The Company and the Group are committed to enhancing the corporate governance as one of the most important managerial tasks, because we recognize that it is important to enhance the auditing and supervisory functions concerning corporate management, achieve full compliance, and improve the transparency of management so that we can sincerely fulfill our responsibilities towards various stakeholders, including customers, business partners, shareholders, employees, and government entities, and enhance our corporate value as sustainable companies.
Overview of Current Corporate Governance System
The Company has adopted an Audit and Supervisory Committee governance structure from the perspective of further enhancing corporate governance by strengthening the supervisory functions of the Board of Directors, thereby promoting the improvement of the corporate value on a mid-to long-term basis through the enhancement of the functions of outside directors who do not execute operations by themselves.
Among nine directors the Company appointed three directors as outside directors (all of Audit and Supervisory Committee members), who aim to strengthen the management supervision function.
-The Company changed to a Company with an Audit and Supervisory Committee after amendments of the Company’s Articles of Incorporation at the 68th Annual General Meeting of Shareholders held on June 29, 2016.
-In line with the transition to a Company with the Audit and Supervisory Committee, the Company proposes that the number of directors (excluding those who are the Audit and Supervisory Committee members) be changed from three more but not exceeding forty to not exceeding thirty and the number of the directors who are the Audit and Supervisory Committee members be set to not exceeding five, in order to keep the number of directors (excluding those who are the Audit and Supervisory Committee members) and directors who are the Audit and Supervisory Committee members to an appropriate level.
- The Company has six directors (excluding those who are the Audit and Supervisory Committee members) and three directors who are the Audit and Supervisory Committee members. The Company has adapted a corporate officer system and appointed twelve corporate officers.
- The Company has appointed three outside directors who are the Audit and Supervisory Committee members in order to further enhance the system for supervising and monitoring the execution of operation by directors and also enhance the system for reflecting the opinions of external experts.
- The Company has set the terms of directors (excluding those who are the Audit and Supervisory Committee members) at one year and directors who are the Committee Members at two years to establish a flexible management system for responding swiftly to changes in business environments and to clarify the responsibility and evaluation of each director.
- As a general rule, the Company holds regular meetings of the Board of Directors each month, and by holding special meetings of the Board of Directors as needed, the Company ensures the proper execution of operations and makes swift decisions.
In order to realize efficient decision making at meetings of the Board of Directors, the Company has established the “Group Management Committee” consisting of directors and corporate officers as well as directors and corporate officers of the Group companies, as an organization tasked with deliberating in advance the proposals that are to be submitted to the Board of Directors, and has introduced a system for holding regular meetings of the “Group Management Committee” twice per month, in principle. The Company ensures the proper execution of operations by thoroughly deliberating on relevant issues at this “Group Management Committee.”
Moreover, with the shift to a holding company structure, the Company carried out an absorption-type company split whereby Toho Pharmaceutical Co., Ltd. succeeded to the Company’s pharmaceutical wholesaling business and PharmaCluster Co., Ltd. to the Company’s management operations of the dispensing pharmacy business. By providing Toho Pharmaceutical Co., Ltd. and PharmaCluster Co., Ltd. with the functions of the intermediary holding company, respectively, the “Group Management Committee” thoroughly deliberates the proposals and the relevant important matters to be submitted to each Board of Directors of the three companies in total; that is, the Company, Toho Pharmaceutical Co., Ltd., and PharmaCluster Co., Ltd.
- The Company ensures the proper execution of operations by proactively utilizing its corporate lawyers and following advice from more than one lawyer for each specialized area.
- The Audit and Supervisory Committee Members conforming to the auditing policies and the allocation of duties, etc., conduct strict audits by attending the Board of Directors, receiving reports mainly from directors concerning the execution of operations, reading important decision-making documents, and inspecting the state of business and assets.
- The Company ensures that, aside from the Company’s corporate lawyers, the Audit and Supervisory Committee has its own legal advisors and takes legal counsels needed in the position of the Committee Members.
- The Company establishes the “Group Audit Office” independent of business operations in order to secure sound management and proper business operations, and conducts regular audits based on the annual auditing plan and conducts irregular special audits in order to enhance and implement internal audits thoroughly.
- In order to strengthen the independence and objectivity of decision on nomination and remuneration of directors, the Company establishes the voluntary “Nomination and Compensation Committee” as advisory committees to the Board of Directors. Committee is chaired by an outside director and the majority members of committee consist of outside directors.
Basic Views on Internal Control System
According to the provisions of the Companies Act, the Company has set up its “Basic Policy on Internal Control System” as described below, and faithfully carries out this policy in order to ensure the legality and efficiency of the Company’s business operations and undertake risk management practices. Moreover, the Company reviews its Basic Policy in a timely manner, according to changes in the socioeconomic climate and other aspects of the environment surrounding the Company, and further improves and enhances its Basic Policy.