Corporate Governance

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UACJ is working to enhance its corporate governance to earn and maintain the trust of all of our stakeholders and increase our corporate value.

Basic Ideas on Corporate Governance

The UACJ Group believes that corporate governance is the basic framework for managing a company amid relationships with shareholders, customers, suppliers, employees, local communities, and all other stakeholders. Our duty is to benefit stakeholders by developing products, technologies, and services that are useful to society and incorporate abundant consideration for safety, and offering them to the market in an effort to continuously increase our corporate value. Toward that end, we practice robust corporate governance and, recognizing the importance of integrity and transparency in management, are committed to doing everything practical to ensure sound management oversight by strengthening Board of Directors functions, enhancing Audit & Supervisory Board functions, properly disclosing financial and management information, ensuring solid corporate ethics, and practicing painstaking compliance and risk management.

Corporate Governance System

The UACJ has adopted a new executive officer system that separates management decision making from the audit and operations functions. This new system both strengthens the Board of Directors functions and increases the speed with which we execute operations.

Corporate Governance System

Flg. Corporate Governance System

Board of Directors Meetings

UACJ Board of Directors meetings, which are convened monthly, are attended by 12 Directors (including 2 outside Director) and 6 Audit & Supervisory Board Members (including 4 outside members)*, who deliberate important matters and hear reports on the status of business activities, as required by laws and ordinances, and UACJ’s Articles of Incorporation and other internal rules.

Director terms have been set at one year in an effort to clarify responsibility.

Of the two outside directors, one is a university professor emeritus with a wealth of academic experience, while the other also has a long and successful academic career and experience serving as a company director. Both of the outside directors serve to assure propriety in decision-making by the Board of Directors.

*Numbers of Directors and Audit & Supervisory Board Members are as of June 29, 2016.

Company Officers

Based on assessments of career backgrounds – factors such as professional experience, positions held, and qualifications – and capabilities, UACJ has put together an optimal group of individuals to serve as officers.

Rationale for Selection of Outside Directors

Name Independent Officer Rational for Selection Activities
Toshio Suzuki Toshio Suzuki is a Professor Emeritus at the University of Tokyo. He was asked to join the Board of Directors based on the judgment that his objective perspective stemming from his wealth of academic experience would enable him to properly perform the duties of an outside member.
Judging also that Professor Suzuki is not in a position that would give rise to a conflict of interest with general shareholders, UACJ has designated him an independent officer.
None of the descriptions provided in Rule 211.4.6 of the Enforcement Rules for Securities Listing Regulations of the Tokyo Stock Exchange apply to Professor Suzuki.
Attended all 14 of the BOD meetings held during the fiscal year, openly expressing his opinion from an objective viewpoint and confidently supporting his comments based on his rich academic experience as a Professor Emeritus.
Ryoko Sugiyama Ryoko Sugiyama is a Professor at Tokoha University. She was asked to join the Board of Directors based on the judgment that her wealth of academic experience, and management experience as a company director, would allow her to properly perform the duties of an outside member.
Judging also that Professor Sugiyama is not in a position that would give rise to a conflict of interest with general shareholders, UACJ has designated her an independent officer.
None of the descriptions provided in Rule 211.4.6 of the Enforcement Rules for Securities Listing Regulations of the Tokyo Stock Exchange apply to Professor Sugiyama.
Attended 10 of the 11 BOD meetings held since joining UACJ in fiscal 2016. Openly expressed her opinions from an objective point of view, clearly showing her poise and experience as a university professor and company director.

The Board of Directors and Executive Officers

At UACJ, the Board of Directors deliberates and renders decisions on important management matters, while the Executive Officers supervise and execute operations. By clearly separating these roles, we have enhanced management transparency and fairness, and created a governance system that clarifies responsibilities for individual business operations. In addition, to help ensure the proper control of operations, management meetings that are separate from the Board of Directors meetings are held on a monthly basis with participation by 10 Directors, 2 full-time Audit & Supervisory Board Members, and 20 Executive Officers (as of June 29, 2016). The purpose of these meetings is to deliberate and consider important management matters, and develop common understanding among those responsible for executing business operations.

