Group Governance Framework Driving Corporate Value Creation

Last update: June 2, 2021

Group governance using a holding company system

Group governance using a holding company system

Based on the Group’s philosophy and management policies, we employ a Group governance framework based on a holding company system as a mechanism to drive the creation of Group corporate value, not only in the short term but also over the medium to long term.
 As the holding company overseeing the Group, in order to achieve sustainable growth for the Group and to increase corporate value over the medium to long term, the Company supports and supervises management execution by operating companies, as well as optimally allocates resources to them. In addition, the Company is responsible for “Group management,” including disseminating the Group philosophy, drawing up sustainability policies and long-term Group strategies, managing the Group’s capital and maintaining financial discipline, enhancing the risk management and compliance system, and enhancing Group governance, as well as “Group communication,” including investor relations and public relations activities.
 Meanwhile, each operating company under the Company’s umbrella, while demonstrating autonomy, aggressively performs structural reforms and growth strategies utilizing the PDCA cycle with respect to its own business area, based on the goals and plans established through dialogue with the Company, and fulfills their own responsibilities, striving to increase corporate value and improve capital efficiency.
 Based on the clear division of roles among the Group companies, we will steadily execute the Medium-Term Management Plan, realize the management philosophy and management policies, and strive to increase Group corporate value, by having closer and stronger dialogue and collaboration between us, the holding company and operating companies.

Mechanism for creating corporate value based on enhanced dialogue and collaboration with operating companies

Mechanism for creating corporate value based on enhanced dialogue and collaboration with operating companies

Approach, etc., to the independence of listed subsidiaries Updated

(1) Views and policies on group management

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.

(2) Significance of holding a listed subsidiary

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.

(3) Measures to ensure the effectiveness of the governance structure of the listed subsidiary

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.