| I. Our Basic Approach to Corporate Governance |
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| Kyosan Electric Manufacturing believes excellent governance means operating for the benefit of all stakeholders, through fair and open businesses managed from a long-term perspective as a going concern that balances both environmental and social considerations, while aiming to maximize shareholder value. Based on this principle, we strive to establish healthy and functional corporate governance, and to build a corporate ethics system that ensures the transparency and soundness of corporate activities. |
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II. Overview of Our Corporate Governance System |
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The Company has chosen to operate with a Board of Auditors. In doing so, we can bolster our system of corporate governance by enhancing the functions of the Board, while benefiting from the observation function of individual auditors.
We have also introduced an executive officer system, enabling us to enhance the functions of the Board of Directors, which makes decisions at the highest level and supervises management, while facilitating the execution of operations by executives. Meanwhile, we have appointed outside directors and outside auditors to bolster the function of management and observation.
Directors are appointed for terms of one year, to ensure that they are accountable in their role of improving management practices and building a management system that can respond quickly and flexibly to changes in the operating environment. |
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Board of Directors |
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| The Board of Directors consists of a maximum of ten directors (nine directors, including two outside directors, as of March 2010). The Board holds an ordinary meeting once a month and an extraordinary meeting as necessary to consider, approve, and decide on matters provided by laws and regulations, matters related to management plans, and other important matters related to the organization, systems, personnel affairs, financial affairs, facilities, and labor agreements. The Board of Directors also supervises the execution of operations. |
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| Management Council |
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| The Management Council consists of directors, executives, internal auditors, and other officials appointed by the representative director. The Management Council holds an ordinary meeting twice a month and an extraordinary meeting as necessary to make decisions at an executive level to ensure that important management matters determined by the Board of Directors are executed without fail, to discuss how to execute them, and to confirm that they have been executed. The Management Council also deliberates on matters to be submitted to the Board of Directors, important matters related to sales, technologies, and production, and other important matters such as special assignments mandated by the representative director. |
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| Board of Auditors |
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The Board of Auditors consists of not more than four auditors (four auditors, including two outside auditors, as of March 2010).
The Board of Auditors determines audit policies, receives reports from individual auditors about their audits, and receives reports as needed from the accounting auditor about its audit.
Auditors attend meetings of the Board of Directors, the Management Council, and other important management meetings to audit the soundness of management and the transparency of the decision-making process, and to audit the legality, appropriateness, and fairness of the execution of duties by directors by listening to their reports, inspecting important approval documents, and other means. |
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| III. Enhancement of the Internal Control System and Risk Management |
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| As a company that is closely linked to public needs, the public interest, and community safety, we believe that it is essential to have a strong sense of responsibility, integrity, and ethics, while complying with laws, regulations, and community standards. Based on this belief, we have created an internal control system for the Company, including its Group companies. To strengthen risk management, we have also established a risk management committee system based on the Risk Management Regulations. |
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| Compliance |
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We make every effort to comply fully with laws, regulations, rules, social and corporate standards of ethics, and the Basic Corporate Behavior Regulations.