The delegation of duties to, and areas of responsibility for, individual Directors are determined in a Board of Directors meeting following the general meeting of shareholders. Management organization rules govern the Executive Officers’ execution of their responsibilities in accordance with laws and ordinances, the Articles of Incorporation, and Board of Directors resolutions.

Regarding concurrent service by directors and executive officers as officers of other companies, one outside director is concurrently serving as an outside director at another listed company. No other directors or executive officers are concurrently holding positions at other companies.

Remuneration of Directors and Audit & Supervisory Board Members

For remuneration of UACJ Directors and Audit & Supervisory Board Members, limits were established in the June 28, 2006 regular general shareholders’ meeting of the former Furukawa-Sky Corp. For Directors, it was determined that remuneration for the Directors as a group shall not exceed 450 million yen annually (not including employee salaries), while for Audit & Supervisory Board Members the upper limit on remuneration for the Audit & Supervisory Board Members as a group was set at \75 million annually. These limits have remained in effect even after the merger with Sumitomo Light Metal Industries, Ltd.

Amounts of remuneration for individual Directors are determined by Board of Directors resolutions within the overall limit approved by the shareholders. In determining amounts of remuneration, a base amount is set depending on status – either full-time or part-time – and position within the company. Adjustments are then made based on performance.

Amounts of remuneration for Audit & Supervisory Board Members are determined via discussion by the Audit & Supervisory Board Members, within the overall limit approved in the general shareholders’ meeting mentioned above.

At the UACJ Group, remuneration of Directors and Audit & Supervisory Board Members is accomplished without the use of stock options.

Audit Function

Audit & Supervisory Board

UACJ is organized as “a company with a board of Statutory Auditors” under Japanese law. Within UACJ, the “board of Statutory Auditors” is referred to as the “Audit & Supervisory Board” and, as an independent element of the Company’s corporate governance, monitors the Directors as they perform their duties.

The Audit & Supervisory Board consists of 6 Audit & Supervisory Board Members, including 4 outside members and two members with knowledge of financial and accounting matters. Audit policies and plans are prepared by the Audit & Supervisory Board annually based on the Code of Kansayaku Auditing Standards (“Kansayaku” is the Japanese term for “corporate auditor” and means Audit & Supervisory Board Member at the UACJ Group.) and the rules governing the Audit & Supervisory Board. Each Audit & Supervisory Board Member, in accordance with the audit policies and plans determined by the Audit & Supervisory Board, is engaged primarily in monitoring the implementation and operation of internal control systems, conditions with regard to risk prevention and responses to management issues, and other matters to determine whether the Directors are properly fulfilling their duties. Audit & Supervisory Board Members also attend Board of Directors and other important meetings, and express their opinions as necessary.

As a rule, the Audit & Supervisory Board comes together in monthly meetings during which audit reports presented by the full-time members serve as a principal means for close communication, and the sharing of information among all Audit & Supervisory Board Members.

Regarding concurrent service by Audit & Supervisory Board members as officers of other companies, two outside directors are concurrently serving in the capacity of an outside auditor or other position with other listed companies. No other Audit & Supervisory Board members are concurrently holding positions at other companies.

