Corporate Governance

Our Group of companies is pursuing technological innovation combined with creativity to provide quality products and services and contribute to health care and welfare provision around the world. To this end, we are working to improve all Group activities and enhance corporate governance.
We are focusing attention on timely and appropriate information disclosure, transparent decision-making processes, enhanced accountability, and more potent corporate governance.

Outline and reason for applying the corporate governance system

(1)Outline and reason for applying the corporate governance system

Our corporate governance system comprises the Board of Directors, Audit and Supervisory Board and Management Board. The current system has been applied, taking corporate size, organization, etc. into consideration, and has been proved to be effective. Each component can be described briefly as follows.

Board of Directors

The Board of Directors holds regular monthly meetings, with additional, ad hoc meetings called as necessary; e.g. if an important resolution, etc. is to be introduced. This Board, in accordance with ordinances and regulations, the articles of incorporation, and the rules of the Board of Directors, decides important business matters and reports on business progress. As of the date of submission of the Annual Report, the Board comprises four directors (including two external directors) who are responsible for efficient decision-making and supervision.

Audit and Supervisory Board

The Audit Board holds regular monthly meetings and additional, irregular meetings as required to deal with relevant matters. This Board, in accordance with ordinances and regulations, the articles of incorporation, and the Audit Board rules, decides important matters and reports on business progress. As of the date of submission of the Annual Report, the Board comprises three auditors (including two external auditors). The two external auditors are a lawyer (a person who practices law) and a certified public accountant (fully conversant with finance and accounting matters).

Management Board

The Management Board, comprising full-time directors and the heads of departments/divisions, meets, in principle, at least once a month. This Board deliberates on important corporate matters and reports on business progress in accordance with the Management Board rules. The full-time auditor attends Management Board meetings to supervise business operations.

(2)Internal audits and auditors’ audits

Personnel and procedures

The Internal Audit Office, under the direct control of the President & CEO, is staffed by one person who monitors observance of rules and regulations, the articles of incorporation, etc., and the effectiveness of internal controls. The Internal Audit Section is audited internally by the head of the Corporate Planning Department. The Head of Internal Audit prepares an annual internal audit plan before seeking approval of the President & CEO and notifies departments/divisions that are to be audited. Internal auditing includes internal controls and is aimed at examining corporate business and financial statuses, and facilitating streamlined management and enhanced efficiency. The details of the audit plan are reported to the President & CEO and to the auditors. Subsequently, the chief of internal auditing informs each audited department/division of areas where improvements are required.

The company employs one full-time auditor and two external auditors (as of the date of submission of the Annual Report) who are the members of the Audit Board. The auditors effectively supervise directors’ performance by holding monthly Audit Board meetings, attending Board of Directors meetings, Management Board meetings and other important in-house meetings, examining corporate assets and business operations, meeting regularly with the President & CEO, etc. The auditors also take measures to prevent malpractice and violation of laws and regulations, and of the articles of incorporation.

Close relations with internal audits, auditors’ audits, and accounting audits

Our company maintains close relations with the Internal Audit Section, the auditors, and the accounting auditor for exchanging of information and opinions as required, and enhancing the auditing function through improved effectiveness and efficiency. The Internal Audit Section also assists the auditors and acts on their instructions for auditing, free from the command and control of the directors and the head of the Internal Audit Section. The Internal Audit Section attends Audit Board meetings for exchanging of information.

(3) External directors and external auditors

Our company has two external directors and two external auditors. Highly independent, well-experienced/informed external directors and auditors bring objectivity to corporate decision-making and contribute to management soundness and transparency. Although we do not have the standards/policy of independence of external directors/auditors, we normally consult the standards based on which the securities exchanges evaluate the independence of their independent directors.

(4) Factors to be taken into account and policy for deciding/calculating directors’ remuneration

Within the limit of the total sum to be decided by a general meeting of shareholders and with several factors, such as corporate performance, economic situation and relativity to employee pay scales, taken into consideration, remuneration levels for directors and auditors are decided through discussion in a Board of Directors meeting and an Audit Board meeting, respectively.

(5) Current accounting audit

Our company has an auditing contract with Hinode Audit Corporation, an accounting auditor, which audits our accounts in accordance with the Companies Act and the Financial Instruments and Exchange Act.

Corporate governance