- Summary of Corporate Governance Structure of the Submitting Company and Reason for Selection of the Structure
- Reasons for Non-compliance with the Principles of the Corporate Governance Code
- Disclosure Based on the Principles of the Corporate Governance Code
- Information on our corporate institutions
- Corporate governance structure
- The status of internal audits, audits by Audit & Supervisory Board Members, and accounting audits
- Overview of Personal Relationships, Capital Relationships, or Transactional Relationships and other Interests between the Company and the Company's Outside Directors, or Outside Audit & Supervisory Board Members
- Views on the functions and roles of Outside Directors and Outside Audit & Supervisory Board Members in corporate governance of the Company, the independence standard or policy for selecting Outside Directors and Outside Audit & Supervisory Board Members and the state of their appointment, and collaboration between the Outside Directors, Outside Audit & Supervisory Board Members and internal control division and audits
- Status of the internal control system and risk management system
- Directors’ compensation, etc.
Summary of Corporate Governance Structure of the Submitting Company and Reason for Selection of the Structure
Our vision is that it is crucial to place emphasis on the health, transparency and efficiency of corporate management, as well as establish a corporate structure that will allow us to respond expeditiously and appropriately to rapid changes in our business environments. Specifically, in addition to speeding up decision-making and implementing mutual supervision of Directors that are well-versed in the business, we have enhanced our ability to supervise our management from third-party perspective by Outside Directors and Outside Audit & Supervisory Board Members. By introducing a division structure, we work toward efficient business execution, while at a Division President Meeting composed of Division Presidents, Directors and Audit & Supervisory Board Members attend to confirm and provide recommendations to ensure that it functions efficiently and effectively. We are also engaged in implementing and enhancing our structure to ensure more openness in our disclosure to shareholders and investors.
The Company Group will place the below corporate ideals at the root of its management, making it the starting point for all corporate activities.
Additionally, the Company has also defined the following “Code of Conduct” to conduct business activities in line with the corporate ideals.
Code of Conduct
Creation of New Value
- We will maintain a spirit of creative inquiry and help make people’s lives better by creating innovative value.
- We will strive harder towards making the company the best rather than the biggest and will work to improve corporate value through the excellence, sustainable business development.
- We will continually challenge new fields with unrestricted imagination and originality.
Global Business Expansion
- We will constantly pursue new opportunities and engage in business activities with the goal of global expansion.
- We will respect the diversity in various regions around the globe, including their histories and cultures, and will remain conscious of the importance of harmonious coexistence as we conduct our business activities.
- We will do our part to conserve the global environment in order to ensure a pleasant society for the people of the world.
Clean and Open Corporate Culture
- Each one of us will remain conscious of social responsibility and will observe laws and social ethics when conducting ourselves.
- Each one of us will build trust by following our consciences to make fair decisions and by maintaining transparency and accountability.
- We will create a corporate culture in which everybody can work with enthusiasm and passion.
Reasons for Non-compliance with the Principles of the Corporate Governance Code
Supplementary Principle 4-11-3 Disclosure of Summary of Analysis and Evaluation Results Regarding Effectiveness of the Board of Directors as a Whole
The Company works to ensure the effectiveness of the Board of Directors as a whole, including decisions made and operation of meetings as the Board of Directors. Furthermore, although the Company does not currently implement self-evaluation of each individual Director or conduct analysis and evaluation of the effectiveness of the Board of Directors as a whole, the Company shall study specific contents in the future.
*Titles of supplementary principles are provided for convenience in the interest of readability.
Disclosure Based on the Principles of the Corporate Governance Code
Principle 1-4 Cross-Shareholdings
As a general principle, the Company will not conduct cross-shareholding. However, in the event that showing the intention to maintain a strong relationship such as business partnerships or maintenance or strengthening of transactional relationships is valid from a business perspective, the Company may hold shares at a minimum to the extent necessary. Exercise of voting rights for such shares will be determined based on whether or not the proposal serves to contribute to the objectives of the holding.
Principle 1-7 Related Party Transactions
When the Company engages in transactions with its officers or major shareholders (i.e., related party transactions), designated approval is required as defined by internal regulations such as the “Rules of the Board of Directors” and “Approval Rules.” The Company deliberates and confirms that such transactions will not harm the interests of the Company or the common interests of its shareholders. Following disclosure standards, information on related party transactions is disclosed in the Business Report and the Securities Report.
