Corporate governance

Basic Guidelines on Corporate Governance

basic way of thinking

Our company regards the most important task as being a company that can be trusted by all stakeholders, including shareholders, by realizing sustainable growth and increasing corporate value in the mid- to long-term through solving customer and social issues through "management consulting." To achieve this, we will work to improve corporate governance that ensures the soundness and transparency of management while at the same time increasing the speed and efficiency of management, in accordance with the following basic principles.

(1) Respect the rights of shareholders and ensure equality.

(2) Consider employees other than shareholders, customers, business partners and partners, and the rights and positions of society, and cooperate appropriately with these stakeholders.

(3) Appropriately disclose corporate information and ensure transparency.

(4) We will establish a corporate governance system that will ensure the soundness and transparency of management while at the same time increasing the speed and efficiency of management.

(5) Conduct constructive dialogue with shareholders who have investment policies that match the interests of shareholders over the medium to long term.

Our corporate governance system

As of the conclusion of the Ordinary General Meeting of Shareholders held on June 26, 2019, we will transition from a company with an audit and supervisory board to a company with an audit and supervisory committee.
Our company's officers consist of six directors (excluding directors who are audit and supervisory committee members) and three directors who are audit and supervisory committee members (including three outside directors), for a total of nine directors (including three outside directors). We believe that it is optimal for our company in the current situation to have personnel with a company-wide management perspective and high ethical standards who are also familiar with the local economy and local companies execute business operations, while personnel with advanced expertise, abundant experience, a wide perspective, and high ethical standards provide advice as outside directors. In order to respond to the rapidly changing business environment, we will strengthen the decision-making and supervisory functions of the board of directors through this corporate governance system. In addition, we will promote the delegation of decision-making authority for important business execution, including through management meetings attended by executive directors, and will also increase the speed and efficiency of management.

1. Operation, function and activity status of each institution and department

board of directors

The Board of Directors, chaired by the President and Representative Director, meets monthly and holds extraordinary meetings as necessary. As the highest decision-making body for business execution, it makes decisions on important matters stipulated in laws and regulations, the Articles of Incorporation, and the "Board of Directors Regulations," and supervises the execution of business by each director, including the representative director.

Management meeting

The Management Committee is headed by the President and Representative Director, and is held monthly, with extraordinary meetings as necessary. It considers and decides on overall important matters related to management, such as matters to be submitted to the Board of Directors and matters related to management policies and plans.

Audit and Supervisory Committee

The Audit and Supervisory Committee, whose directors are members, attends important internal meetings and expresses opinions as appropriate, and also carries out audit procedures such as reviewing important approval documents, etc. In addition, the committee works in cooperation with the accounting auditor and the internal control department to ensure the effectiveness of audits.

Nomination and Compensation Committee

The Nomination and Compensation Committee selects and dismisses members by resolution of the Board of Directors, and the majority of the five members who are directors are independent outside directors.

Internal control system

Our internal control system is designed to ensure (1) the effectiveness and efficiency of operations, (2) the reliability of financial reports, (3) compliance with relevant laws and regulations, and (4) the preservation of assets, in order to continuously increase our corporate value and become a company that is trusted by all stakeholders. We believe it is important that these internal control systems are incorporated in a balanced manner into each business operation and function effectively.

In April 2006, in order to achieve compliance, we established the "Code of Ethics for Officers and Employees" as action guidelines for all officers and employees.

In addition, as a check-and-balance organization for strengthening business management, we have established an internal audit office as a department that reports directly to the president and does not belong to any other office, and has assigned three full-time personnel. The purpose of the Internal Audit Office is to conduct business audits based on internal rules and regulations, and to streamline and streamline management and ensure the proper execution of business. The results are reported to the President and CEO and the Audit and Supervisory Committee, and recommendations are made to the relevant departments as necessary, requesting responses.

In addition, as a basic policy of "development of a system to ensure that the execution of duties by directors conforms to laws and regulations and the articles of incorporation, and other systems stipulated by the Ministry of Justice ordinance as necessary to ensure the appropriateness of the business of the company" has been resolved by the Board of Directors as follows.

