Corporate Governance
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Corporate Governance Report
[1] Basic Policy on Corporate Governance
The Company is committed to enhancing our corporate governance system as a top priority to continuously improve corporate value, as outlined below.
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We will fulfill our accountability to shareholders through prompt and appropriate information disclosure.
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We will strengthen our management system for prompt decision-making and effective business execution.
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We will earn the trust of our stakeholders by continuously strengthening our management oversight and compliance systems.
Looking ahead, we will continue to improve and flesh out our corporate governance system in a timely manner as the company grows in size.
[2] Overview of Current Corporate Governance Structure
The Company’s Board of Directors consists of five internal Directors who are well-versed in our business
operations and four independent outside Directors (as of March 27, 2026).
Additionally, we have adopted a Board of Auditors, consisting of three auditors, including two outside Auditors (as
of March 27, 2026).
In light of our current business scale and operations, we have established an optimal system at this time to maintain
transparency and fairness in management, as well as to effectively exercise our monitoring and oversight functions.
This enables us to achieve appropriate corporate governance.
1. Board of Directors
In addition to the regular monthly meetings of the Board of Directors, extraordinary meetings of the Board of Directors are held as necessary. Meetings of the Board of Directors are conducted to make important management decisions, taking into account discussions from Executive Committee, and to supervise the execution of duties by each Director.
2. Board of Auditors
In addition to the regular monthly meetings of the Board of Auditors, extraordinary meetings of the Board of Auditors are held as necessary. In addition to attending meetings of the Board of Directors and other important company meetings, auditors conduct audits to monitor and oversee the execution of duties by the Representative Director and the management actions of the Directors based on the policies and responsibilities established by the Board of Auditors.
3. Nomination and Compensation Committee
To enhance the fairness, transparency, and objectivity of the procedures for determining the nomination and compensation of Directors, we have established a Nomination and Compensation Committee as an advisory body to the Board of Directors. To ensure its independence, the Committee is composed of a majority of independent outside Directors, with the chair also being an independent outside Director. The Nomination and Compensation Committee deliberates on matters referred by the Board of Directors and submits its findings to the Board.
4. Executive Committee
The Company holds Executive Committee once a week, with internal executives in attendance, in principle. Executive Committee are held to review business plans and performance, and to make decisions on important business matters, based on the management meeting regulations.
5. Internal Audits
Internal audits are conducted by (three) full-time personnel in the Internal Audit Department who is independent within the organization. Full-time personnel in the Internal Audit Department is directly appointed by the President and CEO. The Internal Audit Department conducts audits of various departments, including significant subsidiaries, based on internal audit regulations and internal audit plans. The results of internal audits are reported directly to the President and CEO, Board of Directors, and Board of Auditors, following which said results are communicated to the audited departments. Subsequently, we receive reports from the audited departments on the status of improvements related to any issues raised, allowing us to verify the situation.
6. Auditing Firm
The Company has entered into an audit contract with Deloitte Touche Tohmatsu Limited as its accounting auditor. Said auditing firm conducts accounting audits in accordance with the Companies Act and the Financial Instruments and Exchange Act. The names of the certified public accountants who executed the accounting audit of the Company are Yasuhiro Kawaguchi and Yusuke Kumei, both of whom are limited liability partners and the managing partners. In addition, 7 certified public accountants and 17 other assistants were assigned to aid with the accounting audit. Further, we have advisory contracts with law firms and other outside experts to receive appropriate guidance on various aspects of management.
7. Committees Other than the Nomination and Compensation Committee
(1) Sustainability Committee
We are committed to solving social and environmental issues through our business, aiming to achieve a sustainable society and enhance our corporate value over the medium to long term. The Sustainability Committee has been established as a structure for advancing these efforts. The Sustainability Committee analyzes the impact of sustainability issues on our business model and strategy, and discusses appropriate measures to address them.
(2) Risk Management Committee
The Company has established a Risk Management Committee aimed at ensuring smooth operations by developing a management system to prevent and respond to any risks that may occur. The Risk Management Committee examines risks and discusses countermeasures for each department.
[3] Compliance and Whistleblower System
Drawing on our management philosophy, we believe it is important for all directors and employees to comply with laws, regulations, the Articles of Incorporation, and social norms, and to conduct business activities in a fair and highly ethical manner. To this end, we have established our "Principles for Action" as a code of conduct, and are working to enhance our compliance system and ensure that all employees are fully aware of its details.
