Corporate Governance

Enhancing corporate governance

In order to meet the expectations of stakeholders and build stronger trust, ACOM will strengthen corporate governance as a key management priority. To this end, we will take steps to enhance the soundness, transparency, and efficiency of our operations and achieve sustained increases in our shareholder value. We recognize that effective internal control systems are essential to creating an appropriate corporate governance framework. Based on this recognition, we are encouraging all members of our organization to join forces in building internal control systems and assuring their effectiveness, under the leadership of the Chairman, President & CEO. At the same time, we are constantly evaluating, verifying, and improving the effectiveness of internal control mechanisms already in place.

Corporate Governance and Internal Control System Structure (As of June 24, 2019)

Corporate Governance and Internal Control System Structure Scale up

An overview of corporate governance structure and reasons for employing said structure

The Company is a company with an Audit & Supervisory Committee and aims to enable swift decision-making and enhance the Board of Directors’ supervisory functions by significantly delegating decision-making on material business executions to directors from the Board of Directors. The Board of Directors, in turn, performs thorough monitoring and other measures on delegated matters.

The Company aims to improve the transparency and objectivity of its management by having an Audit & Supervisory Committee composed mainly of outside directors conduct audit and supervisory functions.

The organs installed by the Company are as follows:

Board of Directors

The Board of Directors of the Company consists of nine members: Chairman, President & CEO Shigeyoshi Kinoshita who chairs the Board, Directors Kaoru Wachi, Masataka Kinoshita, Teruyuki Sagehashi, Tomomi Uchida and Naoki Hori, and Members of Audit & Supervisory Committee Tatsuya Ito (Outside Director), Kazuo Fukumoto and Masahide Ishikawa (Outside Director).

The Company has concluded a limited liability agreement with each of the four non-executive Directors (two of whom are Outside Directors), which limits the liability for damage under Article 423, Paragraph 1, of the Companies Act to the extent of the amount stipulated in the law, in accordance with the provision of Article 427, Paragraph 1, of the Act.

The Board deliberates and decides important business management matters, such as management strategies and business planning, and basic policies for building corporate governance and internal control systems, while ensuring objective and rational judgment. Furthermore, the Board delegates decision-making on matters related to the execution of business operations other than matters to be resolved at the Board of Directors to President and Director, and monitors and supervises the execution of duties by thorough monitoring and other measures on delegated matters.

It meets once every quarter in principle, and more as deemed necessary.

Audit & Supervisory Committee

The Audit & Supervisory Committee consists of three members: Tatsuya Ito (Outside Director) who chairs the committee, Kazuo Fukumoto and Masahide Ishikawa (Outside Director).

It meets regularly to receive reports concerning important audit-related matters, hold discussions, and pass resolutions.

Committees

  1. Appointment and Remuneration Committee

    The Appointment and Remuneration Committee consists of six members: Chairman, President & CEO Shigeyoshi Kinoshita who chairs the committee, Representative Directors Kaoru Wachi and Masataka Kinoshita, and Members of Audit & Supervisory Committee Tatsuya Ito (Outside Director), Kazuo Fukumoto and Masahide Ishikawa (Outside Director).

    The Appointment and Remuneration Committee reviews and proposes the appointment of candidates and remuneration for Directors (excluding Directors serving as Members of Audit & Supervisory Committee) for resolution at the Board of Directors Meeting. The Committee also checks management and the status of training for candidates for management and provides an overview of the same to the Board of Directors.

    The Appointment and Remuneration Committee meets three times a year, in principle, and more as deemed necessary.

  2. Compliance Committee

    The Compliance Committee consists of five members: an expert from outside the Company Tatsuzo Honma who chairs the committee, experts from outside the Company Mitsuhiro Umezu and Tan Mitchell, and Representative Directors Shigeyoshi Kinoshita and Kaoru Wachi.

    In the presence of Members of Audit & Supervisory Committee, it discusses and, as necessary, makes recommendations to the Board of Directors about the following compliance-related matters.

    • Items relating to formulation, revision or abolishment of the ACOM Group Code of Ethics and Code of Conduct;
    • Important items related to establishment and operation of compliance systems;
    • Items relating to formulation of basic plans;
    • Items relating to the correction of major violations, actions for improvement and recurrence prevention measures; and
    • Important items related to other compliance issues.

