as of July 10, 2018
PC DEPOT is currently striving to strengthen corporate governance to maintain transparent, healthy, and fair management by strengthening the supervisory function of the board of directors while promoting speedy management.
To achieve it, we emphasize the importance of securing transparency of management by disclosing appropriate information at appropriate timings as well as strengthening the management environment. We will continuously review our corporate governance system and enhance corporate values.
Our company will the procedure for selection and decision of a successor to the President.
Our company does not provide incentives for Directors' compensation at present, but will consider it.
In our company, the directors' compensation is set by rank, based on the Executive Compensation Rules. When the Board of Directors makes personnel decisions regarding management staff, we refer to the opinions of independent external directors. Therefore, we have not established a voluntary committee.
Our company had determined in principle not to hold assets not required for business. However, we shall decide whether we should hold stocks as a policy measure in cases where doing so is judged to contribute to the enhancement of our group's corporate value in the medium- to long-term. This decision will be made in overall consideration of our business strategy and the maintenance and enhancement of our stable relationship with our customers. Regarding the exercise of the voting rights for the stocks, we do not intend to unconditionally agree with proposals made by the corporation or corporations whose stocks are held by us. After meeting with the corporation(s) as needed, we would like to exercise the voting rights giving consideration to whether it contributes to the enhancement of our corporate value and whether the corporation concerned is making good decisions to enhance its corporate value in the medium- to long-term.
In our company, transactions between related parties (e.g. competitive transactions by directors, transactions between director and company, etc.) are subject to discussion and resolution by the Board of Directors. The Board of Directors Rules stipulate that directors who have a special interest in the resolution may not participate in the vote. Once a year, we confirm in writing the existence of the related-party transactions, including those made by the directors of our company and our subsidiaries.
The Board of Directors makes lawful and timely decisions on important matters such as the business plan and business strategy, so as to realize our sustainable growth and enhance our corporate value in the medium- to long-term. The matters to be resolved by the Board of Directors are specifically stipulated in the Board of Directors Rules. The scope of management responsibility is clearly stipulated in the Official Authority Rules.
Our company elects three independent external directors who meet the requirements for independent officers stipulated in the rules on the listing of securities of the Tokyo Stock Exchange. We share information on matters such as discussions, potential risks and approvals, especially in the Administrative Department, with the external directors. We check their opinions as necessary.
In our company, an external director requires the following abilities in addition to the requirements of the Companies Act:
1. Ability to supervise and evaluate overall management through voting in the Board of Directors;
2. Ability to supervise conflicts of interest between our company and management, or between our company and an interested party other than management;
3. Ability to give useful advice regarding our corporate governance, based on experience and knowledge.
Moreover, we elect independent external directors who are not liable to cause any conflict of interest with a stockholder, in addition to meeting the requirements for independent officers determined by the Tokyo Stock Exchange.
Our company decides the appropriate number of candidate directors for the scale of our business, taking into consideration at the same time the appropriate diversity of the members of the Board of Directors in terms such as age, sex and skills.
The concurrent holding of important positions by directors and auditors is described in the Notice of Convocation of the 24rd Ordinary General Shareholders' Meeting (pages 5~11).
The company will evaluate the general effectiveness of the Board of Directors, such as its role, function, size, structure, and management, and after deliberations at the board meeting, we will release a summary of the evaluation to the public and utilize it to enhance the functions of the board. An overview of the evaluation of the Board of Directors’ effectiveness, carried out in 2017, is as follows. I. Evaluation Framework and Method a. Persons to Be Evaluated All board members (10) and auditors (4) *Those serving as of March 2018 b. Execution Method A questionnaire was distributed and collected (responses were anonymously collected) c. Evaluation Criteria i. Role and functions of the board ii. Size and structure of the board iii. Management of the board iv. Coordination with auditing organizations v. Relationships with external board members vi. Relationships with shareholders and investors d. Evaluation Process Based on the results and entries of the collected questionnaire, we deliberated the outcome of the evaluation at a meeting of the Board of Directors. II. Summary of the Evaluation Outcome Based on the deliberation at the meeting of the Board of Directors, it was confirmed that the Board is being managed in an effective manner in general. On the other hand, the three opportunities for improvement shown below were identified, and it was agreed to further enhance the effectiveness of the Board based on these improvement points. 1. Succession plan for the CEO, etc. 2. Discussions on appointment of board members and remuneration 3. Enhancement of the function of outside board members as auditors
When employees assume the posts of executive officer and director or auditors, our company thoroughly notifies them again of their responsibilities and duties based on the main relevant laws, including the Companies Act etc. Moreover, we thoroughly notify each external director and each external auditor of our corporate philosophy and the contents of our group's business.
In order to realize our sustainable growth and enhance our corporate value in the medium- to long-term, our company maintains constructive dialogue with investors through briefings on earnings and individual interviews, and discloses the necessary information on our website etc. as needed. The President and Chief Executive Officer and the Director and Office Manager of the Office of the President dialogue with investors based on reports from the relevant department(s), taking into consideration the purpose and consequences of the dialogue as well as the attributes of the stockholders. As the department in charge, the IR Section of the Office of the President appropriately exchanges information in cooperation with the relevant departments, and appropriately conducts information management such as establishing a silent period based on the Insider Transactions Management Rules. The Board of Directors considers the approach in the next quarter after receiving the quarterly report on the dialogue with investors from the department in charge.
PC DEPOT uses the corporate auditor system and we invite outside directors and outside corporate auditors to assure the establishment of an objective management control system. As of June 30, 2018, we had ten directors (including three outside directors) and four corporate auditors (including three outside auditors). Outside corporate auditors were elected in order to strengthen management while at the same time assuring its continuing soundness.
