Current Status of Corporate Governance
Directors and Business Execution
Directors discuss important business matters at the Board of Directors meetings, which are convened once a month and as needed, and supervise the performance of operations. To properly and efficiently fulfill the supervisory function, the Board of Directors consists of Internal Directors who are experienced and knowledgeable in the Company’s businesses and an Outside Director.
The Company has introduced the Executive Officer system for the execution of business activities. The Executive Council, which consists of high-ranking Executive Officers, discusses specific matters regarding business operation at meetings held twice a month and as needed and directs business operations based on the results of these discussions.
There are Executive Officers who also serve concurrently as Directors. The President and Representative Director assumes the highest management responsibilities in planning, deciding, and promoting the management plans of the Mitsui Kinzoku Group, as well as the highest business executive responsibilities in running the businesses of the Mitsui Kinzoku Group.
The Company believes that it is necessary to swiftly and thoroughly implement the company’s business strategy at sites where business is executed, as well as be deeply knowledgeable about actual business conditions when making business decisions. For this reason, except the executive director who administrates Internal Audit Department, the Representative Director and the Executive Directors serve concurrently as high-ranking Executive Officers who are in charge of either the entire company, a business department, or a functional division.
The Company has adopted the corporate auditor system. They are two full-time auditors with experience in running the Company’s business and two part-time outside auditors. Corporate Auditors primarily audit the Directors and the performance of their duties based on audit plans decided by the Board of Corporate Auditors.
One of the full-time auditors has a management experience as a General Manager in the Group’s engineered materials business, and has an appreciable extent of knowledge for quality assurance, safety environment and sales. The other full-time auditor has an experience centered around areas in finance, public relations, and corporate planning of the Group and has an appreciable extent of knowledge for CSR, finance, public relations and IR.
The Board of Corporate Auditors consists of all the Corporate Auditors, and ensures the soundness of business through its oversight of the execution of the Directors’ duties, based on a full understanding of the special nature of the Company’s business.
The Board of Corporate Auditors is convened at least once a month. In addition, the Company has established a Corporate Auditor Office with six staff members (a concurrent position) to support Corporate Auditors.
The Company has entered an audit agreement with KPMG AZSA LLC, and undergoes accounting audits based on the provisions stated in the law. The accounting audits of the Company were executed by three Certified Public Accountants (CPAs) who are the designated limited liability partners and the managing partners of KPMG AZSA LLC. There are 7 CPAs and 8 other assistants who help with the accounting auditing operations performed by the CPAs.
Basic Approach to Internal Control Systems
The Company believes that conducting fair business activities that observe corporate ethics and comply with laws and regulations is essential if the Company is to achieve long-term development and sustained growth.
Based on this belief, the Company’s Board of Directors has made a resolution about the development of a structure to ensure that the Mitsui Kinzoku Group conducts operations in an appropriate manner. The outline of the resolution is as follows.
- Systems for ensuring that the execution of duties by the Directors and employees of the Company and its subsidiaries is in compliance with relevant laws and regulations and the Company’s Articles of Incorporation
- 1) To ensure that the conduct of business activities by the Directors and employees of the Company and its subsidiaries is in compliance with relevant laws and regulations and the Company’s Articles of Incorporation, the Company clarifies and promotes its compliance system by instituting its “Code of Behavior,” which Directors and employees are required to observe, and internal regulations.
- 2) The Company clearly defines the authority of the Directors through the issuance of internal regulations, including “Regulations for the Board of Directors (Torishimariyaku-kai kisoku).” Also, by appointing Outside Directors who have a high degree of independence, the Company increases transparency and creates a framework to ensure that the Directors execute their duties appropriately.
- 3) In addition, the Company conducts internal audits of accounting, tax affairs, legal affairs, safety, quality, facilities, the environment, hygiene, ICT, etc. for the purpose of maintaining soundness of overall internal control among others.
- Systems for storing and safekeeping of information related to the execution of the duties of the Directors
For information related to the execution of the duties of the Directors, the Company has prepared, stores, and keeps in custody such information according to laws and regulations, the “Regulations for the Board of Directors (Torishimariyaku-kai kisoku),” “Information Management Rules (Jouhou kanri kisoku),” “Regulations Regarding Documentation (Bunsho kisoku),” regulations concerning ICT governance, and other internal regulations.
- Regulations and systems concerning the management of losses and hazards of the Company and its subsidiaries
To prevent the materialization of risks related to the execution of business activities of the Company and its subsidiaries and to respond to risks that have already materialized, based on its “Risk Management Regulations (Risk management kisoku),” the Company designates organizational units in charge of each type of risk to monitor and evaluate the risks that may arise in the business activities of the Company and subsidiaries, decides on policies for risk management, and implements measures to deal with risks when they materialize.
