EBARA Corporate Governance Basic Policy
The EBARA Group has established the “EBARA Way,” composed of its “Founding Spirit,” “Corporate Philosophy” and the “EBARA Group CSR Policy” as the EBARA Group’s identity and set of values to be shared across the Group. Under the EBARA Way, EBARA upholds the enhancement of corporate value through sustainable business development and sharing the results with all stakeholders including shareholders as its most important management objectives. To achieve such objectives, the Company constantly seeks the best possible corporate governance and strives toward its further enhancement.
The EBARA Group has also established the “EBARA Corporate Governance Basic Policy,” and will endeavor to ensure the implementation of the basic policy and to further enhance its corporate governance.
Basic Views on Corporate Governance
The EBARA Group’s basic views on corporate governance are as follows.
|1.||The Company respects shareholders’ rights, and is engaged in establishing an environment which enables shareholders to appropriately and effectively exercise their rights and ensures equality among shareholders.|
|2.||The Company strives to appropriately cooperate with various stakeholders, including customers, business partners, employees and local communities. The Company will also develop a corporate culture in which such stakeholders’ rights and positions are respected and business is executed soundly.|
|3.||The Company strives to ensure management transparency through appropriate disclosure of its corporate information.|
|4.||The Company has developed a governance system in which Independent Directors play important roles, and that is centered on Independent Directors and Non-executive Inside Directors. The Company has adopted the organizational form of a “Company with Three Committees,” with the Nomination Committee, the Compensation Committee and the Audit Committee as statutory committees under the Board of Directors, to achieve clear separation between supervision and business execution in management.|
|5.||The Company engages in constructive dialogue with shareholders and investors on the basis of a separately established “IR Basic Policy,” with a view to contributing to sustainable growth and the medium- to long-term enhancement of corporate value.|
Implementation of Japan's Corporate Gorveranace Code
The EBARA Group agrees with the intent of the Japan's Corporate Governance Code, and has adopted all of the principles therein.
Outline of EBARA’s Corporate Governance Framework
|1.||Board of Directors
The main responsibilities of the Board of Directors are to determine basic policies on management and supervise business execution by Directors and Executive Officers. The Board of Directors comprises Directors elected by the General Meeting of Shareholders.
Taking into account the balance among Independent Directors, Inside Directors (non-executive) and Directors (serving concurrently as Executive Officers), the number of Independent Directors is determined to be at least one-third (1/3) of all the Directors, and the number of non-executive Directors accounts for a majority of all Directors.
As of March 29, 2019, the Board of Directors comprises eleven (11) Directors, and seven (7) of whom are Independent Directors (including one (1) female), three (3) of whom are non-executive inside Directors and one (1) of whom is an executive Director. Sakon Uda, an Independent Director, serves as Chairman of the Board of Directors.
The Company is considering the appointment of Directors of foreign nationality in the future from the standpoint of diversity.
The Nomination Committee makes resolutions on the contents of proposals for the General Meeting of Shareholders concerning the election and dismissal of Directors, basic policies regarding the election and dismissal of Directors, and the establishment, amendment and abolition of regulations and procedures. The Nomination Committee also presents recommendations regarding the election and dismissal of Executive Officers. In addition to formulation of succession plans for the President, Representative Executive Officer. The Nomination Committee comprises all non-executive Directors to ensure its independence and objectivity, and the majority of the committee is made up of Independent Directors.
As of March 29, 2019, the Nomination Committee comprises three (3) non-executive Directors, two of whom are Independent Directors and one (1) of whom is a non-executive inside Director. Hiroshi Oeda, an Independent Director, acts as chairperson of the Nomination Committee.
The Compensation Committee determines policies regarding individual compensation for Directors and Executive Officers and the amount of their compensation and other contents, as well as the establishment, amendment and abolition of the relevant basic policies, regulations and procedures that are necessary for adopting resolutions concerning the aforementioned matters. The Compensation Committee also presents recommendations regarding the officers’ compensation system of the entire Group including subsidiaries and affiliated companies. The Compensation Committee comprises all non-executive Directors to ensure its independence and objectivity, and the majority of the committee is made up of Independent Directors.
As of March 29, 2019, the Compensation Committee comprises three (3) non-executive Directors, all of whom are Independent Directors. Shiro Kuniya, an Independent Director, acts as chairperson of the Compensation Committee.
The Audit Committee endeavors to oversee and verify whether the Executive Officers determine and execute their duties in a sound, fair, appropriate and efficient manner in accordance with the basic policies on management and the medium- to long-term management plans, which are formulated by the Board of Directors.
In addition, Audit Committee Members, in accordance with audit standards and audit plans, audit the execution of business of Executive Officers and Directors in order to prevent the occurrence of violations of laws and regulations and the Articles of Incorporation.
The Audit Committee comprises all non-executive Directors to ensure its independence and objectivity, and the majority of the committee of the Audit Committee is made up of Independent Directors.
As of March 29, 2019, the Audit Committee comprises five (5) non-executive Directors, and three (3) of whom are Independent Directors. Tetsuji Fujimoto, a non-executive inside Director, acts as chairperson of the Audit Committee.
|5.||Independent Directors’ Meeting
The Independent Directors’ Meeting, comprising only Independent Directors, has been established as a venue for Independent Directors to freely discuss matters required for obtaining sufficient information to fulfill their responsibilities and sharing awareness of issues. The Lead Independent Director, who is elected by mutual voting, serves as chairman of the meeting.
