Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.
Corporate Governance Report
Mitsuuroko Group Holdings Co.,Ltd.
Last Update: March 31, 2022 Mitsuuroko Group Holdings Co., Ltd.
Kohei Tajima, President and Representative Director
Securities code: 8131
The corporate governance of Mitsuuroko Group Holdings Co., Ltd. (the “Company”) is described below.
I. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other Basic Information
1. Basic Views
The purpose of Mitsuuroko Group (the “Group”) are to establish systems for ensuring the appropriateness of the Group’s business operations, in accordance with the Companies Act, the Regulations for Enforcement of the Companies Act, codes of corporate conduct issued by financial instruments exchanges, etc., to comply with laws, regulations, and social ethics and norms, and to fulfill the Group’s social mission in our business activities while ensuring transparent management as well as an honest response to our customers, business partners, shareholders, and other stakeholders.
Furthermore, at the Ordinary General Meeting of Shareholders held on June 26, 2015, the Company transitioned from a company with a board of company auditors to a company with an audit and supervisory committee, to achieve more transparent management by strengthening functions for auditing and supervising the legality and propriety of business execution and further strengthen corporate governance systems.
[Reasons for Non-compliance with the Principles of the Corporate Governance Code]
(Supplementary Principle 1.2.4)
As the ratio of overseas investors in the Company is relatively low, at approximately 6% or less, there is no obstacle to exercising voting rights without using the Electronic Voting Platform and without translating the convocation notice for the General Meeting of Shareholders into English. Hence, the Company has not taken such actions at present. However, given that the ratio of overseas investors is expected to increase in the future in line with the ongoing expansion of the Company’s global business, the Company plans to introduce the Electronic Voting Platform at the 113th General Meeting of Shareholders (scheduled for June 2022). In addition, the Company will also proceed with the English translation of the convocation notice. From the 111th Ordinary General Meeting of Shareholders, the Company has made it possible for shareholders to exercise their voting rights via the Internet, including smartphones, to create an environment in which it is easier for shareholders to exercise their voting rights.
(Principle 4.8 Effective Use of Independent Directors)
Of the 12 Directors currently in office, the Company has elected three independent External Directors. Each of them provides recommendations based on their abundant experience, knowledge, and expertise from an objective and neutral standpoint while also fulfilling their supervisory functions, for example, participating in decisions related to the remuneration of Directors. Each independent External Director sufficiently contributes to the Company’s sustainable growth and the enhancement of corporate value medium– to long term. Going forward, the Company will consider the necessity of electing new independent External Directors to contribute to the further growth of the Company and the enhancement of corporate value.
(Supplementary Principle 4.8.1)
At meetings of the Company’s Board of Directors, independent External Directors actively participate in discussions from an objective standpoint. At present, the Company does not hold meetings consisting solely of independent Directors regularly. We recognize the importance of having independent External Directors exchange information and develop a shared awareness from an independent and objective standpoint. Therefore, in the future, we will consider providing opportunities to exchange information and create a shared understanding from an objective perspective, including holding meetings.
(Supplementary Principle 4.8.2)
The Company does not appoint a lead independent External Director. At present, the Company has a system where each independent External Director communicates and coordinates with management and collaborates with Members of the Audit and Supervisory Committee. If it becomes difficult for independent External Directors to communicate and coordinate with management and collaborate with Members of the Audit and Supervisory Committee under the current system, the Company plans to reconsider establishing procedures to promote collaboration, such as appointing a lead independent External Director.
(Supplementary Principle 4.10.1)
Currently, the Company’s Board of Directors, which includes three independent External Directors, makes decisions on the nomination of candidates for Directors and the selection of senior management, taking into consideration the diversity of candidates’ achievements, experience, abilities, skills, gender, and other factors in a comprehensive manner. In addition, the Board of Directors appropriately determines remuneration (basic remuneration) such that the amount is suitable and appropriate in light of Directors’ roles and responsibilities, taking into consideration the business performance of the Company, within the framework of the total amount of remuneration resolved at the General Meeting of Shareholders. Pursuant to a resolution by the Board of Directors, decisions concerning the specific content of the individual remuneration of Directors are delegated to the President and Representative Director, who make decisions concerning the establishment of payment standards in accordance with positions, responsibilities, etc., after consulting with and receiving reports from independent External Directors. In this way, the Company receives appropriate participation and advice from independent External Directors for decisions related to the nomination and remuneration of senior management and Directors and therefore does not have a voluntary advisory committee, etc., related to the nomination and remuneration of senior management and Directors, etc. In the future, when considering important matters such as the nomination and remuneration of senior management and Directors, the Company will consider establishing systems to obtain appropriate participation and advice from independent External Directors, including the establishment of advisory committees and increases in the number of independent External Directors, to further strengthen independence, objectivity, and accountability.
