Corporate Governance
Basic Principles of Corporate Governance
We believe that “Sumitomo’s Business Philosophy” and “Corporate Principle” are the backbone of corporate ethics and the unalterable truth. Based on the recognition that corporate governance is a system for the company to make transparent, fair, prompt and decisive decisions while taking into account the positions of all stakeholders, we established our corporate governance principles. We believe that appropriate practice of this principle will lead to sustainable growth and the improvement of corporate value over the medium to long term, and will benefit all stakeholders including customers, business partners, employees, local communities and shareholders. Thus, we will continue to make constant efforts to further improve governance.
Overview of corporate governance system
Sumitomo Precision Products has a corporate governance system that consists of the Board of Directors including independent outside directors and the Audit & Supervisory Board.
Regarding managerial decision-making, execution and supervision, the Board of Directors decides important matters at its meeting held at least once a month and supervises the execution status of specific businesses. Furthermore, the company operates a system for appropriate and swift practice of business by holding meetings of the Management Council by executives and business meetings in each department, as appropriate, to thoroughly discuss the matter, and receive advice from external specialists, including attorneys and certified public accountants whenever necessary. We introduced an executive officer system. By separating the business decision-making and supervising from the implementation of business operations, the system is designed to enable the Board of Directors to supervise more successfully, while strengthening our implementing business operations. Furthermore, we operate a non-statutory Nomination and Remuneration Advisory Committee as an advisory body for the Board of Directors. This committee, with outside directors consisting of half of the committee and the chairperson of which is an outside director, serves to secure greater transparency and fairness in considering the nomination of and remuneration for directors.
Audit and Supervisory Board members attend meetings of the Board of Directors and other significant meetings to correctly understand and supervise the way the company is actually managed. They also utilize the Audit and Supervisory Board Members’ Office to help audit the internal control system and the risk management structure. Under an agreement with an accounting auditor, the company conducts regular audits and, as the need arises, receives professional advice.
Internal Control System
The Company resolved at its Board of Directors’ meeting and operates the system (internal control system) specified in Article 362 paragraph 4 (vi) of the Companies Act. We will maintain and improve the internal control system by reviewing it continuously.
Compliance
The Company has established a Code of Conduct based on its Corporate Principles and conducts ongoing activities to raise awareness and educate employees about compliance, including those of subsidiaries.
Furthermore, to enhance the activities related to legal compliance, the Company has appointed an officer in charge of compliance and has established the Legal Compliance Department and the Compliance Committee as organizations for maintaining and improving compliance.
The Company also puts emphasis on “immediate reporting” of non-compliance incidents to supervisors. In addition, we have established a whistleblower system for reporting non-compliance incidents to the General Manager of Legal Compliance Department, the General Manager of Audit & Supervisory Board Members’ Office, who is independent of management, and attorneys, each serving as a contact point (Hotline).
Risk management
The Company manages overall risks through the following measures:
Each business division identifies individual risk items and implements necessary risk management for those identified risk items by establishing internal risk management rules, including risk preventive procedures and countermeasures in the event of the occurrence of risks, and by conducting periodic self-inspections. Corporate departments cooperate with each other to develop a corporate-wide risk management framework. They establish internal rules for the operations they control and create risk management policies, techniques, and guidelines. Corporate departments support the risk management of business divisions, as well as conduct monitoring and make necessary improvements to the risk management systems. The Internal Auditing Department, which is independent of business operations, audits the status of risk management in business divisions and corporate departments and provides necessary advice.
Officers in charge are appointed to clarify their responsibilities for each area of issues and risks (compliance, information security, environmental management, quality, safety and health, and human rights and diversity). Advisory committees comprising these officers are established and conduct ongoing corporate-wide activities to support risk management by business divisions and corporate departments.