Corporate Governance

Fundamental Approach toward Corporate Governance

Our Group aspires to be a valuable contributor to all kinds of our stakeholders in the society, including the shareholders, the employees, the business partners and others, by promptly and appropriately responding to the changes in the business environment and continuing operational activities which enable the Group to achieve a sound growth. For this purpose, the Group has placed the greatest importance on enhancement of corporate governance, and in particular, “fully cultivating compliance mind,” “enhancing risk management” and “conducting timely disclosure” as three key initiatives. Furthermore, the Group is determined to make efforts in a unified manner, from the top management down to each employee of the Group companies, led by the Board of Directors, to develop an internal control system as required by the Companies Act and the Financial Instruments and Exchange Act, as well as to set up a system which is credible to investors, as a financial instruments business operator.

Three Important Items in Corporate Governance

Compliance

We place compliance at the top of our agenda and raise awareness of it from top management to all employees of the Group companies.

Risk Management

Assuming every possible risk, we prepare and practice emergency responses under normal conditions with a special focus on eliminating relationships with anti-social forces.

Information Disclosure

We practice disclosure and communication appropriately and on a timely basis to all stakeholders including shareholders.

Basic Policy on Corporate Governance

Corporate Governance Report

    Corporate Governance System

    Corporate Governance System

    organization chart

    As of March 1, 2023

    Reasons for Adopting the Current Corporate Governance System

    The Company has set up the Board of Directors and the Audit & Supervisory Board. While appointing from outside its outside directors and all of its Audit & Supervisory Board Members, it has also adopted an executive officer system, for the purpose of operating its businesses with high transparency. All of the Audit & Supervisory Board Members of the Company have been outside Audit & Supervisory Board Members since the time of listing. The Audit & Supervisory Board Members have always performed audits of the business management of the Company from the viewpoints of ensuring and increasing the Company’s corporate value and the common interests of its shareholders. The Company further enhances its supervisory function over its management by inviting outside directors to the Board of Directors. On the management side, the Company has employed the executive officer system so as to achieve optimal distribution of decision-making functions and operational duties, as well as encouraging the delegation of authority in executing the businesses, in an attempt to strengthen its corporate governance.

    Board of Directors

    The Board of Directors is constituted by nine directors, three of whom are outside directors. As the highest management decision-making body, the Board of Directors makes resolutions on management policies and material issues and also supervises the execution of duties by the directors. In addition, the outside directors (the independent directors), by sharing their opinions from their objective standpoint, provide advices and suggestions to ensure the adequateness and appropriateness of the decisions made by the Board of Directors.

    Nominating and Compensation Advisory Committee

    The Company established the Nominating and Compensation Advisory Committee voluntarily as a consultative body to the Board of Directors to ensure appropriateness and transparency in such matters as the process of selecting candidates in connection with director election proposals submitted to the general meeting of shareholders and resolutions of the Board of Directors relating to allocation of remuneration, etc. to individual directors. The constituent members of the committee include a outside director(s) (independent director(s), one person or more), a full-time audit & supervisory board member (outside audit supervisory board member, one person), representative director (one person), and a full-time director (one person). The outside director who is a member of the committee is the chairperson of the committee.
    To monitor the legality of each decision-making process, the Company's Basic Policy on Corporate Governance stipulates that the committee shall include an independent outside Audit & Supervisory Board Member and that independent outside directors and independent outside Audit & Supervisory Board Members shall be a majority of the committee. To ensure the independence and objectivity of the committee, four of the six committee members are independent officers, and the chairperson is an independent outside director.

    Executive Officer System

    The Company has adopted the executive officer system in order to more clearly segregate the monitoring/supervision of the Company’s business management, which is the duty and responsibility of the directors, from the execution of the business and currently ten executive officers hold this post. All of the Company’s executive officers are appointed by the Board of Directors to adhere to its internal rules and regulations in executing and controlling the business operations of the Company. In addition, the Management Committee, which comprises all executive officers, discusses matters to be resolved by the Board of Directors in advance and provides advice on important decisions to be made by the CEO in advance. 