1. Promotion Structure
In promoting compliance, the Corporate Planning Division oversees cross-sectional, company-wide efforts. This division and other departments conduct periodic education and training for officers and employees to promote compliance awareness. In addition, the Internal Audit Department, in cooperation with the Corporate Planning Division, audits the status of compliance with laws and regulations and the operation of internal regulations, and reports the results to the President and CEO, and full-time auditor.
2. Whistleblower System
We operate an internal reporting system based on the "Internal Whistleblower Protection Regulations" for the early detection and correction of fraudulent and inappropriate acts, as well as for the maintenance and improvement of sound corporate management and workplace environment.
(1) Establishment of Consultation and Reporting Desk
To ensure that whistleblowers can consult with us with peace of mind, we have set up multiple contact points depending on the nature of consultations, as well as independent channels that do not go via the internal departments in charge.
- Whistleblowing (compliance violations, misconduct, etc.)
An external law firm (lawyer) independent of the company has been established as a direct contact point for whistleblowing. We accept reports submitted by e-mail, fax, or in writing, and investigate and respond through channels independent of management. - Harassment and Workplace Environment Consultation
In-house contacts (e.g., Workplace Revitalization Center) provide primary response, and outside contacts (law firms) are also available if necessary. - Comprehensive Consultation
For cases where employees are unsure of where to approach for consultations, an in-house general-purpose consultation service (Workplace Revitalization Center) is available.
(2) Eligible users
In addition to our directors and employees (including temporary employees and outsourced workers), retirees (within one year) and employees of our business partners are also eligible to use this program.
(3) Protection of whistleblowers and confidentiality
To ensure that whistleblowers are able to use the system with peace of mind, the following protection system is thoroughly implemented.
- Prohibition of Disadvantageous Treatment
The regulations prohibit dismissal, disciplinary action, or any other disadvantageous treatment (including retaliation) for reporting or consulting with the Company or for cooperating in investigations. In the unlikely event that adverse treatment is verified, we will provide restorative measures and other remedies. - Anonymity and Information Management
Anonymous reporting and consultation are also accepted. Information identifying the whistleblower and details of reports will be strictly controlled, and will not be shared beyond the minimum necessary for investigation and response. Searching for whistleblowers is also prohibited.
(4) Investigation, correction and feedback
We will conduct fact-finding investigations of the reports we receive, while giving due consideration to confidentiality. If, as a result of the investigation, a violation of laws and regulations or misconduct is identified, corrective measures and recurrence prevention measures will be implemented in a prompt manner. Feedback on the results of the investigation and response will be provided best as possible, provided that the contact information of the whistleblower can be verified. In addition, we have a system in place to ensure the effectiveness of governance by having a mechanism in place to investigate any suspected involvement of directors and officers, after reporting to and discussing with the corporate auditors.
3. Measures to eliminate anti-social forces
Our basic policy is to take a firm stand against anti-social forces that threaten social order and safety. The Human Resources and General Affairs Division is the supervising department, which collects information in cooperation with external specialized agencies such as the police and legal advisors, and checks the attributes of business partners, etc., in order to establish a system to block any relationship. In the event of an unreasonable demands, etc., we will respond in an organized manner in cooperation with external specialized agencies.
[4] Matters Related to Internal Control Systems, etc.
1. Systems necessary to ensure that the execution of duties by Directors complies with laws and regulations and the Articles of Incorporation
(Article 362, Paragraph 4, Item 6 of the Companies Act)
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The Board of Directors shall make decisions on important matters related to the execution of the Company's operations, based on the Board of Directors' regulations and the criteria for matters to be discussed, as well as in accordance with laws and regulations and the Articles of Incorporation.
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The President and CEO shall make decisions related to the execution of the Company's operations delegated by the Board of Directors based on laws and regulations, Articles of Incorporation, and rules, regulations, and procedures (hereafter, “internal regulations”), and shall carry out these duties in accordance with said decisions, resolutions and internal regulations.
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To supervise the execution of Directors' duties, Directors shall report the status of the Company's operations to the Board of Directors based on laws and regulations, and shall mutually monitor and supervise the execution of duties by other Directors.
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The execution of Directors' duties is subject to audit by auditors based on the regulations of the Board of Auditors and the auditing standards.
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The Company establishes "Principles for Action" that outline the standards and norms of behavior for Directors and employees based on our "Philosophy". Additionally, we set up a reporting and consultation channel for compliance related to the execution of Directors' duties, in accordance with the internal whistleblower protection regulations.