Principle 3-1 Full Disclosure
Disclosure and dispatch status of the Company regarding the following items are as follows.
- Business principles, business strategy and business plans: The Slogans, Mission, Vision, and Medium-Term Business Plan are disclosed on the Company’s website and its financial results briefing materials and disclosure materials, etc.
- Basic views and guidelines on corporate governance: Basic views are disclosed on the Company’s website, Corporate Governance Reports, and Securities Reports to TSE.
- Policies and procedures in determining the remuneration of Directors: With regard to Directors, information is disclosed on the Company’s website, Corporate Governance Reports to TSE, the convening notices for general shareholder meetings, and Securities Reports.
- Policies and procedures for the nomination of candidates for Director and Audit & Supervisory Board Member: Appropriateness of candidates is discussed in the Officer Appointment Committee, in which one Outside Director is a committee member, based on the appointment standards stipulated in the “Officer Appointment Committee Operational Regulations” and is reported to the President. The President submits this candidate appointment proposal to the Board of Directors and Audit & Supervisory Board “Board of Auditors,” and upon their resolution, it is proposed to a general shareholders meeting. Furthermore, with regard to independence, the Company’s standard concerning independency is disclosed on the Company’s website and TDnet.
- Explanations with respect to individual appointments of senior management and nomination of Directors and Audit & Supervisory Board Members: Reasons for appointment of all candidates are disclosed in the convening notices for general shareholder meetings.
Supplementary Principle 4-1-1 Clarification of Scope of Delegation to Management
The Company defines in its internal regulations such as the “Rules of the Board of Directors” with regard to items defined by laws and regulation, items for resolution by the Board of Directors as important items, and items for reporting concerning execution status. For instance, acquisition and disposal of shares and equity, and investment items, etc., such as acquisition and disposal of non-current assets, financing, and guarantees, standards of amounts are individually defined within the “Approval Rules,” categorized by various risk types, and the range of decision-making delegation to management, etc., is clearly defined.
Principle 4-8 Effective Use of Independent Directors
As personnel that are able to contribute to the sustainable growth and mid- to long-term improvement of corporate value at the Company, subsequent to fulfilling the requirements set forth in the “Standard concerning independency of outside officers,” the Company has appointed three individuals as Independent Outside Directors who are knowledgeable in global business and law, and with objectivity from a shareholder viewpoint and deep knowledge of efficient asset management. For the foreseeable future, a composition goal of one-third or more will not be set, but the Company shall generally have between two and four individuals out of a maximum of 10 Directors, as set forth by the current Articles of Incorporation.
Principle 4-9 Independence Standards and Qualification for Independent Directors
The Company has defined the “Standard concerning independency of outside officers,” and discloses it on its website. With regard to appointment of personnel, in addition to standards presented by the Tokyo Stock Exchange, candidates must fulfill the Company’s proprietary standards, and while placing emphasis on diversity, the Company works to appoint individuals who can attend Board of Directors Meetings in person.
Supplementary Principle 4-11-1 Disclosure of Views Concerning the Composition, etc. of the Board of Directors
Concerning policies and procedures regarding the appointment of the Company’s Directors, these in principle as shown in 3-1 4, and the Board of Directors of the Company shall be appointed within the framework of a maximum of 10 members, as defined in the Articles of Incorporation. While considering area of expertise and experience, by creating a balanced composition, the Company increases the diversity of its Board of Directors.
Supplementary Principle 4-11-2 Disclosure of Status of Concurrent Positions
With regard to Outside Directors and Outside Audit & Supervisory Board Members of the Company, appointment is made, with the ability and will to attend various meetings in person, including general shareholder meetings and Board of Directors meetings, as appointment standards. Active discussions are made from various angles, and the Company works to strengthen the structure to allow for the Board of Directors to function effectively. Furthermore, concerning the concurrent holding of officer positions at other companies, these items are reported at the Board of Directors upon resolution by the Board of Directors for Directors, and the Audit & Supervisory Board for Audit & Supervisory Board Members. The current status of concurrently held positions is disclosed every year in the convening notice for the general shareholder meeting, the Securities Report, and TDnet.
Supplementary Principle 4-14-2 Disclosure of Training Policy
With regard to the Company’s Directors and Audit & Supervisory Board Members, the Company’s policy is to hold timely training sessions by outside instructors, etc., as necessary, based on the following framework with the objective of achieving the appropriate fulfillment of duties and responsibilities expected of a Director or Audit & Supervisory Board Member.