    Corporate Governance Meeting

    With the aim of continuously strengthening its corporate governance, the Company holds the Corporate Governance Meetings constituted by six full-time directors and two full-time Audit & Supervisory Board Members monthly. At the meetings, the directors and the Audit & Supervisory Board Members review and discuss the corporate governance concerns and the internal control matters in an effort to increase the corporate value of the Company, and where necessary, they receive advices from the outside experts such as corporate attorneys and/or certified public accountants.

    Audit & Supervisory Board

    The Company has adopted the Audit & Supervisory Board Member system and has the Audit & Supervisory Board with two full-time and two part-time Audit & Supervisory Board Members, all of whom are outside Audit & Supervisory Board Members. They audit the operation of the Board of Directors and execution of duties of Directors from an independent and objective standpoint, and provide constructive advice and recommendations for the increase of corporate value with their knowledge.

    Cooperation between Audit & Supervisory Board Members and Internal Audit Department (The Threefold Auditing Structure)

    Audits by corporate auditors The auditing activities by the Audit & Supervisory Board Members are performed in accordance with an annual audit plan. By cooperating with the accounting auditors as well as with the Internal Auditting Department, the Company has developed an efficient and viable auditing system. The full-time Audit & Supervisory Board Members regularly meet with each of the directors and officers in charge of each department, so as to fully understand the status of the business execution and regularly exchange opinions with the outside directors.
    Internal audits The Internal Audit Department under the direct supervision of the President and CEO performs audits for the entire Group in accordance with their annual auditing plan. In the event any inadequacy is discovered, recommendations for corrective actions are made to the audited departments. The audit has been quite effective as the Internal Audit Department discusses with the audited departments as to the issues in need of corrective actions and follows up with specific guidance.
    Audits by the accounting auditor (Shinsoh Audit Corporation)

    The audit of the Company’s accounts is performed based on the annual audit plan. In addition to the full-year audit performed at the end of the fiscal years, Company’s Audit Company (Shinsoh Audit Corporation) conducts reviews at each quarter end. The periodic replacement and re-engagement of the accounting auditor in accordance with the rules and regulations of the audit corporation under the Certified Public Accountants Act are operated as follows;

    • The Engagement Partner may not be involved in the company's auditing operations for more than seven accounting periods.
    • The Engagement Partner may not be involved in the company's auditing operations for two accounting periods after being replaced.

    Attendance at Meetings of the Board of Directors, Nominating and Compensation Advisory Committee, and Audit & Supervisory Board (FY2022)

    NamePositionBoard of Directors Meetings
    (Attendance
    /Number of meetings)
    Nominating and
    Compensation
    Advisory Committee
    (Attendance
    /Number of meetings)
    Audit & Supervisory
    Board
    (Attendance
    /Number of meetings)

    Seiichiro Yamaguchi

    President and CEO

    24/24 2/2 -

    Noboru Hirano

    CFO and Senior Executive Officer of Administrative Division
    (in charge of Human Resource Department)

    24/24 2/2 -

    Hideki Nakanishi

    Director, COO and Senior Executive Officer of Business Division
    (in charge of Asset Solution Department 4 and Asset Solutions Business Promotion Department)
    24/24 - -

    Masaaki Watanabe

    Director, Managing Executive Officer, Deputy Chief of Business Division
    (in charge of Asset Solution Department 5)

    23/24 - -

    Shunsuke Yamaguchi

    Director, Executive Officer
    (in charge of Finance Department and General Affairs Department)

    24/24 - -

    Hitoshi Oshima

    Director, Executive Officer
    (in charge of Asset Solution Department 1 and Crowd Funding Department)

    24/24 - -

    Kenichi Shohtoku

    Outside Director 23/24 2/2 -

    Hiroyuki Kobayashi

    Outside Director 23/24 2/2 -

    Masao Yamanaka

    Outside Director 23/24 2/2 -

    Hitoshi Yagi

    Outside Audit & Supervisory Board Members
    (full-time)

    24/24 2/2 16/16

    Toshinori Kuroda

    Outside Audit & Supervisory Board Members
    (full-time)

    24/24 - 16/16

    Tatsuki Nagano

    Outside Audit & Supervisory Board Members 21/24 - 13/16

    Osamu Doi

    Outside Audit & Supervisory Board Members 24/24 - 16/16

    The Reasons for Election of Independent Officers

    Basic Policy for Appointment of Directors

    When nominating candidates for the Board of Directors, those who execute the business are nominated who have the necessary knowledge as Directors and are familiar with the Group's finances, business, and other aspects of the Group. For Outside Directors, are nominated persons who can be expected to supervise management from an independent and objective standpoint and provide constructive advice and suggestions to Directors concurrently serving as Executive Officers. At present, there is no female Director in office, but the Group considers that a diverse membership in terms of gender, internationality, professional experience, and age will contribute to the medium- to long-term growth of the Group, and if suitable candidates are found in the future, the Company will intend to appoint them.

