In accordance with its Corporate Philosophy, the Company endeavors to enhance corporate governance on an ongoing basis, in order to realize sustainable growth and enhance corporate value over the medium-to-long term.
|Basic Policy on Corporate Governance
Respect for Shareholder Rights
The J-POWER Group believes that sustainable growth and enhancement of corporate value over the medium-to-long term can only be achieved in cooperation with a wide range of stakeholders. The Company respects shareholder rights in order to allow for proper collaboration with shareholders who are important stakeholders.
Ensuring the Rights and Equality of Shareholders
The Company’s policy regarding shareholder rights, such as voting rights at the general meeting of shareholders, is to respect such rights, and ensure substantial equality. In addition, the Company gives consideration to ensuring the exercise of the special rights to listed companies and their officers that are also recognized for minority shareholders (including the right to seek an injunction against illegal activities, and the right to file a shareholder lawsuit).
General Meetings of Shareholders
The Company provides information that is regarded to contribute to appropriate decision making at general meetings of shareholders, through the improvement of the contents of convocation notices, reference materials, and business reports, as well as disclosure of financial results, timely disclosures, and posting on its website, as needed.
The Company sends a convocation notice for each ordinary general meeting of shareholders around three weeks ahead of the meeting date, to ensure that shareholders have sufficient time to consider the proposals for the meetings, and enable shareholders to appropriately exercise their voting rights. It also endeavors to disclose information included in the convocation notice online in both Japanese and English, prior to sending the notice. The Company also endeavors to avoid holding the general meeting of shareholders on days crowded with other companies’ shareholder meetings.
The general meeting of shareholders for the fiscal year ended March 2017 was held on June 28, 2017, avoiding the day when many other companies hold their shareholder meetings. The content of the convocation notice was posted on the Company’s website (in Japanese on May 22 and in English on May 30), and the notice sent to shareholders on June 1, a total of 12 days earlier than the legal deadline.
Legal Compliance of Directors and Employees in Execution of Their Duties
In accordance with the J-POWER Group Corporate Philosophy and the J-POWER Group Corporate Conduct Rules, directors take the initiative in displaying exemplary honest and fair conduct based on a firm spirit of respect for the law and a solid sense of ethics while also endeavoring to instill similarly rigorous conduct standards among all J-POWER employees.
The directors make it known to all employees that they are not to maintain any kind of relationship with antisocial elements that threaten the safety and order of civil society. In addition, through having set up an internal department to act as a point of contact in the event that demands are received from antisocial elements, J-POWER maintains a system that enables itself to rapidly gather information, liaise with specialist external agencies, and appropriately respond.
Corporate Governance System
J-POWER has adopted a Company with an Audit & Supervisory Board structure, and has put in place a system for mutual oversight among Directors through the meetings of the Board of Directors attended by Outside Directors who participate in the Company’s management decision making from an independent position.
Further, the execution of duties by Directors is constantly monitored through the attendance at the meetings of the Board of Directors and other management meetings by the Audit & Supervisory Board Members, including Outside Audit & Supervisory Board Members with abundant experience in such areas as the management of leading Japanese listed companies and execution of government policies. The Company believes this system allows for sufficient corporate governance function.
The Company has also established the Executive Committee in addition to structures prescribed by the Companies Act.
Corporate Governance Structure
(As of June 28, 2017)
Composition of the Board of Directors and the Audit & Supervisory Board
#Composition of the Board of Directors
The Board of Directors is composed of Directors with abundant experience, distinguished knowledge, and advanced specialization, ensuring that a balance and diversity of knowledge, experience, and abilities is maintained as a whole. The number of Directors is 14 or less.
In addition, in order to ensure the effectiveness of independent and objective management supervision by the Board of Directors, the Company endeavors to appoint at least 2 Independent Outside Directors, considering their experience, knowledge, specialization, and other attributes.
Currently, the total number of Directors is 13, including 3 Independent Outside Directors.
#Composition of the Audit & Supervisory Board
The Audit & Supervisory Board comprises a maximum of 5 Audit & Supervisory Board Members, at least half of whom are Outside Audit & Supervisory Board Members. In addition, at least 1 person with appropriate knowledge of finance and accounting is appointed as an Audit & Supervisory Board Member.*
Currently, the total number of the Audit & Supervisory Board Members is 5, including 3 Independent Outside Audit & Supervisory Board Members.
* Senior Audit & Supervisory Board Member Hiroshi Fujioka (Independent Outside Audit & Supervisory Board Member) has a high level of knowledge in the area of finance and accounting as he has had long experience in the administration of fiscal and financial issues, etc.
