Basic Views and Basic Policy on Corporate Governance
The AIFUL Group understands that a key objective of corporate governance is to achieve corporate management with transparency, impartiality and efficiency by conducting corporate activities premised on compliance in accordance with our management philosophy of Earn the trust of society through corporate activity based in integrity to contribute to the development of the economy and society and thereby to gain the trust of society.
In line with the basic views on corporate governance, AIFUL will undertake enhancements to upgrade our corporate governance in accordance with the Basic Policy on Corporate Governance set out below in a bid to achieve continued growth and a medium- and long-term increase in corporate value through transparent, impartial, prompt and bold decision making.
- （1）We will respect the rights of shareholders and ensure their equality.
- （2）We will work on appropriate collaboration with all stakeholders including shareholders.
- （3）We will appropriately disclose our financial, non-financial and other corporate information to ensure transparency.
- （4）Our Board of Directors will recognize its fiduciary responsibility to shareholders and fulfill their roles and duties including making and keeping its function of supervising business execution effective.
- （5）We will hold constructive dialogues with shareholders for the sake of achieving continued growth and a medium- and long-term increase in corporate value.
Overview of the Corporate Governance Structure
Corporate Governance Structure
In order to strengthen the supervisory function of the Board of Directors and to enhance corporate governance, we have made the change from a company with a Board of Auditors to a company with an Audit and Supervisory Committee. This change went into effect on June 23, 2015.
The Audit and Supervisory Committee and directors belonging to the committee
The Audit and Supervisory Committee consists of three directors (including two directors who are outside members). It determines items such as the audit policy and plan, and discusses and decides on important audit matters based on the reports it receives. In addition to these performing these duties, it also audits legitimacy and appropriateness through the use of the internal control system. A meeting will generally be held every month, with extraordinary meetings held when necessary.
The directors who are members of the Audit and Supervisory Committee will cooperate with the Internal Auditing Department and the accounting auditors to enhance management’s supervisory functions. They will also share information with the auditors of affiliated companies in an effort to strengthen the auditing structure for the operations of the entire Group.
To improve these audit functions, the Group will establish an Auditor’s office as the exclusive body for supporting the duties of directors who belong to the Audit and Supervisory Committee. It will also take the necessary steps to secure independence, such as by requiring that the Auditor’s office does not follow any directions or orders from directors (other than directors belonging to the Audit and Supervisory Committee) when carrying out their duties.
Board of Directors and Directors
The Board of Directors consists of eleven directors in total (as of the date of submission of the Annual Securities Report), with eight directors (directors who are not on the Audit and Supervisory Committee) and three directors who are on the Audit and Supervisory Committee. It deliberates and decides on matters that cannot be delegated to directors pursuant to the provisions of laws, regulations, and the Articles of Incorporation, as well as important matters such as management strategies, and monitors these matters regularly. It generally holds semimonthly meetings and extraordinary meetings when necessary. The Company's Articles of Incorporation also stipulate that there be no more than fifteen directors (excluding directors on the Audit and Supervisory Committee) and no more than five directors on the Audit and Supervisory Committee.
Two of the three directors in the Audit and Supervisory Committee are outside directors (as of the date of the Annual Securities Report was submitted). We have developed a structure in which they can attend management meetings and other important meetings and committees to express their views.
The Company introduced an executive officer system in June 2007 to speed up the decision-making process and the performance of duties, and enhance the separation of supervisory and executive functions. The Board of Directors appoints executive officers and delegates its business by establishing the division of duties and authority.
The Management Committee is comprised of all directors and executive officers. It strives to promote sharing information and mutual verification of matters to be submitted to the Board of Directors, and issues and strategies, etc. based on the policies resolved at Board of Directors meetings, so that disagreements do not arise regarding decisions or the performance of duties. It holds meetings on a weekly basis, in general.
The Compliance Committee is placed as an advisory body under the direct control of the Board of Directors. The head of this committee is the executive officer in charge of the Corporate Risk Management Department and approved by the Board of Directors, and it is composed of outside experts, directors also serving as members of the Audit and Supervisory Committee and executive officers of related organizations. Its objectives are to create a corporate culture in which compliance is emphasized, to establish corporate ethics and to promote compliance programs. It makes deliberations and recommendations regarding compliance related important matters and delivers reports to the Board of Directors as required. In addition to six times a year meetings in general, it holds extraordinary meetings as necessary.
