Toward enhancing the effectiveness of the Board of Directors

With the aim of improving the operation of the Board of Directors and enhancing its functions, Matsuda Sangyo conducts evaluations on the effectiveness of the Board by distributing a questionnaire to the Board after explaining the objectives of the survey, then analyzing the opinions and feedback received through all their responses. 

 

Evaluation items　(1) About the operation of the Board of Directors (2) About the agenda of the Board of Directors (3) About the system that supports the Board of Directors (4) Other items

 

Overview of the evaluation of the Board of Directors conducted in FY2021

According to the evaluation of the operation of the Board of Directors, arrangements for events held annually, pre-event notifications, and the securing of time for deliberations and discussions were adequate, agendas were selected based on the regulations, and sufficient time was secured for information-sharing and exchanges of opinions through prior explanations. Systems that support the Board of Directors were assessed to be sufficiently effective, such as reporting on work execution status every quarter by each Executive Officer.

 

Initiatives toward enhancing effectiveness

With the aim of achieving an even more effective Board of Directors, we promote the strengthening of the Board of Director’s oversight and decision-making functions. For the next fiscal period, we will work on strengthening the Board’s oversight function through the activities of the Sustainability Committee, in order to strike a balance between realizing a sustainable environment, society, and economy, and enhancing our corporate value.

１．Qualification of directors

Based on the stance of pursuing a composition and scale to realize an efficient and effective Board of Directors, Matsuda Sangyo identifies the knowledge, experience, and capabilities that each director should possess in consideration of the management strategy, and summarizes this information in the skill matrix. (Refer to the “List of Directors’ Skills”) 

 

２．Policy and procedures for nominating directors

• Matsuda Sangyo has not established any independent advisory committees such as a voluntary nomination committee, but the Board of Directors receives advice from independent outside directors who are members of the Audit and Supervisory Committee, on matters related to the nomination and remuneration of directors. 
• The appointment of candidate for directors outside of the Audit and Supervisory Committee is determined by the Board of Directors with recommendation by the Representative Director and based on the list of candidates presented by the Selection and Deliberation Committee of Candidates for Directors, in line with the policy of comprehensively assessing their experience, career history, personality, and work achievements. The appointment of candidates for directors who are members of the Audit and Supervisory Committee is determined by the Board of Directors with recommendation by the Representative Director and the consent of the Audit and Supervisory Director. In line with the policy of making a comprehensive assessment that includes their expertise in diverse fields, experience, and personality aspects, they should be suitable candidates to fulfill the roles of giving advice that contributes to enhancing medium- to long-term corporate value, supervising management through the Board of Directors, supervising of conflict of interest by the company and the relevant persons-in-charge, and reflecting intentions to the Board of Directors from an independent and neutral position, among others.

3．Policy and Procedures for Directors’ Remuneration

• Matsuda Sangyo has not established any independent advisory committees such as a voluntary remuneration committee, but the Board of Directors receives advice from independent outside directors who are members of the Audit and Supervisory Committee, on matters related to the remuneration of directors. 
• The remuneration of directors who are not members of the Audit and Supervisory Committee consists of a fixed remuneration component and a retirement allowance, which is paid out based on the Officer Retirement Allowance Regulations, subject to a resolution at the Ordinary General Meeting of Shareholders. The basic policy is to pay the full amount of remuneration in monetary basis.
• Individual directors who are not members of the Audit and Supervisory Committee receive a fixed monthly remuneration, and the range of the total amount of remuneration is resolved at the Ordinary General Meeting of Shareholders. A draft proposal on the amount of remuneration is prepared in consultation with the President and Representative Director, Executive Vice President, and the Director in charge of Human Resources, based on the standards established within the abovementioned range with consideration for the evaluation of the responsibilities each director should fulfill, their position, and their performance. The President and Representative Director, who has been entrusted by resolution of the Board of Directors, makes the decision based on the draft proposal. 
• The amount of retirement allowance for individual directors who are not members of the Audit and Supervisory Committee is drafted and proposed in consultation with the President and Representative Director, Executive Vice President, and the Director in charge of Human Resources, based on the Officer Retirement Allowance Regulations. Based on resolution at the Ordinary General Meeting of Shareholders, the final decision is made based on the draft proposal, by the President and Representative Director who has been entrusted by resolution of the Board of Directors. Retirement allowances are paid out in a lump sum at the end of the month following the date of retirement.
• The remuneration of directors who are members of the Audit and Supervisory Committee is determined based on the policy for the remuneration of Audit and Supervisory Committee members, within the limits of the total remuneration resolved at the Ordinary General Meeting of Shareholders. Upon consultation with the President and Representative Director and comprehensive consideration of the evaluation of the responsibilities that members of the Committee should fulfill, their experience, expertise, and other factors, the final decision is made with the unanimous agreement of all members of the Audit and Supervisory Committee.

Matsuda Sangyo has established an internal control system based on the Companies Act and the Regulations for Enforcement of the Companies Act.  

 

Audit status

Matsuda Sangyo’s Audit and Supervisory Committee is made up of four Directors who are Audit and Supervisory Committee Members, all of whom fulfill the requirements for independent officers. Hence, all members are registered with the Tokyo Stock Exchange as independent officers. In addition, two Directors who are Audit and Supervisory Committee Members are qualified certified public accountants, and therefore have the financial and accounting expertise to gain a good understanding of the overall work and business of our company.

 

The audit activities of the Audit and Supervisory Committee are conducted in accordance with field-work standards that are based on the Audit and Supervisory Committee Regulations. The Audit and Supervisory Committee conducts audits based on the yearly audit plans, formulated in accordance with the risk analysis and evaluation.
 

Internal audit status

Matsuda Sangyo has established the Internal Audit Dept. as its internal audit section, and this audit office conducts internal audits based on the Internal Audit Regulations. Based on the yearly internal audit plan reported to the President and Representative Director, Board of Directors, and Audit and Supervisory Committee, an audit of business operations is carried out on the status of the development of internal controls across all the operations of Matsuda Sangyo and its subsidiaries, the effectiveness and efficiency of operations, and compliance status. It requests the audited department to take remedial actions on issues raised and verifies the implementation status of such actions. 

 

The Audit and Supervisory Committee, accounting auditors, and Internal Audit Dept. report on audit plans and results, exchange opinions, and attend audits in person, etc. as necessary, built close relationships with each other, and put effort into strengthening the audit system. 

With the aim of maximizing the value of the entire corporate Group, Matsuda Sangyo is working on strengthening Group governance, taking reference from the Practical Guidelines for Corporate Governance Systems  (METI) and other guidance. 

 

Matsuda Sangyo’s internal control system is established for the entire corporate Group, including our subsidiaries. The Regulations for the Management of Affiliated Companies sets out a system for managing subsidiaries by classifying the business divisions and corporate divisions respectively as business management and administrative management. The TRM Committee, which serves as our risk management system, works to strengthen Group-wide risk management system by adding subsidiaries to the departmental subcommittees.