Corporate governance
Basic policy on corporate governance
We acknowledge that enhancing the corporate governance system is one of the most important issues. Based on our mission “Better Systems, Better World”, we strive to strengthen the system within our organization to meet the responsibilities and expectations of stakeholders as a public institution, realize sustainable growth, and enhance our corporate value over the medium to long term.
Corporate governance structure
Overall structure
We have adopted the Audit & Supervisory Committee for our corporate governance system.
Board of Directors
In principle, the Board of Directors meets once a month, and extraordinary meetings are held as necessary. In addition to the regular monthly meetings, the Board of Directors, as a management decision-making body, deliberates and decides on matters stipulated in laws and regulations or the Articles of Incorporation as well as other important matters related to management policies, and supervises the execution of duties by each director.
The Board of Directors consists of 8 members, 6 of whom are independent outside directors and 3 of whom are female directors (as of October 26, 2023). The company’s Articles of Incorporation stipulate that the number of directors (excluding directors serving on the Audit & Supervisory Committee) shall be 10 or less.
Audit & Supervisory Committee
The Audit & Supervisory Committee meets once a month in principle, and extraordinary meetings are held as necessary. The Audit & Supervisory Committee exercises its supervisory function by deepening awareness of the current situation and the issues facing the company through active discussions at meetings of the Board of Directors. The Audit & Supervisory Committee also exchanges opinions with the accounting auditor on a regular basis, and receives explanations from the accounting auditor regarding auditing policies and plans, as well as the results of audits on quarterly and full-year financial results. In addition, the Audit & Supervisory Committee exchanges opinions whenever concerns arise regarding individual audits. The Audit & Supervisory Committee also regularly exchanges information with the Internal Audit Division and exchanges opinions on the development and establishment of internal control systems and risk assessment. By sharing information with the accounting auditor and the Internal Audit Division, the Audit & Supervisory Committee enhances the effectiveness of its audits and makes recommendations for corrective actions as necessary.
The Audit & Supervisory Committee consists of 3 members, 3 of whom are independent directors. 1 of them is a certified public accountant who has been engaged in the assurance work of listed companies at an accounting firm for many years and has considerable knowledge of finance and accounting.
Nomination Committee (voluntary committee)
The Nomination and Remuneration Committee was separated into the Nomination Committee and Remuneration Committee in September 2023 for the purpose of more focused discussion and deliberation.
The Nomination Committee, as one of the voluntary committees, is chaired by an independent outside director and the majority of its members are independent outside directors in order ensure objectivity and transparency in the nomination of directors. The Nomination Committee is primarily responsible for appointing directors and nominating SVPs who are responsible for execution, and the proposals for the appointment of directors are considered by the Nomination Committee before the resolution by the Board of Directors. Representative Director, President & CEO is not part of the Nomination Committee.
Remuneration Committee (voluntary committee)
Like the Nominating Committee, the Remuneration Committee is one of the voluntary committees and majority of its members are independent outside directors. It is primarily responsible for designing the remuneration system for directors and SVPs responsible for execution and formulating appropriate remuneration proposals in accordance with the roles of directors. After consideration by the Compensation Committee, director compensation proposals are approved by the Board of Directors together with the proposals for the selection of directors.
SVP Meeting, etc.
The company has established companywide SVP Meeting as well as management meetings in each business unit as a body responsible for important decision-making in business execution. The SVP Meeting is composed of Senior Vice Presidents (SVP) responsible for business execution and deliberates and makes resolutions on important matters related to business execution across the entire company. The meetings in each business unit were established as bodies responsible for important decision-making in business execution in each business unit and are composed of members appointed through deliberation and resolution at the SVP meeting.
Board of Directors execution evaluation
The Company’s Board of Directors reviews the overall operation of the Board of Directors at least once a year. For the fiscal year ending July 31, 2023, the following is a summary of the evaluation of effectiveness of the Board of Directors conducted through a survey (total of 23 quetions) for directors (including those who are members of the Audit Committee).
- Roles and responsibilities of the Board of Directors
- Size and composition of the Board of Directors
- Deliberations and operations at the Board of Directors
- Institutional design and operation of the Board of Directors and other bodies
- Relationship and dialogue with shareholders
The scores from the survey were generally high, with significant improvement in the “appropriate separation of oversight and execution,” which was an issue last year, as well as in the cooperation between the Board of Directors and the voluntary committees (Nomination/Remuneration Committees, etc.) to ensure an efficient and highly effective system. While cooperation with the voluntary committees has strengthened, we have received feedback that there is room for improvement in the volume and depth of discussions at the Board of Directors on the implementation and verification of management strategies.
Election and dismissal of director candidates and determining officers remuneration
Policy and process for selection and dismissal of director candidates
Policy and Process for Selection and Dismissal of Director Candidates In the selection and dismissal of directors, we place importance, without distinction as to gender, age, nationality, etc., on the candidates’ deep understanding and empathy with our management vision and corporate culture, awareness and integrity as a public entity of society, sufficient time and mental capacity to make sufficient contributions to our decision-making and governance, and advanced expertise in their respective fields, The Nominating and Compensation Committee, which is composed of the above-mentioned members, is composed of the following three members. The Nomination and Compensation Committee formulates candidate proposals in light of the above criteria, and after discussion and approval by the Board of Directors, the candidates are elected at the General Meeting of Shareholders. In addition, the consent of the Audit Committee is obtained prior to submitting a proposal to the Board of Directors for the appointment of directors who are Audit Committee members.