    The Compliance Committee meets six times a year, in principle, and more as deemed necessary.

  3. Financial Information Disclosure Committee

    The Financial Information Disclosure Committee consists of twelve members: an executive officer who concurrently serve as director in charge of Treasury Department Nobuyoshi Matsutani who chairs the committee, executive officers who concurrently serve as directors in charge of the relevant departments, Teruyuki Sagehashi, Tomomi Uchida, Makoto Kondo and Masataka Kinoshita, and chief general managers in charge of the relevant departments, Akifumi Kinoshita, Takashi Okamoto, Masamitsu Iwamura, Akihide Izumi, Takashi Kiribuchi, Masahiko Machida and Daishi Haraguchi.

    In the presence of Members of Audit & Supervisory Committee, the Committee deliberates in advance the items related to the improvement of the financial disclosure system and the financial information to be disclosed for resolution at the Board of Directors Meeting, in order for the disclosure of the financial information and internal control of financial reports to be made in accordance with the relevant laws in a timely and in an appropriate manner.

    The Financial Information Disclosure Committee meets at least once every quarter, in principle, and more as deemed necessary.

  4. Corporate Risk Committee

    The Corporate Risk Committee consists of seven members: Deputy Chairman Kaoru Wachi who chairs the committee, Representative Directors Shigeyoshi Kinoshita and Masataka Kinoshita, and Members of Audit & Supervisory Committee Tatsuya Ito (Outside Director), Kazuo Fukumoto and Masahide Ishikawa (Outside Director), and an executive officer who concurrently serve as director in charge of Corporate Risk Management Department Makoto Kondo.

    The Corporate Risk Committee discusses important items related to risk management and makes proposals and reports to the Board of Directors as deemed necessary. The Committee also monitors the status of risk management and other matters and reports the results to the Board of Directors.

    The Corporate Risk Committee meets at least once every quarter, in principle, and more as deemed necessary.

Executive Officers’ Meeting

The Executive Officers’ Meeting consists of ten members: Chairman, President & CEO Shigeyoshi Kinoshita who chairs the committee, Representative Directors Kaoru Wachi and Masataka Kinoshita, executive officers who serve concurrently as directors Teruyuki Sagehashi, Tomomi Uchida, Nobuyoshi Matsutani, Makoto Kondo, Yasuhiro Kamura, Masaru Kuroda and Michihito Onodera.

In the presence of Members of Audit & Supervisory Committee, the Executive Officers’ Meeting discusses and makes decisions related to the execution of important business operations delegated by the Board of Directors to the President and Director, and deliberates management policies and management plans in advance for resolution at the Board of Directors Meeting in accordance with basic policies determined by the Board of Directors.

The Executive Officers’ Meeting assembles three times a month, in principle, and more as deemed necessary.

Appointment of Outside Directors and Reason Thereof

The Company has two Outside Directors. Their relationships with the Company are as shown in the chart below.

With respect to the standards for selecting candidates for independent outside directors, the Company places emphasis on how the candidates satisfy the standards regarding the independency of independent directors stipulated by the Tokyo Stock Exchange and whether or not the candidates have extensive experience, deep insight, and advanced expertise.

Name of Outside Director Relations with the Company
Tatsuya Ito
  • No special interests in the Company
  • He has garnered rich experience and knowledge centered around financial practice and corporate legal affairs through years of duty in the financial industry, the industry to which the Company belongs. He also has experience as an attorney-at-law. Therefore, the Company believes that its supervisory functions will be further reinforced by reflecting his strength in the management of the Company.
  • As he has no potential conflict of interest with general shareholders and meets the independence requirements of the Tokyo Stock Exchange, he has been designated as an independent director.
Masahide Ishikawa
  • No special interests in the Company
  • He has a wealth of knowledge and experience acquired in the finance industry over many years, as well as achievements as a corporate manager. He has also served as Vice Chairman of the Japan Investment Advisers Association twice in total, and thus has wide-ranging insight. Therefore, the Company believes that he can supervise and provide appropriate advice for the management of the Company from an external viewpoint based on his knowledge and experience.
  • As he has no potential conflict of interest with general shareholders and meets the independence requirements of the Tokyo Stock Exchange, he has been designated as an independent director.

