Last update: August 31, 2023
The Company ensures the effectiveness of its corporate governance by coordinating "audits" conducted by the Audit & Supervisory Board Members (Audit & Supervisory Board), including multiple Outside Audit & Supervisory Board Members who maintain their independence and have specialized knowledge in such areas as legal affairs and financial accounting, through their actively cooperating with the accounting auditor and the internal audit division, and "formulation of management strategies" and "supervision of business execution" conducted by the Board of Directors, including multiple Outside Directors who maintain their independence and have advanced management knowledge and experience.
The Company has adopted this corporate governance structure because it judges the structure to be workable for realizing and ensuring the Company's corporate governance and for conducting appropriate and efficient corporate management.
The Company considers the following characteristics and advantages of the Audit & Supervisory Board Member system to be effective for ensuring the appropriateness of the Company's Group governance and has therefore adopted it as the corporate governance system:
|Name||Position in the Company||Board of Directors||Audit & Supervisory Board||Nomination Committee||Compensation Committee||Strategy Committee||Management Meeting||CSR Management Committee||Risk Management Committee||Information Management Committee|
|Ryuichi Isaka||President, Representative Director and CEO||◎||◯||◎||◎|
|Katsuhiro Goto||Vice President, Representative Director and CAO
Information Management Supervisor
|Junro Ito||Senior Managing Executive Officer, Representative Director and CSuO
General Manager of ESG Development Division
Supervising Officer of Superstore operations
|Fumihiko Nagamatsu||Director and Senior Managing Executive Officer
Head of Domestic CVS operations (Japan)
|Joseph M. DePinto||Director and Senior Managing Executive Officer
Head of Overseas CVS operations (North America)
|Yoshimichi Maruyama||Director, Managing Executive Officer and CFO
General Manager of Corporate Finance & Accounting Division
|Toshiro Yonemura||Independent Outside Director||◯||◯||◎||◯|
|Yoshiyuki Izawa||Independent Outside Director||◯||◯||◯|
|Meyumi Yamada||Independent Outside Director||◯||◎||◯|
|Jenifer Simms Rogers||Independent Outside Director||◯||◯||◯|
|Shinji Wada||Independent Outside Director||◯||◯|
|Fuminao Hachiuma||Independent Outside Director||◯||◯||◯|
|Paul Yonamine||Independent Outside Director||◯||◯||◯|
|Stephen Hayes Dacus||Independent Outside Director||◯||◯||◎|
|Elizabeth Miin Meyerdirk||Independent Outside Director||◯||◯|
|Noriyuki Habano||Standing Audit & Supervisory Board Member||◎||◯||◯||◯||◯|
|Nobutomo Teshima||Standing Audit & Supervisory Board Member||◯||◯||◯||◯||◯|
|Kazuhiro Hara||Independent Outside Audit & Supervisory Board Member||◯|
|Mitsuko Inamasu||Independent Outside Audit & Supervisory Board Member||◯|
|Kaori Matsuhashi||Independent Outside Audit & Supervisory Board Member||◯|
To facilitate prompt decision making and business execution even amid a dramatically changing operating environment, the Company has introduced the executive officer system and separated the Board of Directors' supervisory functions from the executive officers' business execution functions. This developed an environment where the Board of Directors is able to focus on the "formulation of management strategies" and the "supervision of business execution," while the executive officers can focus on "business execution." The executive officers comprise 24 members (21 men and 3 women) as of May 30, 2023.
The term of office of the Directors is set to one year in order to reflect the intentions of shareholders regarding the appointment of the management team in a timely manner.
Matters to be decided by the Board of Directors at the Company are stipulated in the Board of Directors Regulations, the Decision Authority Regulations, and so forth, and matters stipulated by the Companies Act and the Company's internal regulations are decided by the Board of Directors.
The Decision Authority Regulations clearly set forth the scope of matters to be decided by the Management Meeting and the Representative Director and President. This clarifies the decision-making process for management and the structure of responsibility, while also expediting decision-making by rational delegation of authority.
The Company has established the “Nomination Committee” and the “Compensation Committee” (in this paragraph, “the Committees”) as advisory committees to the Board of Directors. The Committees' chair and the majority of their members are Independent Outside Directors. It has been utilizing the more diverse range of knowledge and advice of Outside Directors and Outside Audit & Supervisory Board Members to ensure further objectivity and transparency in procedures for deciding the nomination of and compensation for Representative Directors, Directors, Audit & Supervisory Board Members, and executive officers (in this paragraph, “Officers, etc.”), thereby enhancing the supervisory functions of the Board of Directors and further substantiating corporate governance functions.