Policy and process for determining officers remuneration
Policy and Process for Determining Executive Compensation Remuneration for directors (excluding directors who are members of the Audit Committee; hereinafter the same) consists of fixed monetary compensation and stock-based compensation based on the following basic policy.
- The remuneration system must function effectively as a medium to long term incentive for continuous growth of corporate performance and sustainable enhancement of corporate value while promoting value sharing with shareholders.
- The remuneration system must be appropriate to the roles and responsibilities required of each director, and enable the Company to attract and retain excellent human resources to realize its goals.
- Incentive design for the Representative Director & President to create an environment that allows him/her to focus on improving corporate value over a long-term 10-year period (maximize the proportion of stock-based compensation).
With respect to stock-based compensation, the Representative Director, President & CEO will be granted “Post-Delivery Restricted Stock Units (RSU)” as compensation for the performance of his/her duties for 10 fiscal years, with the granted rights for the relevant fiscal year to be vested only when certain conditions are met each year. For directors other than the Representative Director, President & CEO, restricted stocks (RS) will be continuously granted and the calculation of the RSU will be determined by taking into account the Company’s stock price level in addition to the factors considered in the preceding paragraph. In principle, RS for each fiscal year is considered and determined by the first meeting of the Board of Directors following the Annual General Meeting of Shareholders, and the restricted transfer period is, in principle, 3 years.
After the voluntary Compensation Committee formulates a compensation proposal, the Board of Directors shall adopt a resolution on the proposal. For directors who are members of the Audit Committee, it is determined by consultation of the Audit Committee.
- Corporate Governance Report
- Policy on Determination of Details of Individual Remuneration for Directors(excluding directors who are Audit Committee Members)
Remuneration
The total amount of remuneration for officers for the fiscal year ending July 31, 2023 is determined by the Board of Directors within the limit of the amount of remuneration approved at the General Meeting of Shareholders.
| Total amount of remuneration (JPY MM) |
Total amount of remuneration by category (JPY MM) |
Number of eligible directors/ auditors |
|||
|---|---|---|---|---|---|
| Basic remuneration | Performance linked remuneration | Non-monetary remuneration | |||
| Directors (excl. Audit & Supervisory Committee members) (Outside directors) |
140
(24) |
83 (13) |
－ (－) |
56 (10) |
9 (3) |
| Directors (Audit & Supervisory Committee members) (Outside directors) |
24 (24) |
24 (24) |
– (-) |
0 (0) |
3 (3) |
| Total (Outside directors/auditors) |
165 (48) |
107 (37) |
－ (－) |
57 (11) |
12 (6) |
*The above total amount of compensation includes four directors who retired at the conclusion of the 13th Ordinary General Meeting of Shareholders held on October 27, 2022.
The total amount of remuneration for officers for the fiscal year ending July 31, 2024 and onwards will be determined by the Board of Directors after review by the Nomination and Remuneration Committee, within the remuneration limit approved by the General Meeting of Shareholders.
Accounting auditor remuneration
The company determines the remuneration to the accounting auditor with the consent of the Audit & Supervisory Committee.
| Period | Total amount of remuneration (JPY MM) |
|---|---|
| FY2021 | 40 |
| FY2022 | 50 |
| FY2023 | 52 |
Other matters related to corporate governance are set forth in the “Corporate Governance Code” and the “Criteria for Independent Judgment of Outside Directors”.
Risk management and compliance
Security
Approach to security
As a company that handles customers’ confidential information, we consider the prevention of information security incidents to be our social responsibility. We will thoroughly manage information and aim to be a company trusted by our customers.
Security initiatives
We have established a Basic Policy for Information Security and are building an information security system.
We have established an Information Security Committee, and have acquired ISMS certification to continuously improve our information security management, as well as P Mark certification to protect personal information. In addition, we provide security training to our employees and undergo an external security audit at least once a year.
Anti-corruption
Anti-corruption policy
In accordance with our Corporate Compliance Policy (Raksul Group Code of Conduct), we, at RAKSUL Group, pledge to take part in a fair, transparent, and free competition, continue taking actions to stay just and honest and live up to the trust society places in us. We have established this Anti-Corruption Police in order to further embody this pledge.
- In order to ensure that we do not engage in any of the following corrupt practices, we will examine, establish, and continuously improve the appropriate anti-corruption management systems based on the specifics and risks of each country and region.
(1) Corrupt practices such as bribery, illegal political contributions, donations, and sponsorships
(2) Providing improper financial or other benefits to customers or business partners to obtain or maintain trade or business favors
(3) Demanding and accepting financial or other benefits from public officials, customers, or business partners in exchange for business favors - We also request our business partners to understand this policy and cooperate with us in our anti-corruption efforts.
- We properly and accurately record all costs and expenditures to ensure no bribery is taking place in violation of this policy
- We have established and will maintain the following appropriate systems in order to implement this policy.
(1) We have established an “Annual Compliance Plan” for our employees and conduct employee education such as legal compliance and anti-corruption training.
(2) We have an internal whistle-blower system to detect, correct, and resolve violations of laws, regulations, internal codes of conduct and rules at an early stage. There are three points of contact for whistle-blowing, and they have been made known to our employees: an internal contact, an Audit Committee member contact, and an external contact (law firm). Through our internal reporting rules, we ensure that our employees will not be mistreated or face deterioration of their work environment as a result of their reporting.
(3) We will set up a contact point to facilitate reporting from our business partners.
Contact for inquiries regarding Anti-Corruption
Please send us an email to our “Anti-Corruption Help Desk“
(Business hours: 10am-5pm JST, closed on Saturdays, Sundays, National Holidays, and New Year’s)