1. System to ensure that the execution of duties by directors and employees conforms to laws and the Articles of Incorporation

1. We have appointed an officer in charge of compliance to enhance the compliance system of our Group (meaning the corporate group consisting of our Company and its subsidiaries; the same applies hereinafter) and to raise awareness of compliance within the Company.
2. We will establish a Compliance Committee to identify issues related to legal compliance within our Group, consider countermeasures, and verify the effectiveness of those countermeasures.
3. The Company has established the "Code of Ethics for Officers and Employees," "Compliance Code of Ethics," "Compliance Rules," and "Insider Trading Management Rules" to be observed by Employees, etc. of the Group (meaning Directors and employees; the same applies hereinafter), and the Executive Officer in charge shall ensure that Employees, etc. of the Group are fully aware of these.
4. The Internal Audit Office shall, in accordance with the "Internal Audit Regulations," conduct audits of each division of the Group regarding the status of compliance with laws and regulations and internal rules and regulations, as well as the efficiency and effectiveness of operations, and shall report and share the results of such audits with the Representative Director and President and the Audit and Supervisory Committee.
5. We will establish "Whistleblower Protection Rules" and develop a system for the early detection and response of violations of laws and regulations, etc. within our group.
6. The General Affairs and Planning Department of the Corporate Strategy Headquarters will be the department in charge of dealing with anti-social forces. We will always be vigilant against anti-social forces, take systematic action against their unjust demands, and have no relationship whatsoever with such organizations or individuals.

2. System for storing and managing information related to the execution of duties by directors

1. Information related to the execution of duties by directors shall be properly stored and managed in accordance with the "Board of Directors Rules" and "Document Management Rules."
2. Responsible departments will always have the documents available for inspection or copying at the request of the directors and the Audit and Supervisory Committee.

3. Regulations and other systems for managing risk of loss

1. We have established a Compliance Committee to grasp the status of risk management related to the operations of each division of our Group and provide support and suggestions as necessary.
2.We will establish rules regarding risk management, such as "Compliance Rules," "Countermeasures against Anti-Social Forces Rules," "Whistleblower Protection Rules," and "Crisis Management Rules."
3. Clarify job authority through "Approval Rules" and "Approval Guidelines", etc.
4. The Internal Audit Department will conduct audits of all divisions of the Group at least once a year, in principle.
By implementing measures 1 to 4 above, we will endeavor to prevent the occurrence of incidents that could have a significant impact on our Group. In the unlikely event that an unforeseen incident does occur, we will establish a task force, headed by the President and Representative Director, in accordance with the Crisis Management Regulations, respond promptly, and endeavor to minimize damage and the financial impact.

4. System to ensure that the duties of directors are executed efficiently

1. We will establish various rules and regulations such as "Board of Directors Regulations," "Officer Service Regulations," and "Approval Standards," clarify the duties and authority of directors, and ensure operational efficiency.
2. As a general rule, the Board of Directors and management meeting shall be held at least once a month to ensure prompt decision-making and efficient business execution.
3. The Group formulates management plans and business plans for each department, confirms the progress of these plans at the Board of Directors and Management Committee, and manages business on a monthly and quarterly basis.

5. System to ensure the appropriateness of operations in the Group

1. In order to ensure the effectiveness and validity of the Group's internal controls, the Corporate Strategy Headquarters will carry out the necessary management according to the situation in accordance with the "Rules for the Division of Duties" and the "Rules for the Management of Affiliated Companies."
2. The Audit and Supervisory Committee and the Internal Audit Department will conduct audits and investigations of the Group's management status and business activities.
3. The Corporate Strategy Headquarters shall receive regular reports on the Group's business performance and important matters related thereto.
4. The Corporate Strategy Headquarters will establish a system for receiving prompt reporting in the event that a significant risk occurs to the Group.
5. Formulate management plans and business plans for the Group and review their progress at the Board of Directors and Management Meetings. 6. Dispatch executive personnel from the Company and TANABE CONSULTING CO.,LTD., a wholly owned subsidiary and major operating company of the Company, to subsidiaries to ensure that they are being operated appropriately in accordance with the Group's management policies.