[Disclosure Based on the Principles of the Corporate Governance Code]
(Principle 1.3 Basic Strategy for Capital Policy)
The Company positions the return of profits to shareholders as an important management issue. Its basic policy is to implement a stable dividend policy while considering the strengthening of its financial position and the enhancement of internal reserves necessary for active business development. From a medium- to long-term perspective, we will continue striving to achieve sustainable growth, increase corporate value, and increase shareholder value by investing management resources in business areas expected to grow.
The Company will endeavor to maintain stable dividends in terms of shareholder returns, with a target dividend payout ratio of 40% per annum.
(Principle 1.4 So-called Cross-Shareholdings)
1. Policy on Cross-Shareholding
The Company’s policy is to hold shares that contribute to enhancing corporate value over the medium- to long-term, after comprehensively considering their importance in relation to its business strategy, relationships with business partners, and other factors. Each year, the Board of Directors examines the significance of acquiring and holding each individual stock and their profitability based on the cost of capital, etc., thus regularly verifying the appropriateness of holding these stocks. Furthermore, the Company has established a policy of selling any stocks that it is unable to recognize the rationality of holding as a result of verifying the significance and purpose of holding them and will take steps to reduce the number of such shares that it holds.
2. Exercise of Voting Rights
The Company appropriately exercises voting rights based on a comprehensive assessment of whether to vote for or against each proposal, taking into consideration factors such as the establishment of appropriate corporate governance systems, the enhancement of the corporate value of the investee over the medium- to long-term, and the impact on the Company. If necessary, we will discuss the content of proposals, etc., with issuers.
(Principle 1.7 Related Party Transactions)
The appropriateness of transactions between the Company and Directors is judged by the Board of Directors, as a matter to be approved by the Board of Directors in accordance with the Rules of the Board of Directors. In addition, although there are no major shareholders at present, the Company’s policy is to obtain the necessary approval for transactions with major shareholders in accordance with internal regulations and for the Board of Directors to receive reports and make decisions on significant transactions. In addition, the Company conducts annual surveys on related party transactions of officers of the Company and the Group, monitors these persons, and discloses the results thereof in annual securities reports, etc.
(Supplementary Principle 2.4.1)
1. Views and targets for securing diversity, and the status thereof
The Group believes in order to provide better services to its customers as “A Lifestyle Producer” in an increasingly diverse society, it is essential to be a company where a diverse range of employees can fully demonstrate their abilities and work in a lively and energetic manner. Accordingly, we are promoting diversity and inclusion within the Group.
As part of these efforts, the Group has been working to promote the active participation of women to achieve the numerical targets announced on November 12, 2014. On September 17, 2021, the Company revised the targets as follows.
(1) Proportion of women in the workforce (*1)(*2)
Target for March 2027: 33%
As of May 2021, women made up 29% of the Group’s workforce. Women made up 25% of the Group’s workforce in September 2014, meaning that a steady increase in the proportion of women in the workforce has been achieved over the past seven years. Going forward, the Company will increase the ratio to 33% by March 2027.
(2) Proportion of women in managerial positions (*1)(*3) Target for March 2027: 11%
As of May 2021, women made up 7.3% of managers of the Group as a whole. Women made up 4.2% of managers of the Group in September 2014, meaning that a steady increase in the proportion of women in managerial positions has been achieved over the past seven years. Going forward, the Company will increase the proportion to 11% by March 2027.
(Note 1) All proportions are calculated after excluding temporary employees, part-time employees, and officers
(Note 2) This figure excludes Logitri Tohoku Co., Ltd., Logitri Chubu Co., Ltd., and Logitri Kansai Co., Ltd., where there are restrictions on female labor because they are LPG delivery companies that handle heavy goods. The number of target employees was 1,433 as of the end of May 2021
(Note 3) Calculated as (number of women in managerial positions ÷ total managerial positions across all consolidated companies (excluding Logitri Tohoku Co., Ltd., Logitri Chubu Co., Ltd., and Logitri Kansai Co., Ltd.)) × 100
In addition, as part of measures to appoint a diverse range of human resources to the optimal positions for them, regardless of gender, nationality, or personal background, the Company hires and appoints foreign nationals and mid-career employees.