(Main items for deliberation by each committee and scope of target persons)
|Committee||Main items for deliberation||The Company||Core operating companies *1|
|Representative Director||Director||Audit & Supervisory Board Member||Executive Officer||Representative Director||Director||Audit & Supervisory Board Membe||Executive Officer||President, CEO||Position equivalent to President, CEO|
|Nomination Committee||Basic policies and standards for nomination of candidates||◯||◯||◯||◯||◯||◯|
|Contents of appointment proposals for candidates||◯||◯||◯||◯||◯||◯|
|Compensation Committee*2||Basic policies and standards for compensation, etc.||◯||◯||◯||◯||◯||◯||◯||◯||◯||◯|
|Contents of proposals for the limit on the total amount of compensation, etc.||◯||◯||◯||◯||◯||◯|
|Contents of individual compensation, etc.||◯||◯||◯||◯||◯|
The Committees deliberate on the nomination and compensation of not only the Company’s Officers, etc., but also Representative Directors of the core domestic operating companies and President and CEO of the core overseas operating companies (in this paragraph, “Representative Directors, etc.”).
The Representative Directors, etc., of the core operating companies occupy an important position for the Group's management and are included within the purview of deliberations by the Committees from the perspective of emphasizing the objectivity and transparency of the principal nomination and compensation procedures for the management of not only the Company but also the Group.
The Company will also appropriately determine the companies to be "core operating companies" with an emphasis on the objectivity and transparency of the Group management procedures, in accordance with the Group's business portfolio strategy and governance system.
The Company increased the number of Nomination Committee members from 5 (2 internal Directors and 3 Outside Directors) to 7 (2 internal Directors and 5 Outside Directors) to enhance objectivity and transparency in the proceedings relating to the nomination of officers as of December 31, 2022.
One internal Audit & Supervisory Board Member and one Outside Audit & Supervisory Board Member act as observers at the Committees.
This is because deliberations by the Committees include nomination of candidate Audit & Supervisory Board Members, whose duty is to audit the performance of duties by the Directors, and it is important to ensure due process at the Committees as advisory committees to the Board of Directors.
The Company's Audit & Supervisory Board develops audit plans with the basic audit policies of ensuring sound and sustainable growth of the Company and its Group companies and establishing high-quality corporate governance systems to respond to public trust. The Audit & Supervisory Board sets the establishment of internal control systems, and the system to promote legal compliance and risk management, as key audit items.
The Audit & Supervisory Board Members attend the Board of Directors meetings and other important meetings. They conduct audits in the following manner: exchanging opinions with the Representative Directors and periodically interviewing Directors and others on the status of business execution; viewing important documents for approval such as request forms; and surveying the status of operations and assets at the Head Office and others. For subsidiaries, they communicate and share information with the Directors and Audit & Supervisory Board Members of subsidiaries, visit the subsidiaries' Head Offices and stores to survey the actual status of operations in accordance with the audit plans, and receive reports.
In order to enhance and reinforce its internal auditing function, the Company has appointed, within the Auditing Office, the “operational auditing staff” and the “internal control evaluation staff,” which are independent internal auditing divisions. The “operational auditing staff” has an oversight function to verify and provide guidance on internal auditing, including the status of the maintenance and management of compliance systems, by core operating companies or to directly audit them, and an internal auditing function for auditing the Company, the holding company, and performs these operations. The “internal control evaluation staff” evaluates internal controls regarding the financial reporting of the whole Group. (The Auditing Office has 26 members as of May 26, 2023.)
The results of internal audits and evaluations of internal controls regarding the financial reporting are reported to the Representative Director and President, each executive officer in charge, the Board of Directors, and also to the Audit & Supervisory Board for coordination with audits by the Audit & Supervisory Board Members.
