Our “for Startups” management vision is one of helping to create growth industries and growth companies in Japan that can compete with the best in the world. As well as working to achieve sustainable growth and enhance corporate value over the medium to long term in accordance with this management philosophy, we place great importance on raising management efficiency, enhancing transparency, strengthening functions for overseeing the execution of business, and other elements of corporate governance. This enables us to fulfill our social responsibility to all our stakeholders, including users, clients, shareholders, employees, business partners, and society itself. To this end we scrupulously maintain the operation of various bodies, such as the General Meeting of Shareholders, the Board of Directors, the Board of Corporate Auditors, and the Management Meeting. In addition to bolstering corporate governance by establishing and enhancing internal control systems, we ensure the impartial disclosure of appropriate business information to shareholders and investors.
Reasons for not fully implementing the principles of the Corporate Governance Code
Our policy is to fully implement all of the basic principles of the Corporate Governance Code.
Policy on measures to protect minority shareholders in transactions with a controlling shareholder
Our dependence on the corporate group of the parent company for business transactions is low, and at this point in time no such transactional relationship exists. We recognize that transactions with related parties, including those with a controlling shareholder, that make use of the advantageous standpoint of such related parties can have an impact on the financial position and operating results of the Company. In order to protect minority shareholders, our policy is that, as a rule, we do not engage in transactions with the corporate group of the parent company. In order to protect minority shareholders, it is a basic principle of the Company that individuals other than officers and employees of controlling shareholders account for a majority of directors. Moreover, when commencing transactions with related parties, including the corporate group of the parent company, the reason and necessity for the transactions, as well as the terms of the transactions and their appropriateness are deliberated fully by the Board of Directors in accordance with the Regulations on Related Party Transactions before a decision is made, to prevent harm to the interests of minority shareholders. The results of such transactions are reported to, and checked by, the Board of Directors.
Other special circumstances that could materially affect corporate governance
With regard the composition of its officers, the Company’s policy is to limit personnel from controlling shareholders to a maximum of one director and one corporate auditor. The Company is not required to seek the approval of the parent company in the course of developing its business, and is free to make decisions as it sees fit.
Business administration organization and other elements of the corporate governance system related to business decision-making, business execution, and management oversight
Matters concerning the composition and operation, etc. of the organization
Information pertaining to directors
Relationship with the Company
In addition to his extensive experience as a corporate manager and as Outside Director of a listed company, Taro Saito has many insights into creative industries in particular. The Company expects him to offer meaningful advice on strengthening corporate governance through branding strategy and by raising awareness of the Company, for which reason the Company judges him to be well suited to the role of Outside Director to which he has been elected. Because he also fulfills the Company’s independence criteria and has no relationship of special interest with the Company, the Company judges that there is no conflict of interest with the interests of general shareholders, and has designated him an Independent Officer.
Masao Horiuchi has many years of operational experience in administrative roles, as well as extensive experience as Outside Director of a listed company and as a corporate auditor, based on which the Company judges that he can be expected to strengthen supervision of the execution of duties by Directors, and has accordingly been elected Outside Director. In addition, although he owns 200 shares of the Company, because he meets the Company’s independence criteria and has no relationship of special interest with the Company, the Company judges that there is no conflict of interest with the interests of general shareholders, and has designated him an Independent Officer.
Takaaki Umezawa has worked at the highest levels of management or as outside director at organizations such as CIC Japan, A.T. Kearney, and Cool Japan Fund, Inc., as well as serving on governmental committees. He was elected because the Company expects him to use his insights into industry in general, and his leadership experience, to offer appropriate advice and supervision to strengthen Group management from the perspectives of promoting both governance and the business as the Group works to expand its operations as a supporter of growth industries. Because he also fulfills the Company’s independence criteria and has no relationship of special interest with the Company, the Company judges that there is no conflict of interest with the interests of general shareholders, and has designated him an Independent Officer.
Information pertaining to Corporate Auditors
Cooperation between Corporate Auditors, Accounting Auditor, and Internal Audit Division
(1) Cooperation between Corporate Auditors and Accounting Auditor
The Board of Corporate auditors receives appropriate and regular reports from the Accounting Auditor regarding quality management systems, audit planning, status of execution of duties, audit results, and other matters. In addition to being present at audit activities during the period of the Accounting Auditor’s audit and otherwise supervising their execution of duties, the Full-Time Corporate Auditor reports the results to the Board of Corporate Auditors, sharing information and exchanging opinions with the Accounting Auditor as necessary.
