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We regard corporate governance to raise the transparency of management as the basis for complying with the law and social norms, while also establishing the optimum management organization for raising corporate value.
Our corporate governance is based on the establishment of an optimum management system best suited to improving our corporate value.
We therefore carried out the following measures:
By separating supervising functions and business execution functions in our management, we aim to bring about a speedy and appropriate resolution of management issues we may face, now or in the future. We employ the company with Nominating Committee, etc. to from a part of management structure to enhance management transparency.
To urge to realize this purpose, Hitachi Capital adopt following structure.
In order to enable prompt decisions on business execution and to maximize the allocation of the finite resources of the Board of Directors to the oversight of business execution and the other unique functions of the Board of Directors, the Company efficiently delegates authority and delegates authority related to decisions on business execution to the extent permitted under the Companies Act to Executive Officers.
In addition, the Executive Board has been established as an advisory organ for decision making by the President. The Executive Board is held two times per month as a general rule for the purpose of thorough consideration and deliberations from a multi-faceted perspective on matters related to business execution (including matters related to business execution delegated from the Board of Directors) based on internal regulations. The results of deliberations by the Executive Board are reported to the Board of Directors in accordance with the nature of proposals.
The Board of Directors is managed with a focus on the deliberation of important management issues such as management strategy and supervision of business execution as described in a above for the purpose of the effective management of the Board of Directors. When the Board of Directors is held, efforts are made to provide materials related to proposals in advance to Outside Directors as early as possible to enable more substantial deliberations, and if necessary provide explanations of proposals or related information that will contribute to deliberations.
In addition, Standing Directors attend the Executive Board as observers for the purpose of overseeing business execution, and listen to the contents of deliberations based on the assumption that they will not interfere with statements and decision making by Executive Officers in light of the reason for the selection of the current corporate governance structure by the Company.
Members of the three committees consisting of the Nominating Committee, Audit Committee, and Remuneration Committee are generally Outside Directors who fulfill the Company’s prescribed independence criteria. In order to ensure the independence of decisions by committees from business-executing employees, an Independent Outside Director is selected as the Chairman of each committee.
However, in some case Internal Directors familiar with the unique circumstances at the Company may be committee members in order to enhance the effectiveness of operations by committees.
The Audit Committee has been established as a standing Audit Committee for the purpose of developing an audit structure and developing a structure to ensure appropriate internal information gathering and operations, and for the constant monitoring and verification of the status of operations.
The Board of Directors Office has been established as an organization serving as a contact point and secretariat, etc. for Board Directors. The Board of Directors Office provides support so that Board Directors can be fully prepared for the Board of Directors and the proceedings of committees, including the provision of materials related to proposals in advance of the day of the Board of Directors and committees, and if necessary explanations on related information.
Corporate Governance System
The Group has formulate the Risk Management Policy and the Credit Risk Policy, to clarify basic management policies and methods for addressing risks. We recognize the importance and necessity of having a true and accurate grasp of risks affecting our business and addressing these risks appropriately. Based on this understanding, we have set up the Risk Management Department in the headquarters to further enhance our risk management stance. The department is intended to comprehensively address the Group’s risks including Business Continuity Plan (BCP). Especially, in October 2017, to secure information security risk, we have emphasized the information security management system through setting the manager for responsible as CISO (Chief Information Security Officer).
* Please refer the risk and the policies that related risk management structure in following PDF format document.
We have set up the Enterprise Risk Management (ERM) Committee as a core organization responsible for overseeing risk management in business activities in order to establish a common understanding and share information among the Executive Board, divisions, and operations, thereby improving the effectiveness of our risk management.
The Committee meets each month to share information and countermeasures on a companywide basis, conduct effective risk impact assessments, and prioritize issues regarding matters reported by concerned departments, such as the (1) maintaining the risk map, (2) registration of accident information in Japan and abroad and operations of the accident investigation committee, (3) information-security related issues and activities, (4) customer inquiries and complaints, (5) points raised through internal audits, (6) responses to inspections conducted by government authorities and external institutions, and (7) trends of laws and regulations and compliance activities.
The Hitachi Capital Group Head of Risk Management (CRO) is Hitachi Capital’s Chief Risk Management and Compliance Officer and is responsible for detecting, identifying and preventing potential misconduct and noncompliance with applicable rules and regulations throughout Hitachi Capital Group, and integrating the establishment and the operation of the enterprise-wide compliance structure in case that said misconduct or noncompliance appears. The Hitachi Capital Group Head of Risk Management immediately reports important compliance issues and material violations to the Chief Executive Officer and the Board of Directors.