(a) Coordination between the Audit &pervisory Board Members, the Auditing Office, and the accounting auditor
In order to improve the overall quality of audits, the Company ensures that the Audit & Supervisory Board Members, the Auditing Office, and the accounting auditor proactively exchange information and endeavor to maintain close ties with each other, by such means as periodically holding tri-partite meetings.
|Tri-partite meetings||April, October||Exchanges information on the performance of accounting audits with the accounting auditor, the performance of internal audits with the Auditing Office, and the performance of Audit & Supervisory Board Member audits with the Audit & Supervisory Board Members and conducts exchanges of opinions.|
(b) Coordination between the Audit & Supervisory Board Members and the accounting auditor
The Audit & Supervisory Board Members receive reports from the accounting auditor at the beginning of the fiscal year on the annual audit plan, and on the procedures and results of accounting audits and internal control audits on a quarterly basis, and exchange opinions to coordinate with them.
|Explanation of audit and quarterly review plans||June||Receives an explanation of the audit plan and proposed audit fees for the fiscal year from the accounting auditor.|
|Report of quarterly review results||July, October, January||Receives reports on quarterly review results from the accounting auditor and exchanges opinions.|
|Interview with Audit & Supervisory Board Members||January||Conducts interviews and exchanges opinions with the Audit & Supervisory Board Members from the accounting auditor.|
|Exchange of opinions on key audit matters (KAM)||June, July, October,
|Periodically receives explanations from the accounting auditor on matters that may become KAM and on the draft text thereof, and, upon reviewing the contents of those matters and texts, exchanges opinions. Considers the appropriateness and consistency of information disclosure.|
|Report on audit results under the Companies Act||April||Receives a report on the audit results under the Companies Act from the accounting auditor.|
|Report on audit results under the Financial Instruments and Exchange Act||May||Receives a report on the audit results under the Financial Instruments and Exchange Act from the accounting auditor.|
(c) Coordination between the Audit & Supervisory Board Members and the Auditing Office
The Audit & Supervisory Board Members and the Auditing Office ensure comprehensive sharing of audit information between each other in order to improve the quality of audits.
|Regular meetings between the Standing Audit & Supervisory Board Members and the Auditing Office||Monthly||Receives reports from the Auditing Office on the audit plan, the results of operational audits, the progress of internal control evaluations, etc., and exchanges opinions. The Standing Audit & Supervisory Board Members report important matters to Outside Audit & Supervisory Board Members.|
|Information sharing and exchange of opinions on the status and results of internal audits||June||Receives reports on the results of operational audits and activity status from the Auditing Office and exchanges opinions.|
|Report on the status and results of evaluations of internal controls regarding the financial reporting||Quarterly||Receives reports from the Auditing Office on the internal controls regarding the Group’s financial reporting as stipulated by the Financial Instruments and Exchange Act.|
(d) At each audit, the Audit & Supervisory Board Members, the Auditing Office, and the accounting auditor receive reports and materials, etc. from the internal control divisions, and request explanations as deemed necessary, and the internal control divisions cooperate in the appropriate performance of these audits.
The Company has established the "CSR Management Committee," "Risk Management Committee," and "Information Management Committee," which report to the Representative Directors. Each committee determines Group policies in cooperation with the operating companies, and strengthens corporate governance by managing and supervising their dissemination and execution.
The Company has established the CSR Management Committee based on CSR Basic Rules for the purpose of promoting, administrating and supervising the CSR activities of the entire Group through operating activities in order to contribute to solving social issues and aim for sustainable growth for both society and the Group. The Company has also established five subcommittees under the CSR Management Committee tasked with the examination and promotion of concrete measures to promote operating activities that will contribute to solving material issues (Materiality) identified to address the expectations and demands of stakeholders and realizing a more thorough compliance practice. Through these subcommittees, the Company has carried out initiatives to find solutions to issues and implemented preventive measures.
Under the CSR Management Committee, to resolve the material issues which should be tackled by the Group, the Company tasks a subcommittee with handling each relevant issue: the “Environment Subcommittee” with helping reduce environmental burdens, such as climate change and depletion of resources; the “Supply Chain Subcommittee” with building a sound supply chain that takes human rights and the environment into consideration and with improving quality and ensuring safety for merchandise and services; the “Corporate Ethics and Culture Subcommittee” with ensuring thorough awareness and adoption of the Corporate Creed and the Corporate Action Guidelines, building worker-friendly workplaces, promoting advancement of diverse human resources and improving the labor environments; the “Compliance Subcommittee” with strengthening compliance and internal controls; and the “Social Value Creation Subcommittee” with the planning, proposal and operation of new businesses originating from addressing social issues through the main business, by utilizing business characteristics and management resources. These subcommittees have formulated and carried out measures to address such individual issues on a Group-wide basis.
Through the activities of these subcommittees, we continue to promote business activities that further ensure compliance and contribute to the resolution of the material issues (Materiality) related to stakeholders, while aiming for sustainable development of both society and our Group from an ESG perspective.
