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Corporate Governance(As of June 24 2024)
NEC Networks & System Integration CorporationThe Company believes that the cornerstone of corporate governance is ensuring management soundness and transparency by establishing a management system that enables quick decision-making to respond promptly to changes in the operating environment, and by practicing timely, appropriate disclosure. To that end, the Company has adopted a Board of Corporate Auditors system and has established a corporate governance system in which the Board of Directors and Board of Corporate Auditors play key roles.
The Company's initiatives based on Corporate Governance Code are described in the Corporate Governance Report.
I. Description of Corporate Organs
(1) Board of Directors and Board of Corporate Auditors
The Board of Directors is composed of nine Directors (six male and three female Directors), including three Outside Directors. The Company strives to ensure that the number of Directors on the Board of Directors is appropriate, and has introduced an Executive Officer System to delegate significant authority to Executive Officers for prompt decision-making. The term of Directors is set at one year to clarify the management responsibilities of Directors and strengthen the management structure.
The Board of Corporate Auditors is composed of four Corporate Auditors, including two Outside Corporate Auditors. The Board of Corporate Auditors decides auditing policies and reports on the audits performed by individual auditors. Corporate Auditors participate in meetings of the Board of Directors and other important meetings, review important documents related to final decisions, and listen to reports on business execution by Directors, Executive Officers, and employees. In this way, Corporate Auditors adequately audit the Directors as they perform their duties. The Company has established the Corporate Auditors’ Office and allocated two dedicated personnel to assist Corporate Auditors in performing their duties.
(2) Nomination and Compensation Committee
The Nomination and Compensation Committee has been established to deliberate on and examine the nomination and remuneration of Directors and others from the viewpoint of ensuring transparency, validity, and objectivity.
The Nomination and Compensation Committee consists of five Directors, and whose majority members are independent Outside Directors.
The Committee shall discuss the following matters and report the contents and results of these discussions to the Board of Directors as appropriate. However, personnel matters related to Corporate Auditors shall be subject to the consent of the Board of Corporate Auditors.
- Matters concerning the personnel of the Board of Directors and the Representative Directors
- Matters concerning the compensation and bonuses of Directors and the Representative Directors
- Matters concerning the personnel of the Board of Corporate Auditors
- Matters concerning the succession plan of Directors, etc.
- Important matters concerning other personnel and compensation
(3) Special Committee
The Special Committee has been established to deliberate on and review material transactions or actions that pose a conflict of interest between the controlling shareholder and minority shareholders to ensure independence from the controlling shareholder and to protect the common interests of shareholders.
The Committee shall discuss the following matters and report the contents and results of these discussions to the Board of Directors as appropriate.
- Status of major transactions with NEC
- Conclusion of contracts in regard to M&As (including business transfers and acquisitions, divestitures, and mergers) with NEC and its subsidiaries
- Other important matters that may conflict with the interests of NEC and the Company’s minority shareholders
(4) Executive Committee and Business Execution Committee
The Executive Committee has been established to discuss important matters related to corporate management and business execution. Particularly important matters are thoroughly deliberated on by the Executive Committee before being submitted to the Board of Directors, thereby enabling thorough deliberation and ensuring appropriate decision-making.
The Business Execution Committee has been established to report on the status of business execution, such as monitoring progress with respect to meeting budgets adopted by the Board of Directors, with the aim of sharing management information and promoting execution efficiency.
(5) Corporate Auditing Division
The Company has established the Corporate Auditing Division as an internal audit division, independent of business execution divisions. The Corporate Auditing Division audits whether business operations are conducted legally and appropriately in compliance with relevant laws, regulations, and internal rules.
(6) Accounting Auditors
The Company has entered into an audit contract with KPMG AZSA LLC as its accounting Auditors. KPMG AZSA LLC expresses its views on the financial statements from an independent viewpoint.
II. Development of Internal Control Systems
The Company has established a basic policy for the development of internal control systems, as shown below, under Article 362, Paragraph 4, Item 6 of the Companies Act. The Company maintains the appropriate execution of operations under the basic policy, laws and regulations, and internal regulations.
III. Situation of Outside Directors and Outside Corporate Auditors
Of the Company’s nine Directors, three are Outside Directors. The Company believes that this is a sufficient number for giving advice and participating in decision making from a fair and objective standpoint, thereby strengthening the Company’s corporate governance.