    Skill Matrix for the Board of Directors

    Status of Outside Directors

    The Company has three Outside Directors and four Outside Audit & Supervisory Board Members. With regard to the nomination of Outside Directors, the Company elects persons who can oversee the management from an independent and objective standpoint and be expected to provide constructive advice and recommendations to Directors concurrently serving as Executive Officers. In nominating Outside Audit & Supervisory Board Members, the Company elects persons who can be deemed to audit the operation of the Board of Directors and execution of duties of Directors from an independent standpoint, and who are expected to provide constructive advice and recommendations for the increase of corporate value with their knowledge.

    The Reasons for Election of Independent Officer

    Outside Directors
    NameReason for the election

    Kenichi Shohtoku

    Director Kenichi Shohtoku, a certified public accountant, he has an extensive experience and knowledge including those relating to overseas business. He has provided invaluable advice on various occasions such as the Board of Directors’ meetings of the Company, liaison meetings with the Audit & Supervisory Board Members of the Company, etc. and has worked energetically to enhance the governance system of the Company and the Group as well as to ensure the appropriateness of financial reporting. Considering that he is indispensable for the maintenance and improvement of corporate governance structure for further expanding the Group and enhancing the checking functions in the future while paying attention to ESG issues.

    Hiroyuki Kobayashi

    Director Hiroyuki Kobayashi, has extensive experience and expert knowledge, accumulated mainly at major financial institutions. With his objective monitoring and proposals based on his abundant experience and expertise, he has been contributing to more active discussion at Board of Directors meetings and improves their effectiveness. Considering that he is indispensable for the maintenance and improvement of corporate governance structure for further expanding the Group and enhancing the checking functions in the future while paying attention to ESG issues.

    Masao Yamanaka

    Director Masao Yamanaka has provided legal advice to a number of companies and has extensive experience as a lawyer and a wealth of expertise in corporate law. Furthermore, serving as outside auditor of multiple listed companies, he possesses considerable expertise in governance of listed companies, and he is a notably effective person for supervising governance of the Group, as we aim for expansion of the Group. Considering that he is indispensable for the maintenance and improvement of corporate governance structure for further expanding the Group and enhancing the checking functions in the future while paying attention to ESG issues.

    Outside Audit & Supervisory Board Members
    NameReason for the election

    Hitoshi Yagi

    Full-time Outside Corporate Auditor Hitoshi Yagi has extensive experience in the auditing divisions of major financial institutions and professional insight based on his qualifications as a Certified Internal Auditor (CIA) and a Certified Information Systems Auditor (CISA), and the Company believes that he can perform his role to ensure the appropriateness and appropriateness of the Company's management.

    Toshinori Kuroda

    Full-time Outside Audit Supervisory Board Member Toshinori Kuroda has abundant experience including overseas assignment primarily at a major financial institution as well as specialist knowledge and the Company believes that he can perform a role in ensuring the adequacy and appropriateness of the Company’s management.

    Tatsuki Nagano

    Outside Audit Supervisory Board Member Tatsuki Nagano has experience at major financial institutions and continues to be involved in corporate management and the Company believes that he can utilize his extensive experience and a high level of expert insight to perform a role in ensuring the adequacy and appropriateness of the Company’s management.

    Osamu Doi

    The Company believes that Osamu Doi can perform a role in ensuring the adequacy and appropriateness of the Company’s management based on his abundant experience at major security companies and at companies that conduct investment banking activities as well as his specialist knowledge.

    Independent Officers' Remuneration

    Outline of the Remuneration System for Directors and Policy for Determining Remuneration

    Remuneration for full-time Directors consists of monetary remuneration, comprising a “fixed salary” which is scaled according to duties, “performance evaluation remuneration” which is based on the achievement of individual goals such as the performance of each full-time Director, and “Directors’ bonuses” which are linked to consolidated profit before tax, and “stock options” which are aimed to increase the desire and motivation to contribute to the medium- to long-term enhancement of corporate value.

