Corporate Governance

Tokyo Seimitsu has adopted a company structure with an audit and supervisory committee.
For dealing with matters that do not fall under the criteria for submission to the Board of Directors, the Company has adopted an Executive Officer System to speed up the decisionmaking process by delegating a large amount of authority to the Head of each company after defining their scope of duties and authority in accordance with the relevant regulations of the Company. In addition, the Executive Management Committee strives to share information and enhance deliberations across company divisions. In addition, various cross-company committees such as the Risk Management Committee and the Compliance Committee have been established to examine and monitor material issues from various perspectives to make appropriate decisions.

The Board of Directors is composed of 8 Directors who are not Audit and Supervisory Committee members (two of whom are External Directors) and four directors who are Audit and Supervisory Committee members (of whom three are External Directors). The Board of Directors holds regular monthly meetings, and extraordinary meetings are also held as necessary. 
The Board of Directors convened 17 times in fiscal 2022.
The Board of Directors deliberates on important matters related to management as stipulated by law, the Articles of Incorporation, and the Board of Directors Regulations, as well as monthly, periodic, and annual business results, and supervises the execution of business by each director.

As an independent body, the Audit and Supervisory Committee audits and supervises the execution of business by Directors other than Audit and Supervisory Committee Members. 
The Audit Department and the accounting auditor exchange opinions on the audit system to determine whether there are problems in auditing, issues, and other matters as needed, and strive to enhance the effectiveness of audits. At the same time, the Audit and Supervisory Committee receives regular reports on findings and related information from internal audits conducted in accordance with the annual audit plan. 

The Company has established a Nomination and Compensation Council as a voluntary committee for the purpose of clarifying the independence, objectivity, and accountability of the Board of Directors functions, especially in nomination of and compensation to the directors. Independent external corporate directors are in the majority (now all five members are external corporate directors) on the council, helping to realize deliberations fully independent from management.

The Company has in place an executive officer system to make speedy decisions on product development planning to respond quickly and flexibly to market trends. In addition to supervising the progress of business plans at regular monthly meetings of the Executive Management Meeting and Executive Officers' Meeting, the Executive Officers’ Meeting aims to share information across the Company and enhance Executive Officers’ Meeting deliberations.

Ages current as of the end of June 2024/Independent External Corporate Director: ◎ Female: ○ Foreign national:  ●
Note: This matrix represents the areas in which we expect each Director to have more expertise and play a more active role, based on their experience and other factors. This matrix does not represent all the knowledge and experience of each person.

The Company has established policies and procedures for determining the amount of remuneration, etc. for directors in its Basic Policy on Corporate Governance. For details about the policy, compensation structure, etc., please refer to the Basic Policy on Corporate Governance.

Among the remuneration paid to directors responsible for business execution, the formula for restricted stock, which is a medium to long-term incentive to share profits with shareholders, was revised to incorporate capital efficiency (ROE).

The Company shall not be engaged in any transactions with Directors and/or major shareholders that may damage the interests of the Company or the common interests of the shareholders, as indicated in “(7) Related Party Transactions” in the Directors and Boards section of the Basic Policy on Corporate Governance. When a Director is intending to enter into a transaction with the Company for him/herself or for any third parties, the Director shall obtain prior approval of the Board of Directors according to the rules of the Board of Directors, and report important facts in that transaction at the board meeting. Terms and conditions for the transaction may be determined in the same manner as a transaction with third parties.

To identify any transactions involving a conflict of interest by Directors, the Company checks annually and regularly existence of such transactions (excluding compensation) between the Company Group and Directors or their family members within the second degree of kinship.

When the Company is intending to enter transactions between the Company and major shareholders or other related parties, then it shall be approved in advance by personnel with authority commensurate with the importance and scale of the transaction in accordance with internal regulations determined by the Board of Directors.

The Board of Directors comprehensively examines whether shares held as cross-holdings are worthwhile based on risk and return from the perspective of medium- to long-term economic rationality, and qualitative considerations such as the purpose of holding and credit status. If this examination results in the judgment that it is not worthwhile to retain cross-holdings, in principle such holdings are reduced. However, if it is determined that holding of such shares will contribute toward the improvement of medium- to long-term corporate value, they are retained. As a result of such deliberation, the Company sold 16 cross-shareholdings (including shares subject to deemed holding) for 7,550 million yen between April 2015 and March 2023.

The Company conducts questionnaire surveys of all directors (including Audit and Supervisory Committee members) regarding the roles, functions, and operations of the Board of Directors. The Board of Directors discusses among the Internal and External Directors the results of the responses being summarized and analyzed, and then the Board of Directors evaluates its effectiveness and discusses future actions.

The Company conducts a questionnaire survey of all the Corporate Directors (including those directors who are serving as Audit and Supervisory Committee members) regarding the following points. After discussions among Internal Directors and among External Directors, a summary of the results and an analysis are shared at the Meeting of the Board of Directors, to evaluate the effectiveness of the Boards and to discuss the possibility of further improvement. In order to ensure the effectiveness and transparency of the survey, an external organization is incorporated in compiling and analyzing the survey results.

In addition to an item-by-item evaluation, the questionnaire takes the form of a questionnaire asking each director for comments on the strengths of the Company's Board of Directors and areas for improvement, reflections on each director's own contribution to the Board of Directors, and other free opinions and suggestions.

The results concluded that the effectiveness of the Board of Directors was largely ensured, with members with diverse experience and expertise engaging in free and vigorous discussions and providing opportunities for external directors to gain a better understanding of the Company.

Issues raised in the previous year, with regard to strengthening the governance of the Company Group as a whole, efforts are being made to strengthen and improve the subsidiary management system, providing effective support as well as supervision. About succession planning and training for directors, discussions are ongoing in the Nomination and Compensation Council.

In addition, about the enhancement of discussions at Board of Directors meetings, the Company is reviewing our operational methods, for example by separating deliberations and reporting. Furthermore, with a view to deepening understanding of the Company group among shareholders and investors, dialogue on governance and sustainability is enhanced, and the feedback is shared with the Board of Directors and used for initiatives for sustainable growth in the future.

On the other hand, the following issues were reaffirmed through this survey.

The Company's Board of Directors will consider revising the criteria for agenda items, distributing materials earlier and adding individual topics to the agenda about further enhance discussions. About succession planning, the Nomination and Compensation Council will further deepen discussions with a view to formulating a education plan.

Also, about a training for directors, the Company we will also consider further enhancement of on-site inspections, including at overseas locations.

Through these initiatives, we will continue to work towards ensuring the effectiveness of the Board of Directors.