Our corporate governance vision
Our corporate philosophy is "Citizen contributes to and strives to be respected by the citizens of the world," and we derive our name from this. We are contributing to society and increasing our corporate value through sustainable corporate activities that are in harmony with the local community and the local environment. We believe that an important part of promoting these aims is to secure transparency in management and monitor many fields of management. Accordingly, we are striving to expand and improve our corporate governance.
Summary of corporate governance system and reasons for its adoption
The Board of Directors of our company is composed of full-time Directors, part-time Directors and Outside Directors. The full-time Directors serve Citizen Holdings Co., Ltd. (holding company) on a full-time basis and mainly execute operations as a listed company. At the same time, they clarify the goals of the Corporate Group and monitor each operating subsidiary. The part-time Directors are well-acquainted with the businesses under their charge and serve concurrently as Representative Directors at major operating subsidiaries. The 2 Outside Directors leverage their wealth of experience and extensive knowledge as executives to check and supervise the management of our company from an independent position. Audits are conducted by 3 Corporate Auditors, including 2 Outside Corporate Auditors who possess extensive knowledge on corporate financial and legal affairs.
Furthermore, we have established the Nominating Committee and the Compensation Committee as voluntary institutions for the improvement of the transparency of the management of our company. The main duties of the Nominating Committee include the discussions on the matters concerning the appointment of the Representative Director, the President and CEO, and the Chairman of the Board of Directors, as well as proposals of such matters to the Board of Directors. The main duties of the Compensation Committee include the discussions on the matters concerning the policies and standards of the compensation to be received by Directors, and the provision of advice concerning the same to the Board of Directors. Each of the Committees is composed of at least 3 or more Directors who are appointed by a resolution of the Board of Directors. Each committee has a majority of Outside Directors and includes at least 1 Representative Director. The Chairperson of each of the Committees is an Outside Director elected by mutual election of the members of the Committees.
By adopting the above systems, we believe we can secure appropriate and effective performance of duties and achieve transparency in management, as well as effectively monitor many fields of management.
Our organization and status, etc. of development of internal control system
1. Summary of our organization
We have a Board of Directors comprised of 8 Directors who are familiar with our business lines and 2 Outside Directors who are independent from our management (as of June 26, 2012).
We also employ a Board of Corporate Auditors system. Our Board of Corporate Auditors is comprised of 3 Corporate Auditors including 2 Outside Corporate Auditors (as of June 26, 2012).
2. Our organization and status of development of internal control system
At least once a month, meetings of Group Management Committee comprised of the full-time Directors and other members are held to make a prompt business decision and maintain management transparency. At these meetings, resolution items for the Board of Directors meetings and other important managerial issues are fully discussed and deliberated in advance.
The Board of Directors makes decisions about the performance of business and supervises these performances. The Representative Director and each Director in charge of respective operation conduct business administration.
Board of Directors meetings were held 18 times during the current fiscal year. All Directors and Corporate Auditors attended approximately 94% or more of the Board of Directors meetings held during the term of their office during the current fiscal year.
3. Status of audits by Corporate Auditors and Independent Auditors, and internal audits
Each Corporate Auditor conducts strict audits on the Directors' performance of their duties, in accordance with the audit policy and audit program stipulated by the Board of Corporate Auditors. The audits involve the following: attending the Board of Directors meetings, the Group Management Committee meetings, division meetings, and other meetings; receiving from the Directors and other officers reports on the status of the performance of their duties; reviewing important written decisions and other documents; and investigating the business and financial status of our company. We also receive an audit report from Nihombashi Corporation, an Independent Auditor. We conduct audits effectively on ourselves and our subsidiaries in collaboration with the Independent Auditor, and are working on the further expansion and improvement of corporate governance. Full-time Corporate Auditor, Haruhisa Shiraishi has been managing banks and other companies for many years and has extensive knowledge of finance and accounting. Also, Outside Corporate Auditor, Masaomi Suizu is thoroughly experienced in corporate legal affairs as an attorney-at-law and has extensive knowledge of finance and accounting.
Board of Corporate Auditors meetings were held 13 times during the current fiscal year. All Corporate Auditors attended 100% of the meetings of the Board of Corporate Auditors held during the current fiscal year.
