Basic Stance on Corporate Governance
AIDA ENGINEERING considers strengthening and enhancing its corporate governance systems to be one of the key priorities of management. We are working to improve the fairness and soundness of our management functions while bolstering our management supervisory functions to accelerate decision-making and ensure transparency in our operations.
Corporate Governance Report [in Japanese only, PDF, 10 pages, 293 KB]
Articles of Incorporation [PDF, 7 pages, 53 KB]
Implementation Status of Corporate Governance Measures
Directors, the Board of Directors, Operating Officers and the Executive Committee
The Company’s management structure comprises 18 persons:16 operating officers, seven of whom concurrently serve as directors, and two external directors, both of whom are independent directors as defined by the Tokyo Stock Exchange. The Board of Directors functions as the decision-making body for important matters mandated by law and as a supervisory body for the execution of business operations. The Company has adopted an operating officer system as a means of expediting management decision-making and clarifying lines of authority and responsibility. The Executive Committee—comprising the directors, statutory auditors, and operating officers—discusses management policies and issues, and strives to achieve unified management purpose and swift execution of business operations.
The external directors and external statutory auditors proactively offer their views and opinions at meetings of the Board of Directors and other forums based on their specialist knowledge and expertise.
Statutory Auditors and the Board of Auditors
The Company appoints three statutory auditors, all of whom are external statutory auditors and are independent auditors as defined by the Tokyo Stock Exchange. The statutory auditors attend important meetings, including meetings of the Board of Directors, and receive reports from the accounting auditor. The statutory auditors also receive briefings and inspect important documents related to the Company's business, and carry out on-site inspections of the operations and assets of each division of the Company. In addition, the statutory auditors evaluate the legal compliance and appropriateness of the directors' execution of duties.
Remuneration for Directors and Statutory Auditors
In fiscal 2010, remuneration for the Company's directors and statutory auditors was as follows:
(unit: millions of yen)
| Number of persons |
Basic remuneration |
Stock options |
Bonus | Total amount |
|
|---|---|---|---|---|---|
| Directors (excluding external directors) |
6 | 76 | 20 | 9 | 107 |
| External directors | 3 | 15 | - | - | 15 |
| Statutory auditors (all external) |
4 | 22 | - | - | 22 |
Accounting Audits
AIDA ENGINEERING has contracted with Ernst & Young ShinNihon LLC to conduct accounting audits in accordance with the requirements of the Companies Act and the Financial Instruments and Exchange Act. The audit firm receives compensation in return for conducting such activities. There are no conflicts of interest between the auditing firm and AIDA ENGINEERING or between the certified public accountants of that firm who perform the audits and AIDA ENGINEERING. Furthermore, there are self-imposed safeguards in place to ensure that the auditing firm and the auditing accountants of that firm are only involved in the accounting auditing of AIDA ENGINEERING for set periods of time.
Internal Audits
AIDA ENGINEERING has established an independent Internal Control Auditing Office.
This office verifies the effectiveness of the internal controls related to legal compliance and financial reporting systems. It also confirms the appropriateness and efficiency of operational processes, management and administrative structures at consolidated subsidiaries, as well as conducts on-site internal audits of subsidiaries both in Japan and overseas as necessary.
AIDA ENGINEERING has concluded an advisory contract with a law office, and seeks the opinion of a legal advisory on matters involving management decision-making that require a legal determination.
Risk Management Structure
In our risk management structure, risks related to the execution of management strategies are analyzed and appropriate countermeasures are implemented by the relevant business units with exposure to that risk. These matters are then discussed as needed by the Board of Directors and the Executive Committee. Risks inherent in daily operations are usually handled by the respective business units, but depending on the nature of the risk we have also established a dynamic risk management structure whose response is dependent upon the potential impact on operations. This includes committees for health and safety, product liability, export administration, and other cross-functional committees, as well as project teams assembled to address specific risks.
Internal Control System
To ensure stringent legal compliance and promote the highest ethical standards in the conduct of its business, the Company has formulated the “AIDA Group Action Guidelines.” The Company has also established the Compliance Committee to strengthen its internal control system. In addition, the Internal Control Audit Office audits training programs related to the AIDA Group Action Guidelines and the status of the Guidelines' implementation.
Furthermore, the Company strives to ensure the reliability of its financial reports in accordance with the Financial Instruments and Exchange Act by conducting reviews of the status of Group-wide control systems and control activities.
In accordance with the Companies Act, the Company resolved as the “Basic Policy Concerning Improvement of the Internal Control System” at the Board of Directors’ meeting held on May 9, 2006.
AIDA Group Action Guidelines [PDF, 41KB]
Basic Policy Concerning Improvement of the Internal Control System [PDF, 66KB]
Approach to Enhance Corporate Governance during the Previous Year
In accordance to meet the management’s assessment of internal control effectiveness over financial reporting based on the Financial Instruments and Exchange Act, we had applied possible simplifications and made adequate readjustments by sustaining the basic framework of internal control operations, based on consequences lighted by the practice of second implementation year. In addition, to meet the reliability levels of financial reporting, we had performed solid execution and verification of business process documentation.
In order to cope with compliance environment, by adding required regulations to internal training programs performed in first and second year, we had managed to accomplish ten-language translated group compliance manual with group-wide distribution. Entering the third regulatory implementation period, by restraining compliance and code of conduct violations accompanying the sustainability of “AIDA Group Compliance Hotline System”, we had executed the utmost establishment of compliance framework.
In order to enhance transparency and fairness accompanying efficient corporate governance structure of our management and by reinforcing risk management environment including enterprise disaster recovery risks, we have launched a “Risk Management Committee” from current fiscal year.
Policy toward the Large-Scale Share Purchases (Takeover Defense Measures)
In light of its Basic Policy Concerning Company Control, the Company has established rules pertaining to large-scale purchases of the Company's shares along with a clearly defined policy for responding to such purchases, in contingencies where a large-scale purchaser complies or does not comply with these rules. These rules and policies are designed to prevent parties deemed inappropriate from gaining control over the Company's assets or business policy decisions. For details on this policy, please refer to the Company's press release dated May 13, 2010 at the Company's web site (http://www.aida.co.jp).