Organization and Initiatives
Corporate Governance Structure and Initiatives
Meidensha clearly separates important management decision-making and operational decision-making in the rules of the Board of Directors and the rules of internal approval procedures, and ensures flexible executive functions.
The executive committee, which comprises executive directors and executive officers, has been created for executive decision-making, and decides matters based on the rules of internal approvals, as well as matters for which consultation from a whole company perspective is required.
Furthermore, we have established review meetings as an advisory body that operates separately from the decision-making structure in order to create a system for in-depth discussion and consideration of important management matters.
(1) Features of Institutional Design
① Executive Officer System
Meidensha introduced an executive officer system in June 2003 in order to streamline the Board of Directors so as to “speed up corporate decision-making and enhance its supervisory function.” At the same time, we strengthened the functions of the Board of Directors and separated the “decision-making and supervisory functions” and the “executive functions” that the Board of Directors used to have. The former functions were assigned to the Board of Directors and the latter to the executive directors and executive officers to whom the duties were delegated by the representative directors.
Executive functions for business operations are carried out according to resolutions and decisions of the executive committee, which is a decision-making body for executive functions, and the executive directors and executive officers, who have the authority to carry out executive functions, under the supervision of the Board of Directors. In this way, business operations are executed autonomously, flexibly, and swiftly.
Furthermore, with the Board of Directors having broadly assigned authority to conduct executive functions to the executive officers, directors and executive officers in charge of operations are required to submit status reports on the execution of operations to the Board of Directors at least once every three months in order to ensure that the supervisory function of the Board of Directors properly works.
② Composition of Directors
There are currently nine directors, and we believe that this number is appropriate to ensure thorough consideration to make appropriate and swift decisions to address the drastically changing business environment.
Furthermore, two of the nine directors are outside directors who carry out a supervisory function for execution of operations in order to strengthen corporate governance.
Meidensha’s outside directors satisfy the requirements of independent directors as stipulated in the rules of the Tokyo Stock Exchange.
③ Policy for Appointment of Candidates for Director and Appointment/Dismissal Process
When appointing Meidensha’s directors, it is our basic policy to appoint appropriate personnel that will ensure diversity and balance of the Board of Directors and contribute to increasing Meidensha’s corporate value based on individual directors’ abilities, knowledge, and experience, etc.
The number of directors is a number that we deem appropriate to fully deliberate on the management issues of the Company, with an upper limit of fifteen members.
Based on the above, we conduct a selection of candidates for director that will contribute to the enhancement of the Board of Directors decision-making function and oversight function, by resolution of the Board of Directors, with advice from the Nomination and Remuneration Committee* (voluntary committee), which is chaired by an independent outside director. The candidates are then presented at the General Meeting of Shareholders.
Furthermore, with regard to the dismissal of directors, if it is discovered that a director has breached the law or the Articles of Incorporation, or committed acts that flagrantly breach the director’s selection policy, the Board of Directors will take the necessary steps to dismiss said director with the advice of the Nomination and Remuneration Committee.
*Meidensha established a voluntary Remuneration Committee in December 2017. In December 2018, the Committee took on the functions of a voluntary nomination committee to become the Nomination and Remuneration Committee. The Nomination and Remuneration Committee is chaired by an independent outside director and is comprised of two outside directors, the chairman of the Board of Directors, and the president of the Board of Directors.
(2) Effectiveness Evaluation of the Board of Directors
Meidensha has a mechanism in place to conduct an analysis and evaluation of the effectiveness of the Board of Directors in order to strengthen the supervisory function of the Board of Directors.
With regard to the activities of the Board of Directors in fiscal 2018, all the directors and auditors, including the outside directors and outside audit & supervisory board member s, conducted a self-evaluation of the effectiveness of the Board of Directors, and the following discussions took place at the meeting of the Board of Directors in May 2019.
i. Items Evaluated
Composition and operation (resolution and deliberation methods, etc.) of the Board of Directors, self-evaluations concerning effectiveness of the Board of Directors, other opinions
ii. Outline of Analysis and Evaluation Results
The results of the evaluation of each director and audit & supervisory board member were collected, and after deliberation by the Board of Directors, it was determined that the quality of operation and deliberation is sufficient, sufficient opinions and advice have been received from outside directors and outside audit & supervisory board members, and the effectiveness of the Board of Directors is currently secure.