2. Systems regarding retention and management of information in relation to the execution of the duties of a Director
(Article 100, Paragraph 1, Item 1 of the Regulations for Enforcement of the Companies Act)
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The responsibility for the storage and management of information related to the execution of Directors' duties is assigned to the head of the Management Control Division. The responsible departments for storage and management will be specified according to the content of the information in the document management regulations and the division of duties regulations.
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The responsible departments shall properly record information related to the execution of Directors' duties and, based on laws and regulations, document management regulations, and other internal rules, will store and manage it rigorously for the specified duration. Additionally, depending on the storage medium, said departments shall maintain said information in a secure and easily searchable state, and promptly respond to requests for inspection from Directors and Auditors.
3. Rules and other systems related to management of the risk of loss
(Article 100, Paragraph 1, Item 2 of the Regulations for Enforcement of the Companies Act)
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Risk management regulations shall be established as the foundation of its risk management system and, based on these regulations, the Company shall establish a Risk Management Committee that will recognize, identify, and manage individual risks, while also appointing a risk management officer and build a management framework.
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In the event of significant or urgent unforeseen circumstances, a task force led by the President and CEO shall be established, along with an emergency response committee that includes the Risk Management Committee and legal advisors, to ensure prompt action, prevent the escalation of damage, and minimize the impact.
4. Systems to ensure that the execution of the duties of a Director is performed efficiently
(Article 100, Paragraph 1, Item 3 of the Regulations for Enforcement of the Companies Act)
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Meetings of the Board of Directors shall be held monthly to make important management decisions, taking into account discussions from Executive Committee, and to supervise the execution of duties by each Director. Additionally, Executive Committee shall be held once a week, primarily attended by internal Directors, to review business plans and performance, and to make decisions on important business matters, based on the management meeting regulations.
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The authorities and responsibilities regarding the execution of duties shall be clearly defined in the division of duties regulations, authority regulations, and other internal rules, and shall be reviewed in a timely and appropriate manner.
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With respect to business management, an annual budget and business plan shall be developed, with monthly budget management conducted to achieve these goals. Additionally, key sales metrics shall be monitored on a daily and weekly basis for progress management.
5. Systems to ensure that the execution of the duties of an employee complies with laws and regulations and the Articles of Incorporation.
(Article 100, Paragraph 1, Item 4 of the Regulations for Enforcement of the Companies Act)
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Based on the "Principles for Action" that outline the standards and norms for Directors and employees, proper execution and supervision of duties shall be enforced through the organizational structure. In case of issues, strict disciplinary actions shall be taken in accordance with the employment regulations. In addition, to ensure thorough implementation, the Corporate Planning Division shall oversee compliance initiatives across the organization, and will conduct executive and employee training and education centered around said division.
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The Internal Audit Department shall collaborate with the Corporate Planning Division to audit the status of compliance. Said activities shall be regularly reported to the President and CEO, and full-time auditors.
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To enable employees to directly report actions that may raise legal concerns, internal whistleblower protection regulations shall be implemented and applied.
6. Systems to ensure proper business activities in a business group comprised of the stock company and any parent company or subsidiary companies thereof
(Article 100, Paragraph 1, Item 5 of the Regulations for Enforcement of the Companies Act)
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Facilitate and properly manage the operations of each Group company in accordance with regulations for managing affiliated companies. In addition, the Company shall provide guidance and support to Group companies as necessary.
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The Company shall establish standards for certain important matters and risk information, and conduct management control of each Group company through a system of decision-making and reporting to the Company.
7. Matters related to employees requested to assist a company auditor of the company
(Article 100, Paragraph 3, Item 1 of the Regulations for Enforcement of the Companies Act)
If an auditor requests the assistance of employees to support their duties, the Company may appoint employees from within the organization to assist the auditor in the performance of his or her duties.
8. Matters concerning the independence of said employees in the preceding item from Directors
(Article 100, Paragraph 3, Item 2 of the Regulations for Enforcement of the Companies Act)
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Employees who receive orders necessary for audit activities from an auditor shall not be subject to directives from the Directors with respect to such orders.
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The appointment, transfer, and evaluation of such employees shall require the consent of a full-time auditor.
