Corporate Governance

As a corporate citizen trusted by the international community, we recognize that enhancing corporate governance to develop fair and highly transparent management activities is vital, and, under the following basic policy, are working to build effective corporate governance structures and systems.

Basic Policy on the Corporate Governance Code

Tokyo Seimitsu Co., Ltd. supports all of the principles of the Corporate Governance Code. We report on the status of our compliance with the code in the Corporate Governance Report submitted to the Tokyo Stock Exchange.

Corporate governance structure

Cross-held Shares

The presence of parties such as business partners as stable shareholders can result in less rigorous monitoring of management by shareholders. In addition, cross-held shares constitute an asset not utilized in the corporate balance sheet, and may be inefficient in terms of capital management. Accordingly, Tokyo Seimitsu handles cross-held shares in accordance with the following policy.

  • The Board of Directors comprehensively examines the medium- and long-term economic rationality and qualitative aspects of cross-held shares on the basis of risk and return.
  • In principle, we will reduce cross-held shares which were not recognized by examination to be significant.
  • We will hold shares that are deemed to contribute to medium- and long-term improvement of corporate value.

As a result of this policy, between April 2020 and March 2021 the Company sold 11.5 million cross-held shares.

Basic Policy and Structures for Internal Control

While working to strengthen corporate governance and compliance, we are also strengthening our internal control structures and systems for ensuring soundness and transparency in our management.
In particular,

  • We are constructing an effective internal control system by the Board of Directors and are establishing a structure for compliance with laws, regulations, and the Articles of Incorporation, to conduct overall business execution properly and soundly.
  • The Audit and Supervisory Committee audits the effectiveness and functioning of the internal control system.
  • The Audit Department evaluates and verifies the effectiveness of the operation of internal controls related to financial reporting.

In response to inappropriate accounting actions by the former CEO of a consolidated subsidiary that came to light in February 2021, Tokyo Seimitsu Co., Ltd. formulated recurrence prevention measures for the issue and worked to further strengthen compliance and internal control through means including reviewing structures and operations.

We will continuously and effectively work toward the improvement of compliance and internal control by enhancing our corporate governance and strengthening our internal control structure.

About Internal Audits

  • The Audit Department conducts internal audits of the Tokyo Seimitsu Group's business execution, to verify the validity of management and compliance with laws and regulations, the Articles of Incorporation, internal regulations, and so on.
  • The Audit Department also collaborates with other divisions and teams to audit IT control.

When an internal audit discovers an act of business execution that violates laws, regulations, the Articles of Incorporation, or internal regulations, or is deemed as a risk for other reasons, the Audit Department immediately reports to the CEO, Board of Directors and Audit and Supervisory Committee, after which action is taken by the Board of Directors.

Internal audits are conducted on the basis of an annual plan approved by the Board of Directors. The results are promptly reported to the CEO, as well as made known at the Board of Directors and the Executive Management Meeting. Information on audit findings and recommendations for improvement are shared with relevant divisions in the Company.

In fiscal year 2020, the Audit Department audited five internal departments and Group companies. While minor indications of differences from internal regulations were found in some operations, there were none that could lead to legal violations or serious risks.