- Create opportunities for new officers to acquire necessary knowledge concerning business, finance, and organizations, etc.
- Create opportunities for outside officers to share and deepen understanding of business content and management issues
- Create opportunities to acquire other knowledge, etc., necessary to fulfill responsibilities
Principle 5-1 Policy for Constructive Dialogue with Shareholders
With regard to dialogue with institutional investors and individual investors, the Company positively responds to them to a reasonable extent.
*Titles of supplementary principles are provided for convenience in the interest of readability.
Information on our corporate institutions
The Company adopts an Audit & Supervisory Board Members system. Details of the main bodies of the Company including the Board Of Directors are as follows (the number of members shown below are as of March 31, 2016):
a. Board of Directors
The Board of Directors consists of eight Directors (including three Outside Directors) and meets at least once every month to make decisions on crucial operational matters and oversee the execution of Directors’ duties.
b. Steering Committee
The Steering Committee consists of five Directors including the President and meets typically once every month to deliberate on the direction of management, assess the status of business execution, and advance discussion, etc. on agenda of the Board of Directors meetings, etc.
c. Division President Meeting
The Division President Meeting composed of Division Presidents meets typically at least once every month to deliberate on measures to solve management issues in business execution, share status of business execution and make adjustment, etc., to work toward efficient business execution. Additionally, proceedings and results of the Division President Meetings are reported to the Board of Directors.
d. Audit & Supervisory Board
The Audit & Supervisory Board consists of four Audit & Supervisory Board Members (including two Outside Audit & Supervisory Board Members) and meets at least seven times a year to receive reports on important matters relating to audits, as well as carry out discussions and make resolutions on these matters. Additionally, a forum for sharing information and exchanging views, etc. among Audit & Supervisory Board Members will be installed as necessary, in order to contribute to the formulation of audit opinion and enhance the effectiveness of audits. In order to gain an understanding on important decision-making processes and the status of business execution, Audit & Supervisory Board Members also participate in Board of Directors meetings, Steering Committee meetings, Division President Meeting, and other important meetings within the company. Audit & Supervisory Board Members also conduct audits on various business locations and affiliate companies in addition to engaging in strengthening its function of monitoring the Directors’ execution of duties.
Corporate governance structure
The status of internal audits, audits by Audit & Supervisory Board Members, and accounting audits
Internal audits are performed by the audit section, which reports directly to the President and currently consists of 6 members. The audit section performs internal audits of different divisions based on the audit plan determined at the beginning of the year, and reports the results to the President.
The state of audits by Audit & Supervisory Board Members is described in “Information on our corporate institutions d. Audit & Supervisory Board.” Audit & Supervisory Board Members receive explanations of the audit plan and reports of audit results from, and exchange views and information as necessary with, accounting auditors. The Audit & Supervisory Board Members and audit section liaise on various matters, such as the development of audit plans, to improve the effectiveness and efficiency of audits.
Full-time Audit & Supervisory Board Member, Mr. Masanori Nakagawa, has been involved in operations in financial institutions for many years, and Full-time Audit & Supervisory Board Member, Mr. Masayasu Suzuki, has been involved in operations in financial institutions for many years as well as accounting and general affairs operations in the Company. Outside Audit & Supervisory Board Member, Mr. Shigeki Matsuda, is licensed as a certified public accountant and tax accountant, and Outside Audit & Supervisory Board Member, Mr. Mitsuhiro Honda, has an abundant experience in international tax affairs. All four individuals are well-versed in finance and accounting matters.
While the Company has no special vested interest with the accounting auditor, Deloitte Touche Tohmatsu LLC, or its engagement partners, the two parties maintain close contact with each other so that the Company is able to receive appropriate advice on an ongoing basis. As for consolidated subsidiaries, accounting audits are consigned to independent auditors in order to ensure the appropriateness of our consolidated accounting. Furthermore, the accounting audit for the fiscal year under review was conducted by Certified Public Accountants Messrs. Masato Nishimatsu, Atsushi Numata, and Hiroshi Waseda, who are designated limited liability partners and engagement partners. (As the number of consecutive years conducting audits is within seven years, the number of years is omitted.) Assistance for audit operations is provided by 12 Certified Public Accountants and four other persons.
