SUSTAINABILITY

Governance

Corporate Governance

It is essential for our group company to establish a sound, fair, and transparent management. We position the organization of management system as our basic corporate governance policy. We strive to build trusts with all stakeholders and to achieve stable growth and development of the company.

To achieve these goals, we will make prompt and appropriate management decisions, exercise independent auditing functions, establish an effective internal control system, and promote timely and appropriate information disclosure, while ensuring awareness of all officers and employees of their social responsibilities.

The Company also recognizes the fundamental principles of the Corporate Governance Code to enhance our corporate governance.

Corporate Governance Organization: Business Execution and Supervision

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The Company’s organization are Board of Directors, Audit & Supervisory Committee, and Accounting Auditors. Internal Audit Division which has been established as an organization directly under the Founder & CEO, maintains and strengthens corporate governance based on these organizations.

Audit & Supervisory Committee will exercise a strong supervisory function while maintaining the independence of business execution and supervision. Each Audit &Supervisory Committee member is a director with voting rights on the Board of Directors. Currently all are outside director and one as full-time auditor.

In accordance with the law, the term of Directors (not Audit & Supervisory Members) is a single year, and the term of Directors (Audit & Supervisory Board Members) is two years and resolve for their election at the General Shareholders’ Meeting.

The Board of Directors has established a voluntary Nomination Committee and Remuneration Committee, majority of which are organized by outside directors. We believe this improves the transparency and objectivity of the Directors candidate selection process (excluding Directors who are Audit & Supervisory Committee).

The Company has established the Compliance Committee, Management Committee and Sustainability Committee under the supervision of the Founder and CEO and organized the Internal Audit Office directly under the Founder and CEO.

The Management Committee is composed of executive officers with the attendance of a full-time Audit & Supervisory Board member to facilitate prompt decision-making and efficiency of management activities. The Sustainability Committee shall regularly report the progress status to the Board of Directors with proceeding policy and promotion of sustainability management. This will include identification, assessment, and management of risks related to climate changes. As for internal audit, we do not have a full-time staff member in charge, however the Company maintains independence under the direct supervision of Founder & CEO. Each member does not audit the department to which they belong. The members have been collaborated appropriately with the Audit & Supervisory Committee and accounting auditors. Quarterly three-way audits system has been conducted, which we recognize to be functioning effectively.

Moreover, the Company collaborates with legal counsel for important legal judgments in the decision-making process. This ensures soundness, transparency, legal compliance, and efficiency of management and business execution through close mutual cooperation.

Board of Directors

10 Directors are determined in the Articles of Incorporation. Current total number of the Board of Directors is eight (8) and consists of four (4) directors (excluding part-time outside directors and directors who are members of the Audit & Supervisory Committee), three (3) directors who are members of the Audit & Supervisory Committee (outside directors), and one (1) part-time outside director. Monthly Board Meetings are held by the middle of each month to resolve on important matters and report on the status of business. Materials are distributed prior to the Board Meeting to ensure that each Director has sufficient time to review and consider each agenda. Audit & Supervisory Committee meetings held prior to the Board Meetings, formulate a Committee opinion which then is discussed at the Board Meetings. Each director expresses their opinions without discernment, sound discussions are held, and mutual auditing and supervision of directors in the execution of their duties are conducted.

The Articles of Incorporation and the Regulations of the Board of Directors stipulate that the Founder & CEO shall be the chair person of the Board of Directors unless otherwise provided for in laws and regulations.

In addition, the Company is under consideration in the selection of female candidates for the Board of Directors to strengthen diversification of the Board.

