Corporate Governance

Basic Concept

We strive to improve our corporate value over the medium to long term based on the “Sojitz Group Statement” (“The Sojitz Group creates value and prosperity by connecting the world with a spirit of integrity”). In order to materialize this, based on our belief that the enhancement of our corporate governance is an important issue of management, we have built the following corporate governance structure in our effort to establish a highly sound, transparent and effective management structure, while also working toward the fulfillment of our management responsibilities and accountability to our shareholders and other stakeholders.

Management and Business Execution System

We employ an executive officer system for the purpose of, clarifying authority and responsibilities, and ensuring a smooth and swift execution of business through the separation of managerial decision-making from business execution.

The Board of Directors, chaired by the Chairman of the Board, is the highest decision-making body reviewing and resolving fundamental policies and most important cases concerning the management of the Group The Board of Directors also supervises business execution through proposals of important matters and regular reports from the executing body.

As the executing body, we have established the Management Committee, chaired by the President, who is also the Chief Executive Officer. The Committee is responsible for the review and approval of the Group’s important managerial and executive agendas, from the Group-wide and medium-to-long-term viewpoints. In addition, we have established the Finance & Investment Deliberation Council for the review and approval of investments and loans, the Human Resource Deliberation Council for the review and approval of major human resource matters, and internal committees to handle issues to be addressed from cross-organizational perspectives, as executing bodies all directly reporting to the President & CEO.

The term of Directors and Executive Officers is one year, in order to respond swiftly and appropriately to rapid changes in the business environment and clarify their responsibilities to management.

Monitoring and Supervisory Functions for Manage

We appoint multiple Outside Directors for the purpose of receiving appropriate advice and proposals on management of the Group from an outside, objective standpoint and to reinforce the supervisory function of the Board of Directors. In addition, We ensure appropriateness and transparency with regard to the appointment of Directors and remuneration by having Outside Directors serve as the chair of the Nomination Committee and the Remuneration Committee, both advisory bodies to the Board of Directors,

We are a company with an Audit & Supervisory Board, that independently oversees and audits the operations of the Group.

Governance Structure

Corporate Governance Report

Structure

Organizational form

Sojitz is a company with Audit & Supervisory Borad.

Board of Directors

The Board of Directors comprises seven members (including two outside directors). It discusses and resolves management policies and high-priority issues facing the Group, as the Company's foremost decision-making body.

Nomination Committee /Remuneration Committee

Sojitz has established the Nomination Committee and Remuneration Committee as consultative bodies to the Board of Directors, to ensure appropriate and transparent selection and compensation of directors.

Each committee comprises four members (two of whom are outside directors) and is chaired by an outside director.

Audit & Supervisory Board

The Audit & Supervisory Board comprises five members (four of whom are outside Audit & Supervisory Board Members). Independent from the Board of Directors, the Audit & Supervisory Board Members audit directors’ execution of duties.

Accounting Auditors

Sojitz has appointed the independent auditing firm KPMG AZSA LLC to conduct accounting audits based on Company Law, financial statement auditing based on the Financial Instruments and Exchange Act, quarterly reviews, and internal auditing.

Internal Audits

Internal audits are led by the Audit Dept. Based on auditing plans approved by the Board of Directors at the beginning of each term, the Audit Dept. conducts audits to assess priority matters, such as compliance, reliability of financial reporting, risk management, and investment/loan management, primarily focusing on the business departments, corporate departments, and the Group’s consolidated subsidiaries including major overseas affiliates. Additionally, the Audit Dept. monitors whether each department’s internal controls and governance systems are functioning effectively and suggests practical ways to amend operational issues.

On top of the auditing work conducted in their respective roles, the corporate auditors, accounting auditors, and internal auditors exchange information to mutually complement their separate functions and raise auditing effectiveness.

Business Executing Bodies

We have established the following executing bodies that directly report to the President, who is the Chief Executive Officer.

  • Main Council
    • Management Committee
      The Committee is comprised of Executive Directors and Executive Officers in charge of business divisions and the heads of corporate departments. It reviews and approves management policies, management strategies and management administrative matters among the Group from Group-wide and medium-to-long-term viewpoints.
    • Finance & Investment Deliberation Council
      The Council is comprised of Executive Directors and Executive Officers in charge of business divisions and the heads of corporate departments. It discusses and resolves important investment and loan proposals from Group-wide viewpoints.
    • Human Resource Deliberation Council
      The Council is comprised of Executive Directors and Executive Officers in charge of business divisions and the heads of corporate departments, and discusses and resolves important issues pertaining to human resources from Group-wide viewpoints
  • Internal Committees
    In order to enhance corporate value, we have established the following internal committees that act as executing bodies under the direct supervision of the President & CEO to advance management initiatives that need to be handled across the organization. Each internal committee regularly reports on its activities to the Board of Directors and the Management Committee.
    • Internal Control Committee
      The Internal Control Committee formulates policies to maintain and improve our internal control system based on the Companies Act and the Financial Instruments and Exchange Act, and monitors this internal control system and its enforcement among the Group.
    • Compliance Committee
      The Compliance Committee examines and formulates fundamental policies and measures to ensure compliance.
    • CSR Committee
      The CSR Committee examines and formulates fundamental policies and measures related to promotion of CSR.