(2) Cooperation between the person in charge of internal audits, the Board of Corporate Auditors and the Accounting Auditor
During the phases of drawing up audit plans, implementing the audit, and reporting the audit, the person in charge of internal audits explains any necessary matters to the Full-Time Corporate Auditor and exchanges opinions with them. The person in charge of internal audit also receives appropriate advice from the Accounting Auditor on matters pertaining to accounting and internal checks, and cooperate with them to implement effective measures for improvement. Joined meetings between the three parties may also be held as necessary in order to facilitate communication.
Relationship with the Company
Junko Shima has specialist insights and experience in accounting and corporate governance, accumulated while serving as Representative Partner of an audit firm and in other roles. She leverages these specialist skills from an objective standpoint that is independent of the management of the Company in order to exercise appropriate checks on the Board of Directors. Because he also fulfills the Company’s independence criteria and has no relationship of special interest with the Company, the Company judges that there is no conflict of interest with the interests of general shareholders, and has designated him an Independent Officer.
As an attorney, Yoshihiro Akimoto not only has a high level of specialist knowledge in the area of corporate legal affairs, but also has deep insights into venture businesses and other matters. She leverages these specialist skills from an objective standpoint that is independent of the management of the Company in order to exercise appropriate checks on the Board of Directors. Because he also fulfills the Company’s independence criteria and has no relationship of special interest with the Company, the Company judges that there is no conflict of interest with the interests of general shareholders, and has designated him an Independent Officer.
Information on Independent Officers
Other matters concerning Independent Officers
All Outside Directors who are qualified to be Independent Officers have been designated as such.
Other matters concerning Independent Officers
A stock option plan has been introduced with the objective of improving morale and further motivating recipients to enhance the performance of the Company.
Other matters concerning Independent Officers
This is intended to raise awareness of participation in management and to encourage contributions to enhancing corporate value, with those eligible for grants and the number of shares granted varying in accordance with the expected role and the degree of contribution.
Supplementary explanation for this item
No individuals receive ¥100 million or more in total remuneration, etc., and so individual remuneration amounts are not disclosed. Remuneration, etc. for Directors and Corporate Auditors are disclosed as the total amount for the respective category of Officer.
Details of disclosure for the policy on determining remuneration amounts or their calculation methods
Remuneration for Directors and Corporate Auditors is determined by resolutions of the Board of Directors and deliberations of the Board of Corporate Auditors respectively, in accordance with internal regulations and within the total remuneration limits set by the General Meeting of Shareholders.
Support structure for Outside Directors (Outside Corporate Auditors)
The Company does not assign dedicated staff to Outside Directors and Outside Corporate Auditors, but support for such outside officers is provided by the Corporate Division. Specifically, when circulating materials for meetings of the Board of Directors and other important meetings in advance, we work to distribute them as quickly as possible in order to ensure that outside officers have sufficient time to consider them, and we also provide explanations in advance where necessary. We seek to share, in timely fashion, information that Corporate Auditors will find useful in conducting their audits, such as the results of accounting audits and internal audits.
Matters concerning such functions as execution of business, audit and supervision, nomination, and determining of remuneration (overview of current corporate governance system)
1. Corporate governance system, status of audit and supervision
In addition to having established a Board of Directors, Management Meeting, and Board of Corporate Auditors, the Company has designated a person in charge of internal audits. We have also introduced an executive officer system aimed at achieving greater efficiency in the execution of business. The Company judges that corporate governance functions effectively through a process of mutual cooperation between these various organizations, which has resulted in the corporate governance system as it currently stands.
(1) Board of Directors
The Board of Directors is chaired by President and CEO Yuichiro Shimizu, and consists of eight Directors (the other seven being Isao Kikuchi, Director, Head of Corporate Division; Yukiko Tsuneda, Managing Director, Head of Talent Agency Division; Kazuhiko Shimizu, Director, Head of Acceleration Division; Shigeru Ohara, Director; Taro Saito, Outside Director; Masao Horiuchi, Outside Director; Takaaki Umezawa, Outside Director). In addition to deciding matters determined by laws and regulations and by the Articles of Incorporation, formulating basic management policy, and making decisions regarding operations, the Board of Directors supervises the execution of business through a system of mutual checks and balances. To enable rapid decision-making and execution of business by management, regular meetings of the Board of Directors are held once per month, as a rule, with extraordinary meetings of the Board of Directors held as required. Moreover, the Board of Directors Regulations set out specific matters that should be placed on the agenda of Board of Directors meetings.
