Concepts and System
Basic Concepts
The Company should seek to increase their corporate value over the medium to long term based on capital invested by the shareholders through fair business activities. Companies are expected to contribute to society as public institutions through business activities, considering their responsibility to customers, shareholders, employees, clients, communities, and all other stakeholders. Within this context, management is expected to pursue outstanding business practices. Toward that end, it must work to continuously develop the company, increase management transparency by being accountable for its actions, and fulfill its social responsibilities.
Based on this understanding, the Company believes its highest duty is to preserve and strengthen the AUTOBACS brand by perpetually offering merchandise and services that please customers, while fulfilling our social responsibilities, to continuously earn the support and trust of all stakeholders. We, therefore, are also committed to the constant strengthening and improvement of our corporate governance.
Corporate Governance System
The Company is organized as a company with an Audit and Supervisory Board (a “company with Board of Company Auditors” as defined in Japan’s Companies Act), which means that it has a double-checking function with the Board of Directors overseeing the execution of company operations and an auditing function performed by audit and supervisory board members. We have also taken the following measures to enhance corporate governance:
- Introduction of officer system: Separation of business execution and oversight, clarification of management responsibilities
- Ratio of outside directors above 30%: Enhancement of the oversight function
- Establishment of committees consisting primarily of members of advisory organs to the Board of Directors: Ensuring of transparency, objectivity, and propriety, and advancement of risk management activities
- Appointment of independent outside directors, as well as outside audit and supervisory board members: Protection of general shareholders’ interests
- Establishment of the Executive Committee and committees comprised of the Company’s officers: Ensuring of appropriate and swift decision making and forming of consensus among officers
The Company has eight directors, of whom three are outside directors, and of the three types of boards of directors presented by the sectional committee of the Financial System Council, the Board of Directors is classified as “a board of directors centering on outside directors.” Meanwhile, the Company has a Corporate Governance Committee consisting of all outside directors and the representative director. The Company therefore has a hybrid corporate governance system, which is based on the system of a company with an Audit and Supervisory Board, but also has the function of a company with a committee system. The Company has three independent outside directors and three independent outside audit and supervisory board members to protect the interests of general shareholders.
Corporate Governance Framework of AUTOBACS SEVEN
| Configuration | Company with an Audit and Supervisory Board | ||
|---|---|---|---|
| Management and Business Execution Framework | Board of Directors | Chairman | Representative director |
| Member | Directors: 8 (3 outside directors, all of whom are independent directors, and 5 directors who are also executive officers) Audit and supervisory board members: 4 (3 outside members, all of whom are independent members) |
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| Roles | Make decisions and report on the matters set out by laws and regulations or the Articles of Incorporation, and deal with important matters relating to the Company’s business activities | ||
| No. of meetings held in FY2015 | 16 times (including 4 ad hoc meetings) | ||
| Executive Committee | Chairman | Chief Executive Officer | |
| Member | Executive Officers (Observers: audit and supervisory board members and outside directors) | ||
| Roles |
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| Advisory Organ to the Board of Directors | Corporate Governance Committee | No. of meetings held in FY2015 | 12 times |
| Chairman | Outside Director (chosen from the outside directors) | ||
| Member | Outside Directors and Representative Director (Observers: outside audit and supervisory board members) | ||
| Roles |
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| No. of meetings held in FY2015 | 6 times | ||
| Risk Management Committee | Chairman | Representative Director | |
| Member | Officers with directorships and officer responsible for internal control (Observers: audit and supervisory board members and outside directors) | ||
| Roles | Promote smooth and appropriate risk management | ||
| No. of meetings held in FY2015 | Once | ||
| Auditing and Supervising by Audit and Supervisory Board Members and Internal Auditing System | Auditing and Supervising by Audit and Supervisory Board Members | Audit and supervisory board members | 4 (3 outside members, all of whom are independent members) |
| Employees assisting with the duties of audit and supervisory board members’ | 3 (full-time) | ||
| No. of meetings held in FY2015 | 14 times (including 2 ad hoc meetings) | ||
| Internal Auditing | Internal Auditing Organ | Evaluate internal controls: 5 members (report directly to the CEO) Audit subsidiary operations: 10 members |
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| Roles |
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| Cooperation | At the beginning of each fiscal year, the audit and supervisory board members consult with the independent auditor about an audit and supervising plan for the fiscal year. The audit and supervisory board members receive a progress report each month on audits of financial statements and reviews, and exchange information and opinions. The audit and supervisory board members check the audit plan developed by the Internal Auditing Organ at the beginning of the fiscal year. The audit and supervisory board members receive a report on audit results from the Internal Auditing Organ once a quarter and express opinions on it. They also exchange information. |
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Addressing the TSE’s Corporate Governance Code
The Company regards the contents of the Corporate Governance Code put into effect June 1, 2015 by the Tokyo Stock Exchange, Inc., as important for making swift, resolute management decisions, while maintaining management transparency and fairness, and will duly consider them as it strives to increase corporate value over the medium-to-long term by achieving sustainable earnings growth and maintaining proper internal controls.