Overview of Personal Relationships, Capital Relationships, or Transactional Relationships and other Interests between the Company and the Company’s Outside Directors, or Outside Audit & Supervisory Board Members
Outside Director, Mr. Takuo Hirose, is a partner of Anderson Mori & Tomotsune, a law firm with which the Company has business transactions including the receiving of various services that are based on our legal advisory contract. However, the Company receives legal advisory services from different attorneys of the said law firm.
Additionally, there are no personal, capital or transactional relationships and other interests with companies, etc., at which other Outside Directors and Outside Audit & Supervisory Board Members serve or served as executives or employees either at present or in the past. (The “past” is defined as within the past 10 years, pursuant to the “range of confirmation of affiliation information” stipulated by stock exchanges.)
Views on the functions and roles of Outside Directors and Outside Audit & Supervisory Board Members in corporate governance of the Company, the independence standard or policy for selecting Outside Directors and Outside Audit & Supervisory Board Members and the state of their appointment, and collaboration between the Outside Directors, Outside Audit & Supervisory Board Members and internal control division and audits
We expect Mr. Takuo Hirose, Outside Director, to leverage his knowledge and experience as an attorney, Ms. Chieko Okuda, Outside Director, to leverage her wide experience and deep knowledge that she has acquired as an expert in global asset management, and Mr. Katsuhiro Endo, Outside Director, to leverage his practical experience in global taxation businesses and his knowledge and experience that he has acquired as a tax accountant, in all aspects of our corporate management and provide independent oversight and counsel regarding our corporate operations as well as to contribute to enhancing the transparency of Board of Directors proceedings and our supervisory functions.
Additionally, we can expect two Outside Audit & Supervisory Board Members to work with our Audit & Supervisory Board Members, drawing on their extensive knowledge of accounting and tax matters, and execute objective and neutral audits in their independent capacities regarding all aspects of our corporate management as described in “Information on our corporate institutions d. Audit & Supervisory Board” and the state of Audit & Supervisory Board Member audits in “The state of internal audits, audits by Audit & Supervisory Board Members, and accounting audits.”
As such, we believe Outside Directors and Outside Audit & Supervisory Board Members in our current organization are able to fulfill the functions and roles that are required with regard to our corporate governance.
The Company has stipulated the “standard concerning independency of outside officers” which satisfies the requirements of independent officers stipulated by the Tokyo Stock Exchange, and posted it on the Company’s website.
We have judged that all of Outside Directors and Outside Audit & Supervisory Board Members satisfy these standards and have secured adequate independence, and have reported all Outside Directors and Outside Audit & Supervisory Board Members as independent officers.
Status of the internal control system and risk management system
The Company carries out activities based on the “Basic Policies for Establishing an Internal Control System” which is resolved at the Board of Directors meeting each fiscal year. We have placed the three slogans of “Inspire the Enjoyment of Creativity,” “Be the BEST rather than the BIGGEST,” and “The Roland Family – Cooperative Enthusiasm” at the foundation of our management, and use them as the starting point for all corporate activities.
To secure conformity with laws and regulations and the Articles of Incorporation for execution of business by Directors and employees, our compliance structure includes internal education activities on Code of Conducts that can receive support from society, and an internal whistleblowing structure to promote compliance with laws and regulations within the Group.
The President assumes responsibility for the risk management structure, and a person responsible for risk management, designated by the person responsible for the risk management structure, conducts comprehensive management of company-wide risk management, periodically reporting to the Division President Meeting and the Board of Directors. Additionally, a structure is established to receive periodic reports on risk management from subsidiaries, and matters related to the group-wide risk management are treated as risk management issues of the Company.
Furthermore, to secure the appropriateness of operations of the Group, we have defined regulations regarding management of affiliated companies, and while receiving reports on management status from subsidiaries, we supervise the management of key subsidiaries by seconding our Directors, etc., based on the business content and scope of subsidiaries. We secure appropriateness of operations by placing management advisory bodies at key subsidiaries to deliberate on significant management matters. With respect to the internal control reporting structure for financial reporting as required by the Financial Instruments and Exchange Acts, the management procedures and structure, etc. for development, operation and evaluation of internal control system are defined, with the Accounting Service Department in charge. The evaluation of effectiveness is conducted through evaluation of the status of development and operation in each department and subsidiary, as well as independent evaluation by the audit section.