(2) Board of Corporate Auditors
The Board of Corporate Auditors is chaired by Full-Time Outside Corporate Auditor Junko Shima, and consists of three Corporate Auditors (the other two being Outside Corporate Auditor Yoshihiro Akimoto and Corporate Auditor Shizuka Sawada). Regular meetings of the Board of Corporate Auditors are held once per month, as a rule, with extraordinary meetings of the Board of Corporate Auditors held as required, with members working to draw up audit plans, and to mutually share information on the status of audit implementation with other members. In addition to attending meetings of the Board of Directors and other important internal meetings as required, to supervise execution of duties by Directors, each Corporate Auditor audits accounts and operations in accordance with the audit plan. The Corporate Auditors also cooperate with the person in charge of internal audits and the Accounting Auditor to implement efficient and effective audits.
(3) Management Meeting
The Management Meeting is attended by eight participants: the President and CEO as chairperson; Director, Head of Talent Agency Division; Director, Head of Corporate Division; Director, Head of Acceleration Division; the Full-Time Outside Corporate Auditor; and three executive officers. As a rule, the Management Meeting convenes at least once a month to receive reports on the execution of business at each division, to engage in deliberations of agenda items in advance of Board of Directors meetings, and to discuss and decide other important matters.
(4) Accounting Auditor
The Company has entered into an audit agreement with BDO Sanyu & Co., and as well as receiving accounting audits implemented from an independent standpoint and carrying out other regular audits, it cooperates as appropriate in relation to points of accounting, and works to achieve suitable accounting treatment.
(5) The person in charge of internal audits
Because of the Company is relatively small, it has not established an independent internal audit department, but in accordance with the instructions of the Representative Director, a person in charge of internal audits has been designated. Furthermore, care is also taken to appoint a person in charge of internal audits from a division other than the one being audited so as to prevent it from becoming a self-audit. Persons in charge of internal audits are assigned from among individuals who have specialized knowledge of the Company’s business and internal audits. They also strive to coordinate audits with the Corporate Auditors and the Accounting Auditor, as necessary, in order to achieve efficient audits.
2. Overview of liability limitation agreement
Pursuant to the provisions of Article 427, paragraph (1) of the Companies Act, the Company has entered into liability limitation agreements with Outside Directors and Corporate Auditors, such that their liability is limited to that set out in Article 423, paragraph (1) of the same Act. In accordance with these agreements, their liability shall be an amount determined in advance of not less than ¥2 million, or the minimum amount permitted by laws and regulations, whichever is the greater. Moreover, the limitation of liability shall be restricted to situations in which the Outside Corporate Auditor is executing the duties that give rise to the liability in good faith and without gross negligence.
Reason for selecting the current corporate governance system
The Company has adopted the configuration of a company with corporate auditors that allows the appointment of a Corporate Auditor with full-time responsibilities. This enables two-fold monitoring of execution of business through supervision by the Board of Directors and through the auditing of legality by Corporate Auditors. The appointment of two Outside Directors and two Outside Corporate Auditors to participate in management in addition to the above configuration makes it more likely that the effectiveness of the Board of Directors and the Board of Corporate Auditors, etc. will be guaranteed, and has resulted in the current corporate guidance system.
Matters concerning the internal control system, etc.
Basic approach to internal control system and status of implementation
In order to further enhance corporate value, the Company has set out a Basic Policy on Internal Control Systems, in accordance with which it operates its internal control systems.
(1) System to ensure that the execution of duties by Directors and employees complies with laws and regulations, and the Articles of Incorporation
・In order to ensure that the execution of duties by Directors and employees complies with laws and regulations, and with the Articles of Incorporation, the Company has set out Compliance Regulations in order to promote the adherence to laws and regulations.
・A Compliance Committee chaired by the President and CEO, who is also the Chief Compliance Officer, has been established. Its members consist of Directors and others, and it deliberates important matters relating to the planning and operation of compliance systems.
・The Company has established and operates a whistle-blowing contact point to allow information to be conveyed swiftly to the department with jurisdiction for compliance in cases where an officer or employee of the Company discovers problems related to violations of internal control, or of laws and regulations.
・Persons in charge of internal audits who report directly to the President and CEO are appointed to verify the implementation and operational status of internal control systems from the standpoints of the effectiveness of operations, the trustworthiness, and compliance. In addition, they provide advice and suggestions for improvements.
・Regulations for the Prevention of Insider Trading have been established to forestall insider trading. In terms of management of information related to material facts, Timely Disclosure Regulations have been established with the aim of ensuring fair, impartial, and timely disclosure of information.
・In order to instill and enhance their awareness of compliance matters, we implement ongoing compliance education and training for Directors and employees.