Rationale for Selection of Outside Audit & Supervisory Board Members

Name Independent Officer Rational for Selection Activities
Akari Asano Akari Asano has been a senior executive in charge of general affairs and performed other management roles at a manufacturing firm and within that firm’s corporate group. He was asked to join the Audit & Supervisory Board based on the judgment that the knowledge and experience he has acquired throughout his career would enable him to properly perform the duties of an outside member.
Judging also that Mr. Asano is not in a position that would give rise to a conflict of interest with general shareholders, UACJ has designated him an independent officer.
None of the descriptions provided in Rule 211.4.6 of the Enforcement Rules for Securities Listing Regulations of the Tokyo Stock Exchange apply to Mr. Asano.
Attended all 14 BOD meetings and 13 Board of Auditors meetings throughout the fiscal year. Openly commented and expressed his opinions backed by his years of experience accumulated as a company executive.
Tetsuya Sato - Tetsuya Sato has a broad range of experience stemming from his experience as a statutory auditor at Furukawa Electric Co., Ltd. and in other senior management positions. He was asked to join the Audit & Supervisory Board based on the judgment that his wide-ranging experience would enable him to properly perform the duties of an outside member. Attended 13 of 14 BOD meetings 10 of 13 Board of Auditors meetings held during the fiscal year. Openly commented and expressed his opinions based on his wealth of knowledge and broad perspective as a company officer.
Takashi Sone - Takashi Sone acquired a wealth of experience and broad range of knowledge in his career at Sumitomo Corporation. He was asked to join the Audit & Supervisory Board based on the judgment that his experience and knowledge would enable him to properly perform the duties of an outside member. Attended all 14 BOD meetings and all Board of Auditors meetings held in the fiscal year. Freely expressed his opinions when he felt it was needed, doing so confidently and contributing his wealth of knowledge and broad perspective as a company officer.
Atsuki Matsumura - Atsuki Matsumura is President and Representative Director of Siltronic Japan Corporation and has previously participated in the management of Nippon Steel & Sumitomo Metal Corporation (NSSMC) and its group companies, overseeing corporate planning as an executive officer of NSSMC. He was asked to join the Audit & Supervisory Board based on the judgment that his expertise and experience in corporate management would enable him to properly perform the duties of an outside member. Attended 10 of the 11 BOD meetings and all 10 Board of Auditors meetings held since joining UACJ during the fiscal year. Openly expressed his opinions backed long experience as a corporate officer.

Audits by Audit & Supervisory Board Members

To help ensure the full functionality of UACJ’s Audit & Supervisory Board, two employees have been assigned to assist the Audit & Supervisory Board Members with their work. To enhance the quality of audits, audit work is performed in a three-pronged scheme consisting of audits by the Audit & Supervisory Board Members, audits by internal auditors, and audits by independent auditors. For audits by Audit & Supervisory Board Members and audits by internal auditors, on-site audit plans are developed in accordance with respective annual policies and plans. Audit & Supervisory Board Members and internal auditors freely share these plans, the results obtained, and opinions with each other. They also freely share their audit results and opinions with the independent auditors, and follow up on audit findings.

Internal Audit System

At the UACJ Group, internal audits are performed by the 15-member (12 full-time internal auditors and 3 internal auditors with other job responsibilities as well) Internal Auditing Department, which reports directly to the chairman of the board and the president of UACJ Corporation. Internal audits are performed in accordance with annual audit policies and plans prepared based on the Internal Audit Rules. Their purpose is to objectively examine and assess the business activities of individual group companies to determine whether they are being pursued within the law, and with rationality and propriety. Audit results are reported to the chairman of the board and the president of UACJ Corporation, together with recommendations and suggestions for improvements.

* as of March 30, 2016

Internal Controls

The UACJ Group endeavors to strengthen its internal control system to help ensure that its business activities are in line with management objectives, within the law and rational. Furthermore, as regards the status of internal controls stipulated by the Financial Instruments and Exchange Act, the Internal Auditing Department conducts tests and assessments with the aim of ensuring the reliability of financial reporting.

Status of the Internal Control System

As described below, the UACJ Group’s internal control systems (Systems for ensuring that the execution of duties by the Directors and employees of the Company and the Group complies with laws and ordinances, and the Articles of Incorporation, and for ensuring the propriety of the business activities of the corporation and of the corporate group consisting of the corporation and its subsidiaries) have been established in accordance with Japan’s Companies Act and Ordinance for Enforcement of the Companies Act.

a. Systems for ensuring that the execution of duties by the Directors and employees of the Company and the Group complies with laws and ordinances, and the Articles of Incorporation

  • The Company and the Group act in accordance with the management philosophy and company principles, and aim to be virtuous organizations that abide by laws and ordinances, and the Articles of Incorporation.
  • Under the leadership of the CSR Committee, workshops are held, manuals are distributed, and other education steps are taken, and compliance activities, such as checks for legal and regulatory compliance, are pursued.
  • An internal reporting system has been put in place to promote the early detection and correction of compliance violations.
  • The Internal Auditing Department, as the internal audit unit, monitors the performance of duties in individual units, conducts audits to determine whether internal control systems are functioning effectively, and reports findings to the Board of Directors.