Regarding independent audits, the Certified Accountants who independently audited our company are Shigehiro Chiba, Akira Ogura and Kenichi Yajima, associates of Nihombashi Corporation. In addition, 7 certified accountants and 5 successful candidates who have passed the Certified Public Accountants Examination assisted in the audit of our company. We assure fairness and independence while we are audited by the Independent Auditors.
Each year, we ask the Board of Directors for its opinion on the reappointment of the Independent Auditors, and the Board of Directors deliberates on and resolves this matter. If the Board of Directors does not approve the reappointment of the Independent Auditors, such proposal is deliberated on at the Ordinary General Meeting of Shareholders pursuant to the Companies Act.
Further, we have established the Internal Audit & CSR Department as an internal audit division to conduct audits based on our annual audit plan on the appropriateness and reasonableness of the execution of operations by subsidiaries.
These auditing organizations and the internal control division closely communicate with each other.
4. Relationship with Outside Directors and Outside Corporate Auditors
We appoint 2 Outside Directors and 2 Outside Corporate Auditors. These 2 Outside Directors leverage a wealth of experience and extensive knowledge as executives to check and supervise the management of our company. These 2 Outside Corporate Auditors conduct audits by applying their wealth of experience and extensive knowledge as bank manager and attorney-at-law, as well as their knowledge on finance and accounting. Through the appointment of these individuals, we believe that we realize a sufficient system to maintain and promote our corporate governance.
We have no special interest with Outside Director, Kazumoto Yamamoto, Outside Director, Teruaki Aoki, Outside Corporate Auditor, Haruhisa Shiraishi, and Outside Corporate Auditor, Masaomi Suizu. We are convinced that each officer maintains an independent position without causing any conflicts of interest with general shareholders. Outside Corporate Auditor, Haruhisa Shiraishi once served as a director and advisor of Mizuho Bank, Ltd. which, in addition to Mizuho Corporate Bank, Ltd., one of our principal lenders, is a subsidiary of Mizuho Financial Group, Inc. However, Mizuho Bank, Ltd. does not have any relationship with our company that may have the same degree of influence on our company's management decision-making as a company in the relationship with our company as a parent company and its subsidiary or a company and its affiliate. In addition, Mr. Shiraishi resigned as a director and advisor of Mizuho Bank, Ltd. prior to assuming the office of Outside Corporate Auditor of our company. Accordingly, we are convinced that he is able to perform the audits from an independent position, without causing any conflicts of interest with general shareholders.
The numbers of our company's shares held by Outside Directors and Outside Corporate Auditors as of June 26, 2012 are as follows.
Outside Director, Kazumoto Yamamoto 10,000 shares
Outside Director, Teruaki Aoki 10,000 shares
Although we have not established standards or a policy regarding independence from our company for appointing Outside Directors or Outside Corporate Auditors, we endeavor to appoint Outside Directors or Outside Corporate Auditors who carry no risk of causing any conflicts of interests with general shareholders. We work to ensure this by making reference to the types of candidates likely to cause conflicts of interests with general shareholders that are specified in the guideline for listing supervision, etc. of Tokyo Stock Exchange, Inc., while also placing an emphasis on candidates that have a wealth of experience and extensive knowledge as executives, or extensive knowledge on corporate financial and legal affairs.
Status of development of risk management system
Recognizing the importance of acting with a good social consciousness, the Citizen Group has always adhered to laws and regulations, and is strengthening its efforts toward practicing corporate ethics and preventing corporate misconduct.
To clarify and manage a risk management system at each Group company is fundamental. Committees such as the Security Control Management Committee and the Subcontract Transaction Optimizing Committee are assigned for each important theme and put in place on a cross-sectional basis in the Corporate Group.
In addition, placing importance on corporate social responsibility and recognizing that business can only be realized through trust and integrity, we have initiated various CSR activities with the strong backing of our President. We have established the "Citizen Group Code of Conduct" and strive on a daily basis to observe and abide by it. Our CSR operational system consists of the President as CSR Chief Executive Officer, presiding over the CSR Committee and Group CSR Promotion Committee as standing bodies. The CSR Committee drafts CSR policies, establishes and improves the Code of Conduct provisions, establishes regulations, provides educational and training programs, examines consultation items, and conducts monitoring. The Group CSR Promotion Committee executes and promotes CSR activities in all Group companies.
We have also created an internal reporting system that while protecting whistle-blowers, provides a qualified complete framework for responses and supplements early detection and voluntary correction efforts with the aim of preventing losses or minimizing effects.