In executing its responsibility, CRO provides the Risk Management Division which is in charge of compliance issues and Risk Management with an appropriate instruction and guidance.
In addition, a risk map was revised in fiscal 2016 as an important tool for more sophisticated risk management. From fiscal 2017, the Group in consolidated and global will promote risk management with risk-based approach utilizing the risk map has been formulated.
Additionally, to prevent risk and discover/prevent risk as early as possible, we execute monitoring system as "3 Lines of Defense" by 3 "lines" as individual, risk management, and supervising department.
The Group has formulated a Compliance Policy, and the Compliance Department handles the information gathering and the planning, proposal-making, and facilitation of compliance systems. Here it is worth pointing out that during fiscal 2017 there was neither a serious violation of legislation by any company or employee in our Group, nor a business-related incident leading to criminal charges.
We also act on a Policy against Antisocial Forces (groups and individuals who pursue economic gain through violence, force, and fraud), thereby seeking to avoid disrupting the social order while gaining public confidence. The policy set outs management systems to reject and completely eliminate any relationship with antisocial forces, and stipulates how to respond to improper demands from antisocial forces.
The Group has also put in place an Information Security Policy and a Personal Information Protection Policy based on which it operates management systems for diligent information management, and it has acquired the Privacy Mark. In November, 2017, the sales department where specialized in Public Sector has been acquired ISMS certification.
In fiscal 2016, the Hitachi Capital Group developed the Hitachi Capital Global Compliance Program (HCGCP) as regulations in response to areas such as preventing corruption, complying with competition laws, excluding antisocial forces, and money laundering to ensure the effective implementation of compliance while respecting social norms that include laws and regulations relevant to the Group. In HCGCP, Hitachi Capital consists Codes of Conduct, Anti-Corruption Regulations, Regulations to Comply with Competition Laws (“Anti-Trust Regulations”), and Regulations for the Prevention of Anti-Social Transactions (“Anti-Social Regulations”) as the core compliance policies of the Group and promote actions against these regulations.
In fiscal 2017, to ensure the effective implementation of compliance, the whole global Group regulate “Detailed Rule for Third Party Due Diligence” “Procedure manual for Third Party Due Diligence” including the suppliers (as agents, partners, etc. those include payees) compliance check, and other regulation that related to employees’ due diligence and employment of current- and ex-public officers, to prevent Anti-social transactions, corruptions, realize disciplined donations and gifts, and comply with competition laws.
The Group has a whistle blowing system that allows Group and Supplier’s directors and employees (not only fulltime employees currently working but all employees including those who have already left the company) to report any illegal activities or improper conduct that has occurred or is occurring in the Group to either an internal contact point or external legal counsel based on “Whistle-Blower Protection Act” in Japan. By putting a system in place for receiving whistleblowing (organizational development) through dedicated contact points inside and outside of the company in this system, and nurturing an awareness that illegal and improper conduct must not be overlooked (attitude building), we aim to quickly discover problems within the company and solve them before they escalate.
Additionally, after the Consumer Affairs Agency made amendments to the Guidelines for Private Business Operators Regarding the Establishment/Operation of Internal Reporting Systems Based on the Whistleblower Protection Act in December 2016, which called for companies to strengthen efforts to protect whistleblowers, we started intensifying internal protection efforts in October 2017, and have revised internal regulations to comply with the requirements of said guidelines.
Compliance survey realize the twice a year and targets to all group companies and department to check the status of misconducts, lawsuits, claims of whistle-blowing system, disciplinary actions, corruption, complying with competition laws, extinction of Anti-social forces and money laundering, complying with environmental regulations and responsible and the person in charge of compliance management, and updating the GIRS（Global Incident Reporting System）report line, etc. Results shares not only ERM（Enterprise Risk Management）Committee but Audit Committee and Executive Board.
In terms of compliance education for employees, the Group, working in line with educational programs created by the division in charge of education, provides well-planned basic legal training, employee grade based training, and specialized educational training. Additionally, to realize all members (officers, full-time and temporary employees) targeted compliance education, every October, which we have designated as Corporate Ethics Month, we share the message of President and CEO/CRO and e-learning that related with Code of Conduct, prevent corruption and anti-social treatment, and complying with competition laws and acquire the letter of commitment of compliance education from all members. From fiscal 2017, to enhance daily compliance mind in business operation, the President and CEO release the compliance message quarterly.
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* Please refer the following policies that related to compliance structure.