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Basic Policy for Corporate Governance
Minebea has adopted the five principles as its basic policy for management, which are "a company for which employees feel proud to work," "a company that is trusted by customers," "delivering on shareholders' expectations," "a company that is welcomed by the community," and "contributing to international society." Under this basic management policy, Minebea's business objective is to fulfill its social responsibilities to the various stakeholders, such as shareholders, business partners, local communities, international society, employees, and maximize its corporate value. In order to achieve this business objective, Minebea has approached the enhancement and reinforcement of corporate governance as a key management theme. Also, in order to ensure the health of the management of the company and strengthen corporate governance, we are promoting the establishment, maintenance and expansion of an internal control system.
Basic Explanation of Company's Organization
In response to the need for highly strategic business judgments and timely action, we changed the Board of Directors to a ten member system in June 2003. At the same time, by introducing an executive officer system, we have delegated significant authority from the Board of Directors to Executive Officers, and clearly divided the role of management / supervision functions from execution functions.
Moreover, aimed at obtaining advice on all aspects of our corporate management and strengthening the Board of Director's functions to supervise the organizations of execution, we have included two external board members in the ten Board of Directors.
Furthermore, regarding the Board of Auditors, in order to strengthen and enhance its auditing functions further, we have changed the Board to a system of five members (including three external auditors), by resolving to add one external auditor at the Ordinary General Meeting of Shareholders held on June 29, 2006.
In addition to holding the Board of Auditors' meetings and attending the Board of Directors' meetings and other important meetings, the auditors, in conjunction with the the Independent Auditors, and the Internal Audit Department, audit domestic offices, subsidiaries, and overseas subsidiaries, to carry out auditing the activities of directors.
Enhancement of Internal Control System
Minebea resolved at the Board of Directors Meeting that the in-house control system built for performing operations as part of due care of a good manager would be rebuild and implemented as "Basic Policy for Internal Control System." With the introduction of the internal control system, the company will be able to comprehensively maintain and reinforce the compliance system, information storage system, risk management system, efficiently performing duties system, group company control system, auditing system, etc. (For details, please refer to "Basic Policy for Internal Control System and its Enhancement Situation.")
Summary of Management Decisions, Supervision and Various Functions
(a) Supervision of Management
Minebea's Supervision of Management is done by the ten member Board of Directors who will make significant strategic business judgments that can facilitate prompt and highly strategic decision making. We have included two external Board members in the Board of Directors aimed at obtaining advice of our corporate management and strengthening the Board of Directors' functions to supervise the organizations of execution.
(b) Execution Function of Management
Minebea's execution function of management is building a system that will reinforce diligent attendance of each division's operations according to the Company's management policy, and activate and prompt management by introducing an executive officer system.
(c) Monitoring of Management
Minebea has built a monitoring system made of five corporate auditors, of which three are external auditors.
Also, there are no titles or ranks order for the Board members in order to enhance the monitoring of each Board member.
(d) Summary of each organization
| Board of Directors Meeting |
The ten member Board of Directors will make prompt and strategic decisions at the Ordinary Board of Directors Meeting held once every month or Extraordinary Board of Directors Meeting held accordingly. Significant business matters related to each Headquarters, each Business Unit and each group companies will be resolved or reported to the Board of Directors accordingly. |
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| Senior Executive Officers Council |
This is the President and Chief Executive Officer's advisory panel. Discussions related to business operations are held at the Senior Executive Officers Council held once every month or Extraordinary Senior Executive Officers Council held accordingly. |
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| Executive Officers Meeting |
Business operations of each Headquarters, each Business Unit and group companies are reported at the Executive Officers Meeting held every quarter or accordingly in order to strengthen interdivisional cooperation. |
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| Board of Auditors Meeting |
Discussing and adequately analyzing specific issues at the Ordinary Board of Auditors Meeting held basically once every month and Corporate Auditors Preliminary Meeting held accordingly. Also, an informal meeting with the Representative Director, President and Chief Executive Officer is held every quarter. |
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| Other Committees |
Committees are established for specific matters necessary for adequate business operations, such as Compliance, Risk Management, Information Security, etc. |
(e) The structure of Minebea's operational functions, business supervision and internal control is as follows.
