We see the construction and reinforcement of corporate governance as one of our most critical management tasks, and will aim to realize our corporate philosophy, achieve management plans, improve corporate value in the medium/long-term, and grow continuously by reinforcement of this corporate governance.
Furthermore, our basic philosophy of corporate activities is to pursue efficient, fair, and highly transparent operations to attain greater corporate value for the sake of all our stakeholders.
Based on this philosophy, we endeavor to improve our management system and management organization mainly through appropriate and rapid decision-making, reinforcing the monitoring function of our decision-making, establishment of a compliance system, improvement and strengthening of an internal control system, and establishment of good relations with stakeholders.
Corporate Governance System
As of June 29, 2016
Business Management System
We set up the Board of Directors to decide important matters concerning business operations, such as the decision of management plans, and resolutions set by the laws, regulations, and the articles of incorporation. It also monitors the management activities as well. This improves corporate value by responding dynamically to changes in the business and management environment.
The Board of Directors hold the Corporate Management Council before the meeting of the Board of Directors to discuss important matters concerning business operation for the purpose of rapid decision-making of management and smooth business operation. In addition, the Executive Board is held to share information about company management, operate business smoothly, and strengthen business operation.
Furthermore, the Board of Directors set up various committees to discuss the major management challenges of our company. Specifically, we set up the "Risk Management Committee" to manage risks in the business operation, the "CSR Committee" to work on CSR challenges, the "Compliance Committee" to maintain and manage the compliance structure, the "Personnel Committee" to confer about personnel utilization, the "IT Committee" to maintain IT environment, and the " Nomination and Compensation Committee" to confer about selection and remuneration of directors.
In the business operation structure, Leopalace21 implements a four-headquarters system comprised of Marketing and Sales Headquarters which manage each business division, Corporate Business Promotion Headquarters which strengthen the ties among business divisions, Management Planning Headquarters which establish and monitor the management strategy, and Management Headquarters which support the business management.
We also see the enhancement of audit functions as our critical management task, and will try to reinforce the management monitoring function by setting the Board of Auditors as a supervising body for directors' business operations, by electing outside directors, and by setting the Auditing Department which is responsible for internal audit functions.
With this structure in place to clarify responsibilities and authorities, we aim to continuously enhance our corporate governance.
Board of Directors
The Board of Directors (the Board), composed of eleven directors including three outside directors, put an important point in managing both securing mobility of the management and improving moniter function. We think appropriate election of directors is important to improve the corporate value. Therefore, we incorporate the deliberation at Nomination and Compensation Committee, including outside directors as a committee member, in the decision process.
It holds regular meetings once a month, while extraordinary meetings can be called at any time as required, in order for decisions to be made on critical management matters as well as to monitor business performance and directors' performance of duties.
We elect three outside directors now to reinforce the audit function of management and to receive objective advice for decision-making. The outside directors give various advices to improve corporate value by participating in essential meetings such as the Board of Directors meetings, Corporate Management Councils, and Executive Board meetings. Especially in selection and remuneration determination of the Board, we think decision based on an objective advice is important. Therefore, the Nomination and Compensation Committee is composed of President and CEO, and outside directors.
In addition, the election of the outside directors is based on an independency standard we formulated. Please refer to the relevant part in our Corporate Governance Report (Japanese only).
Board of Auditors
The Board of Auditors, composed of four Auditors including two externally appointed members, put an important point in reinforcement of directors' performance of duties. We adopt a system to enhance the effectiveness of auditing by members' participation in essential meetings such as the Board of Directors meetings, by conducting operational status investigations, and by appropriate cooperation with the Auditing Department, accounting auditors, and outside directors, based on an auditing plan prepared by the Board of Auditors.
Ensuring Corporate Governance
Corporate Planning Division director is supervising the management of Leopalace21 and affiliates in order to achieve thorough governance throughout the Group. Affiliates liaison conference is regularly held to promote smooth information exchange and group activity. In addition, directors of each affiliate are in charge of establishment of CSR promoting system, compliance system, and risk management system, in line with policies based on management plan and efficient business operation.
Corporate Governance Report (Japanese only)
Download our Corporate Governance Report (PDF)
Compliance, Risk Management, CSR Promotion
With regards to the compliance system, the Compliance Committee has been set up as an advisory body to the Board of Directors, in addition to the establishment of the Corporate Code of Ethics and an internal reporting system, aiming to strengthen compliance. With the president serving as chair, the Compliance Committee includes lawyers and other external experts. As one plank in our efforts to bolster governance, the committee develops various measures relating to compliance such as enhancing educational training and reinforcing the information management system. We are also working to bolster monitoring systems and to identify and improve problems, and have put into place a system to assertively implement compliance-related measures onsite where operations are conducted, assigning a person responsible for compliance at each division and department.