In terms of current appointments of foreign nationals as core personnel at Japanese companies, one Director of the Company and one head of a subsidiary of the Company are foreign nationals. Still, there are no foreign nationals in managerial positions. In the future, as we promote hiring the right people for the right job, we will also actively promote hiring foreign nationals to managerial positions. Furthermore, the percentage of mid-career hires in managerial positions is approximately 65%, which we believe is sufficient to ensure human resource diversity. Accordingly, we have not set a target for the percentage of mid-career hires in managerial positions.
2. Policies for developing human resources and creating internal environments to ensure diversity, as well as the implementation status thereof
As part of our efforts to promote diversity and inclusion, the Group provides annual training on women’s health and has also held training on women’s career development and training to support the creation of career paths for the female subordinates of managers with such subordinates. We will continue to implement this training in future.
In addition, we are working to create an environment in which employees can work comfortably while balancing work and family life. For example, we have established half-day paid leave, hourly paid leave, and non-scheduled work exemption periods, expanded leave, and shortened working hours for childcare and family care leave, and have provided employees with the ability to select options to take three days holiday a week and work from home.
(Principle 2.6 Roles of Corporate Pension Funds as Asset Owners)
The Company does not have a corporate pension fund plan. We have introduced a corporate defined contribution pension plan to assist the stable formation of assets by our employees. We also provide regular education and training for eligible employees.
(Principle 3.1 Full Disclosure)
1. Management philosophy, etc., management strategy, and management plan [Management philosophy]
Based on our management philosophy of “As a Lifestyle Producer, we consistently conduct our business with integrity and from the customer’s perspective,” the Group is working to enhance consumer services, particularly concerning energy. We will continue to contribute to theconservation of the global environment by constantly expanding our range of new services from a consumer-oriented perspective through such means as utilizing natural energy and promoting the installation of energy-saving residential equipment.
In energy products, in particular, we will continue to strengthen our efforts to maintain safety to ensure that we can provide products with “safety and security” as our top priority while also focusing on compliance in our business activities. In this way, we will fulfill our corporate social responsibility.
[Medium- to long-term management strategy]
To achieve our vision of being “A Lifestyle Producer,” as outlined in our management philosophy, we will mainly focus on the following matters while maintaining our competitiveness in the energy-related business, our core business.
(1) In order to make the most of the competitive superiority that comes with owning our power sources, we will aim to increase the profitability of the electric power business, including the sale and supply of electric power, while also focusing on the spread of household fuel cells and power storage equipment.
(2) With the Group’s strength in providing services for daily life, customers are the basis for our sales activities both in our existing and our next-generation businesses and increasing the customer base lies at the foundation of the Group’s management. We will continue taking steps to increase the number of customers to ensure that the Group’s fans increase as many as possible.
(3) The Company is taking steps to further expand into the “foods business,” centering on the active expansion of the store network of “Carl’s Jr.,” a burger restaurant chain, as well as the development of the shop & restaurant business, the grocery shop business, and the voluntary chain business. In addition, Sweet Style Co., Ltd., will continue to actively develop its store network by expanding the “Azabujuban Mont– Thabor” chain of bakeries where experienced bakers do everything from scratch, from preparing to baking, at each store, as well as the “Motomachi Coffee” chain, which offers customers carefully selected coffee and an original space (retreat). We will continue to provide products that satisfy our customers and further strengthen quality controls and hospitality.
2. Basic views and policies on corporate governance
Based on the Mitsuuroko Group Corporate Ethics Charter, the Company aims to contribute to the conservation of the global environment and the creation of a fulfilling society that is easy to live in while also ensuring that our corporate activities are fair and sound and maintaining good relations with our various stakeholders. Additionally, we are constantly promoting the reform of our corporate governance methods as we look to ensure swift management decision-making, strengthen functions for supervising management, and ensure transparency in our corporate behavior, while also working to reform our management structure and enhance internal control systems, as part of our endeavor to enhance value for all stakeholders of the Mitsuuroko Group.
3. Policies and procedures for when the Board of Directors determines the remuneration of senior management and Directors As stated in “Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods” in part II 1 of this Report.