Basic Policy for Internal Control System and its Enhancement Situation
Based on the Company Law enforced May 1, 2006, in order to substantiate the health of company management, "Basic Policy for Internal Control System" was finalized after the resolution of the Board of Directors.
The Company's internal control system is a system necessary to assure that the Board Members' execution of duties conform to laws and articles of incorporation, and assure that the other operations of the corporation are adequate.
By establishing an internal control system that disciplines business management, we will reinforce corporate governance and strongly fulfill the company's social responsibilities, as well as further increase corporate value.
Specifically, the in-house control system built by the operations officer as part of due care of a good manager previously has been organized and systematically finalized as an internal control system and will be continuously implemented after the Company Law is enforced. From now on, this internal control system will be constantly monitored for improvement and reinforcement.
(Structure of Internal Control System, etc.)
(a) Structure to assure that Board Members', Executive Officers' and employees' execution of duties conform to laws and articles of incorporation (Compliance system)
1. Minebea has set up a management structure regarding compliance and established a Minebea Group Code of Conduct in order to have the Board Members, Executive Officers and Employees follow laws, articles of incorporation and corporate philosophy.
2. Minebea Group Code of Conduct has set the specific standards that have to be observed for labor, safety and health, environment protection, and ethical management. In order to enforce this, the Compliance Committee was established to control the Group's compliance efforts in a cross-section manner, as well as, educating officers and staff members with the Committee taking the lead. We will further enhance this structure.
3. The activities of the Compliance Committee will be reported regularly or accordingly to the Board of Directors.
4. The current system which keeps an external director in the Board of Directors will be maintained in order to have the check-and-balance system that assures the legality of the Board Members' execution of duties.
(b) Storage and management of information related to execution of duties by Board Members and Executive Officers (information storage system)
1. The Board of Directors establishes Document Management Rules and keep documents (including electrical records) with related materials.
2. If the documents should be kept for a certain period of time or a certain location, the preservation period and location shall follow the Document Management Rules except in case there is a specific provision in any law. The document shall be stored by a method as it can be viewed within 2 days, if there is an inspection request from a Board Member or Corporate Auditor.
3. If the Document Management Rules shall be revised, it must be resolved by the Board of Directors.
(c) Rules for Risk of Loss Management and other Structures (Risk Management Structure)
Minebea's Risk Management Structure is made of newly establishing Basic Regulations for Risk Management that systematically sets up risk management. The chief officer of the risk management of Minebea Group shall be the Representative Director, President and Chief Executive Officer, and a Risk Management Committee is established under his direct control.
Based on the Basic Regulations for Risk Management, the individual risks will be monitored continuously by each responsive organization, and we will assume and classify specific risks in advance, and develop a quick, adequate communication and emergency structure in case of an emergency.
Also, the Risk Management Committee will regularly review above structure, verify specific items and regularly report the status of risk management including such verification results to the Board of Directors.
(d) Structure that assures the execution of duties by the Board Members and Executive Officers are efficiently done (system for an Efficient Execution of Duties)
1. Minebea has changed the twenty five member Board of Directors to a ten member system as of June 2003, to facilitate prompt and strategic decision making. At the same time, by introducing an executive officer system, we have delegated significant authority from the Board of Directors to Executive Officers, clearly divide the role of management / supervision functions from execution functions, heighten the organization's agility and further enhance these functions.
2. Board Members, Executive Officers and Employees will jointly have a company-wide goal and try to spread this as well as chiefs of Headquarters and heads of Business Units will decide the specific goals and efficient methods for each Headquarter and Business Unit of achieving this.
The results will be converted into data using an IT-driven system, and will be regularly reviewed by the Board of Directors after analyzed by each Headquarter, Business Unit and Business Administration department. By implementing improvements such as removing or reducing causes that block efficiency, accuracy of achievement of goals will increase, and a system that will achieve the efficiency of company-wide operations will be built.
