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CORPORATE GOVERNANCE
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DENSO is working to strengthen its corporate governance systems. The Company sees this effort as vital not only to the improvement of Group competitiveness but also to the maintenance and improvement of long-term business performance in today’s rapidly changing global markets.
Management System
Corporate Oversight
Compliance
Risk Management
   
    To maintain strong and healthy corporate institutions, DENSO developed a variety of internal governance mechanisms to support sound, efficient and highly transparent management. At their heart, the systems are based on the continuous disclosure of information —both within the company and to shareholders, investors and other stakeholders.
   
    Management System
    In June 2004, DENSO introduced a new management system designed to speed up decision-making and operations. The key changes were a reduction in the size of the Board of Directors from 32 to 13 members, and the introduction of non-board managing officers. Under this new system, the managing officers, including one non-Japanese, are able to focus exclusively on operations in the divisions for which they are responsible. Eight of the 13 directors are assigned to supervise activities in all divisions. These directors play a bridging role between management and day-to-day operations. In addition, the term of office for directors has been reduced to one year to create a management structure capable of adapting flexibly to changes in the business environment and to maintain clearer chains of management responsibility within individual business terms. By streamlining the Board of Directors, DENSO strengthened group-level functions in the area of management strategy and decision-making.
   
    Corporate Oversight
    Two standing corporate auditors and three external corporate auditors oversee the actions of the Board of Directors, and the operations and financial status of DENSO and its domestic and overseas subsidiaries. In addition to these legally mandated functions, DENSO also established internal audit departments in DENSO and its major subsidiaries worldwide. Each department in DENSO and its subsidiaries conduct internal checks of their own governance systems. There are also continual site audits designed to ensure not only legal compliance, but also appropriate management and operational procedures. Auditors hold monthly meetings to set audit policies and discuss audit results. They also work to improve the efficiency and quality of audit activities.
   
    Compliance
    In 1997, DENSO established the Corporate Ethics Committee. Using the Legal Department as its secretariat, this Committee checks all aspects of corporate activity from the perspectives of legal compliance and corporate ethics. The Committee also works to inform employees about corporate ethics through education programs and other activities, as well as through the publication of ethical and behavior guidelines for employees, including the DENSO Code of Business Conduct. In 2003, DENSO established the Business Ethics Helpline for employees who need advice or wish to report compliance-related issues. The helpline is run by external legal advisors. These initiatives are indicative of the importance that DENSO places on compliance in its management activities.
   
    Risk Management
    Risk factors are multiplying and becoming increasingly diverse as business activities expand overseas, information technology makes rapid advances, and the impact of corporate social and environmental performance grows in importance. In May 2003, DENSO established a Risk Management Committee to manage these various risks from a global perspective. Measures to strengthen DENSO’s capacity to cope with risk have included an increase in the number of risk management items from 36 to 59. Other initiatives designed to minimize the business impact of risk factors at Group level include the improvement of preventive systems and emergency response systems.
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