In accordance with the basic rules for risk management, the Company and its Group companies establish, streamline, and manage comprehensive risk management systems, centered on the Risk Management Committee, in order to properly analyze, evaluate, and appropriately respond to risks associated with each business, with consideration for changes in the management environment and risk factors.
The Risk Management Committee receives reports from the departments in charge of risk management regarding the risk management status of the Company. The committee comprehensively determine, assess, and analyze risks and discuss measures, and determine the future direction going forward.
In recent years, the Risk Management Committee has been striving to improve the effectiveness of the entire Group’s risk management and to establish a PDCA cycle by building a framework to support and instruct each Group company in mitigating risks overseen by the Company’s department in charge of risk management, and also by adopting shared risk management indicators for the entire Group. In FY2023, the committee is working to strengthen coordination between the Company and each Group company, while identifying high-priority risks and further improving the system for preventing and mitigating risks as well as preventing their recurrence.
In accordance with the Information Control Regulations, the Company has carried out risk analysis, evaluation and measures regarding the information handling of all operations-related information that is learned, created or retained by officers and employees of the Group under the Information Management Committee, chaired by the information management supervisor.
Continuing on from the previous fiscal year, in FY2022, the Company strived to strengthen its information collection and management structure. It strengthened its structure to timely and appropriately collect important information on its Group companies and to then deal with that information in cooperation with those companies. At the same time, the Company worked to strengthen its structure to centrally manage that information and to report it to management and related departments without omissions or delays.
Moreover, while complying with laws, regulations and guidelines concerning information security, the Company is strengthening its information security structure by reviewing its information handling procedures, tightening its management of contractors, and providing education to its officers and employees to enhance its response to ever-evolving cyberattacks. Furthermore, it is promoting an increase in the sophistication of human, organizational, physical and technical safety management measures.
In particular, the Company provided all the officers in its Group with internal training on the prevention of insider trading so that they properly handle important facts and other information. The aim of that training was to inform them of the rules preventing insider trading and to prevent insider trading.
The Company will continue to deploy and provide guidance on those efforts within its Group companies through the Information Management Committee again in FY2023. At the same time, it will work to enhance governance in information management by supporting the autonomous and continuous promotion of these efforts in its Group companies by monitoring and evaluating them.
The Company is taking steps to appropriately manage the various risks associated with business continuity, in an effort to secure the soundness of its management and the efficiency of its business, while ensuring the lasting preservation and development of the Group and continuing to provide the merchandise and services required by its customers. In the management of the Group's risks, the Company quantifies the risks of every business domain to the extent possible, verifies that these risks are within an acceptable range based on the Company's owners' equity, and employs an integrated risk management method, which implements measures that avoid, transfer, mitigate, and retain risks.
The Company and its Group companies have established a Risk Management Committee, with the departments that oversee the overall risk management of the respective companies as the secretariat.
As a general rule, the Risk Management Committee meets once every six months to receive reports on the risk management status of the respective companies from the departments responsible for the management of risks, to comprehensively determine, assess, and analyze risks and discuss measures, and to determine the future direction going forward.
Meanwhile, with regard to individual risks, Group policies related to such risks, initiatives to mitigate risks undertaken by each company, and various internal and external examples illustrating signs of materializing risks, etc., are shared through a group-wide meeting body, etc., headed by the Company's departments responsible for the management of risks.
The Company has established a basic policy on risk management that is shared by the whole Group.
The Company classifies the risks to be managed into the four categories of governance risk, operational risk, B/S risk, and business risk.
In order to assess the group-wide status of each risk and effectively make improvements, the Company has clarified the departments responsible for the management of risks within the Company, while also establishing the Corporate Governance Management Department to centrally and comprehensively manage all risk areas.
|Large classification||Middle classification|
|Operational risk||Information management risk, System risk, Quality assurance and labeling risk, IR risk, PR risk, Reputational risk, Legal risk, Risk associated with intellectual property rights (rights of trademark, etc.), Business continuity risk, Risk of incidents and accidents, Risk associated with antisocial groups, Accounting risk, Tax-related risk, Personnel- and labor-related risk, Environmental risk|
|B/S risk (Risk occurring as a result of, or derived from assets and liabilities)||Asset risk, Business credit risk, Financial credit risk, Market risk, Liquidity risk|
|Business risk||Existing business risk, Investment return risk|
The Group conducts risk management through the comprehensive identification and quantification of risks based on the shared Group risk assessment sheets, “risk assessment and proposal of improvement measures,” “prioritization of risks,” and “improvement activities and monitoring.”