Also, further revitalization of deliberations of the Board of Directors was confirmed through these evaluations. We will also increase understanding of Meidensha’s business environment and strategy and provide ongoing opportunities for discussion such as through explanations in advance, meetings to exchange opinions, and explanatory programs outside of the initiatives of the Board of Directors referred to below.
Training of Directors and Audit & Supervisory Board Members
Legal training is conducted for officers on an annual basis, for the purpose of improving the effectiveness of the Board of Directors and internal control.
In fiscal 2018, we promoted risk management at each department and conducted training relating to governance, which was conducted by outside lawyers, for our officers, as part of internal control activities conducted at all companies.
The Meiden Group conducted training on the Companies Act for new officers of Meidensha and affiliated companies.
(3) Initiatives to Utilize Outside Directors
Meidensha seeks active participation in management by outside officers, in order to enhance the supervisory function of the Board of Directors. As such, we are conducting the following initiatives to ensure free and active debates.
① Initiatives at the Board of Directors
i. Advance Explanation of Agendas of the Board of Directors
We give explanations in advance so that directors are able to confirm the content of agenda items prior to participating in meetings of the board of directors. Our system allows us to accept questions, etc., relating to the content of agendas in advance and prepare an explanation to be given at the meeting of the Board of Directors, and this revitalizes and enriches deliberations.
ii. Timely and Appropriate Sharing of Information
Besides the agenda for the meeting, Meidensha provides briefings on current topics relating to the company at meetings of the Board of Directors, with the aim of timely and appropriate sharing of information with outside directors, so that they can share the status of the Company in a timely fashion.
② Initiatives Outside of the Board of Directors
i. Introductory Sessions
Primarily for newly appointed outside directors and outside audit & supervisory board members, we provide opportunities for them to understand the Company’s business.
The officers or general managers in charge of each business explain their business and Meidensha’s governance system to the outside officers, answer their questions and exchange opinions with them.
ii. Meeting for Exchange of Opinions
Besides legally-required board meetings, we organize monthly meetings for an exchange of opinions in order to best use the knowledge of the outside directors and outside audit & supervisory board members.
In these meetings, participants vigorously exchange opinions, mainly concerning matters relating to corporate governance and the Company’s management issues and strategy. The meetings also serve as preliminaries to discuss matters prior to passing resolutions at the Board of Directors.
(4) Audit & Supervisory Board Members and the Audit & Supervisory Board
Meidensha is a company with audit & supervisory board members. Each audit & supervisory board member (two of the four audit & supervisory board members are outside audit & supervisory board members) performs his assignment of duties in accordance with the auditing policies and the auditing rules for audit & supervisory board members stipulated by the Audit & Supervisory Board. They communicate with directors, the internal auditing department, and other relevant departments, attend meetings of the Board of Directors and other important meetings, and investigate the business and financial conditions, in order to audit the execution of directors’ duties.
The Company also has Internal Auditors Office to assist the Audit & Supervisory Board under the direct control of the Board.
(5) Internal Auditing System
We have an internal auditing division under the direct control of the President. The Internal Auditing Division conducts internal audits to check the effectiveness and efficiency of business operations, the reliability of financial reporting, the status of compliance with laws and regulations, and the maintenance of assets, covering the Company and all Group companies at home and abroad.
Since fiscal 2016, we have conducted risk management using control self assessment (CSA) at each Meidensha factory and each Japanese subsidiary in order to enhance internal control and increase the efficiency of risk audits at each business unit.
In fiscal 2018, we conducted joint audits with other existing internal business units in the course of overseas internal audits and joint audits with third parties through outside consulting at three locations in China to enhance internal control functions.