4. Policies and procedures for when the Board of Directors elects and dismisses senior management and nominates candidates for Directors and Audit & Supervisory Board Members
With regard to the election of Directors, to contribute to the sustainable development of the Company over the medium- to long-term, the Company elects persons for senior management positions who possess appropriate abilities for senior management, such as swift, decisive, and accurate management decision-making and appropriate risk management.
For Internal Directors, the Company nominates candidates who have abundant knowledge, experience, and achievements in their areas of responsibility and possess abilities suitable for Directors, including their character. Additionally, for External Directors, the Company nominates candidates who have expert knowledge, diverse experience, and a broad perspective and who also possess abilities suitable for External Directors. In addition, for Directors who are Audit and Supervisory Committee Members, the Company nominates candidates with appropriate knowledge of finance and accounting, knowledge of the Company’s business fields, and diverse perspectives on corporate management. Furthermore, Directors will be dismissed if they engage in conduct that is inappropriate for Directors of the Company, such as to conduct that violates public order or morals, if they have difficulty continuing their duties for health reasons, if they do not possess the qualities stipulated in the election criteria, and if any other equivalent reasons apply.
The election and dismissal of Directors and the nomination of Director candidates are determined by the resolution of the Board of Directors after consideration by the Representative Director and the Director responsible for human resources, based on the above policy. The consent of the Audit and Supervisory Committee is required for the nomination of candidates for Directors who are Audit and Supervisory Committee Members, in accordance with the provisions of laws and regulations.
5. Explanation of individual elections and nominations when the Board of Directors elects and dismisses senior management and nominates Directors and Audit & Supervisory Board Member candidates based on item 4 above
When electing Directors, the Company discloses the career summary, concurrent positions, number of shares held, and reasons for the election of each Director (including Directors who are Audit and Supervisory Committee Members) in the Reference Documents for the General Meeting of Shareholders in the “Notice of Convocation of the Ordinary General Meeting of Shareholders.” The reasons for the election of External Directors (including Directors who are Audit and Supervisory Committee Members) are also disclosed in part II 1 of this Report and annual securities reports. In addition, the reasons for the election of Internal Directors are as follows.
Representative Director since 2007 and has achieved many results including the creation of new businesses in response to the changing society. In addition, he possesses the abundant experience and executive ability in relation to the Group’s businesses and corporate management as well as a global perspective and broad insight. Amid drastic changes in the external environment and the industry as a whole, he is suitably qualified to respond to changes in society and the needs of our customers to achieve business strategies that consistently look to the future, Group strategies aimed at enhancing corporate value, and to strengthen corporate governance further.
▪ Director Atsushi Futami has served as Director of the Company since 2005, Managing Director since 2008, and President and
Representative Director of Mitsuuroko Green Energy Co., Ltd., a major consolidated subsidiary of the Group, since 2011. His career and track record as Director have been outstanding. He can be expected to make a significant contribution to the further business development and expansion of the Group based on his advanced abilities and broad insight.
▪ Director Kazuhiro Kojima served as Assistant General Manager of the Accounting Department of Mizuho Corporate Bank, Ltd. (currently Mizuho Bank, Ltd.) in 2005 and Deputy General Manager of Sales Department No. 1 of Mizuho Corporate Bank, Ltd. in 2008, and thus has experience in both overseas business and accounting. At the Company, he served as Group Executive Officer, General Manager attached to the President’s Office, and General Manager of the Finance & Accounting Department in 2012. In 2014, he was appointed as Director of the Company, and served as General Manager of the President’s Office, General Manager of the Group Management Office, General Manager of the Corporate Administration Office, and General Manager of the Finance & Accounting Department. In 2020, he was appointed as Group CFO and Group CAO. His track record has been outstanding, and he can be expected to make a significant contribution to the enhancement of the corporate value of the Group based on his advanced abilities, global perspective, and broad insight.
Lubricating Oil Division of EMG Marketing G.K. (currently ENEOS Corporation) in 2013 and Vice President and General Manager of the Lubricating Oil Sales Management Division of EMG Lubricants G.K. in 2017, and he was also appointed Director of the Company in 2019. His career and track record have been outstanding, and he can be expected to make a significant contribution to further the business development and expansion of the Group based on his advanced abilities, global perspective, and broad insight.
