management decisions. Moreover, while continuing efforts to make prompt and accurate decisions according to laws and regulations as well as internal rules, our company properly manages departmental goals to ensure the execution of the medium-term management plan and annual budget, confirms and reviews the progress of these management targets at the Board of Directors meetings and other meetings as needed.
Furthermore, we identify, evaluate, and analyze risks in all aspects of our business, and properly manage and reflect them in medium-term management plans and departmental goals, and as a company involved in the lifeline business, we have established a security system to prepare for security risks such as large-scale earthquakes.
In addition, to ensure legality in all aspects of our business, we seek professional advice from law firms and accounting firms with which we have advisory contracts, and have established the Compliance Committee consisting of the president of our company and the presidents of our subsidiaries, etc., to promote corporate activities in accordance with legal compliance principles and corporate ethics.