Risk Management System
With regards to the risk management system, the Risk Management Committee has been created as an advisory body to the Board of Directors to ascertain and manage the risks facing the entire Company in a comprehensive manner, with a view to strengthening risk management. With the president serving as chair, the Risk Management Committee includes lawyers and other external experts. It not only verifies risk management conditions but also plans and implements training and other measures in its efforts to reduce risk and increase preparedness and prevention. Each division extracts and analyzes risks concerning their operations, establishes and supervises risk countermeasures, and reports these efforts to the Risk Management Committee. The committee ensures the proper management of risks in each division through consultation and guidance.
CSR Promotion System
With regards to the CSR promotion system, the CSR Committee has been set up as an advisory body to the Board of Directors to promote CSR activities. With the top executive of our Management Planning Headquarters as the chairman, the CSR Committee includes supervisors of each division as members. It checks the progress of activities by basic CSR policies and consults about future goals to promote CSR activities. Our Group's CSR activities are in line with changing modern-day needs and guidelines such as ISO 26000. We have set out five new basic policies and are committed to expanding CSR activities even further through our business. As stated above, we intend to implement CSR activities in accordance with these five basic policies, underpinned by corporate governance and compliance system, in order to "create new value" hand in hand with all of our stakeholders.
Internal Control System
Our Group's basic policy of the internal control system is to base our corporate activities on legal compliance and compliance with social ethics. Specifically, we adopt a system by which the Audit & Supervisory Board, Compliance Committee, General Affairs Department, Legal Affairs Department and the Auditing Department supervise if relevant laws and regulations have been complied, on the very basic internal understanding of the Corporate Ethics Charter. Additionally, we have established the Auditing Council to prepare appropriate financial statements while aiming to comply with all laws and regulations, to safeguard the company's assets, and to carry out our business activities efficiently. We have also created the Risk Management Committee, establishing a system to conduct research on all management risks within the company group and to conduct prior check of importance and necessity of the outstanding issue. Furthermore, we opened a window for the internal communication in order to grasp and improve various other issues of problems to accomplish further improvement and reinforcement of the internal control system.
Basic Policies on Financial Reporting
In the interests of reliable financial reporting, we ensure adequate disclosure of financial information and implement transparent, sound corporate management in accordance with the following basic policies.
1. We will comply with standards and legislation, formulate accounting and other applicable regulations, and put in place the necessary IT environment to adequately process our accounts.
2. We will design organizations and systems to ensure that all information pertaining to financial reports is provided quickly and accurately, both inside and outside the group.
3. We will rigorously implement risk management as part of all operating processes within the group, and strive to create internal control systems that are both efficient and transparent.
4. We will regularly evaluate the standard and implementation of internal controls in accordance with generally accepted standards, and continue to improve our operations on an ongoing basis.
5. We will continue to improve and implement internal controls in relation to financial reporting, and submit valid and adequate internal control reports.
The Auditing Department, established as a department directly reporting to the president, oversees the internal control and internal audit functions and conducts audits, including of subsidiaries and affiliates. The Auditing Council, set up to maintain sound internal controls, is tasked with monitoring management activities and risk management and thereby strengthens governance. The results of audits are reported to directors and auditors at monthly meetings of the Auditing Council and also to accounting auditors for information sharing.
The Board of Auditors (composed of two standing auditors and two non-standing auditors) makes audit plans, and the auditors attend important meetings, including meetings of the Board of Directors, according to the audit plans to monitor important decision-making processes and the directors' performance of their duties. They also conduct operational status investigations and regularly exchange opinions with the president to enhance the effectiveness of audits. The auditors and accounting auditors exchange their opinions at quarterly debriefing meetings about accounting and hold other meetings as needed.
As described above, the Auditing Department, auditors, and accounting auditors work to carry out efficient internal audits and auditor's audits in close coordination with each other.
Audit by CPA
Leopalace21 has hired Grant Thornton Taiyo ASG to audit its financial statements. The auditing contract we signed is for audits to be performed in accordance with Japanese legislation, the Companies Act, and the Financial Instruments and Exchange Act.
The Basic Policy on the Establishment of an Internal Control System
Download our Basic Policy on the Establishment of an Internal Control System (PDF)