As of March 29, 2019, Shiro Kuniya, an Independent Director, acts as the Lead Independent Director.
|6.||External Independent Auditor
The Company has entered into an audit agreement with Ernst & Young ShinNihon LLC, which conducts the Company’s accounting audits with respect to audits required by the Companies Act and the Financial Instruments and Exchange Act.
Executive Officers are elected by a resolution of the Board of Directors. Executive Officers determine the execution of duties as delegated by the Board of Directors and perform such duties in compliance with the overall direction of management (Basic Policy) as determined by the Board of Directors. Although all fourteen (14) of the Executive Officers are currently Japanese males, the Company is considering the appointment of female Executive Officers and Executive Officers of foreign nationality in the future from the standpoint of diversity.
|2.||Internal Audit System
The Corporate Audit Department conducts internal audits, the results of which are reported to the President, Representative Executive Officer. The Corporate Audit Department, in accordance with the Internal Audit Rules, performs internal audits to evaluate the development and operation status of corporate governance, compliance, risk management and internal controls of each business execution division of the Company and its subsidiaries, in order to check and evaluate the legality and appropriateness of their business execution in line with management policy and rules and regulations, and to give advice and recommendations toward improvement.
|3.||Meeting bodies for business execution|
The Management Meeting has been established as a deliberative organ to support the President, Representative Executive Officer in conducting his/her decision making. Important matters concerning managerial business execution are deliberated at the Management Meetings, which are held regularly once a month, in accordance with the Management Meeting Rules. The Management Meeting comprises all Executive Officers.
|2)||Management Planning Committee
With respect to the status of business administration, the Management Planning Committee reviews the yearly budget plan on a quarterly basis, in addition to deliberating at the Board of Directors.
|3)||Risk Management Panel
The Risk Management Panel (“RMP”) has been established as an organization to supervise, deliberate, instruct on improvements to and support the risk management activities. The RMP is chaired by the President, Representative Executive Officer and comprises all Executive Officers as panel members. In addition, the non-executive Directors attend to the RMP as observers to exert the supervision function, if necessary, in light of the aim of RMP, and give the RMP appropriate instructions concerning risk management on its topics. The deliberation situation in RMP is reported to the Board of Directors. The Board of Directors obtains the risk management situation of RMP precisely through such reports and maintains the system to exercise a supervision function. The RMP is held regularly four times a year and as necessary.
The CSR Committee deliberates on maintenance, development and issues of activities related to EBARA Group CSR Policy, and determines the policy of CSR activities, while determining the key issues (materiality), policy and KPIs of CSR and confirming the progress and the state of achievement. It also monitors the status of compliance at the Company and its subsidiaries in accordance with the EBARA Group CSR Policy and the EBARA Group Code of Conduct, while giving instructions for improvement as appropriate. The CSR Committee is presided over by the President, Representative Executive Officer, and the Executive Officers are the committee members. The attorneys of external law office in charge of the External Compliance Consultation Counter participate in the committee meetings as advisors. In addition, the non-executive Directors actively attend to the CSR committee as observers to exert the supervision function, if necessary, in light of the aim of CSR committee, and give the CSR committee appropriate instruction concerning management on its topics. The deliberation situation in CSR committee is reported to the Board of Directors. The Board of Directors obtains the management situation of CSR committee precisely through such reports and maintains the system to exercise the supervision function. The CSR Committee is held regularly on a quarterly basis.
The Company has established the Disclosure Committee to handle disclosures of corporate information including events that involve the entire Group and matters that have been decided and financial closing information in a fair, timely and appropriate manner.
Evaluation of the Effectiveness of the Board of Directors
To ensure corporate governance functions effectively, the Company’s Board of Directors itself performs analysis and evaluation of the effectiveness of the Board of Directors, identifying issues and making improvements. Overviews of the results are disclosed.
Initiatives for Strengthening Corporate Governance
Evolution of EBARA’s Corporate Governance System
The EBARA Group continuously reinforces its Group governance and risk management systems in order to support the global expansion of its business. We have established the Risk Management Guidelines*1 and the Internal Control Guidelines*2 as shared risk management guidelines for the Group and utilize them to further support Group companies in developing their risk management and internal control systems. We additionally clearly communicate to all subsidiaries the requirements of the regulations for Group administration, which indicate the essential operating rules and systems for the Group. Based on these frameworks, subsidiaries are required to perform assessments prior to exposure to serious risks with the potential to impact the entire Group and to submit reports after risks have been assumed.
*1. Guidelines targeting improvements in risk management at overseas Group companies that were formulated by having each company conduct self-evaluations of their risk management level based on 12 areas, including the environment, anti-corruption, occupational safety, and human rights, and then establish a plan for the development of risk management systems to be implemented by the fiscal year ending December 31, 2019
*2. Guidelines for self-inspections designed to help EBARA Group companies practice autonomy in establishing, implementing, and improving internal controls
The EBARA Group strives to act as a good corporate citizen that earns the trust of stakeholders. For this reason, the “EBARA Way” and the EBARA Group Code of Conduct are shared among all employees to form a common identity and set of values. With this as the foundation, it is our basic policy to practice legal compliance along with faithful adherence to internal rules, social norms, and common sense and to act with good intentions and integrity.
Our Risk Management Guidelines, which are based on the principle of spreading compliance awareness, guide us in creating systems for detecting risks and preventing their actualization and in establishing comfortable and open workplace environments.