Apart from the above, the followings have been developed to realize appropriate internal control and risk management; a structure to secure efficient execution of duties by the Directors of the Group; a structure related to storage and management of information regarding the execution of duties by the Directors; a structure to make reports to the Audit & Supervisory Board members including a structure for the Directors and employees to make reports to Audit & Supervisory Board members; a structure regarding employees to assist the duties of Audit & Supervisory Board Members should they request to have such employees; and a structure to ensure that persons making reports to Audit & Supervisory Board Members do not receive detrimental treatment as a result of making such reporting.
Furthermore, we have defined “Basic Views and Maintenance Status Toward Elimination of Anti-social Forces” with respect to anti-social forces, and under the basic principle of “taking a firm stance and having no relationships, and not conducting any transactions,” we strive to infiltrate this to all employees while assigning the General Manager of the General Affairs Service Department in charge of preventing wrongful requests, and through cooperation with related internal departments, we work to terminate relationships with anti-social forces across the entire company.
In addition to the above, in order to respond to various legal contingencies, we have in place advisory contracts with multiple law firms with whom we consult and develop solutions to issues as needed.
Directors’ compensation, etc
Total amount of compensation and other remuneration for different officer categories, total amount of compensation and other remuneration by type, and the number of eligible officers
Director category Total amount of compensation
and other remuneration
(Millions of yen)
Total amount of compensation
and other remuneration by type
(Millions of yen)
Number of directors Basic compensation Stock options Bonuses Retirement benefits Directors
(excluding Outside Directors)
187 121 - 66 - 6 Audit & Supervisory Board Members
(excluding Outside Audit & Supervisory Board Members)
23 19 - - - 2 Outside Officers 22 22 - 4 - 6 Total 232 162 - 70 - 14
- The maximum amount of compensation, etc. for Directors was resolved to be 300 million yen per year (including a limit of 30 million yen per year for Outside Directors) at the 33rd general shareholder meeting held on June 18, 2014. The maximum amount of compensation, etc. for Directors does not include wages for the employee component.
- The maximum amount of compensation, etc. for Audit & Supervisory Board Members was resolved to be 60 million yen per year at the 29th general shareholder meeting held on June 16, 2010.
- The number of paid officers includes one Audit & Supervisory Board Member who retired at the conclusion of the 34th general shareholder meeting held on June 17, 2015.
- Aside from the amounts provided above, 64 million yen has been recorded as Officer Performance-linked Compensation toward six Directors (excluding Outside Directors) based on the Stock Benefit Regulations (for Officers). This Performance-linked Compensation scheme for Officers was resolved in a separate category from the compensation described in 1. at the 33rd general shareholder meeting held on June 18, 2014.
At the general shareholders' meeting held on June 16, 2010, it was decided that external directors will be able to receive compensation in return for the execution of their duties, and that maximum annual total compensations for directors and auditing officers will be capped at 300 million yen (capped at 10 million yen for external directors) and 60 million yen per year respectively, as bonuses for directors and auditing officers will be paid within the framework of compensations.
The total amounts, etc. of consolidated compensation, etc. for each officer of the submitting company
This information is not included because there is no individual earning a consolidated compensation, etc. equal to or greater than 100 million yen.
Policy regarding the determination of the amount and the method for calculating the compensation for officers and the method of determination
With regards to the compensation, etc. for Directors, the determination of the amount for each Director is delegated to the President by resolution of the Board of Directors, within the limit for the compensation, etc. as resolved at the general shareholder meeting.
With regards to determination of the compensation standards for Directors, the Director Remuneration Committee, consisting of Directors who are elected by the Board of Directors (3 to 5 Directors; does not include the President), deliberates on the compensation standards for Directors, and reports to the President. The President, based on the report of the Committee, drafts the compensation standards for Directors and refers it to the Board of Directors. The compensation standards for Directors are determined by the resolution of the Board of Directors. With regards to the bonuses for Directors, the determination of the amount of bonus for each Director is delegated to the President by resolution of the Board of Directors, and the Presidents determines the amount taking into consideration of the post and contribution to the business performance of each Director.
With regards to the compensation, etc. for Audit & Supervisory Board Members, determination is made by deliberation of the Audit & Supervisory Board Members within the maximum limit of compensation, etc. which is resolved by general shareholder meeting, taking into account whether the member is full-time or not, and specific audit responsibilities.