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 12 members, 6 of whom are independent outside directors and 3 of whom are female directors (as of October 21, 2021). 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 and Remuneration Committee (voluntary committee)

The Nomination and Remuneration Committee, as one of the voluntary committees, has been established with the purpose of ensuring objectivity and transparency regarding the nomination and remuneration of directors, with the majority of its members being independent outside directors. The committee is mainly responsible for the appointment of directors and the formulation of their remuneration. Proposals for the appointment and remuneration of directors are reviewed by the Nomination and Remuneration Committee and then resolved by the Board of Directors.

Executive Committee (voluntary committee)

As one of the voluntary committees, the Executive Committee consists of members appointed by the Board of Directors with the purpose of ensuring objectivity and transparency in the execution of important business operations by the CEO. The Executive Committee is mainly responsible for the formulation of strategic budget plans, the nomination of persons to execute the plans, and the appointment and dismissal of important employees for discontinuous innovation from the perspective of increasing corporate value by optimizing the business portfolio of the entire company. Proposals are reviewed by the Executive Committee and then executed by the CEO, etc.

The Executive Committee consists of 4 members, 2 of whom are outside directors (as of October 21, 2021).

Management Meeting, etc.

The company has established companywide Management Meeting as well as management meetings in each business unit as a body responsible for important decision-making in business execution. The Management Meeting is composed of executive directors 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 by the CEO after deliberation by the Executive Committee.

Board of Directors execution evaluation

We review the overall operation of the Board of Directors at least once a year at the meeting of the Board of Directors. The following is a summary of the evaluation of the effectiveness of the Board of Directors conducted in the fiscal year ended July 31, 2021.

The evaluation of the effectiveness of the Board of Directors is based on responses of questionnaires for each director, and the company provided feedback on the results to the Board of Directors. We received responses that the Board of Directors, regardless of whether they are internal or external directors, engages in free and constructive discussions and exchanges of opinions on various agendas directly linked to corporate value, such as optimal allocation of capital, ESG, and corporate risks. Agendas to be discussed include the further improvements of the initiatives with the voluntary committees started from the fiscal year ending July 31, 2021 through periodic verification.

Based on these analyses, we will promote initiatives to further enhance effectiveness of the system.

Officers remuneration

Process for determining remuneration

Based on the business results from the previous fiscal year, the company considers and determines the remuneration between the end of the fiscal year and the first meeting of the Board of Directors after the Ordinary General Meeting of Shareholders. Fixed monetary remuneration is paid in a fixed monthly amount, and non-monetary remuneration in the form of restricted stock is paid in a lump sum every November in an amount equivalent to the remuneration for the execution of duties over the following three fiscal years. From the end of the fiscal year which ended July 31, 2021, the company has adopted a policy of having the voluntary Nomination and Remuneration Committee formulate remuneration proposals and then having the Board of Directors pass resolutions on them.

For directors who are members of the Audit & Supervisory Committee, remuneration is determined through consultation with the Audit & Supervisory Committee.

Remuneration

The total amount of remuneration for officers for the fiscal year ending July 31, 2021 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)
152
(15)
100
(11)

(-)
52
(4)
8
(3)
Directors (Audit & Supervisory Committee members)
(Outside directors)
23
(23)
20
(20)

(-)
2
(2)
3
(3)
Total
(Outside directors/auditors)
175
(39)
121
(31)

(-)
54
(7)
11
(6)

The total amount of remuneration for officers for the fiscal year ending July 31, 2022 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)
FY2019 23
FY2020 40
FY2021 40

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 strive to increase our company’s credibility through fair, transparent, and free competition.
Whether directly or indirectly, we do not and will not engage in any corrupt practices, including but not limited to bribery, kickbacks, inappropriate entertainment/gifts, illegal political contributions, donations, and sponsorships.

Anti-corruption initiatives

  1. We have established regulations regarding the management of insider information. We strive to ensure compliance with laws and regulations by periodically disseminating insider information.
  2. We establish an annual plan for employee education including training on legal compliance and corruption prevention.
  3. We have established Risk Management Committee to carry out regular monitoring.
  4. We have established an internal reporting system in order to identify, correct, and resolve any violation of laws and regulations, internal codes of conduct and rules at an early stage. Our employees are informed about three contact points for reporting: an internal contact point, Audit & Supervisory Committee, and an external contact point (law firm). In accordance with our internal reporting regulations, we have set up a system to ensure that no one is subject to any disadvantageous treatment or deteriorated working environment as a result of the reporting.