Department, before being appointed Group Executive Officer in 2012 and Director of the Company in 2014, as well as Director, Sales Division Supervisor, and General Manager of the Sales Management Department of Mitsuuroko Co., Ltd. In these and other ways, he possesses advanced abilities and broad insight. In 2017, in response to changes in the business environment surrounding the Group, he established a system to deploy sales strategies that take advantage of the characteristics of each region, which further strengthened our competitiveness and created more effective management strategies. His career and track record have been outstanding, and he can be expected to make a significant contribution to further the business development and expansion of the Group based on his advanced abilities and broad insight.
▪ Director Motoyasu Omori assumed office as President and Representative Director of Mitsuuroko Beverage Co., Ltd. (currently Mitsuuroko Provisions Co., Ltd.), a major consolidated subsidiary of the Group, in 2011 and was appointed General Manager of the President’s Office of the Company in 2012 and Group Executive Officer in 2014. In these and other ways, he possesses advanced abilities and broad insight. In 2017, he promoted the establishment of a company to supervise the expanding “food” business and he can be expected to make a significant contribution to the further business development and expansion of the Group by pursuing synergies between each brand and creating new value in the “food” field.
▪ Director Goh Wee Meng assumed office as North Asia and the Pacific Group Manager of International Enterprise Singapore in 2009, then Center Director (Tokyo) of the Singapore Embassy Commercial Office in 2011, and served as Council Director of the ASEAN-Japan Centre during this time. In these and other ways, he can be expected to make a significant contribution to business development and overseas expansion based on his advanced abilities and global perspective.
(Supplementary Principle 3.1.2)
The Company has released an English translation of the summary of its financial results for the six months ending September 30, 2021. In future, we will continue to disclose and provide information in English on financial results and other information deemed necessary from disclosure documents such as integrated reports (business reports).
(Supplementary Principle 3.1.3)
The Company’s Board of Directors has established basic policies related to the Company’s sustainability initiatives as part of the “Mitsuuroko Group Management Policy and Strategy.” For details, please refer to pages 13 and 14 of the “Business Report (Integrated Report) 2021.” https://ssl4.eir-parts.net/doc/8131/ir_material_for_fiscal_ym2/107691/00.pdf
In the Group, we define “our role” in its relationship to ESG (environmental, social, and governance) factors. Then, to fulfill “our role,” we engage in “our activities.” In order to achieve a sustainable society through such factors as our response to global environmental issues, the provision of safe and secure energy, and the revitalization of local communities, we will carry out further activities while fulfilling “our role.”
“Our role” (“Business Report (Integrated Report) 2021,” pages 29 to 44)
・ Achieve a low-carbon society (Environment)
・ Achieve a safe and secure society (Society)
・ Revitalize local communities (Society)
・ Coexistence with local communities (Society)
・ Develop human resources and promote active participation (Society)
Corporate governance (Governance)Furthermore, for details of “our activities,” please refer to pages 31 to 44 of the above “Business Report (Integrated Report) 2021.”
In addition, based on the belief that human resources are the “source of growth” and our “greatest asset,” the Group positions the creation of an “environment that is easier to work in” and an “environment that is easier to actively participate in” for sustainable growth as an important role of management. For details of specific initiatives, please refer to “Developing Human Resources and Promoting Active Participation” on page 36 of the above “Business Report (Integrated Report) 2021.”
With regard to investments in intellectual property, etc., the Group is working to achieve a low-carbon society through measures including support for the development and dissemination of high-performance, safe, large-scale lithium batteries and the development and provision of the SmartOWL service, which aims to reduce environmental impact by improving the efficiency of LPG delivery. For details of specific initiatives, please refer to pages 31 and 32 of the above “Business Report (Integrated Report) 2021.”
The Company is currently collecting and analyzing data on the impact of climate change risks and earnings opportunities on its business activities and earnings. From April 2022 onwards, we plan to publish a sustainability report and provide disclosure based on the materiality (material issues for the Company) and the framework of the TCFD.
(Supplementary Principle 3.2.1)
The Audit and Supervisory Committee has established criteria for the selection of candidates for external financial auditors and criteria for assessing incumbent external financial auditors, receives reports on the audit systems, activities, etc., of accounting departments and the external financial auditors, and evaluates audit quality and the appropriateness of the level of remuneration of the external financial auditors, as well as confirming their independence and expertise. Furthermore, the Company is not aware of any issues concerning the independence and expertise of KPMG AZSA LLC, the current external financial auditor of the Company.
