Corporate Governance Structure
Outline of System of Corporate Governance
We, as a holding company, have adopted the company with Audit & Supervisory Board system in accordance with the Companies Act for the purpose of ensuring the corporate governance of group companies, and have both the Board of Directors and the Audit & Supervisory Board monitor and audit the management and operation of the Company. In addition, we have voluntarily established the Nomination of Directors Advisory Committee and Remuneration of Directors Advisory Committee, the majority of which are composed of Independent External Directors, as the advisory bodies to the Board of Directors.
Reason for Adoption of such System
The Company has adopted a governance system based on a Board of Directors, comprising directors who are conversant with businesses and external directors with diverse professional backgrounds, and an Audit & Supervisory Board, including external Audit & Supervisory Board members. This governance system enables the holding company to effectively supervise and audit the execution of operations at Group companies and to realize and maintain high-quality business management.
In addition, the Nomination of Directors Advisory Committee and the Remuneration of Directors Advisory Committee have been established as advisory bodies to the Board of Directors. The fairness, independence and objectivity are enhanced by having a majority of both of these Committees composed of independent external directors and by having an independent external director serve as the Chair of each of these Committees.
The Board of Directors comprises eight directors, five of whom are external directors and two of whom are woman, who carry out management decision-making and supervision from an objective perspective. They aim to reinforce supervisory functions and enhance decision-making. To clarify management responsibility, directors are appointed for one year. Thus, we have built a business management system that enables rapid responses to changes in business conditions. Comprising five Audit & Supervisory Board members, three of whom are external members, the Audit & Supervisory Board aims to strengthen their supervision and auditing of business management.
Corporate Governance Structure
Overview and Composition of the Board of Directors, Advisory Committees, and Other Meetings
Name | Outline | Number of meetings FY2024 |
|
---|---|---|---|
1 | Board of Directors | Our Board of Directors is entrusted by shareholders and makes the best decisions based on fair judgment. In addition, our Board of Directors exercises its supervisory function for the execution of its business and aims to maximize corporate value. Our Board of Directors conducts a review of our medium- to long-term management strategy and social issues, as well as decision-making regarding material matters as stipulated in applicable laws and regulations or in our Articles of Incorporation. The Company will formulate basic policies on sustainability issues, and monitor the allocation of management resources and the implementation of business portfolio strategies to contribute to sustainable growth. |
17 times |
2 | Nomination of Directors Advisory Committee | This Committee discusses and provides recommendations to our Board of Directors on matters related to evaluation, election, dismissal, and promotion of Directors, and on matters regarding establishment and revisions of rules and bylaws of Directors. Attendance and approval of all committee members is required to pass resolutions. |
6 times |
3 | Remuneration of Directors Advisory Committee | This Committee discusses and provides recommendations to our Board of Directors on matters regarding performance review and remuneration of Directors, and matters regarding remuneration system of Directors. Attendance and approval of all committee members is required to pass resolutions. |
4 times |
4 | Independent External Auditors & Directors Meeting | The meeting attendees, mainly composed of our Independent Officers, exchange and share opinions regarding corporate governance and our Board of Directors. The meeting attendees analyze and evaluate the effectiveness of our Board of Directors, identify issues, compile improvement measures, and provide recommendations to our Board of Directors. | 1 times |
5 | Audit & Supervisory Board | The Audit & Supervisory Board is entrusted by shareholders to discuss or resolve important matters relating to the audit and establish a high-quality corporate governance system that responds to social trust. The Board builds a system to enhance the effectiveness of audit by each Audit & Supervisory Board Member. |
18 times |