(e) Structures to ensure that the Operations of the Company and its Affiliated Companies are adequate (Management of Group Companies)
1. We will reinforce the current system of the Company's Headquarters and Business Unit organizations appropriately and properly leading Group Companies' (including overseas) business operations.
2. We set up a common Minebea Group Code of Conduct and develop a law-abiding spirit together with the officers and employees of the Group Company.
3. In order to increase the effects of the internal control system audits for Group Companies currently done by the Corporate Auditors, we will improve the cooperative structure to the Corporate Auditors.
4. The current system, setting a numerical goal for each Group Company, reviewing regularly, and feeding back the results, will be reinforced.
5. The current system of the Internal Auditing Office regularly auditing the Group Companies will be expanded and reinforced.
(f) Structures to ensure that the Audits by the Corporate Auditors are effective (Audit System matters)
| 1. The structure when a Corporate Auditor requests for an employee to assist him |
(1) When such employee is required, he/she should be properly set and we assist the audit.
(2) The Internal Auditing Office shall discuss with the Board of Auditors what the Corporate Auditor requestes and do an internal audit and report the results to the Board of Auditors. |
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| 2. Independence from the Board of Directors of the employee mentioned in the preceding paragraph 1. hereof |
(1) The audit support by such employee will be done under the Corporate Auditor's directions and orders.
(2) The Board of Auditors' opinion will be respected on the personnel changes and personnel evaluation regarding such employee. |
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| 3. Structure of Board Members', Executive Officers' and employees' report to the Corporate Auditor and other reporting structure to the Corporate Auditor |
| (1) The Board Members will report the following to the Board of Auditors |
- Matters discussed at the Senior Executive Officers Council
- Matters that might cause the company a significant loss
- Monthly business conditions that is important
- Important matters regarding internal audit status and risk management
- Significant violations of law or articles of incorporation
- Status of calls to the compliance hotline and its contents
- Other important matters related to compliance
- Matters related to request for approval decided by Board Members or Executive Officers
- Agreements executed by Board Members or Executive Officers
- Matters related to litigations
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(2) Executive officers may directly report (ii) through (v) in the previous paragraph (1) hereof to the Board of Auditors.
If the employee discovers a significant fact related to (ii) and (v) in the previous paragraph (1) hereof, he/she may directly report it to the Board of Auditors |
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| 4. Other matters in order to ensure the efficiency of the Corporate Auditors audit |
The Corporate Auditor has an opportunity to interview Board Members, Executive Officers and important employees, as well as hold informal meetings regularly with Representative Director, President and Chief Executive Officer and the Independent Auditor respectively. |
Internal Audits, Audits by Corporate Auditors and Accounting Audits
The Company's internal audit division, comprised of three members who report directly to the president, corrects improper or inappropriate business affairs, and improves operating quality and efficiency, in accordance with the implementation regulations for internal audits.
The Board of Auditors is comprised of five members (three standing auditors and two absentee auditors), of which three are external auditors. The auditors, in line with the audit policy laid down by the Board of Auditors, attend Board of Directors' meetings and other key meetings. They also work in conjunction with the internal audit department to audit domestic offices, subsidiaries, and overseas affiliates, as well as audit the activities of directors by making examinations of business operations and assets.
Furthermore, the Board of Auditors meets the Independent Auditor Ernest & Young Shin Nihon four times a year to confirm audit systems, plans and implementation, and to exchange opinions. At the same time, the Board, by witnessing accounting audits at domestic offices, affiliates, and overseas affiliates, confirms their situation on a regular basis.
Ernest & Young Shin Nihon, which has an audit contract with the Company pursuant to the Company Law and Securities Exchange Law, conducts accounting audits. The certified public accountants who audited the Company are Hidenori Takahashi, Shinichiro Suzuki, and Kazumi Okamoto. Nine other certified public accountants and sixteen junior accountants assisted them.
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