(Supplementary Principle 4.1.1)
The Rules of the Board of Directors set forth that matters stipulated by laws and regulations, matters stipulated in the Articles of Incorporation, and matters related to important business operations shall be determined by the resolution of the Board of Directors. Issues related to important business operations include the concurrent appointment of Directors as officers of other companies, the conclusion of important contracts, matters related to lawsuits, the establishment of subsidiaries, etc., and other issues related to affiliated companies, etc. In addition, the Rules of the Board of Directors also set forth the fact that matters to be resolved by the resolution of the Board of Directors may be transferred or delegated to other bodies, except in cases where it is stipulated by laws and regulations that such matters cannot be resolved except by resolution of the Board of Directors.
Internal regulations (the Approval Regulations) stipulate that, for example, the following matters shall be resolved by the resolution of the Board of Directors in cases when the amount exceeds ¥200 million, and determined by the Representative Director and other bodies in cases with the amount is ¥200 million or less, depending on the amount: the rebuilding of buildings and facilities, etc., the purchase of fixtures, equipment, and vehicles, etc., the purchase and disposal of operating assets that are important and high in quantify, etc., and the purchase of LP gas business rights, etc. In addition, the following matters shall be resolved by the resolution of the Board of Directors in cases when the amount is ¥30 million or more and determined by the Representative Director and other bodies in instances where the amount is ¥30 million or less, depending on the amount: write-offs and loan forgiveness for non-performing loans, compensation, and compensation for damages, provision of debt guarantees and collateral, etc.
(Supplementary Principle 4.2.1)
The Company has introduced a performance-linked stock remuneration plan for Directors (excluding External Directors) other than Directors who are Audit and Supervisory Committee Members, following the adoption of a resolution to introduce the system at the 107th Ordinary General Meeting of Shareholders held on June 28, 2016, with the objective of raising awareness of increasing medium- to long-term business performance and enhancing corporate value by clarifying the link between the remuneration of Directors (excluding External Directors) and the Company’s business performance and share value and ensuring that Directors share not only the benefits of rising share prices but also the risks of falling share prices with shareholders.
Performance-linked remuneration, etc., are not appropriate for External Directors who are independent of the execution of business operations and Directors who are Audit and Supervisory Committee Members in an independent position with the authority to supervise the execution of duties by Directors without being affected by business performance. Accordingly, these Directors are only paid basic remuneration, which is fixed remuneration.
Procedures for determining remuneration are stated in “Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods” in part II 1 of this Report.
(Principle 4.9 Independence Standards and Qualification for Independent External Directors)
The Company classifies independent External Directors as those who do not fall under any of the following categories.
1. Current person who executes business or persons who were a person who executes business within the past 10 years of the Company or a subsidiary of the Company
2. Persons for whom the Company or a subsidiary of the Company are a major client (*1) (or persons who execute the business thereof in cases when the relevant person/entity is a corporation, etc.)
3. Major clients of the Company or subsidiaries (*2) (or persons who execute the business thereof in cases when the major client is a corporation, etc.)
4. Persons who have received donations totaling ¥10 million or 2% of their net sales or total income, whichever is higher, from the Company or its subsidiaries in the immediately preceding fiscal year
5. Consultants, certified public accountants and other accounting experts, and attorneys and other legal professionals who have obtained property other than officer remuneration from the Company or its subsidiaries that exceeds ¥10 million or 2% of that person’s net sales or total income, whichever is higher, in the most recent fiscal year (if the person who obtains said property is a corporation, partnership, or other organization, persons who belong to said organization).
6. Major shareholders who directly or indirectly hold 10% or more of the Company’s total voting rights (or persons who execute the business thereof in cases when the shareholder is a corporation, etc.)
7. Persons who have fallen under the above categories 2 through 6 within the past three years.
8. Close relatives of persons falling under the categories 1 through 7 above (spouses or within the second degree of kinship)
*1 A person for whom the Company or a subsidiary of the Company is a major client refers to either of the following.
(1) A client that provides products or services to the Company or its subsidiaries, and for which the amount of transactions with the Company and its subsidiaries in the most recent fiscal year exceeds ¥100 million or 2% of the consolidated net sales of that client, whichever is higher. (2) A client to which liabilities are owed by the Company or its subsidiaries, and for which the total amount of liabilities owed by the Company and its subsidiaries as of the end of the most recent fiscal year exceeds ¥100 million or 2% of the consolidated total assets of that client, whichever is higher.