<Attendance Record>

Total Meetings Uryu Takada Ban Hamano Ishibashi Yoshimura
FY2021
(2021.03)
19 Number of attendances 19 19 19 17 19 19
% of attendance 100% 100% 100% 89% 100% 100%
FY2020
(2020.03)
22 Number of attendances 22 22 22 21 22 16*
% of attendance 100% 100% 100% 95% 100% 100%
*Mr. Yoshimura was elected as a Director (Audit & Supervisory Committee member) at the Shareholders’ meeting in FY2020.
Audit and Supervisory Committee

The Audit & Supervisory Committee is composed of 3 outside directors, and generally held prior to the Board of Directors’ meetings. One of the members of the Audit & Supervisory Committee is a full-time auditor, who conducts audits on daily basis by attending the weekly management committee and checking approval of submission. Audit & Supervisory Committee has an important governance function.

<Attendance Record>

Total Meetings Hamano Ishibashi Yoshimura
FY2021
(2021.03)
14 Number of attendances 13 14 14
% of attendance 93% 100% 100%
FY2020
(2020.03)
14 Number of attendances 14 14 14
% of attendance 100% 100% 100%
*Mr. Yoshimura was elected as a Director (Audit & Supervisory Committee member) at the Shareholders’ meeting in FY2020.

Assessment of the Effectiveness of the Board of Directors

The Effectiveness of the Board of Directors and the Compensation Committee is continuously implemented through, questionnaire to all directors. Results are discussed and evaluated by the Board of Directors annually. The Company identified the following issues from the recent assessment in the FY2021: Female Board of Director appointment consideration for diversity and expertise balance, which is also our medium-long term target; digital transformation initiatives; management team delegation from the Board of Directors. We believe this ensures flexibility to secure business opportunities while maintaining risk management based governance.

Executive Compensation

Remuneration for Directors shall be paid within the maximum amount approved at the General Shareholders Meeting. Basic fixed remuneration is paid under the current individual remuneration system. This is based on the basic policy that the individual remuneration should be at an appropriate level with the responsibilities of each position and the incentive for continuous improvement of corporate value. However, a flexible remuneration system is currently considered including stock-based compensation.

The amount of individual remuneration shall be determined by the Audit & Supervisory Committee who are Audit & Supervisory Committee member Directors, and by the Compensation Committee non-Audit & Supervisory Committee member Directors. The amount shall reflect their position, responsibilities, business performance and contributions to sustainable shareholder and corporate value improvement.

The members of the Compensation Committee as well as the chairman of the Compensation Committee are appointed by Board of Directors resolution. Majority of the members are independent outside directors.

<FY2021 Total amount of compensation for directors>

Number of Directors paid Compensation
(JPY000s)
Bonuses
(JPY000s)
Amount of Compensation etc.
Director (excluding Audit and Supervisory Committee member)
(outside director)
3
(-)
119,298
(-)

(-)
119,298
(-)
Director (Audit and Supervisory Committee member)
(outside director)
3
(3)
19,230
(19,230)

(-)
19,230
(19,230)
Total
(outside director)
6
(3)
138,528
(19,230)

(-)
138,528
(19,230)
*The above total amount of remuneration includes the company's share of the defined contribution pension plan.

Accounting Auditor’s Compensation

The accounting auditor remuneration amount is determined with agreement of the Audit and Supervisory Committee.

<Amount of remuneration>

Accounting Auditor’s Compensation Amount of remuneration Total of cash and other profits payable by the Company to Accounting Auditor
fiscal year ended March 31, 2021 JPY 31 million JPY 31 million
fiscal year ended March 31, 202 JPY 27 million JPY 28.5 million
* In the audit contract between the Company and the accounting auditor, the amount of remuneration. for the audit based on the Companies Act and the audit based on the Financial Instruments and Exchange Act are not clearly separated and cannot be practically separated, thus the accounting auditor remuneration amount under review is the total of these amounts.

Ownership

All of the Company’s issued shares are identical and have full voting rights, and the number of shares per unit is 100 shares without any rights limitation.

The Company believes that those who control its decisions on financial and business policies should aim sustainable growth and concentrate their management resources on maximizing its corporate value and increasing shareholder’s profit.

The Company has not introduced any special takeover defense.

