Fundamental policy of corporate governance

Our company desires to always be of service to each and every stakeholder including our shareholders, investors, users, business partners and local communities.
To achieve this goal, we believe that corporate governance must be implemented as a corporation not only by ensuring strict compliance with laws and rules, but also by making appropriate risk management so as to act flexibly and sufficiently according to the ever-changing economic environment.
Based on this fundamental policy, we endeavor to implement corporate governance to the fullest extent as a priority issue, and to promote reinforcement of Group management.

Corporate governance structure

(1) Brief explanation of the organizations within the company

In addition to auditors within the company, we also have the following corporate organizations: general shareholders' meeting, board of directors, board of auditors and accounting auditor. There are seven directors (including two outside directors) and four auditors (including two outside auditors) in our company as of June 22, 2018.
Furthermore, to put into practical operation our "the system to ensure proper operation in the company", we have various committees established under the board of directors, including the risk management committee, compliance committee, and information security committee. In addition, our company has an executive officer system for the purpose of ensuring quick and smooth execution of works, and our inside directors concurrently serve as executive officers. The board of directors therefore has a function to supervise the execution of works by the executive officers, as well as a supervising function of the execution of works by the directors who also serve as representative director or executive officer.

We outline the function of the board of directors, the board of auditors and accounting auditor as follows.

① Board of directors

The board of directors holds a regular meeting once a month in principle, and other meetings from time to time as necessary to make corporate decisions and draw up strategies for business management of subsidiaries. The board of directors endeavors in this way to enhance the business performance and drive the growth of the entire Group as well as reinforce corporate governance.


② Board of auditors

The board of auditors is responsible for establishing and conducting an audit policy and an audit program based on the auditors' standards. In addition, the board of auditors reviews the focus items of the audit every year in accordance with changes in the environment for business management.

③ Accounting auditor

Our company is subject in a fair and legal manner to accounting audits conducted by KPMG AZSA LLC, which acts as the accounting auditor of our company under the audit contract.

(2) Establishing and reinforcing internal control system

We have established our "the system to ensure proper operation in the company" based on which we are building a system that enables us to ensure the fulfillment of duties of the directors in compliance with laws, regulations and the by-laws of the company and a system to ensure proper and adequate operation of other works in the company.
More specifically, we have an internal system so that the directors and the employees should fulfill their duties according to high ethical standards, which is prompted by the compliance committee under Nifco Group's charter for corporate behavior.
Management of risk of loss in the Group is led by the risk management committee, in which major risks are identified and analyzed and then preventive measures against them are reviewed and implemented. Regulations and systems with regard to information security are reviewed and established under the leadership of the information security committee.
As part of internal control, we have also established a whistle-blowing system with the aim of early detection of any corporate misconduct or other issues, based on internal reporting regulations.

(3) Reason for choosing current corporate governance

In our company, two outside directors having substantial insight of monetary and financial affairs, foreign exchange and international situations are supervising our management policies and business operations in the board of directors from an independent and fair position. In addition, two outside auditors having expertise, knowledge and experience in the fields of accounting, financing and laws and regulations together with two inside auditors who are familiar with the situations in our company are engaged in auditing in close cooperation with the accounting auditor and the staff of the auditing division.
We have chosen the current system of corporate governance because we believe that the methods of supervision and audit described above guarantee adequacy and appropriateness of our business operations.