Corporate Governance Systems
Pasona Group has adopted the auditor system. Within the overall confines of this auditor system, the Company maintains a Corporate Auditors' Office, Board of Directors, Executive Officer System, appointment of Outside Directors and Auditors. Through these means, Pasona Group strives to ensure an adequate system of checks and balances is in place to monitor and supervise management. Furthermore, in order to bolster the monitoring function of the Board of Directors, three of fifteen (male:twelve, female:three) members of Board of Directors are appointed from outside the Group, while three of the Company's four Corporate Auditors are also outside appointments. Accordingly, over thirty-two percent of the Company's Directors and Auditors come from outside the Group.
Execution of Duties by Directors
The Board of Directors decides on significant matters regarding corporate management and provides oversight on business execution. They are responsible for making decisions on the matters provided for by law and by the articles of incorporation, in addition to the important matters of the Company and the Group companies.
The rules of the Board of Directors (which have come into force upon the approval of the Board of Directors) stipulate that M&As, reorganization, disposals & acquisitions of significant assets, and substantial investments & loans are subject to a resolution of the Board of Directors.
Currently, the Company has fifteen directors and four corporate auditors in line with what the Company considers appropriate sizes, i.e., 12 to 15 directors and three to five auditors, to ensure accurate, speedy, and just decision-making by the Board of Directors, which decides on significant matters regarding corporate management and provides oversight on business execution.
Strict compliance is enforced by the directors through the Work of PASONA GROUP, the PASONA GROUP Corporate Action Constitution, and internal rules, including rules for directors, in addition to various laws and the articles of incorporation. The Company appoints more than one outside director and makes sure that their active opinions are heard at the meeting of the Board of Directors and at other forums, as their participation strengthens the oversight function. The division of duties and authorities granted to each director is defined in the organizational rules to ensure the clarification of responsibility and the efficient execution of business.
Execution of Duties by Auditors
The corporate auditors, including outside auditors, confirm the condition of the maintenance and operation of internal controls administered by the Internal Control Systems Committee and other bodies responsible for internal controls and the operational state thereof through attendance at the Board of Directors meetings and attendance by full-time auditors at the Management Meetings and other critical meetings. Through mutual information exchange with the accounting auditor, Internal Control Department, Internal Audit Department, and other bodies involved in internal controls, the corporate auditors monitor all the internal control systems in general and dispense advice to aid more efficient operation.
The Corporate Auditors' Office, which is staffed by dedicated support employees, directly reports to the Board of Corporate Auditors, and it is separated from the organizations belonging to the executive divisions. Personnel matters affecting support employees such as internal transfers and employment conditions are decided by prior mutual consultation with corporate auditors.
Policies and Procedures in the Appointment and the Nomination of Directors and Auditors Candidates
The Company's basic policies call for the selection of candidates for directors and corporate auditors from among persons of outstanding character and profound insight. In particular, the Company specifically looks for insight into corporate management, finance & accounting, law, or world affairs in candidates for outside directors, while insight into finance & accounting, law, world affairs, or risk management is sought in candidates for outside auditors, in an attempt to secure sustainable growth for the Company and to elevate corporate value over the medium and long term.
Candidates for directors and corporate auditors are decided by a resolution of the Board of Directors. Prior to decision-making, the outside directors are briefed on each candidate regarding his or her experience and accomplishments, as well as on the reason for recommendation, in order to help the outside directors make informed opinions, which will be taken into account in the decision-making process.
All three outside directors and the three outside auditors are deemed independent outside directors and outside auditors, respectively, who voice their opinions from an independent perspective during the meeting of the Board of Directors.
Independence Standards and Qualification for Independent Directors
The Company considers that an outside director, an outside auditor or a candidate therefor is independent, if he or she satisfies the following independence criteria set forth by the Company:
* No relative within a second degree of kinship is or has been an executive director of the Company or any of its subsidiaries;
* No business transaction that they have been involved in has never exceeded two percent of the Company's consolidated net sales in a three-business year period (where he/she is currently an executive officer or employee of a firm with which the Pasona Group has a business relationship);
* He or she never received compensation exceeding 10 million yen directly from the Pasona Group in the past three years for services rendered as a legal, accounting, or taxation professional or consultant (except for payments in the form of compensation for services rendered as the Company's outside director or outside auditor or for fees paid to the organization or firm that the outside director or outside auditor is affiliated with); and,
* He/she is not an executive officer of an organization that has received donations from the Pasona Group in excess of 10 million yen annually over the past three business years.
Corporate Governance and Internal Management Structure