In addition, we have established the Disclosure Subcommittee, Security Trade Control Subcommittee and Information Security Subcommittee as subsidiary bodies of the internal committees.

  • Executive Officers
    Sojitz has adopted an executive officer system to clarify authority and responsibility at the management level, as well as expedite decision-making and business execution.

Analysis and Assessment of the Effectiveness of the Board of Directors

Each year, we analyze and assesse the effectiveness of the Board of Directors as a whole in order to improve the functions of the Board of Directors. Starting from the fiscal year ended March 31, 2016, we have been conducting assessments of the effectiveness of the Board of Directors.

<Analysis and Assessment Method>
In the fiscal year ended March 31, 2017, a written self-assessment survey was conducted for all Directors and Audit & Supervisory Board Members. Then, we had the survey results assessed by a third party (an outside consultant), and the details of analysis was discussed at the Board of Directors.

<Overview of Major Self-Assessment Survey Items>
Roles and responsibilities of the Board of Directors, Composition of the Board of Directors, Management of the Board of Directors, Decision-making process of the Board of Directors, Supervision by the Board of Directors, Support system for the Board of Directors, Nomination Committee and Remuneration Committee, which are advisory bodies to the Board of Directors, and Items concerning Outside Directors

<Outline of Assessment Results for the Fiscal Year Ended March 31, 2017>

The aggregated survey results showed that both the average score and scores by major items exceeded the standard, while the assessment by the third party confirmed that as a whole, the Board of Directors is functioning appropriately and its effectiveness is ensured. In particular, it was confirmed that the Board of Directors is actively engaged in discussion and that the Outside Directors are carrying out their functions appropriately.

Based on these assessment results, we will continue working to improve the effectiveness of the Board of Directors.

Training Policy for Directors and Audit & Supervisory Board Members

We take the following initiatives to enable Directors and Audit & Supervisory Board Members to appropriately fulfill their roles and responsibilities.

  • We provide newly appointed Directors and Audit & Supervisory Board Members with opportunities for lectures by lawyers on legal obligations and responsibilities of Directors and Audit & Supervisory Board Members.
  • In order for internal and Outside Directors and Audit & Supervisory Board Members to deepen their understanding of our extensive business activities, Chief Operation Officers (COO) of each business division hold business briefing sessions, and in order for them to deepen their understanding of the latest macroeconomic conditions, our research institute holds monthly briefing sessions. In addition, we provide other necessary information on an ongoing basis.
  • We offer Directors and Audit & Supervisory Board Members opportunities to attend seminars, etc. held by external organizations such as the Japan Association of Corporate Directors and the Japan Audit & Supervisory Board Members Association.

Remuneration of Directors and Audit & Supervisory Board Members

Classification
Directors
Audit & Supervisory Board Members
Total
Number of persons to be paid
Amount
(Millions of yen)
Number of persons to be paid
Amount
(Millions of yen)
Number of persons to be paid
Amount
(Millions of yen)
Remuneration pursuant to resolution of General Shareholders' Meeting
8 408 7 97 15 505
Internal
6 384 2 37 8 422
Outside
2 24 5 65 7 83
Notes: 1.   Directors’ maximum remuneration resolved at the Ordinary General Shareholders’ Meeting held on June 27, 2007
  Internal Directors: ¥550 million per year (excluding salary as employee)
  Outside Directors: ¥50 million per year
2.   Audit & Supervisory Board members’ maximum remuneration resolved at the Ordinary General Shareholders’ Meeting held on June 27, 2007
¥150 million per year

Policies on Appointment and Standards for Independence of Outside Officers

We place importance on the independence of outside officers. We have formulated our own Independence Standards for Outside Directors and Outside Audit & Supervisory Board Members in addition to the provisions of the Companies Act, and standards for independence of officers set by financial instruments exchange, and confirm that all our outside officers meet these standards.

(Reference) Standards Concerning the Appointment and Independence of Candidates for Outside Directors and Outside Audit & Supervisory Board Members

<Standards Concerning the Appointment of Candidates for Outside Directors and Outside Audit & Supervisory Board Members>
The Company appoints Outside Directors from those with a wide range of knowledge and deep insight and abundant experience in industries and administrative fields, such as those who have management experience in business corporations and government agencies and others who have objective and specialist viewpoints toward world affairs, social and economic trends and corporate management. In appointing Outside Audit & Supervisory Board Members, in addition to the above, we also ensure the diversity of the candidates’ background from the perspective of reflecting the viewpoints of a variety of stakeholders in the audit of business activities.

<Independence Standards for Outside Directors and Outside Audit & Supervisory Board Members>
The Company judges Outside Directors and Outside Audit & Supervisory Board Members to be independent by confirming that they do not fall under any of the following standards, in addition to the independence standards prescribed by financial instruments exchanges.