6 | Group Management Meeting | The Meeting considers matters concerning the management strategy of our group and important management issues. The Meeting also conducts preliminary deliberations on important matters mainly related to business execution, prior to resolutions by the Board of Directors, from the viewpoint of legality, objectivity and rationality. |
12 times |
7 | Corporate Ethics and Risk Management Committee | The Committee identifies risks related to the overall management of our group, and build and strengthen our risk management system. This Committee prescribes the “Risk Management Basic Rules” subject to the approval of the Board of Directors. The Committee clarifies the responsibilities by risk category pursuant to these rules, and formulates a risk management system that thoroughly and/or comprehensively controls potential risk within our group. This Committee promotes risk-mitigation initiatives, identifies risks, monitors the implementation of countermeasures, and reports the operation status of our risk management system to the Board of Directors on a quarterly basis. |
4 times |
8 | Sustainability Committee | In order to accelerate our initiatives to achieve balancing “to resolve social issues” and “sustainable growth” through our business, this Committee formulates specific measures, monitors progress, and evaluates the status of achievement based on our basic policy on sustainability issues including climate change, global environmental issues and human rights issues. The Board of Directors monitors the allocation of management resources and the implementation of strategies related to the business portfolios to ensure that the initiatives of the Sustainable Committee contribute to sustainable growth. |
7 times |
Diversity of the Board of Directors and the Audit & Supervisory Board
Directors
Name | ●Male ●Female |
Independence (for external officer only) |
Knowledge and Experience expected by the Company( * ) | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Company Management (Experience and Insight) |
Legal/ Compliance |
Investment/ Financial/ Capital Market |
Finance/ Accounting |
Sustainability Diversity & Inclusion | Human Resource/ Organizational Development |
Global Awareness | Digital Transfor mation |
Marketing | Technology/ Production Quality Control |
|||
Masaaki Yajima | ● | ● | ● | ● | ● | |||||||
Akira Miyagi | ● | ● | ● | ● | ● | ● | ||||||
Keisuke Kwanishi | ● | ● | ● | ● | ● | |||||||
Tsunehiko Iwai | ● | ● | ● | ● | ● | ● | ● | |||||
Chizuru Yamauchi | ● | ● | ● | ● | ||||||||
Hisae Sato | ● | ● | ● | ● | ● | |||||||
Koji Nitto | ● | ● | ● | ● | ● | ● | ||||||
Tetsuro Harada | ● | ● | ● | ● | ● | ● |
- *The above list does not cover the entire knowledge and experience of the candidates.
Audit & Supervisory Board Members
Name | ●Male ●Female |
Independence (for external officer only) |
Knowledge and Experience expected by the Company( * ) | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Company Management (Experience and Insight) |
Legal/ Compliance |
Investment/ Financial/ Capital Market |
Finance/ Accounting |
Sustainability Diversity & Inclusion | Human Resource/ Organizational Development |
Global Awareness | Digital Transfor mation |
Marketing | Technology/ Production Quality Control |
|||
Shinichi Kitagawa | ● | ● | ● | ● | ● | |||||||
Katsuhiro Okamoto | ● | ● | ● | ● | ||||||||
Mitsuhiro Hamamoto | ● | ● | ● | ● | ||||||||
Hitoshi Suzuki | ● | ● | ● | ● | ● | |||||||
Motoko Tanaka | ● | ● | ● | ● |
- *The above list does not cover the entire knowledge and experience of the candidates.
External Directors and External Audit & Supervisory Board Members
The Company has five External directors and three External Audit & Supervisory Board members. We have elected those persons having extensive knowledge and experience as executives and persons having insight into investment and financial capital markets, to our External Directors, and each of such persons takes a role in improving the appropriateness of the decision made by the Board of Directors by giving objective and independent advice based on their long careers in each business area and extensive professional knowledge. Also, we have elected those persons who have experiences as business administrators in financial industry extensive knowledge from his experience as a member of the Policy Board of the Bank of Japan, independent attorneys at law or independent certified public accountants having a considerable degree of finance and accounting knowledge, to our External Audit & Supervisory Board Members. Each External Audit & Supervisory Board Member conducts a strict audit on the legality of Directors’ decision making and performance of their businesses from a technical perspective by maintaining high levels of independence.