Risk Management Committee
AIFUL has the Risk Management Committee under the direct control of the Board of Directors. Headed by the president and representative director, it is composed of all the directors. For the purposes of preventing risks and mitigating losses in the event of a crisis by constructing a reasonable risk management structure, it regularly receives risk status reports to enable it to be constantly aware of risks and continuously review the risk management system to submit reports to directors. In addition to quarterly meetings in general, it holds extraordinary meetings as necessary.
Reasons for the current structure
As we have an auditor system, we appoint two outside corporate auditors for our three corporate auditors. We have ensured independent audits by developing a system where all corporate auditors attend Board of Directors meetings and other important meetings and committee meetings, including Management Committee meetings, to express their opinions. We have also ensured audits by establishing an Auditor's office as the exclusive body for supporting the duties of corporate auditors. Further, we separate management's supervisory functions and business execution functions by implementing an executive officer system and strengthening supervisory functions by establishing a Compliance Committee including outside experts and a Risk Management Committee, etc.
We have adopted our current system to achieve corporate management that is transparent, fair, and efficient.
The diagram below illustrates our Group's structure for business execution, management supervision, internal control and risk management as of the date of submission of the Annual Securities Report.
Matters concerning directors’ remuneration, etc.
Matters related to the determination of the amount of directors’ remuneration and its calculation method
AIFUL has established a policy on the determination of the amount of directors’ remuneration and its calculation method. Its policy is to ensure that the remuneration functions as consideration for directors’ exercise of their roles as well as effectively functioning as an incentive toward medium- to long-term improvement of the company’s business performance and corporate value.
The determination is made by the president & CEO following prior collection of the opinions of the Audit & Supervisory Committee. The remuneration of Audit & Supervisory Committee members is decided by consultation with the Audit & Supervisory Committee members.
Matters related to the determination of the amount of directors’ remuneration
The amount of directors’ remuneration of the Company was resolved at the general meeting of shareholders held on June 23, 2015. The remuneration for directors (excluding Audit & Supervisory Committee members) is 500 million yen or less per year, and that for directors who are Audit & Supervisory Committee members is 80 million yen or less per year.
The Board of Directors and the Audit & Supervisory Committee have the authority to decide the policy for determining the amount of directors’ remuneration and its calculation method. The policy is decided in view of the business environment and business performance, the remuneration structure and level are reviewed as needed, and the allocation of remuneration among the directors is decided according to the magnitude of each post as well as the content and responsibilities of the entrusted work and the duties of each person.
Remuneration for directors (excluding Audit & Supervisory Committee members) consists of base remuneration (fixed amount) and performance-linked remuneration (variable amount). A remuneration table is determined for each remuneration rank. The base remuneration is based on the remuneration rank, which is based on a certain standard established for each position. From the perspective of independence, the remuneration for directors who are Audit & Supervisory Committee members does not include remuneration that fluctuates according to business performance and consists only of base remuneration.
Standards and approaches concerning portfolio stock categories
Regarding categories of portfolio stock, namely portfolio stock held for purposes other than pure investment and portfolio stock held for the purpose of pure investment, stock held based on the judgement that such holding will contribute to the medium- to long-term development of the Company through the maintenance and strengthening of stable and medium- to long-term business relationships with business partners are categorized as portfolio stock held for purposes other than pure investment. Furthermore, the Company does not, in principle, hold portfolio stock other than portfolio stock held for purposes other than pure investment.
Holding policy and methods of verifying the rationality of holding and verification by the Board of Directors etc. concerning the appropriateness of holding specific issues
When stock in listed companies is held, each year the Board of Directors carefully examines whether the purpose of holding specific stocks is appropriate, whether the benefits and risks associated with holding specific stocks is reasonable given the cost of capital, etc., conducts investigations from the perspective of maintaining and strengthening relationships with business partners.
The “Report on Corporate Governance” (PDF file) can be downloaded below.