System for the Execution of Directors’ Duties
#Ensuring Effectiveness in Business Execution
The Board of Directors meets monthly in principle*1 and on an as-needed basis, with attendance by all Directors and Audit & Supervisory Board Members, including Outside Directors and Outside Audit & Supervisory Board Members. The Executive Committee meets weekly in principle, with attendance by all Senior Directors*2, Executive Managing Officers, and full-time Audit & Supervisory Board Members. This committee discusses matters subject to deliberation by the Board of Directors, significant company-wide matters related to business execution by the President and Executive Vice Presidents based on policies decided by the Board of Directors, and important matters related to individual business execution.
In addition to allocating functions for the Board of Directors and Executive Committee, the Company has established a system in which Senior Directors and Executive Officers share responsibility for business execution. This system clarifies responsibilities and authority, enables appropriate and prompt decision making, and provides for efficient corporate management.
*1 The Board of Directors met 12 times during fiscal 2017.
*2 Senior Directors: Chairman, President, and Executive Vice Presidents
#Ensuring Appropriateness in Business Execution
The Company has established the Internal Audit Department to ensure proper business execution, which conducts internal audits from a perspective that is independent of other operating units. In addition, each operating unit regularly conducts self-audits of its own business execution.
#Preventing Conflicts of Interest
The Directors of the Company, in accordance with its Corporate Philosophy, Corporate Conduct Rules, and Compliance Action Guidelines*1, exemplify honest and fair conduct based on a spirit of compliance and business ethics. In addition, the Company works to prevent conflicts of interest in the event that the Company engages in a transaction with one of its Directors, etc.,*2 by obtaining the approval of the Board of Directors before the transaction, and reports the results to the Board of Directors.
*1 Please refer to page 58 for further information on the Corporate Conduct Rules and Compliance Action Guidelines.
*2 Directors or major shareholders (shareholders with shares representing 10% or more of the voting rights in the Company)
Audits by Audit & Supervisory Board Members
In accordance with the Companies Act, J-POWER appoints Audit & Supervisory Board Members, who audit the legality and appropriateness of Directors' business execution. At J-POWER's Headquarters, Audit & Supervisory Board Members conduct audits by attending the meetings of the Board of Directors and other important meetings and observing the status of the execution of Directors' and Executive Officers' duties. In addition, the Audit & Supervisory Board Members perform site visits to local operating units and subsidiaries in Japan and overseas.
In the course of accounting audits, Audit & Supervisory Board Members liaise with the Independent Auditors to regularly receive reports and exchange opinions regarding auditing schedules and results as a means of ensuring consistency with the Independent Auditors' auditing methods and results.
When performing audits, Audit & Supervisory Board Members liaise with the Internal Audit Department.
With regard to staff under the Audit & Supervisory Board Members, the Company has established the Office of Audit & Supervisory Board Members as an independent unit outside of the Directors’ chain of command. The office's full-time specialist staff assist the Audit & Supervisory Board Members in the course of their audits.
With regard to the administration of subsidiaries and affiliates, the J-POWER Group's basic policy calls for Group-wide business development in accordance with the Group's management plan. The administration of subsidiaries and affiliates is undertaken in accordance with the Company's internal regulations, and the Group Management Committee works to improve the appropriateness of operations for the entire corporate Group. In addition, the Audit & Supervisory Board Members and the Internal Audit Department implement audits of subsidiaries and affiliates with the objective of ensuring proper operations at all Group companies.
Evaluation of Effectiveness of the Board of Directors
The Company annually analyzes and evaluates the effectiveness of the Board of Directors to improve its effectiveness, as well as to realize sustainable growth and enhance corporate value over the medium-to-long term.
Regarding the evaluation in 2018, the Board of Directors discussed the matter based on the status of measures implemented based on the previous year's analysis and evaluation, and interviews conducted mainly with Outside Directors and Outside Audit & Supervisory Board Members, and the chairs of the Board of Directors and Audit & Supervisory Board. As a result of the discussion, the Company determined the effectiveness of the Board of Directors to be sufficient. Going forward, the Company will further expand the scope of deliberation based on changes in the business environment, and make continual efforts to enhance the effectiveness of the Board of Directors.
The Company's Outside Directors and Outside Audit & Supervisory Board Members are independent officers that meet both the requirements for independent officers prescribed by the Tokyo Stock Exchange, and the Criteria to Determine the Independence of Outside Officers prescribed by the Company.