Outside directors and external auditors play an important role in monitoring and auditing the operations of the Company. Opinions expressed by outside directors and outside corporate auditors in the deliberations and decision making at the Board of Directors meeting enhance the transparency, soundness, objectivity and appropriateness of the management process.
In consideration of their capability to meet the Company’s expectations and carry out the above-described roles, the Company elects appropriate independent directors/corporate auditors (outside directors and outside corporate auditors who are unlikely to have conflicts of interest with general investors) as specified in Rule 436-2 “Securing Independent Director(s)/Auditor(s)” of the Securities Listing Regulations established by Tokyo Stock Exchange, Inc.
Outside directors Mineo Fukuda and Hidetaka Fukuda and outside auditors Kazuo Yamamoto, Masaki Nishimura and Yoshinari Noguchi are deemed to have no potential conflicts of interest with ordinary shareholders and have been registered with the Tokyo Stock Exchange, Inc. as independent directors/auditors in accordance with the requirements thereof.
Under PC DEPOT’s risk management system, internal and external risks to which we may be exposed are monitored and evaluated.
The Company evaluates risk level based on its influence and emergency level, and reports risk to the Compliance Committee if necessary. A "Risk Management Team" is organized as needed, which institutes preventive measures according to risk level.
Pursuant to the Companies Act Article 427 (1) and the provisions of the Articles of Incorporation, PC DEPOTS has concluded contracts with directors (excluding executive directors, etc.) and corporate auditors to limit the liability of said directors and auditors specified under Article 423 (1) thereof.
When establishing internal control systems, PC DEPOT complies with its fundamental policy that prescribes guidelines for business activities. In addition, PC DEPOT conducts business activities that are legal and efficient, maintains the reliability of its financial statements, and has controls and procedures concerning the disclosure of corporate information. Risk is managed based on the periodic analysis of risk exposure.
PC DEPOT has an organizational stance that is resolutely opposed to anti-social behavior.
PC DEPOT has a rigorous program to ensure that directors and employees comply with laws, regulations, the Articles of Incorporation and other rules. The Company is also upgrading its internal control system by reinforcing risk management systems and taking other actions. At monthly meetings of the board of directors, the directors reaffirm their commitment to compliance to laws and regulations. Furthermore, directors, executive officers and employees sign a Compliance Oath every six months. This system makes these individuals reaffirm their commitments to compliance and business ethics. In addition, there are compliance training programs and tests.
PC DEPOT has appointed independent outside auditors in order to strengthen the management supervision function. For further activating the board of directors, the Company has decided to appoint independent outside directors.
PC DEPOT examines internal and external risks. The Company organizes the "Risk Management Team" as necessary, which is made up primarily of internal/external officers. The team ranks risks depending on the magnitude of their potential impact on the Company and their urgency and enacts preventive measures that match the level of each risk. The Compliance Committee, which is made up primarily of directors, cooperates with the Risk Management Team to prevent problems from reoccurring.
Documents (minutes of meetings, documents used for decision-making, contracts, etc.) and other information concerning how the directors perform their duties are properly stored and managed as prescribed by internal rules (rules of the board of directors, rules for handling decision-making documents, etc.).
At PC DEPOT, there is a regular meeting of the board of directors once each month, in principle. The directors reach decisions concerning important items and supervise the execution of business activities by the directors. In addition, the term of office for directors is one year in order to clarify their responsibilities regarding business activities.
Moreover, for the performance of jobs that have been assigned to relevant directors by the board of directors, specific rules are determined for responsibilities and details of procedures for activities in each delegated business sector.
In response to a request from a corporate auditor, directors will assign employees to assist the corporate auditors in performing their duties.
In order to ensure the independence of corporate auditors when performing their duties, employees who are assigned to assist them in performing their duties shall comply with the directions given to them by the auditors. Said employees shall not receive orders and instructions from the director of the organization that they belong to.
PC DEPOT stipulates in its Compliance Committee Provisions that it is prohibited to treat adversely those who submit reports prescribed in 8 due to their reporting.
PC DEPOT has a system in place for the smooth execution of procedures for advance payments or reimbursement of expenses incurred by corporate auditors in executing their duties and any other processing of expenses or reimbursement of costs they incur in connection with their duties, upon request from the auditors.
To fulfill its social obligations and defend itself, PC DEPOT refuses any and all contact, improper demands and other actions of anti-social elements. PC DEPOT has an uncompromising stance regarding the refusal of any relationship with anti-social elements.
PC DEPOT's General Manager of Comprehensive Management Headquarters is responsible for overseeing internal systems for the elimination of anti-social elements.
Employees confirm their commitment to refusing any contact with anti-social elements in the Compliance Oath that they sign every six months.
When selecting suppliers and other business partners, PC DEPOT performs a survey when the relationship is first established and periodically thereafter as prescribed by PC DEPOT's rules. Contracts with business partners include a provision concerning the refusal to associate with anti-social elements. These contracts include a clause that allows PC DEPOT to terminate the contract if a business partner that signed a contract is later found to have a business relationship with anti-social elements. This provides a means for the elimination of any relationships with anti-social elements.
The Company is a member of the Kanagawa Prefecture Corporate Defensive Measures Council. This council works closely with the police, attorneys, external survey agencies and other organizations to exchange and gather information. To respond to problems involving anti-social elements, the council works closely with the police, attorneys and other external organizations to achieve a resolution quickly.