    Due to the emphasis on their supervisory function from a standpoint independent of the execution of business, Outside Directors’ remuneration is composed of a “fixed salary” and “stock options” only. No “performance evaluation remuneration” or “Directors’ bonuses” are paid to Outside Directors. The Representative Director drafts proposals for each Director’s remuneration, which are discussed by the Nomination and Compensation Advisory Committee, before being decided by resolution of the Board of Directors.

    Fixed salary

    On the basis of comparisons with the results of surveys of Directors’ remuneration at listed companies, conducted by external specialist agencies, and surveys of the levels of Directors’ remuneration at the Company’s competitors, conducted by the Company, as well as comparison with the highest amounts of remuneration paid to employees of the Company, the Company has established fixed salary scaling guidelines, based on Directors’ duties and posts held by Directors concurrently serving as Executive Officers. Remuneration for each individual Director is discussed by the Nomination and Compensation Advisory Committee, before being decided by the Board of Directors.

    Performance-linked remuneration (performance evaluation remuneration and Bonus)

    The “performance evaluation remuneration” for full-time Directors is based on their individual achievement of single-year performance targets. A “standard evaluation remuneration amount” equal to 33% of the fixed salary is paid monthly together with the fixed salary, and where there is an adjustment based on the achievement of performance targets (of between +55% and -50% of the standard evaluation remuneration), this is added to and paid together with Directors’ bonuses or deducted from Directors’ bonuses after the conclusion of the Ordinary General Meeting of Shareholders held during the fiscal year. “Directors’ bonuses,” which are linked to single-year consolidated profit before tax, are calculated by multiplying the fixed salary per annum by a factor, which is the sum of a predetermined factor based on the level of profit before tax, and an extra factor where the single-year target profit before tax has been achieved. This is paid as a lump sum after the conclusion of the Ordinary General Meeting of Shareholders held during the fiscal year.
    *The performance targets for full-time Directors include governance practices, ESG promotion, contribution to business performance, management of departments in charge, and individual missions as evaluation items.

    Stock options

    In order to practice corporate management with a focus on enhancing corporate value over the medium- to long-term, the President and Representative Director drafts proposals for the number of stock options to be granted to each Director, based on the Director’s duties as well as posts held concurrently by the Director as Executive Officer, for each medium-term management plan. These proposals are examined by the Nomination and Compensation Advisory Committee, before being decided by the Board of Directors. A fixed number of stock options are granted to Outside Directors, considering the importance of their management monitoring and supervisory function aimed at enhancing corporate value.

    Auditor's Remuneration

    Audit & Supervisory Board Members, considering their role, are remunerated with a fixed salary only. Remuneration for each Audit & Supervisory Board Member is decided through discussion of the Audit & Supervisory Board, within the limits of the maximum total amount.

    Amount of Remuneration for Executive Officers (FY2022)

    Position

    Total
    amount of
    remuneration,etc.
    (¥ thousand)

    Total amount by type of remuneration, etc.
    (¥ thousand)

    Number of
    recipients
    (Person)
    Basic
    remuneration
    performance
    evaluation
    remuneration
    BonusStock Option
    Directors
    (outside directors)

    291,248
    (20,850)

    171,789
    (20,850)
    50,313
    (ー)
    69,146
    (ー)

    (ー)
    9
    (3)
    Audit & supervisory
    board members
    (outside audit & supervisory
    board members)

    33,060
    (33,060)

    33,060
    (33,060)

    (ー)

    (ー)

    (ー)
    4
    (4)

    Internal Control System

    The Company has established a Basic Policies of Internal Control Systems by resolution of the Board of Directors, and under this basic policies, in a continuous effort to develop the internal control system, the Company establishes plans for implementation and operation of the internal control system annually taking into consideration of revisions of relevant laws and regulations, changes in the business environment of the Group, expansion of the businesses, etc. Also, in ensuring the adequacy of financial reporting, an internal control system structure (so-called J-SOX with reference to the COSO-ERM framework (COSO Enterprise Risk Management - integrated framework)) that complies with the Financial Instruments and Exchange Act has been established and is in operation.