Actions that are in line with the Corporate Governance Code’s general principles, and which the Company has already taken, are described below.
General Principle 1: Securing the Rights and Equal Treatment of Shareholders
The Company, in order to secure equal treatment of shareholders, has taken steps, such as participating in an electronic platform for the exercise of voting rights, and posting English-language shareholder meeting notifications on its website in an effort to enhance shareholder convenience. In the same vein, it has also instituted actions, such as sending shareholders’ meeting notifications well in advance of shareholder meetings and holding shareholders’ meetings on days other than those selected by large numbers of other companies, to help create conditions that allow shareholders to exercise their voting rights.
Furthermore, the Company strives to further enhance shareholder value in terms of ROE, which has been put forth as the primary indicator of management performance. Results and initiatives taken for the benefit of shareholder value are posted on the Company website, and Company performance is discussed in detail in briefings held for analysts/institutional investors and individual investors.
General Principle 2: Appropriate Cooperation with Stakeholders Other Than Shareholders
The Company has set forth a management philosophy to serve as a guideline for its interactions with society and the roles it should play and responsibilities it should bear. While striving to enhance medium-to-long-term corporate value, the Company also aims to grow together with all of its stakeholders, while deepening bonds of trust with them, in the course of all of its business activities. Toward that end, it has formulated its Code of Conduct and Guidelines for Action, and posted both on its website.
In addition, the Company Group has instituted a mutual check function within the Group, works to raise compliance awareness among executives and employees, and, to uncover violations of the Code of Conduct and Guidelines for Action early on, has adopted an internal whistleblower system together with rules protecting the identity of, and prohibiting retaliation against, whistleblowers.
General Principle 3: Ensuring Appropriate Information Disclosure and Transparency
The Company, in order to enhance management transparency and enable shareholders and other investors to properly understand and assess Company management, has instituted a system, including elements such as policies for timely disclosures, a code of conduct on information disclosures, and rules on information disclosures, as part of its effort to ensure the timely and proper disclosure of accurate company information. Furthermore, the Company actively discloses a wide range of information it believes is highly useful to shareholders. This information is disclosed through the Company’s website and other channels and includes not only financial statements but also items such as monthly sales and other types of financial information, the Company’s management philosophy and business plans, CSR and corporate governance information, and business information on stores and products.
To ensure the proper performance of audits by the independent auditor, the representative director, corporate audit department, members of the audit and supervisory board, and others meet regularly with the independent auditor to share information.
General Principle 4: Responsibilities of the Board
The Company, in selecting outside officers, places the greatest emphasis on independence. It has established its own requirements for independence and all six of its outside officers (3 outside directors and 3 members of the audit and supervisory board) meet these requirements. In the fiscal year ended March 31, 2015, all of the directors participated in a focused discussion of the Company Group’s medium-to-long term growth strategy based on the strategic direction established by the Board of Directors.
The Corporate Governance Committee, a consultative body to the Board of Directors on all corporate governance matters at the Company, sets policies on officer remuneration, develops ways to link officer remuneration to medium-term performance, and properly weighs appointments of candidates for director and for officers with executive responsibilities.
Audit and supervisory board members, as independent observers, actively attend important internal meetings, and express their objective and properly considered opinions to management in meetings of the Board of Directors.
General Principle 5: Dialogue with Shareholders
The Company has established a dedicated IR department and designated an officer to bear primary responsibility for IR. It endeavors to maintain dialogues with shareholders and other investors, and is active in disclosing information via the Company website and other channels, holding results briefings, meeting independently with analysts and investors, pursuing overseas IR, and engaging in other forms of dialogue with shareholders and other investors.
The Representative Director and Chief Executive Officer leads IR activities, which other directors and executive officers also actively participate in. Results of these activities are shared within the Board of Directors, which also receives reports from the dedicated IR department and other information that, taken together, amounts to timely and appropriate feedback to the directors, audit and supervisory board members, and other officers.