9. System for Directors and employees to report to company auditors and other systems for reporting to company auditors
(Article 100, Paragraph 3, Item 3 of the Regulations for Enforcement of the Companies Act)
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Auditors shall attend Board of Directors meetings and other important meetings, and will also review key decision documents and related materials.
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The President and CEO, along with the Directors responsible for business execution, shall report on the status of operations at important meetings such as Board of Directors meetings.
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Directors and employees must promptly report to the auditors any knowledge of significant violations of laws and regulations or the Articles of Incorporation, as well as any facts that may pose a substantial risk of harm to the company.
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Auditors may request reports from Directors and employees at any time, as necessary.
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Persons who report to the auditors shall not face any adverse treatment as a result of their report.
10. Other systems for ensuring that audits by the company auditor are performed effectively
(Article 100, Paragraph 3, Item 4 of the Regulations for Enforcement of the Companies Act)
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Regular opinion exchanges shall be established between auditors and the President and CEO.
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Auditors shall collaborate closely with the Internal Audit Department and, when necessary, request investigations from them. Additionally, auditors shall meet with accounting auditors regularly to exchange opinions and information, and may request reports from them as needed.
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In conducting audits, auditors may, at their own discretion, engage attorney or other outside experts, separate from the company's legal advisors, where necessary.
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Auditors may be reimbursed by the Company for expenses incurred in the execution of their duties.
11. System to ensure the appropriateness of financial reporting
The Company shall maintain and operate internal controls related to financial reporting on an ongoing basis. Additionally, the Internal Audit Department shall regularly evaluate the adequacy of internal controls and make corrections as needed.
12. Basic policy and status of its implementation for the elimination of antisocial forces
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The Company’s policy is to respond resolutely to any contact or unjust demands from anti-social forces that threaten social order and safety.
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The Human Resources and General Affairs Division shall oversee efforts to collect information in collaboration with external agencies (such as the relevant police department and legal advisors), and shall verify the attributes of business partners and the trading status of company shares, as far as possible, to prevent damage from unjust demands made by anti-social forces that may become business partners or shareholders. Further, the Company shall collaborate with external agencies to establish a system to appropriately respond to unjust demands from anti-social forces.
[5] Other matters related to the corporate governance system, etc.
1. Basic Policy on Timely Disclosure
The Company is committed to providing timely, fair, and appropriate information to stakeholders, including shareholders and general investors. In addition to disclosing important information in accordance with timely disclosure regulations and other relevant laws and rules, we will actively communicate information deemed useful for investors.
2. Internal System for Timely Disclosure
The Company designates the head of the Finance, Accounting & IR Division as the internal information management officer, with each department head serving as the internal information management officer. The Finance, Accounting & IR Division functions as the central department for internal information management. The internal information management officer is committed to understanding and rigorously managing the information necessary for investors to make informed investment decisions. The contents of the disclosure will be made public through the Timely Disclosure Network (TDnet). After publication, the information will also be promptly made available on our Company website.
(1) Information on Decision-making Facts
Information on decision-making facts is deliberated at Executive Committee, and disclosure materials are prepared by the Finance, Accounting & IR Division, which serves as the central department for internal information management, based on the instructions of the internal information management officer. Once a decision is made by the Board of Directors, the disclosure will be made based on the instructions of the internal information management officer.
(2) Information on Facts of Occurrence
Important facts that occur in each department are reported to the Executive Committee by the heads of each department, who serve as internal information management officers. Disclosure documents are prepared by the Finance, Accounting & IR Division, which serves as the central department for internal information management, based on the instructions of the internal information management officer. Once approved by the Board of Directors, the information will be disclosed according to the internal information management officer's instructions. In the event that important facts that require prompt disclosure occur, the information will be disclosed based on the instructions of the internal information management officer after verification by the internal information management officer and approval by the President and CEO.
(3) Information on Financial Results
Disclosure documents related to financial results are prepared by the Finance, Accounting & IR Division and reported at Executive Committee after verification by the internal information management officer. Once a decision is made by the Board of Directors, the disclosure will be made based on the instructions of the internal information management officer.
3. Audit of Internal Systems for Timely Disclosure
In order to prevent insider trading, the Company has established "Regulations for Prevention of Insider Trading" and makes every effort to ensure that all executives and employees are aware of these regulations. In addition, full-time personnel in the Internal Audit Department, directly appointed by the President and CEO, conducts regular internal audits to assess the effectiveness of the timely disclosure system.
Corporate Governance Structure
Flow of Procedures for Timely Disclosure