*2 A major client of the Company or a subsidiary of the Company refers to any of the following.
(1) A client to which the Company or its subsidiaries provide products or services, and for which the amount of transactions with the client in the most recent fiscal year exceeds ¥100 million or 2% of the consolidated net sales of the Company or its subsidiaries, whichever is higher.
(2) A client that owes liabilities to the Company or its subsidiaries, and for which the total amount of liabilities owed to the Company and its subsidiaries as of the end of the most recent fiscal year is 2% or more of the consolidated total assets of the Company or its subsidiaries.
(3) A financial institution group that has lent money to the Company or its subsidiaries (meaning a person who belongs to a consolidated group to which the direct lender belongs), and for which the total amount of loans from said financial institution group to the Group as of the end of the most recent fiscal year exceeds 2% of the consolidated total assets of the Group.
(Supplementary Principle 4.11.1)
To ensure the sustainable development of the Company over the medium to long term as “A Lifestyle Producer,” the Company elects a good balance of Internal Directors who have abundant knowledge, experience, and achievements in their areas of responsibility, and who also possess abilities suitable for Directors, including their character. Additionally, for External Directors, the Company elects persons who have expert knowledge, diverse experience, and a broad perspective and who also possess abilities suitable for External Directors. In this regard, Director Matsui, whose designation as an independent director has been reported, has abundant experience as a manager, as stated in the reason for her election. In addition, the Company discloses a skill matrix for each Director (excluding Directors who are Audit and Supervisory Committee Members) in the Notice of Convocation of the Ordinary General Meeting of Shareholders.
To ensure thorough deliberations and prompt decision-making, the Company believes an appropriate number of members of the Board of Directors is 12 or fewer, and we have set forth rules to that effect. The Board of Directors currently has 12 members, of which five are External Directors.
(Supplementary Principle 4.11.2)
The Company discloses the status of significant concurrent positions held by candidates for Directors and Directors every year in the Reference Documents for the General Meeting of Shareholders in the “Notice of Convocation of the Ordinary General Meeting of Shareholders” as well as annual securities reports.
(Supplementary Principle 4.11.3)
Starting with meetings of the Board of Directors held in fiscal 2015, the Company has conducted self-evaluations of the effectiveness of the Board of Directors in the form of questionnaires given to Directors. The Company endeavors to ensure objectivity by seeking advice from attorneys and other experts as appropriate in relation to the preparation of this questionnaire and the analysis of evaluation results.
In the questionnaire, views were freely expressed from the standpoint of each Director. The Finance & Control Center of the Company analyzed the results of the questionnaires and concluded that the Company’s Board of Directors was generally effective in fiscal 2020. Specifically, the Board of Directors is particularly highly evaluated in relation to the following points: the appropriate composition of members for the effective operation of the Board of Directors, the sharing of management information and the fulfillment of the role of External Directors, the appropriate reporting of the results of audits of the effectiveness of internal control systems, and the appropriate verification of cross-shareholdings. On the other hand, it has been recognized that the Board of Directors must more actively consider the promotion of ESG initiatives and should also more strategically implement and confirm revisions to the business portfolio and capital and human resource investments. The Company will work to make improvements on these points in future.
(Supplementary Principle 4.14.2)
The Company conducts regular training for Directors to deepen the knowledge and insight necessary to address matters related to management, matters related to corporate governance, and revised laws and regulations, etc., as Directors. To date, we have provided training with compliance awareness videos based on specific case studies and video training related to sexual and power harassment. In addition, the Company has created opportunities to provide explanations to newly appointed Directors concerning matters related to corporate laws and regulations, including corporate governance and their attitudes as Directors and other matters, at the time of appointment. In particular, the Company strives to provide information on the Group’s business and management strategies, etc., to newly appointed external officers.
We also recommend that officers actively participate in training provided by external organizations and make efforts to improve their skills, meaning that each officer receives training as necessary.
(Principle 5.1 Policy for Constructive Dialogue with Shareholders)
On January 1, 2020, the Company established the Finance & Control Center and created a team overseeing IR within this organization. The Director, who is Head of the Finance & Control Center, is also the Director responsible for IR and the manager in charge of IR. The Company actively discloses information to shareholders through such measures as the issuance of business reports (integrated reports) and shareholder