Reasons for Election of External Directors and External Audit & Supervisory Board Members
External directors | Reason for election Expected | Expected field of expertise and knowledge | Attendance at Board of Directors’ meetings |
---|---|---|---|
Tsunehiko Iwai | In addition to his extensive knowledge and experience as a business manager, Tsunehiko Iwai can also be expected to contribute to management using his specialist knowledge relating to research, production, and various fields of technology. | Company Management, Legal/Compliance, Sustainability Diversity & Inclusion, Marketing, Technology/Production Quality Control | 17/17 |
Chizuru Yamauchi | In addition to extensive knowledge and experience as an executive, she has expertise in diversity and inclusion. We expect she will provide advice that contributes to human resource strategies, such as women’s empowerment and personnel development, while further enhancing the supervisory function of our corporate management. | Company Management, Sustainability Diversity & Inclusion | 13/13 |
Hisae Sato | In addition to knowledge and insight related to investment and financial capital markets, she has experience overseeing pension assets on a global level. We expect she will help improve the Company’s corporate value and further enhance the supervisory function of the Board of Directors. | Investment / Financial / Capital Market, Finance / Accounting, Sustainability Diversity & Inclusion | 13/13 |
Koji Nitto | He has extensive experience as a manager who can incorporate finance into management strategies. We expect he will help improve the Company’s corporate value and further enhance the supervisory function of the Board of Directors. | Company Management, Investment / Financial / Capital Market, Finance / Accounting, Global Awareness | 13/13 |
Tetsuro Harada | In addition to his extensive experience as a consultant and the various insights,he has experience in implementing structural reforms in a short period of time as a top-level management executive. We expect he will help improve our corporate value and contribute to strengthening the supervisory function of the Board of Directors. | Company Management, Investment/Financial/Capital Market, Finance/Accounting, Human Resource/Organizational Development | - |
External Audit & Supervisory Board members | Reason for election | Attendance at Board of Directors’ meetings and Audit & Supervisory Board meetings | |
---|---|---|---|
Board of Directors’ meetings | Audit & Supervisory Board meetings | ||
Mitsuhiro Hamamoto | Mitsuhiro Hamamoto’s experience and specialized knowledge as an attorney make him an appropriate external Audit & Supervisory Board member. | 17/17 | 18/18 |
Hitoshi Suzuki | As a manager with many years of experience in the financial industry, we expect he will apply his knowledge and experience to our auditing system. | 13/13 | 13/13 |
Motoko Tanaka | As a certified public accountant, we expect she will apply her specialized knowledge and experience in accounting and finance to our auditing system. | 13/13 | 13/13 |
Strengthening of the Functions of the Audit & Supervisory Board and Its Members
The Audit & Supervisory Board comprises two internal full-time Audit & Supervisory Board members and three external Audit & Supervisory Board members. Convening monthly to coincide with the meetings of the Board of Directors, the Audit & Supervisory Board also holds extraordinary meetings as required. The Audit & Supervisory Board prepares an audit report, determines appointment and removal of Standing Audit & Supervisory Board Members, audit policies, procedures of investigation on the conduct of the business, the assets, properties and matters regarding the execution of duties of Audit & Supervisory Board Members in accordance with the Companies Act. The Audit & Supervisory Board also examines matters to be resolved by the Audit & Supervisory Board such as matters regarding appointment and removal or non-reappointment of the accounting auditor, consent on the amount of remuneration, etc. paid for the accounting auditor, consent on appointment of Audit & Supervisory Board Members, examines the agenda of the Board of Directors in advance, exchanges information and opinions in relation to audit including the proceedings of the important meetings attended by the Standing Audit & Supervisory Board members, exchanges opinions with the Representative Director, and conducts hearings on the execution of duties with our executive Directors and the Directors of Wacoal Corp., our major subsidiary.
At meetings of the Audit & Supervisory Board, external Audit & Supervisory Board members communicate and coordinate extensively with full-time Audit & Supervisory Board members. For example, the latter provide the former with reports on the status of audits of operations and the details of discussions at important meetings. External Audit & Supervisory Board members also receive various types of reports from the independent auditor and departments engaged in internal control as well as audit internal control systems, including the appropriateness of financial reporting. With a view to heightening the effectiveness of audits, external Audit & Supervisory Board members engage in a range of other activities. For example, they attend important meetings other than those of the Board of Directors in light of discussions of the Audit & Supervisory Board and visit subsidiaries to conduct audits and investigative interviews.
Internal Control
Pursuant to the “Internal Audit Regulations”, our Audit Office, the internal audit division, which is directly under the control of the Representative Director and President, audits the legality and appropriateness of the execution of operations at the Company and our domestic and overseas subsidiaries, and evaluates the effectiveness of the internal controls. The number of staff of our internal audit department (Audit Office) was 7 as of March 31, 2023.
Our Audit & Supervisory Board Members and internal audit department (Audit Office) have a regular meeting for reporting and confirmation once a month. The main purpose of such meeting is to report the discussions at major meetings at which our Audit & Supervisory Board Members attended, and plans and achievements by our Audit Office. We have implemented an audit system allowing the sharing of documents and information necessary for audit so that audit working papers are mutually exchanged and confirmed by our Audit & Supervisory Board Members and Audit Office, and the audit can be performed more efficiently and effectively through alliance between our Audit & Supervisory Board Members and Audit Office.
Corporate auditors and accounting auditors hold regular reporting and review meetings. The contents included explanations of audit plan, report on results of audit pursuant to companies act, report on quarterly review, and report on results of audit pursuant to financial instruments and exchange act and internal control audit.