The Company classifies investment shares held for the purpose of earning profits from the value changes of shares and dividends as net investment, and other shares as investment shares for the purpose other than net investment (strategic holdings). The Company holds no cross-holding-shares. The Company re-evaluates economic rationality considering the importance of amount under the basic policy of disposing or reducing any strategic holdings when proven little significance to hold in light of business conditions. With these, by the Board of Directors or management committee examine and decide.

Risk Management

In order to mitigate and prevent risks, the Company is enhancing to strengthen its risk management system and ensure compliance through the establishment of risk management regulations and meetings of the Compliance Committee. In the event of an unforeseen situation, a task force shall be established headed by the President and Representative Director to take prompt action putting in place a system to prevent and minimize the spread of damage. In addition, the Sustainability Committee is enhancing to reduce risks and maximize opportunities under appropriate sustainability risk management including the identification, assessment, and management of climate changes risks.

Initiatives for Personal Information Security

The Group Company mainly utilizes IT to acquire and provide information via internet. We recognize the importance of ensuring various information security, including personal information. The Company established an “Information Security Standards” to protect confidentiality, integrity, and availability of Company information assets and to minimum impact of any possible accidents. The Company also conducts information security trainings for all Group employees to improve information security literacy.

The Company constantly reviews measures and operations towards various external threats. Installations of security software and terminal control on all internal PCs and devices, and IDaaS and other systems have been implemented. This prevents and detects unauthorized accesses or multi-factor authorization.

As part of our continuous efforts, each Group Companies have been certified Privacy Mark or/and ISMS (Information Security Management System.)

Compliance

In order to ensure compliance with laws and regulations, corporate ethics, and internal rules in business activities, we have established a "Basic Compliance Policy" that sets out the basic matters to be complied with, and make them known to the officers and employees of our group.

As a specific code of conduct, the Company has established a Basic Compliance Policy which shall comply with laws and regulations, industry self-regulation, and company rules.

The policy also conducts fair and transparent corporate activities that do not violate social rules. It also maintain appropriate and transparent business operations, respecting human rights and the environment, and protecting reporting and whistleblowers.

Prevention of Corruption

In accordance with the Basic Compliance Policy, the Group Companies will not engage in any illegitimate activities whether directly or indirectly, bribery, kickbacks, inappropriate entertainment and gifts, and illegal political donations, contributions, and sponsorships.

Basic Policy for Eliminating Organized Crime Groups and Status of Implementation

Based on our Basic Compliance Policy, the Group Companies take a firm stand on countering organized crime groups and established a system to eliminate organized crime groups by fully cooperating and sharing information with external specialized organizations such as police authorities, the federation of special anti-violence countermeasures of which is organized by the Metropolitan Police Department, and legal advisors.

Tax Policy

Each Group Companies have fulfilled tax obligations and have continued to secure stable profits for appropriate tax payments. In addition, the Company complies with the laws and regulations of each country the international organizations’ standards and OECD Transfer Pricing Guidelines. We fully pay appropriate taxes in various transactions. The Company currently does not have any overseas subsidiaries and does not engage in any transactions that could lead to tax avoidance, including tax havens.

Ensuring Compliance

The Company has established a Compliance Committee to ensure and determine policies for its Group Companies. It monitors specific matters to be complied within the execution of duties, such as laws and regulations, the Articles of Incorporation, internal regulations, and the Code of Conduct. Committee also established a system to prevent compliance violations.

The Company regularly provides compliance training for all employees including management, in laws and regulations that need to be understood for our business sustainability. The Company continuously raises employees’ awareness through regular insider trading regulations and harassment programs.

Periodically conduct internal audits to ensure that the execution of their respective duties is in compliance with laws and regulations and the Articles of Incorporation.

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We respond to the Whistleblower Protection Act in accordance with the “Whistleblower Handling Rules,”. The Company emphasizes on compliance management through early detection and correction of fraudulent activities by establishing an environment where whistleblowers can easily consult with internal and external multiple reporting windows by phone or email.