6. System for employees to assist the duties of the Audit and Supervisory Committee, matters concerning the independence of such employees from directors (excluding directors who are Audit and Supervisory Committee members), and instructions from the Audit and Supervisory Committee to such employees Matters related to ensuring the effectiveness of

1. The Audit and Supervisory Committee Secretariat shall be established to assist the duties of the Audit and Supervisory Committee.
2.For employees in charge of the Audit and Supervisory Committee Secretariat, to ensure independence from directors (excluding directors who are Audit and Supervisory Committee members) and the effectiveness of instructions, decisions on personnel transfers and personnel evaluations, etc. In this case, the consent of the Audit and Supervisory Committee is required.
3. The Audit and Supervisory Committee Secretariat shall, in accordance with the Audit and Supervisory Committee Standards for Audit and Supervisory Committee, carry out assistance, etc. related to audits by the Audit and Supervisory Committee at the direction of the Audit and Supervisory Committee. In addition, when performing such assisting work, the directors (excluding directors who are Audit and Supervisory Committee members) and employees shall not interfere with this and cooperate in ensuring the effectiveness of the audit.

7. Systems for reporting to the Audit and Supervisory Committee by Group employees, etc. or those who receive reports from such employees, etc., and other systems for reporting to the Audit and Supervisory Committee

1. When Group Employees, etc., or those who have received reports from such persons discover any facts that violate laws and regulations or that may cause significant damage to the company, they shall promptly report the facts to the Audit and Supervisory Committee in accordance with internal company rules and regulations.
2. The Group will prohibit any person who makes a report as described in the preceding paragraph from being treated unfavorably because of said report, and will thoroughly inform all employees, etc. of this.
3. A system shall be established to ensure that the following matters are reported to the Audit and Supervisory Committee without delay.
Matters on which the Audit and Supervisory Committee has requested us to report on operations
● Results of internal audits conducted by the Internal Audit Department
4. When a Director who is a member of the Audit and Supervisory Committee receives a report from a Director (excluding Directors who are also Audit and Supervisory Committee Members) or an employee, he/she will promptly report the report and share the information at the Audit and Supervisory Committee.

8. Systems to ensure that audits by the Audit and Supervisory Committee are carried out effectively

1. We will strive to create an environment in which directors who are Audit and Supervisory Committee members can access important company information.
2. Hold regular meetings with the President and Representative Director. In addition, we will regularly exchange opinions and information with the accounting auditor, and request reports from the accounting auditor as necessary.
3. Employees, etc. of the Group shall fully understand the importance of audits by the Audit and Supervisory Committee and strive to improve the environment for audits by the Audit and Supervisory Committee.
4. Expenses or debts arising from the execution of duties by directors who are Audit and Supervisory Committee members shall be promptly processed after receiving a request from a director who is an Audit and Supervisory Committee member.

System for excluding antisocial forces

1. Basic approach to eliminating anti-social forces

Our basic policy is to maintain a resolute stance against anti-social forces that pose a threat to the order and safety of civil society and strive to prevent transactions with them.

2. Development status for elimination of anti-social forces

1. Status of the department in charge of handling cases and the person in charge of preventing unreasonable demands
Responsible department: General Affairs and Planning Department, Corporate Strategy Headquarters
Person in charge of preventing unreasonable demands General Affairs and Planning Department, Corporate Strategy Headquarters
2.Collaboration with external specialist organizations
We have established a system in which we work closely with specialist agencies to enable us to promptly report to the police and consult with lawyers etc. in emergencies.
3.Collection and management of information relating to antisocial forces
We have established a system for collecting and managing information regarding anti-social forces in the General Affairs and Planning Department of the Corporate Strategy Headquarters.
4. Status of preparation of response manuals
Our basic stance toward anti-social forces is set out in the "Code of Ethics for Officers and Employees" and the "Rules for Countering Anti-Social Forces," and we also set out specific responses in manuals and other documents as necessary.
5. Status of training activities
We conduct training as appropriate during various training sessions.