  • 1.  A major shareholder of the Company (a shareholder holding 10% or more of the total voting rights of the Company) or a member of business personnel thereof
  • 2.  A major creditor to the Company (a creditor from whom the Company owed an amount exceeding 2% of the consolidated total assets of the Company in the most recent fiscal year) or a member of business personnel thereof
  • 3.  A major business partner of the Company (a business partner whose transaction amount with the Company exceeded 2% of the Company’s annual consolidated revenue in the most recent fiscal year) or a member of business personnel thereof
  • 4.  A party whose major business partner is the Company (an entity whose transaction amount with the Company exceeded 2% of its annual consolidated net sales in the most recent fiscal year) or a member of business personnel thereof
  • 5.  An attorney, certified public accountant, certified tax accountant, consultant or other professional who received money or other property from the Company for his/her services as an individual in an amount exceeding ¥10 million annually on average over the past three fiscal years, other than remuneration of Directors or Audit & Supervisory Board Members (if such money or property was received by an organization, such as a corporation or partnership, this item refers to a person who belongs to the organization that received money or other property from the Company in an amount exceeding ¥10 million annually on average over the past three fiscal years or in an amount of 2% of the annual total revenue or consolidated net sales of the organization, whichever the greater.)
  • 6.  A person who receives donations or grants from the Company in an amount exceeding ¥10 million annually (if such donations or grants are received by an organization, such as a corporation or partnership, this item refers to a member of business personnel of the organization.)
  • 7.  A person who is the Accounting Auditor of the Company or a person who is engaged in audit activities of the Company as an employee of the Accounting Auditor
  • 8.  A person who has fallen under any of the above items 1. to 7. in the past three years
  • 9.  A spouse or relative within the second degree of kinship of a person falling under any of the above items 1. to 8. (limited to the person holding the position of officer or other important positions)
  • 10. A spouse or relative within the second degree of kinship of a member of business personnel (limited to the person holding the position of officer or other important positions) of the Company or any of its consolidated subsidiaries
  • 11. A person whose term of office as Outside Director or Outside Audit & Supervisory Board Member of the Company exceeds eight years
  • 12. A person with concerns on his/her independence such as having constant and substantial conflict of interest with general shareholders as a whole in performing the duties of Outside Director or Outside Audit & Supervisory Board Member or for other reasons

Outside Directors and Outside Audit & Supervisory Board Members

 
<Outside Directors>
Name
Board of Directors (No. attended/No. held)
Audit & Supervisory Board (No. attended/No. held)
Yoko
Ishikura
100% (19/19)

Yoko Ishikura provides valuable advice from an independent and objective perspective based on her wide range of knowledge and abundant experience as a scholar, and her experience as an outside director at a diverse range of companies.

Yukio
Kitazume
100% (19/19)

Yukio Kitazume provides valuable advice from an independent and objective perspective based on his wide range of knowledge and abundant experience as a diplomat. He has accumulated experience in key positions in the public administration field.

<Outside Audit & Supervisory Board Members>
Name
Board of Directors (No. attended/No. held)
Audit & Supervisory Board (No. attended/No. held)
Takayuki
Ishige
100% (15/15)
100% (14/14)

Takayuki Ishige provides valuable advice from an independent and objective perspective based on his abundant experience in finance, accounting and management audits, etc., and in serving as an Audit & Supervisory Board member.

Mikinao
Kitada
93% (14/15)
93% (13/14)
Mikinao Kitada provides valuable advice from an independent and objective perspective based on his experience in the judicial field in important posts such as public prosecutor and attorney, as well as in serving as an outside director and outside Audit & Supervisory Board member at various companies.
Kazunori
Yagi
Kazunori Yagi possesses a wealth of experience and abundant knowledge related to corporate management as an outside director at other companies, as well as in key positions in the accounting and corporate planning fields.
He has therefore been appointed based on the judgment that he will be able to appropriately execute his duties as an outside Audit & Supervisory Board member.
Hyo
Kambayashi
Hyo Kambayashi has accumulated experience and deep insight in the auditing and internal control fields as a certified public accountant and as an authority on corporate internal controls. He has therefore been appointed based on the judgment that he will be able to appropriately execute his duties as an outside Audit & Supervisory Board member.
*Kazunori Yagi and Hyo Kambayashi have elected on the 14th Ordinary General Shareholder's Meeting (June 20, 2017)

Holdings of Listed Shares

<Policies Regarding Share Holdings>
We make decisions on acquiring listed shares for purposes other than portfolio investment, comprehensively taking into account whether revenue is expected to be earned by strengthening relationships for marketing strategies and whether there are opportunities of medium-to-long term revenue by acquiring the shares.
In addition, with regard to the shares held by the Company, we review the reasons for holding the shares from the qualitative perspective as mentioned above, and also by quantitatively verifying investment returns such as revenue and dividend income in connection with each investment target on a yearly basis.

<Exercise of Voting Rights>
Upon considering the significance of holding listing shares, voting rights are exercised based on whether the exercise contributes to sustainable growth of both the Company and the investment target as well as for enhancing their corporate value over the medium-to-long term, therefore, the Company has established a system that confirms the status of exercising voting rights.

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