Hanwa Co., Ltd.

Corporate Governance

Basic Corporate Governance Policy

We aim to fulfill our social responsibilities as a good corporate citizen so that we can gain and retain the respect from stakeholders and be recognized as a valuable enterprise. We work to establish a high degree of transparency in management systems to ensure full legal and regulatory compliance and respect for social norms.
In addition to participating in many corporate social responsibility (CSR) activities, we have established the CSR Committee and use a commitment to CSR management to make our corporate brand even more respected.

Corporate governance structure

We have adopted a corporate auditors’ system. The Board of Corporate Auditors is composed of five corporate auditors (of whom three are outside corporate auditors) elected at the General Shareholders Meeting and monitors and verifies the business execution of the Board of Directors, which is a management decision-making and business oversight body, and the business execution of the Company’s administrative organizations operating under the Management Committee, which is a business execution body. The Board of Corporate Auditors approves its findings and report them at the General Shareholders Meeting.
In April 2012, we introduced the Executive Officer System to establish a system that enables more detail-oriented business execution and to promote more efficient and quicker decision-making.
The Board of Directors is composed of twelve directors (of whom four are outside directors) elected at the General Shareholders Meeting, and meets once a month, in principle, to make decisions on matters stipulated by laws and regulations and the Articles of Incorporation, plan and formulate important management matters for the Group, and oversee business execution.
The Management Committee is composed mainly of executives at the level of managing director or above and full-time corporate auditors, and meets twice a month, in principle, to submit to the Board of Directors the issues of significance pertaining to the Group’s management decisions, and, as the highest business execution body, to promote quick execution of business in accordance with the management policies determined by the Board of Directors.
Regarding the executives’ selection and compensations, we have introduced a three-committees system of the Executive Evaluation Committee, the Nomination Advisory Committee, and the Remuneration Advisory Committee, and adopted the following procedures.
Regarding the determination of the executives’ evaluation, we have introduced the Executive Evaluation Committee, which is chaired by the President and composed of members that also include outside directors and outside corporate auditors. The Committee meets at least twice a year and performs overall evaluation of each executive based on the evaluation of commitment set by each executive at the beginning of the fiscal year and the results of the peer reviews conducted among executives and provides the evaluation results to the Nomination Advisory Committee and the Remuneration Advisory Committee.
To select executives, the Nomination Advisory Committee, which is chaired by an outside director and whose majority members consist of outside directors and outside corporate auditors, reviews the composition of executives for the following fiscal year based on the evaluation of executives and the results of performance evaluations of employees. A draft is then submitted to the Board of Directors where a proposal of the list of candidates is then forwarded to the Annual Shareholders Meeting.
To determine each executive’s compensation, the Remuneration Advisory Committee, which is chaired by the President and whose majority members consist of outside directors and outside corporate auditors, creates a regular salary plan as fixed monthly compensation for the following fiscal year, after reviews based on the evaluation of executives, and submits the plan to the Board of Directors. In terms of the executive’s bonus, we use a system of performance-linked salary which specifically reflects the achievements and responsibilities of each executive, and it is determined by the Board of Directors after the Remuneration Advisory Committee examines the proposed calculation rules of performance-linked salary for each fiscal year.
We have introduced a system for evaluation of the effectiveness of the Board of Directors. The Board of Directors Evaluation Committee, which is chaired by one of outside directors and composed of all outside directors and corporate auditors, leads the evaluation, and reports the results of its evaluation and makes a proposal for improvement to the Board of Directors.

Evaluation of the effectiveness of the Board of Directors

We have been analyzing and evaluating the effectiveness of the Board of Directors since fiscal 2019, and are working to further improve the functions of the Board of Directors. We have conducted the third evaluation of the effectiveness of the Board of Directors, and we will disclose the outline and results as follows.

Evaluation method
The Board of Directors Evaluation Committee, which is consists of all corporate auditors and all outside directors, conducts an anonymous questionnaire survey of all directors and corporate auditors, and based on the results of the survey and analysis, the Board of Directors deliberated on the effectiveness of themselves and made the final decision on the evaluation. The committee was chaired by an outside director from this time

Questionnaire contents
1) Questions about the operation of the Board of Directors
2) Questions about the advance of Board of Directors′ governance functions
3) Questions about voluntary advisory committees related to the appointments and evaluations of directors and executive officers

Evaluation results
It was confirmed that the Board of Directors appropriately discusses factors and viewpoints that directors and corporate auditors should emphasize in decision-making and supervision concerning basic management policy, business strategy and important business execution.
In addition, as an approach to the issues recognized in the previous effectiveness evaluation, we reviewed the criteria for proposals by the Board of Directors and improved the deliberation process of the Investment Examination Committee.
On the other hand, from the viewpoint of further enhancing the effectiveness, the following recommendations were made by the Board of Directors Evaluation Committee.
[1] Creation of a system to secure time for understanding and deliberation of matters of high importance
[2] Compacting and reviewing the structure of materials and streamlining explanations of materials
[3] Further review of the criteria for submitting proposals to the Board of Directors
[4] Changes in the operation of matters to be reported
It was also decided that in addition to the above recommendations, the Board of Directors would promote initiatives to improve governance through the further utilization of voluntary committee organizations, including the appointment of an outside directors as the chairperson of the Nomination Advisory Committee.

We will continue to strive to improve the effectiveness of the Board of Directors, strengthen its functions ,and continuously improve corporate value.



[The Corporate Governance Structures]

Internal Control Policy

Hanwa is committed to using an effective corporate governance system to achieve sustained growth and other progress while reducing exposure to risks associated with achieving business goals. To accomplish this, we need to work on the establishment and operation of a system of internal controls for performing business activities properly and efficiently.
Our goal of internal control systems is to achieve (1) operational effectiveness and efficiency; (2) reliability in financial reporting; (3) strict compliance with laws and regulations in operating activities; and (4) appropriate preservation of assets.

[Flowchart (Design, Operation and Assessment of Internal Control)]

UK Tax Strategy

The publication of this strategy statement is regarded as satisfying the duty under Paragraph 16(2),Schedule 19, Finance Act 2016 in UK.

  • The Hanwa Scholarship Foundation Corporate Citizenship