b. Systems for the preservation and management of information on the execution of duties by Directors

  • Board of Directors meeting minutes, approval documentation, and other information on the execution of duties by Directors is prepared and retained in accordance with internal rules.
  • Information is kept in a state that permits viewing by Directors and Audit & Supervisory Board Members whenever necessary.

c. Provisions and other systems addressing management of the risk of loss for the Company and the Group

  • The Company and the Group, in accordance with internal rules, properly address environmental, safety and health, quality, information security, export management, and other Company or Group risks. Risks unique to particular units are managed by those units. The CSR Committee advances horizontal risk management.

d. Systems for ensuring efficient execution of duties by Directors of the Company and the Group

  • Within the Company and the Group, duties are efficiently fulfilled based on measures such as the rule-based division of duties among Directors.
  • Mid-term management plans and fiscal year budgets are prepared, and specific targets are established and their achievement is managed by individual units or groups.

e. Systems for ensuring the propriety of operations by the subject corporation and the corporate group consisting of it and its parent company and/or subsidiaries

  • The UACJ Group has constructed and put in place an internal control system.
  • The Internal Auditing Department conducts audits of operations. It then reports results to the Audit & Supervisory Board Members and Representative Director as a measure for promoting compliance throughout the Group. In addition, subsidiaries are obligated by their own internal rules to discuss important management matters with the Company. If necessary, rules concerning the management of subsidiaries will be revised to ensure the propriety of business activities carried out by the Group.

f. Matters concerning employees to be assigned to assist Audit & Supervisory Board Members at their request

  • An employee has been assigned to assist the Audit & Supervisory Board Members. This employee supports the work of the Audit & Supervisory Board Members in accordance with their instructions.

g. Matters concerning the independence of the employee referred to in the previous item and the validity of instructions issued to the employee, from Directors

  • The employee referred to above is an employee designated to be outside the direction and supervision of Directors, and personnel decisions concerning that employee require the prior agreement of the Audit & Supervisory Board.

h. Systems enabling Directors and employees of the Company and the Group to report concerns to Audit & Supervisory Board Members, and systems for other reports to Audit & Supervisory Board Members

  • In connection with the execution of their duties, Directors, Executive Officers, and employees of the Company and the Group report to the Company’s Audit & Supervisory Board Members without delay instances of significant violations of laws and ordinances, and the Articles of Incorporation; improprieties; and developments that could result in significant damage to the Company or Group.
  • Directors, Executive Officers, and employees, based on the Board of Directors meeting rules and other internal rules, report or settle matters in Board of Directors meetings or other meetings at which Audit & Supervisory Board Members are in attendance.
  • Subjecting Directors, Executive Officers, and employees of the Company and the Group, who have reported a matter, such as those described above, to the Company’s Audit & Supervisory Board Members, to disadvantageous treatment on account of their having reported the matter is prohibited.

i. Other systems for ensuring that audits by Audit & Supervisory Board Members can be performed effectively

  • The Board of Directors ensures Audit & Supervisory Board Member attendance at Board of Directors meetings, and management and other important meetings.
  • The Audit & Supervisory Board Members and representative Director periodically hold meetings to exchange views.
  • When the Audit & Supervisory Board Members make a request concerning the effectiveness of audits performed by the Audit & Supervisory Board Members, the Directors, Executive Officers, and heads of relevant units respond in good faith.
  • Expenses covered by Article 388 of the Companies Act are handled in accordance with rules.

Strategic Shareholdings

UACJ’s basic stance on strategic share investments is to maintain shareholdings to the extent that rational purposes, such as maintaining or strengthening business ties, or advancing business collaborations, can be advanced. Questions regarding possible investments in shares not already held, purchases of additional shares, and divestment are addressed with appropriate research considering factors such as necessity for the growth of the UACJ Group and effective use of the Group’s capital, before referral to the Board of Directors, as required by Company standards.

Voting rights for shares held are exercised based on an overall consideration of whether resolution approval would have benefits, for example, in terms of supporting the purpose for the shareholding or promoting the sound management and, ultimately, greater corporate value for the issuing company.

Takeover Defense Strategy

Presently, UACJ has not adopted any takeover defense strategies.