On 20 December 2021 we issued “Announcement of Investigation on Attribution Period of Sales at our Subsidiary”, following which we have implemented practical measures to prevent a reoccurrence and strengthen internal controls. These include the establishment of a new Compliance Division , external appointment of a Chief Compliance Officer (CCO), formulation of a compliance education structure and regular compliance training sessions.
|Feb-20||Prevention of insider trading|
|Nov-19||Information security rules, Compliance|
|Oct-19||Management of working hours, Information security rules|
|Jul-19||Information security rules, Information management|
|May-19||Information management, Prevention of insider trading|
|Apr-19||Rules on use of printed documents|
|New employees||At start of employment||Information security rules|
|Prevention of insider trading|
There is a regular cycle of monthly meetings convened for the Risk Management Committee, whose members comprise executive directors and a senior manager of the legal department. Besides in-depth discussion of matters pertaining to overall risk administration, including adherence to our Ten Guiding Principles for Compliance Behaviour, the committee reports regularly to the Board of Directors in an appropriate fashion, when necessary with reference to guidance and advice from external parties such as legal advisors whom we may consult.
In this way we have a structure in place to respond quickly to any important matter impacting the business, with swift discussions to reach a mutual understanding.
Moreover, the committee provides encouragement and carries out checks to ensure employees continuously act in accordance with compliance rules and social ethics.
The effectiveness of the Risk Management Committee is evaluated by the Board of Directors with a view to revising the guidelines as and when appropriate. Furthermore, in the event that it is necessary to respond to changes in the business environment that require our reaction to be disseminated to all employees or to respond to a new form of risk category, we have in place measures to report issues and actions of each case appropriately to management.
The Risk Management Committee is the first call for when an incident occurs and will act in an appropriate manner at the right time, deciding how the incident should be reported, communicated and discussed, depending on its content, urgency and importance. Also it analyses incidents and takes appropriate measures to prevent a recurrence.
When taking on new mandates we conduct an assessment with checks that include the probability of a successful sale, the reason for the sale, trustworthiness and a provisional valuation. Not only does this assessment of new mandates play an important role in risk management, it also contributes to greater trustworthiness of the transactions we undertake. From January 2021 we have added new ESG negative screening components to this assessment process for new mandates. We are checking for any overt problems from an ESG perspective, such as an outbreak of pollution to land or water, work-related injuries, product-related health risks, repatriation of illegal foreign workers, illegal labour practices through encouragement or coercion, unpaid salary or rental, or inappropriate relationships with public officials.
If the process of this assessment leads to the discovery of ESG risk, an overall judgement is made on whether or not to proceed with the proposed transaction, also taking into account a series of other checks.
In FY 2021 there were 14 mandates deemed to contain ESG risk.
In order to develop our business activities in other countries it is necessary to understand anti-corruption measures required to operate locally in compliance with laws and regulations and international standards. We put in place the necessary procedures in consultation with both in-house counsel and external legal advisors for corruption risk assessment to prevent risks such as entertainment or present giving which people might think suspicious or dubious; inappropriate cash incentives for generating profit, and any other form of attempt to profit by bribery. Accordingly, employees associated with overseas business undertake training to raise awareness of the risk of corruption in “high risk” emerging markets that may arise from local customs such as excessive entertainment, present or profit giving incentives.
Our Group complies with the Political Funds Control Act and other laws/regulations. We do not make any political donations to individual politicians, and when we make donations to political parties, political fund groups or purchase political fund party tickets, we do so in a legitimate manner. The total amount of our group's political donations was 0 yen in FY2020, 0 yen in FY2021 and 170,000 yen in FY2022.
Total: ¥0 (FY2021)
Our corporate governance organisation is illustrated in the chart
Our Board of Directors comprises 15 members including Audit and Supervisory Committee members, with 7 independent directors making up over a third of the total.
Internal control systems have been put in place to ensure thorough adherence to compliance is reflected in effectiveness and efficiency within business operations in tandem with trustworthy financial reporting.
Further detail is available in our corporate governance report. *Japanese Only
Following the announcement on 14 February 2022 of the discovery of inappropriate reporting of sales recognition we have taken seriously the cause of the incident identified by the Investigation Committee and recommendations on preventive measures, and have made efforts to strengthen internal controls. For further details see "Implementation Status of Measures to Prevent Reoccurrence", announced on 23 March 2022.
Our target is to take into account diversity in the composition of our Board of Directors, including ability, breadth of experience, term of service, age and gender. The Mid-Term Plan aims for the percentage of female members of the Board of Directors to be 10% by 2025. In June 2021 it was 15%.
The Board of Directors undertakes reviews as appropriate to see if any changes are required to the Risk Management Committee and ten compliance principals which form our code of ethics. Furthermore, in the event that it is necessary to respond to changes in the business environment that require our reaction to be disseminated to all employees or to respond to a new form of risk category, we have in place measures to report issues and actions of each case appropriately to management.
When an incident occurs we respond in a timely and appropriate way based on procedures for reporting, communicating and discussing the incident according to the content, urgency and priority. We then analyse the incident to implement an appropriate policy for the prevention of any reoccurence.
Our group has built highly secure systems with support from external specialists. We work hard to ensure that we have in place comprehensive rules for information security and that these are fully in operation through training of employees and use of the intranet. Furthermore, systems are verified inter alia by internal audit for operational performance and to see if they remain fit for purpose.
On 25 May 2016 we obtained ISO27001 certification, the Information Security Management System (ISMS) international standard.
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