Basic Policies on Corporate Governance
The Company recognizes the establishment of corporate governance as a priority initiative for achieving sustainable long-term increases in corporate performance in a fast-changing global market. The Company has adopted a corporate auditor system under which it has established the General Meeting of Shareholders, Board of Directors, Audit & Supervisory Board, and Accounting Auditors as statutory bodies. In addition to these legal functions, the Company has established various governance-related frameworks. At the same time, the Company provides information regarding its business conditions to its shareholders and other investors on an ongoing basis, thereby implementing sound, efficient, and transparent management. Also, the Company has adopted its Basic Policies on Corporate Governance, which can be viewed below.
Corporate Governance System and Principal Organizations
DENSO CORPORATION has adopted a corporate auditor system under which it has established the General Meeting of Shareholders, Board of Directors, Audit & Supervisory Board, and Accounting Auditors as statutory bodies. Through a corporate officer system that separates and clarifies the roles between members of the Board, who are responsible for management (decision-making and supervision), and senior executive officers, who are responsible for the execution of business operations, DENSO CORPORATION is streamlining the number of members of the Board and is realizing swift decision-making and business operations.
Under this system, depending on the circumstances, members of the Board serve concurrently as senior executive officers to ensure that the Board maintains an overall balance of knowledge, experience, and ability. DENSO CORPORATION sets the term of office for members of the Board at one year, with the aim of building a flexible management structure that responds to changes in the management environment and further clarifying management responsibility during the business year.
Corporate Governance System
Board of Directors
The Board of Directors resolves matters stipulated by laws and regulations, as well as matters of importance to the Company’s decision-making. Where possible, the Board delegates authority to those in charge of business execution. This approach simultaneously accelerates execution and enables the Board to spend more time deliberating on management policies and strategies.
The Board of Directors meets once a month, in principle, and is composed of 12 members: eight directors (including three outside directors), two inside Audit & Supervisory Board members, and two outside Audit & Supervisory Board members. With respect to the independence of outside directors and outside Audit & Supervisory Board members, the Company has selected a total of five independent officers (three outside directors and two outside Audit & Supervisory Board members) based on the assumption that they fulfill the independence criteria stipulated by the Financial Instruments and Exchange Act.
Resolutions must be approved by a majority of the members present at a Board of Directors’ meeting, and the meeting itself must be attended by a majority of directors. Also, we provide explanations of important agenda items to the outside directors and outside Audit & Supervisory Board members before meetings are held. This is done to ensure that there are no discrepancies between the inside and outside officers in terms of the volume of information with which they are provided, and to enable the outside officers to perform to the very best of their abilities. In these ways, we strive to ensure the efficient operation of the Board of Directors when making resolutions.
Results for meetings convened in fiscal 2021
|Number of times convened||13|
|Attendance rate||Directors: 99%
Audit & Supervisory Board members: 100%
Appointment of Member of the Board
Directors and Audit & Supervisory Board members are nominated with an emphasis on diversity, including gender and internationality, and from the viewpoint of striking a balance between experience, skills, and expertise so as to promote accurate and swift decision-making.
Experience and Specialties of Directors and Audit & Supervisory Board Members
We have defined 11 experiences and specialties necessary to realize the long-term vision and sustain stable corporate management.The items that company expect each member to demonstrate are as shown in the table, below. *It does not represent all the experience and specialties of each person.
Procedures of Appointment
The president and relevant directors listen to opinions based on various perspectives and select suitable candidates to serve as a member of the Board, comprehensively taking into account their background, personality, insight, and other factors. The Executive Nomination and Remuneration Council, which is chaired by an independent outside director and also has a majority of independent outside directors serving as its members, then holds debate on these candidates and lists the candidates for selection for the current fiscal year.
Directors are selected based on an informal resolution by the Board of Directors and deliberation at the General Meeting of Shareholders.
Audit & Supervisory Board members are selected based on an informal resolution by the Board of Directors and deliberation at the General Meeting of Shareholders, with the consent of the Audit & Supervisory Board.
Management Strategy Meeting and Management Deliberation Meeting
The Management Strategy Meeting holds strategic discussions with a business, functional, and regional focus, particularly from a medium- to long-term perspective. The Management Deliberation Meeting holds discussions on agenda items for meetings of the Board of Directors and other important matters pertaining to management overall (Companywide business plans, investment projects, important transactions, collaborative projects, and other important management-related matters). These bodies also share information that is important for business management in order to facilitate swift operational execution.
Meetings of both bodies are attended by the president, the heads of each business group and functional department, general managers, and the inside Audit & Supervisory Board members. In this way, the meetings provide a structure for engaging in multifaceted discussions.
Both bodies, in principle, meet once a week. In fiscal 2021, the Management Strategy Meeting met a total of 34 times, and the Management Deliberation Meeting met a total of 32times.
Management Oversight Function
Two inside Audit & Supervisory Board members and two outside Audit & Supervisory Board members with dedicated staff are responsible for monitoring the execution of duties by directors as well as the business operations and financial conditions of the Group.
In accordance with in-house regulations, the Internal Audit Department conducts internal audits on the legality, validity, and efficiency of the Company’s operations. Based on the issues pointed out in these audits, each department of the Company is working to establish and subsequently enhance operational control and management systems. Audit & Supervisory Board members attend important meetings including meetings of the Board of Directors and audit directors’ execution of their business duties through the exchange of information with the Internal Audit Department and Internal Control-Departments, as well as with the Accounting Auditors, thereby fulfilling their management oversight function.
Establishing and Strengthening Internal Controls
With the aim of ensuring fair and efficient business operations, we formulated the DENSO Basic Policies for Internal Control. We have stipulated basic policies for control as well as various rules and systems in areas that form the basis of our management, such as the code of conduct, management systems, risk management, and compliance. We make revisions and changes when necessary after undertaking regularly scheduled annual verifications of the status of implementation.
To bolster the Board of Directors’ effectiveness, each year we interview participants, look back on results, and consider plans for improvement. We also survey each committee and deliberating body , including the Management Deliberation Meeting, asking participants to reflect back on the past year. These surveys provide feedback to the secretariat, which we incorporate into our improvements.
Through ongoing improvements, DENSO will continue working to enhance its corporate governance.
For more information, please refer to the “Corporate Governance” section of Integrated Report 2021.