The Company establishes “Regulations for Emergency Responses (Kinkyu-jitai hasseiji no taiou ni kansuru kisoku)” to protect human lives and assets and to swiftly recover and continue business in the event of a large disaster.
- Systems to ensure that the Directors of the Company and its subsidiaries execute their duties efficiently
As the basis for systems that ensure the Directors execute their duties efficiently, the Board of Directors holds a regular meeting once a month, and at other times as necessary. In addition, the Company determines assignment of responsibilities for management and clarifies the approving authorities including those of subsidiaries, and transfer of authority to executive departments, with an aim to enhance the efficiency of decision-making. Also, through the introduction of the Executive Officer system, the Company endeavors to accelerate the execution of business activities.
- Systems for reporting to the Company of matters related to the execution of duties by Directors of the Company’s subsidiaries
Directors, Corporate Auditors, and the responsible department shall receive reports on the status of execution of duties by Directors of the Company’s subsidiaries in accordance with the “Regulations for the Management of Subsidiaries and Affiliates (Kankei-gaisha kanri kisoku )” etc.
- Matters concerning employees who are to assist the duties of Corporate Auditors when Corporate Auditors request assignment of such employees and matters related to ensuring the independence of such employees from Directors and effectiveness of instructions given by Corporate Auditors to such employees
- 1) Under the Company’s “Regulations for Company Work Systems (Kaisha shokusei kisoku),” the Company establishes an Auditor Office and assigns employees to assist the Corporate Auditors in the execution of their duties. In addition, the selection of these employees is made with reference to the opinions of the Corporate Auditors.
- 2) The employees who are assigned to assist the duties of Corporate Auditors shall assist Corporate Auditors in accordance with the “Regulations for Company Work Systems.” At the meetings of the Board of Auditors, such employees shall receive instructions from Corporate Auditors, and also shall report on the progress of matters that they were instructed to address, and provide information.
- Systems for Directors and employees to report to the Corporate Auditors; systems for Directors, Corporate Auditors, and employees of the Company’s subsidiaries and for persons who received reporting from such persons to report to the Corporate Auditors; and other systems regarding reporting to the Corporate Auditors
- 1) When the Directors and employees of the Company and Directors, Corporate Auditors, and employees of the Company’s subsidiaries discover facts that may cause serious losses to the Company, or when other events occur concerning the matters requiring reporting specified by the Board of Auditors, they shall report to Corporate Auditors.
- 2) Upon auditing of subsidiaries by the Corporate Auditors, Directors, Corporate Auditors, and employees of the Company’s subsidiaries shall report the status of operations and other matters required by the Corporate Auditors.
- 3) Regarding the details of the reporting made via the whistleblowing system, a system shall be setup for promptly sharing the information with the Corporate Auditors.
- Systems to ensure that persons who reported to the Corporate Auditors will not receive detrimental treatment because of the reporting
The Company shall prohibit detrimental treatment of the Directors and employees of the Company and Directors, Corporate Auditors, and employees of the Company’s subsidiaries who reported to the Corporate Auditors because of the reporting.
- Matters concerning procedures for advance payment or reimbursement of fees arising in connection with the execution of duties by the Corporate Auditors and other policies regarding handling costs or obligations arising in connection with the execution of such duties
When the Corporate Auditors request advance payment or reimbursement of expenses for their execution of duties, based on deliberation by the responsible department the Company shall make advance payment of or reimburse such expenses swiftly except in the case that such expenses or obligations are proved to be unnecessary for the execution of duties by such Corporate Auditors.
- Other systems to ensure that audits by the Corporate Auditors are performed effectively
The Representative Directors and Corporate Auditors meet periodically to exchange opinions. The Corporate Auditors may attend important meetings to exchange information with Directors and employees thoroughly. Moreover, a system is in place that enables close collaboration between Corporate Auditors and the Internal Audit Department for audits.
Basic Approach towards the Excluding Antisocial Forces and Organizations
The Code of Conduct, which specifies the values and standards of conduct shared by all officers and employees in the Mitsui Kinzoku Group, stipulates that everyone must firmly stand against antisocial forces and/or organizations, and hold no relationships whatsoever with these parties.
The Legal & Administrative Department currently heads the Mitsui Kinzoku Group’s efforts to exclude antisocial forces and/or organizations. The Company will continue working to further strengthen the structure for excluding antisocial forces and/or organizations.