Corporate Governance

Sumida recognizes corporate governance is one of the most important topics of management and that its basis is to secure the transparency and efficiency of management to respond to the expectations of stakeholders and to continuously enhance corporate value of the company.

In April 2003, Sumida shifted to a Company with Committees System to strengthen corporate governance of the company. In the System, Committees in which outside directors occupy the majority are established in order to improve management transparency. Executive Officers concentrate on business execution while the Board specializes in the supervision of their execution – thus the System clearly separates "Management" and "Governance" in order to make both organizations function effectively.

Corporate Governance Report

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Committees

The Board concentrates on the supervision of directors and Executive Officers, and the decision making on statutory approval items such as formulation of basic policy of management etc., that execution of other matters are delegated to Executive Officers. There are 7 directors in the Board in which 6 of them are outside directors, and following committees have been set up (as of 27th March, 2017):

Nomination Committee (Statutory) - composed of 3 outside directors and 1 internal directors
The Committee makes decisions on the resolution’s content for appointment and dismissal of directors. At Sumida, the Committee also appoints the nominees of Executive Officers for recommendation to the Board. The Chairman of the Committee is an outside director.

Audit Committee (Statutory) - composed of 3 outside directors
The Committee monitors and inspects the duty execution of directors and Executive Officers, and to make decisions on the resolution’s content concerning appointment and dismissal of accounting auditors etc. that to be submitted to the shareholder's meeting.

Compensation Committee (Statutory) - composed of 3 outside directors and 1 internal director
The Committee determines the compensation policy as well as compensations of each director and Executive Officer. The Committee judges performance of Executive Officers according to their commitment. The Chairman of the Committee is an outside director.

Systems of Supervision and Internal Control

Supervision System
The Board and Audit Committee are the supervising bodies that they are responsible for supervision and inspection of directors and Executive Officers’ execution of duties accordingly. Besides, internal control division reports to the supervising bodies at any time when there is possibility of damage or influence on the interests of the company."

Internal Control System
To ensure their business activities comply with applicable laws, regulations and the Articles of Incorporation, Executive Officers have set up an internal control system based on the "Sumida Business Principles" which aims to ensure an appropriate decision-making process as well as the surveillance of individual activities, and thereby enhance operating efficiency.

1. Risk Management Committee was set up in July 2003. The Committee’s duties are to predict potential risks from global viewpoints and to formulate preventive measures against the risks by analyzing regular report from the risk monitors appointed in the group’s main business bases including overseas areas. The Committee is also responsible for examining correspondence methods to minimize losses in case of crisis.

2. Compliance function: Sumida positions compliance activities not limited to the problems concerning the compliance of laws and regulations, but also to actively accomplish the Corporate Social Responsibility (CSR) based on integrity, discipline, and common sense. The compliance body serves as the main body for framework maintenance and the core part of corporate governance, and monitoring functions of compliance activities.

3. Controlling of internal audit function: Deciding the yearly audit direction by having prior consultation with Audit Committee, and reporting the implementation and results of internal audit while closely cooperate with Audit Committee.

The function also provides various supports to internal auditors appointed in the main business bases in the group including overseas sites. The supports include planning of internal audit schedule and its implementation in order to enhance internal audit operation among Sumida group as well as to improve the internal control system.