(2) System for the retention and management of information related to the execution of duties by Directors
・Information related to decisions made at the Board of Directors or other important meetings, information related to other important approvals or compliance, and other information related to the execution of duties by Directors is recorded or retained on paper or electronic media, or disposed of, in accordance with the Document Management Regulations.
・This information is retained using methods that permit viewing by a Director or Corporate Auditor at their request.
(3) Risk management system
・The Company’s risk management system has been built to reflect the view that risk factors must be apprehended in a timely manner and reflected swiftly in the conduct of management. Under this system, in addition to meetings of the Board of Directors, Management Meetings are held as necessary to uncover risk-related material facts at an early stage and to quickly grasp the progress of risk management and other problems. Furthermore, the policy of the Company in the event of an unexpected situation is to establish a countermeasures committee led by the President and CEO, which works with the Corporate Auditors and with advisory attorneys and other external advisors to take prompt action and minimize losses.
(4) System to ensure the efficient execution of duties by Directors
・The Board of Directors provides supervision to ensure that Directors execute their duties efficiently and appropriately. By complying with decision-making rules that vary according to the significance of the issue, based on approval criteria, etc., we seek to ensure prompt decision-making and efficient execution of duties by Directors and employees.
・Through the adoption of an executive officer system and the delegation of authority for routine execution of business to Executive Officers, we aim to focus the Board of Directors on the strategic decision-making and supervisory functions, while seeking to increase the efficiency with which businesses executed and strengthening oversight.・In order to enable Directors of the Company to conduct Group decision-making and execution of business efficiently, structures such as the Management Meeting are established and operated.
(5) Matters concerning employees assigned to assist the duties of Corporate Auditors when such assistance is requested, and the independence of such employees from Directors
・In the event that Corporate Auditors request that employees be assigned to assist them in their duties, Company policy is to assign such employees, having deferred to the opinions of Corporate Auditors with regard to the specific details of their assignment (appointment, relocation, personnel considerations, rewards and punishments, etc.), and to ensure their independence from Directors.
(6) System for reports by Directors and employees to Corporate Auditors and for other reports to Corporate Auditors
・In order to understand the process of making important decisions and the status of execution of business, Corporate Auditors attend important meetings and committees in addition to the meetings of the Board of Directors.
・Under this system, approval documents for major items and other important documents are circulated to Corporate Auditors, and related documents and materials and so on are provided immediately on request.
・To ensure cooperation with regard to internal audits, Corporate Auditors receive regular reports from the person in charge of internal audits on audit planning and results of audits. Corporate Auditors also receive regular reports from the Compliance Committee on the operational status of the whistle-blowing system.
・Internal regulations make it clear that Directors and employees who provide reports to Corporate Auditors or report via the whistle-blowing contact point must not be subjected to prejudicial treatment in personnel evaluations, and must not be disciplined or otherwise receive punishment. Educational and training opportunities are created to publicize and instill this policy.
(7) Other systems to ensure that audits by Corporate Auditors are performed effectively
・Directors understand the standards for audits by Corporate Auditors, are fully aware of the importance and usefulness of their audits, and have put in place an environment to enable such audits.
・Corporate Auditors are provided with regular opportunities to exchange information and opinions with the President and CEO, and with the audit firm.
・Corporate Auditors meet with the audit firm on a regular basis, and actively exchange information and opinions.
(8) Systems for ensuring appropriate financial reporting
・In order to ensure the appropriateness of financial reporting in accordance with the provisions of the Financial Instruments and Exchange Act, we regularly evaluate the implementation and operational status of control activities at the level of the company as a whole and at the level of business processes, and work continuously for their improvement.
Basic approach to exclusion of antisocial forces and status of implementation
In order to practice compliance, the Company has established Compliance Regulations that contain the following injunction. “Officers and employees shall have no relations of any kind with antisocial forces, including business transactions. Improper demands must be rejected.” In terms of specific guidelines within the Compliance Regulations, we have established a “Manual for Investigating Antisocial Forces” and a “Manual for Preventing Improper Demands, etc.” as part of our efforts to prevent dealings with antisocial forces before they can occur. In order to publicize and instill these matters throughout the Company, the Compliance Committee has put in place a system of education and training for those entering the organization, and makes regular announcements at all-company meetings and on other occasions. The Company is also a supporting member of the Anti-Organized Crime Campaign Center of Tokyo, and has appointed a person in charge of rejecting improper demands.
Other matters concerning the corporate governance system, etc.
The flow of the corporate governance system of the Company and an overview of the timely disclosure system is provided below.