Outside Director Michiko Ashizawa has an abundance of experience, including business experience as a certified public accountant at an audit firm and engaging in revitalization projects of major companies at Industrial Revitalization Corporation of Japan. She also possesses expertise in all aspects of business administration, mainly researching M&A for corporate restructuring and serving as an associate professor at a graduate school.
The Company believes she will play an appropriate role in matters such as giving advice and providing supervision related to managing the Company, particularly from the perspectives of global strategy and growth strategy by drawing on her knowledge and experience.
Ms. Ashizawa attended all 12 meetings of the Board of Directors held in the fiscal year ended March 31, 2024. She has been designated as an independent Director as defined in Rule 436-2, Paragraph 1 of the Securities Listing Regulations of the Tokyo Stock Exchange.
Outside Director Mamoru Yoshida has led various businesses, including overseas business, and served as technology officer and Corporate Auditor at a major electrical appliance manufacturer. In addition to excellent management skills and strategy building ability, he possesses extensive insight and experience particularly in technology management and corporate governance.
The Company believes he will play an appropriate role in matters such as giving advice and providing supervision related to managing the Company, particularly from the perspectives of corporate strategy and governance by drawing on his knowledge and experience.
Mr. Yoshida attended all 12 meetings of the Board of Directors held in the fiscal year ended March 31, 2024. He has been designated as an independent Director as defined in Rule 436-2, Paragraph 1 of the Securities Listing Regulations of the Tokyo Stock Exchange.
Outside Director Mikiko Morimoto, after gaining experience at private companies such as private thinktanks in macroeconomic research and analysis, management of investment fund, and consulting in areas such as corporate and organizational sustainability promotion and ESG response, established a consulting company that provides comprehensive support for sustainability management, at which she serves as CEO.
The Company believes she will play an appropriate role in matters such as giving advice and providing supervision related to managing the Company, particularly from the perspective of sustainability by drawing on her knowledge and experience.
Ms. Morimoto attended 9 out of 10 meetings of the Board of Directors held in the fiscal year ended March 31, 2024 after her appointment on June 23, 2023. She has been designated as an independent Director as defined in Rule 436-2, Paragraph 1 of the Securities Listing Regulations of the Tokyo Stock Exchange.
Of the Company’s four Corporate Auditors, two are outside Corporate Auditors. We believe that this is a sufficient number for auditing the Directors’ execution of their duties from a fair and objective standpoint, thereby strengthening the Company’s corporate governance.
Outside Corporate Auditor Akiko Isohata has specialized knowledge of the Companies Act and corporate governance, and the like, and has a wealth of experience as a lawyer in the field of general corporate legal affairs. The Company believes she will audit the legitimacy of its business operations from a fair and objective standpoint, by making use of her knowledge and experience.
Ms. Isohata attended all 12 meetings of the Board of Directors and all 13 meetings of the Board of Corporate Auditors held in the fiscal year ended March 31. Ms. Isohata has been designated as an independent Auditor as defined in Rule 436-2, Paragraph 1 of the Securities Listing Regulations of the Tokyo Stock Exchange.
Outside Corporate Auditor Koji Inagaki has been engaged in audit work for many years at an audit firm as a certified public accountant, has deep knowledge of finance and accounting, and in addition, has gained a wealth of experience in management, including overseas operations and promotion of innovation by using digital technology, as Deputy CEO of an audit firm. The Company believes he will be capable of auditing the legitimacy of its business operations from a fair and objective standpoint, by making use of his knowledge and experience.
Mr. Inagaki attended all 10 meetings of the Board of Directors and all 10 meetings of the Board of Corporate Auditors held in the fiscal year ended March 31, 2024 after his appointment on June 23, 2023. He has been designated as an independent Auditor as defined in Rule 436-2, Paragraph 1 of the Securities Listing Regulations of the Tokyo Stock Exchange.
There are no special interests between the Company and its Outside Directors or Outside Corporate Auditors.
The Outside Directors and the Outside Corporate Auditors regularly exchange information and consult with the Corporate Auditing Division and staff departments, receiving reports on business execution at meetings of the Board of Directors and on other occasions.
The Outside Corporate Auditors cooperate with the independent Auditors, exchanging information and consulting with them regularly at meetings of the Board of Corporate Auditors and on other occasions.