In addition, the internal auditing division of each company verifies whether risk management is being conducted effectively, from an independent perspective, through periodic internal audits of the departments in charge of overall risk management and the departments responsible for the management of risks of the respective companies, and provides each department with the necessary advice for improving risk management, as required.
In FY2020, the Company introduced shared Group risk indicators (Key Risk Indicators, “KRIs”) to enhance the effectiveness of the Group’s risk management.
KRIs are quantitative monitoring indicators that facilitate the early detection of the materialization or potential materialization of risks, as well as the reduction and minimization of any possible damage and its impact. For these tasks, approximately 90 KRIs for operational risks have been set.
In operations, priority risks and their KRIs are identified from the perspectives of Group companies and operating companies. By conducting assessments from a Groupwide cross-organizational perspective, along with self-assessments by each operating company, the Company coordinates with the operating companies to take measures before a major incident occurs.
These KRIs are utilized as one of the PDCA tools for risk management to further enhance the effectiveness of Group risk management.
The environment surrounding the Group, including recent technological innovations and social values, has changed drastically, and we are continuously revising our views on risk management, accordingly.
In particular, regarding risks associated with information security, damage from cyberattacks is increasing, as corporate DX (digital transformation) is advancing.
Accordingly, the Group has been engaged in redeveloping its information security policy, regulations, guidelines, etc., increasing personnel with expertise in security, and providing internal training to instill a better awareness of information security within the Group.
In addition, as the business environment changes drastically, recognizing that prevention and early detection of incidents are crucial, the Company is promoting company-wide initiatives that require each line of defense, i.e., the operating division-the first line of defense, the administrative divisions-the second line of defense, and the internal auditing division-the third line of defense, to function properly.
In the first line of defense, the operating division strengthens communication in the regular business line to ensure the early detection and reporting of/responses to risks onsite.
In the second line of defense, the internal control promotion division, which is independent from the regular business lines (e.g., the administrative divisions and monitoring divisions), has established a system to give feedback, advice and support to the operating division, the first line of defense, regarding the information gathered daily, while engaging in mutual coordination, as necessary.
In the third line of defense, the internal auditing divisions of the Company and its Group companies conduct the risk management audits that analyze and evaluate whether the first and second lines of defense of each company are functioning properly.
In addition to the above, given the lightning speed of changes in today's business environment, the Company is strengthening analysis of information on social media as well as the content of opinions from its customers and other parties, as part of its efforts to strengthen early understanding of the warning signs of risk.
As part of the internal controls of the whole Group, the Group operates a "Groupwide Employee Help Line" for blowing the whistle by Group employees, a "Business Partner Help Line" for blowing the whistle by business partners, and an "Audit & Supervisory Board Member Hotline" regarding management team members, with the aim of preventing, rapidly identifying, rapidly rectifying, and preventing the recurrence of violations of laws and regulations, social norms, and internal rules.
Overall, the Group's cross-shareholdings as of the end of February 2023 comprise 54 stocks, with a market value of ¥71.5 billion accounting for 2.0% of consolidated net assets.
In principle, the Group does not hold cross-shareholdings except where there is an accepted rational for doing so, such as maintaining or strengthening business alliances or business relationships, in order to maintain and strengthen business competitiveness.
Stocks held are reviewed annually and shares with less rationale or less effectiveness for holding are to be sold in view of the circumstances of the investee companies.
When exercising voting rights as to listed cross-shareholdings, based on the following Detailed Rules regarding Standards for Exercising Voting Rights, the Company decides whether to vote for or against proposals from the perspective of increasing the medium- to long-term corporate value of the Company and the investee companies, and engages in dialogue with the investee companies about the proposals before exercising its voting rights if necessary.
a. Whether proposals at each Shareholders' Meeting inure to medium-to long-term improvement of corporate value?
b. Whether proposals at each Shareholders' Meeting will maximize the benefits of shareholders of the company that convenes the Shareholders' Meeting?
c. Whether a convocation notice of Shareholders' Meetings and other materials such as documents that explain proposals are timely and appropriate as information disclosure?
The Company's Board of Directors assesses the matters below regarding the rationale for and effectiveness of holding listed cross-shareholdings and makes comprehensive decisions regarding the appropriateness of holding said shares. The Company will continually review the matters to be assessed.