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| Internal audit |
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| We have set up the Internal Auditing Department to evaluate risks associated with the execution of operations by the Company and its Group companies, to audit legality and appropriateness, and to evaluate the efficacy and efficiency of operations. The Internal Auditing Department makes requests and recommendations for improvement through its auditing activities, and evaluates the development and operation of the internal control system. |
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| IV. Resolutions Concerning the Internal Control System |
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1. Systems to ensure that the execution of duties by directors and employees complies with laws and regulations and the Articles of Incorporation
(Article 362, Paragraph 4, Item 6 of the Companies Act and Article 100, Paragraph 1, Item 4 of the Enforcement Regulations of the Companies Act) |
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| (1) |
Auditors shall audit the legality, appropriateness and fairness of the execution of duties by directors and, if there is any act that violates or could possibly violate a law, regulation or the Articles of Incorporation, take the necessary measures, such as providing directors with recommendations and advice. |
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All officers and employees of the Company and its Group companies shall practice the Basic Corporate Behavior Regulations of Kyosan Electric Manufacturing Co., Ltd., which specifically sets out regulations that must be followed when pursuing corporate objectives, and shall observe the Basic Compliance Regulations as guidelines for compliance with laws, regulations, the Articles of Incorporation, and corporate ethics. |
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The official in charge of the Legal and Compliance Department shall familiarize all officers and employees with the Basic Corporate Behavior Regulations and the Basic Compliance Regulations as guidelines for compliance with laws, regulations, the Articles of Incorporation, and corporate ethics. |
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The Legal and Compliance Department shall provide compliance training to all officers and employees of the Company and its Group companies in accordance with the Basic Compliance Regulations. |
| (5) |
The Compliance Committee shall deliberate on important matters related to compliance in the Company and its Group companies and shall report to the Risk Management Committee and the Board of Directors as necessary. |
| (6) |
The Legal and Compliance Department shall keep all officers and employees of the Company and its Group companies informed of the compliance consultation and reporting contact (Help Line), as a support system available to them. |
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All officers and employees of the Company and its Group companies shall adopt a resolute attitude in dealing with antisocial forces. |
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| 2. Systems for storage and management of information concerning the execution of duties by directors(Article 100, Paragraph 1, Item 1 of the Enforcement Regulations of the Companies Act) |
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| (1) |
The Company shall construct and operate the information and information security management systems by adopting a Basic Information Security Policy, Information Management Regulations, Document Management Regulations and other relevant regulations and rules. |
| (2) |
Documents and information about the execution of duties by directors and executives must be properly managed by the officer in charge of general affairs and the chief administrator of information management in accordance with the regulations. |
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Directors, executives and auditors may inspect on a regular basis documents and information that are stored and managed. |
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| 3. Regulations and other systems for the management of the risk of losses(Article 100, Paragraph 1, Item 2 of the Enforcement Regulations of the Companies Act) |
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| (1) |
The Company has established a risk management system based on the Risk Management Regulations. The president & representative director has appointed a chief administrator of risk management, and the chief administrator of risk management is required to strengthen and enhance the overall risk management system of the Company and its Group companies. |
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To recognize and address management risks and conduct risk management, the Company shall establish the Risk Management Committee, led by the president & representative director, and set up the Management and Financial Risk Committee, the Business Risk Committee, the Disaster Risk Committee, the Information Management Committee, and the Compliance Committee as individual committees under the Risk Management Committee. The activity status of these individual committees must be reported to the chief administrator of risk management and submitted as necessary to the Risk Management Committee and the Board of Directors. |
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| 4. Systems to ensure that directors execute their duties efficiently(Article 100, Paragraph 1, Item 3 of the Enforcement Regulations of the Companies Act) |
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| (1) |
Directors and executives shall develop specific actions to take to achieve management targets based on an annual management plan and shall ensure that they take those actions. |
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Directors and executives shall report on the status of execution of their duties at the Management Council each quarter, and the Board of Directors shall review and approve it. |
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| 5. Systems to ensure the appropriateness of operations in a corporate group that consists of a stock company and its parent company and subsidiaries(Article 100, Paragraph 1, Item 5 of the Enforcement Regulations of the Companies Act) |
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| (1) |
The Company shall hold liaison meetings with its Group companies on a regular basis to communicate its management policies and develop an annual management plan. |
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The Corporate Planning Department shall develop the Affiliated Companies Administration Regulations and administer the Group companies as necessary. |
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The Internal Auditing Department shall audit Group companies, conduct an operational audit and develop, operate and evaluate an internal control system. |
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The compliance consultation and the reporting contact (Help Line) of the Company shall be operated as a single system shared by the Company and its Group companies. |
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6. Matters related to employees appointed to assist auditors at the request of auditors
(Article 100, Paragraph 3, Item 1 of the Enforcement Regulations of the Companies Act) |
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| (1) |
At the request of auditors, the Company’s Board of Directors shall assign temporary assistant employees to assist auditors in their duties. |
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