Compensation to Directors and Company Auditors

  1. Matters concerning the policy for the decision on the amounts of compensation to Directors and Company Auditors or the calculation method thereof
    The amount of compensation payable to Directors (excluding Directors serving as Members of Audit & Supervisory Committee) is reviewed and proposed at the Appointment and Remuneration Committee and determined at the Board of Directors in consideration of business results and other factors, within the total amount of compensation resolved at the meeting of shareholders. The amount of compensation payable to Members of Audit & Supervisory Committee is determined at consultation with Members of Audit & Supervisory Committee in consideration of their duties and responsibilities, within the total amount of compensation resolved at the meeting of shareholders. The Company newly introduced performance-linked compensation based on single-year performance for compensation to full-time Directors (excluding Directors serving as Members of Audit & Supervisory Committee) from the fiscal year ending March 31, 2020.
    It was resolved that compensation to Directors (excluding Directors serving as Members of Audit & Supervisory Committee) per year shall be no more than 400 million yen (excluding the portion of employee’s salary paid to Directors who concurrently serve as employees) at the 40th Ordinary General Meeting of Shareholders held on June 22, 2017. It was also resolved that compensation to Directors serving as Members of Audit & Supervisory Committee per year shall be no more than 100 million yen at the said Ordinary General Meeting of Shareholders.
    The final decision of specific amount of compensation to Directors (excluding Directors serving as Members of Audit & Supervisory Committee) is entrusted to Chairman, President & CEO Shigeyoshi Kinoshita by resolution at the Board of Directors Meeting based on the result of meetings of the Appointment and Remuneration Committee.
  2. Total amount of compensations by categories for the Filing Company, total amount of compensations by type, and the number of paid officers
    Category Number of recipients Amount paid
    (Millions of yen)
    Directors
    (excluding Audit & Supervisory Committee Members and Outside Directors)
    7 139
    Audit and Supervisory Committee Members
    (excluding Outside Directors) 
    1 19
    Outside Directors and Outside Company Auditors 3 37
    Total 11 196

    (Notes)

    1. There are no employee-directors.

    2. "Number of persons" represents the cumulative number of directors who received compensation during the current fiscal year.

  3. Total amount of consolidated compensations by Filing Company's officers.
    This is omitted as none of officers of the Filing Company received aggregated consolidated compensations of 100 million yen and above.

Status of securities held by the Company

  1. Criteria and basic stance of classification of investment securities
    For classification between investment securities held for pure investment purposes and investment securities held for other than pure investment purposes, the Company does not hold any investment securities held for other than pure investment purposes and does not have a plan to hold them in the future.
  2. Investment securities held for other than pure investment purposes
    Not applicable
  3. Investment securities held for pure investment purposes
    Category Fiscal Year Ended March 2019 Fiscal Year Ended March 2018
    Number of names
    (Name)
    Value in balance sheet
    (Millions of yen)
    Number of names
    (Name)
    Value in balance sheet
    (Millions of yen)
    Non-listed
    Securities
    22 821 24 827
    Securities
    other than
    the above
    2 0 1 0
    Category Fiscal Year Ended March 2019 (Millions of yen)
    Total dividend received Total gain or loss on sale Total valuation gain or loss
    Non-listed
    securities
    15 3 (Note)
    Securities
    other than
    the above
    - 0 0

    (Note) “Total valuation gain or loss” is not shown for non-listed securities, since they have no market value and it is considered extremely difficult to obtain the value of such securities.

  4. Investment securities, of which holding purpose has been changed from pure investment to other than pure investment
    Not applicable
  5. Investment securities, of which holding purpose has been changed from other than pure investment to pure investment
    Not applicable

Promoting Prompt and Accurate Fair Disclosure

ACOM endeavors to maintain and improve transparency of management for the benefit of stakeholders through accurate and prompt disclosure of various management information. Concurrently, ACOM concentrates on diverse investor relations activities both in domestic and overseas. These consist of, but not limited to: earnings release conferences for investors and institutional analysts; individual interviews; conference calls, and overseas IR roadshow.

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