1. Background of acquisition
2. Presence or absence of business relationship
3. Strategic significance at the time of holding
4. Possibility of future business
5. Risks related to survival or stability, etc. of business if shares are not held
6. Continuity of advantages, future outlook for business, and risks if shares continue to be held
1. The most recent amounts of transactions and profits if any business is conducted through business alliances, etc.
2. Annual dividends received and gain or loss on valuation of shares
3. Whether the benefits and risks from each holding cover the Company's cost of capital
The results of the Board of Directors' FY2022 assessment of all of the Company's listed cross-shareholdings are as below. (The review was performed at the Board of Directors meeting on February 5, 2023.)
|Stock||Purpose of shareholding||Qualitative/quantitative rationale and effectiveness of shareholding||Holding of the Company's shares|
|AIN HOLDINGS INC.||Further reinforcement of business collaboration in promotion of joint merchandise development, etc.||Yes*1||No|
|Credit Saison Co., Ltd.||Further reinforcement of business collaboration through the Group financial business companies, etc.||Yes*1||Yes|
|Mitsui Fudosan Co., Ltd.||Further reinforcement of business collaboration in transactions, etc., related to stores, logistics facilities, and other real estate for the Group operating companies||Yes*1||Yes|
|SEIBU HOLDINGS INC.||Further reinforcement of business collaboration in joint development of stores, areas, etc., of the Group operating companies||Yes*1||No*2|
|TBS HOLDINGS, INC.||Further reinforcement of business collaboration in sales promotion leveraging media content, etc.||Yes*1||No*2|
|Dai-ichi Life Holdings, Inc.||Further reinforcement of business collaboration in life insurance and other financial transactions, etc., with the Group companies||Yes*1||No*2|
The Company's Board of Directors confirms that its Group companies other than listed subsidiaries also assess the Group's cross-shareholdings based on the same shareholding policy as the Company.
Status of the advisors for the Company and major operating companies is as below.
|Duties||Provide advice when needed by the Company's management team|
|Working arrangement/conditions||Full-time/with compensation|
|Date of retirement of the Company's president, etc.||May 26, 2016|
|Term of office||1 year|
|Title/position||Advisor of SEVEN-ELEVEN JAPAN CO., LTD.|
|Duties||Provide advice when needed by the company's management team|
|Working arrangement/conditions||Full-time/with compensation|
|Term of office||1 year|
With regard to transactions with related parties, the Company investigates and identifies related parties and checks if there are any transactions with related parties and the details thereof. The Company discloses the transactions in accordance with the Companies Act, the Financial Instruments and Exchange Act, and other applicable laws and regulations, as well as the regulation of the Tokyo Stock Exchange.
Furthermore, with regard to any competing transactions and conflict-of-interest transactions between the Company and any Directors, the Company makes it a rule for the Directors to obtain approval of the Board of Directors in accordance with laws and regulations and the Board of Directors Regulations and to report material facts if the Directors carry out such transactions.
Although the Company owns the listed subsidiary, Seven Bank, Ltd., from the standpoint of respecting the independence of Seven Bank, Ltd., we value the management decisions of the said listed subsidiary, and respect the independent and autonomous deliberation and determination of its business strategies, personnel policies, capital policies, etc., as it engages in its operating activities.
In order for Seven Bank, Ltd. to achieve sound and sustained growth, the development of business innovation through an advanced combination of collaborations with various business partners based on the foundations of corporate trustworthiness and transparency of management is thought to be indispensable. Furthermore, the Company believes that listing the said subsidiary's shares on the market is one of the most effective method of ensuring the said subsidiary's trustworthiness and transparency of management, and it is preferable for the said subsidiary to enhance its corporate value through its own growth strategies, etc., from the standpoint of group management.
Seven Bank, Ltd. has established a Nomination and Compensation Committee chaired by an Independent Outside Director, as an advisory organization to the Board of Directors, in order to deliberate matters regarding the nomination of candidates for Director and Executive Officer, thereby ensuring the independence of the election of the management team of the said subsidiary from the Company. Furthermore, the said subsidiary has assigned Independent Outside Directors and Independent Outside Audit & Supervisory Board Members to conduct monitoring to prevent the occurrence of any conflicts of interest between the Company and shareholders other than the Company.
The Company has not entered into a group management agreement with the said subsidiary.
Moreover, to comply with disclosure and other requirements, the "Reporting Guidelines for Significant Events" has been set forth between the Company and the said subsidiary, which require the said subsidiary to report only matters that could impact the Company's timely disclosures, matters that could significantly impact the Company's consolidated financial statements, and matters that could damage trust in the Group.