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Corporate Governance

Basic Concepts of Corporate Governance

We consider the strengthening of corporate governance to be a priority management issue in making a contribution to society as a good corporate citizen based on one of the objectives of “contributing to improvements in life and culture in local communities” set out in our Management Philosophy. We have introduced the independent officer system and the audit and supervisory board system, and the execution of the duties by Directors is being supervised and audited by the Board of Directors and the Audit & Supervisory Board. We will continue our efforts to heighten the transparency and fairness of our corporate management and increase corporate value for the benefit of shareholders and other stakeholders.

Company Motto

“WA SHITE KOJO, HIBI KANSYA”

Management Philosophy

  • 1.Contribute to improvements in life and culture in local communities
  • 1.Bring employees happiness and develop human character
  • 1.Work for co-existence and co-prosperity with business partners
  • 1.Secure profits for growth and development of the Company

Basic Policy on Corporate Governance

Basic Policy on Corporate Governance

Policy on Cross-Shareholdings

It is the policy of the Company to, as a general rule, not acquire shares for the purpose of cross-shareholdings unless such cross-shareholdings are deemed to contribute to an increase in the corporate value of the Company in the medium to long term. The purposes of the acquisition and holding of shares in cases where the cross-shareholdings are deemed to contribute to an increase in corporate value shall be validated by the Board of Directors every year from the perspective of the business strategy of the Company in the medium to long term. In addition, shares for which the value of the holding is determined as insignificant shall be sold off. The exercise of voting rights pertaining to cross-shareholdings shall be determined from the perspective of an increase in the shareholder value of the issuer under the premise that it shall contribute to an increase in the corporate value of the Company, and be carried out appropriately.

Policy on Transactions Between Related Parties

The Company requires prior approval by a resolution of the Board of Directors for transactions between related parties pursuant to internal regulations, and the resolution is made after excluding the relevant officer from the quorum of that resolution as a special interested party.

Diagram of Corporate Governance System

体制図

Overview of the Corporate Governance System

The Company has introduced the audit and supervisory board system as its corporate governance system. Experts are appointed as Outside Directors and Outside Audit & Supervisory Board Members from the perspective of ensuring legal compliance and the appropriateness of the business execution of the Company.

1. Directors and the Board of Directors

Role
Board of Directors meetings are held once or twice a month to make decisions on important matters concerning business management and supervise the status of business execution. With respect to the execution of day-to-day operations, the Company has established a business promotion system in which Directors are assigned to key positions and necessary authority is delegated to them.

Balance, Diversity and Size of the Board of Directors as a Whole
The Company believes that the current number of the Board of Directors is appropriate for substantial and effective discussions on strategic agenda items set by the Company. The Board of Directors is comprised of members who have business experience and professional expertise and experience in multiple categories in consideration of the overall balance. Outside Directors and Outside Audit & Supervisory Board Members in particular are those who have highly-specialized expertise and experience with due consideration to ensuring the sound and sustainable growth of the Company. In addition, female Directors are appointed, which exemplifies support for the diversity of the Company. In appointing Directors and Audit & Supervisory Board Members, candidates are selected according to the criteria of whether they are capable of contributing to an increase in the corporate value of the Company, and upon discussions with the candidates, the selection will be submitted for approval at a General Meeting of Shareholders. In addition, guidelines pertaining to the appointment of Outside Directors and Outside Audit & Supervisory Board Members are established and the criteria for determining the independence are disclosed in our securities reports and this report.

2. Audit & Supervisory Board Members and the Audit & Supervisory Board

The Company has introduced the audit and supervisory board system. Audit & Supervisory Board Members perform audits by attending Board of Directors meetings, Business Strategy Meetings and other important meetings, interviewing Directors, auditing stores, etc., based on the audit plan. Audit & Supervisory Board meetings are held once a month where the audit policy and audit plan are discussed and decided upon.

3. Business Strategy Meetings

The Company holds Business Strategy Meetings once a week in principle, aside from Board of Directors meetings, to discuss individual management issues. Business Strategy Meetings are attended by all Directors, Audit & Supervisory Board Members and key general managers and deputy general managers at the Headquarters who discuss important policies on business execution concerning management and the performance of operations, and are significantly utilized for prompt management decision-making.

4. Internal Control Committee

The Company regularly assesses risks at Internal Control Committee meetings to establish crisis management on a company-wide basis. In addition, the Internal Control Committee supervises the Compliance Committee, the Crisis Management Committee and the Committee for Response to the Japanese Sarbanes-Oxley (J-SOX) Act.

5. Compliance Committee

The Company has put in place the Compliance Committee, the objective of which is to contribute to ensuring the appropriateness of operations and the soundness of management and the retention and improvement of credibility by formulating basic concepts on compliance and creating and maintaining a compliance system. Compliance Committee meetings are held once a month in principle to discuss and evaluate the status of compliance in overall operations from a company-wide perspective, thereby working to strengthen and improve the compliance system. The Compliance Committee has been creating and maintaining necessary internal programs and systems based on the “Compliance Manual,” which sets forth the behavioral standards and views that Halows should observe. In addition, an internal contact desk is set up and important reports are investigated to prevent recurrence.

6. Crisis Management Committee

The Crisis Management Committee works on company-wide risk management, reviews the status of the development and implementation of the “Crisis Management Regulations” and carries out education for employees, among other efforts.

7. Committee for Response to the J-SOX Act

The Company has put in place the Committee for Response to the J-SOX Act for the purpose of ensuring the appropriateness of financial reporting and has been developing and implementing risk controls in important operational processes.

Policy on Training for Directors and Audit & Supervisory Board Members

The Company provides Directors and Audit & Supervisory Board Members with orientation individually at the time of assuming office, and if requested on an individual basis, with opportunities to participate in business site tours, earnings presentations, etc., so as to allow them to deepen their understanding of our business.
In addition, the Company provides them with opportunities to participate in training sessions, etc., held by audit firms and the Audit Nippon Public Interest Incorporated Association. Information concerning the Companies Act, the Financial Instruments and Exchange Act, etc., is provided to Directors and Audit & Supervisory Board Members on a continuous and as-needed basis.