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]
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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)]
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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.