Corporate Governance

CORPORATE GOVERNANCE
Basic approach to corporate governance

The Group believes that improving management efficiency and enhancing management soundness, transparency, and compliance will improve corporate value over the long term and maintain the trust of our stakeholders. To this end, we consider it as an extremely important management issue to establish, implement, and function a fair management system that enhances management soundness and transparency as well as quick decision-making and appropriate business operations, and we are determined to enhance our corporate governance.

Corporate governance overview
Corporate governance overview
Our corporate governance structure
Directors and Boards of Directors

As of this document’s filing date, our Board of Directors consists of 5 directors, including 2 outside directors. For effective and quick decision-making, our Board of Directors holds a regular meeting once a month and special meetings as necessary. In accordance with laws and regulations and the Articles of Incorporation, the Board of Directors functions as a management decision-making body and supervisory body.

Auditor and Audit & Supervisory Board

As of this document’s filing date, our Audit & Supervisory Board consists of 3 auditors, all of whom are outside corporate auditors, and one of whom is a full-time corporate auditor. The auditors attend the Board of Directors Meetings and other important internal meetings and offer their opinions, as appropriate. The auditors conduct audits based on the audit plan and hold a regular meeting once a month and special meetings as necessary. Additionally, they share information necessary for audit by holding regular meetings with internal audit officers and accounting auditors.

Executive Management Committee

PIALA has established a Management Committee attended by full-time directors, executive officers, the head of each division, as well as other persons appointed by the President and Representative Director as necessary and holds meetings about twice a month. The purpose of the Management Committee is to ensure the smooth operation of company business. Specifically, each division reports on the status of business execution and business results to the Management Committee, which allocates investments and resources in line with business domains and market opportunities, enhances the internal control system, and instructs and communicates important matters, as well as unifying recognition of management issues and coordinating and taking measures company-wide.

Internal Audit Office

PIALA has established the Internal Audit Office under the direct control of the President and Representative Director as a department dedicated to internal audits. Internal audit officers, who belong to the Internal Audit Office, conduct audits on the appropriateness of business execution and compliance status, etc. for all departments and all subsidiaries based on the internal audit regulations and report the audit results to the President. The President provides instructions for improvement of audited departments based on the audit results, and the efficacy of internal audits is secured by monitoring their improvement status through the Internal Audit Office.

Accounting Auditor

PIALA has concluded an audit agreement with KPMG AZSA LLC and undergoes accounting audits from an independent standpoint.

Compliance & Risk Committee

PIALA has established the Compliance & Risk Committee for the purpose of discussing and approving issues related to compliance promotion and measures to address these issues as well as sharing necessary information. The Compliance & Risk Committee is chaired by the President and Representative Director and holds a meeting once every 3 months as a rule and special meetings as necessary to promote initiatives and conduct internal training related to compliance, and provides periodic reporting of non-compliance matters.

Basic policy for internal control system
System to ensure that the performance of duties of the directors and employees complies with laws and regulations as well as the Articles of Incorporation
  1. To ensure that the execution of duties by directors and employees of PIALA and its group companies is in compliance with laws, regulations, and the Articles of Incorporation, PIALA has established the PIALA Codes of Conduct, and the directors themselves comply with this, and the President and Representative Director communicates its spirit to the employees repeatedly.
  2. We have established a compliance system focusing on various systems including the Compliance & Risk Committee, an approval system, a legal review system for contract documents, and advice from internal audit and legal counsel to ensure that the execution of duties by directors and employees is in compliance with laws, regulations, and the Articles of Incorporation.
  3. The Board of Directors makes decisions on business execution and supervises the duties of the directors to meet the legality based on laws and regulations and the appropriateness based on management judgment.
  4. The corporate auditors exercise the authority provided by laws and regulations and audit the execution of duties by directors.
  5. In the event of any misconduct occurring within the Group, the Compliance & Risk Committee will investigate the cause, formulate measures to prevent recurrence, and deliberate on disclosure of information, and the compliance officers will promote activities such as the development of measures to prevent recurrence.
  6. A reporting contact has been established as an internal reporting system for legal violations and other compliance matters, and we operate it appropriately based on the Whistleblower Regulations.
  7. Violations of laws and regulations by directors and employees are subjected to punishment based on the Employment Regulations and other provisions.
System for the storage and management of information related to directors’ execution of their duties
  1. We clarify the system of responsibility for information security based on the Information Management Rules for information including the minutes of Board of Directors’ meetings related to the execution of the duties of the directors, the minutes of other important meetings, contracts and approval documents, and establish an information security management system that continuously implements measures to maintain and improve information security. The internal information managers will consider specific measures regarding information security with directors, executive officers, managers, and others and promote these measures across the Group.
  2. Regarding the storage and management of information related to the execution of the duties of the directors, the information will be recorded in documents or electromagnetic media and stored and managed appropriately based on the internal rules such as the Document Management Rules, Basic Rules for Personal Information Management, and Rules for Prevention of Insider Trading.
Regulations and other systems concerning the management of risk of loss
  1. While considering the PIALA Codes of Conduct as a broad concept, we continue to build systems to take measures for early detection of potential risks and for accidents and misconduct promptly and appropriately by establishing the Compliance & Risk Committee, Compliance Regulations, and Whistleblower Regulations.
  2. We ensure the continuation and stable development of our business through risk management practices in accordance with the basic rules set forth in the Risk Management Regulations.
System for ensuring the efficient execution of the duties of the directors
  1. The Board of Directors holds a meeting once a month as a rule and special meetings as necessary and makes flexible decisions.
  2. The directors are to execute their duties efficiently, flexibly, and promptly by exchanging opinions closely and sharing information.
  3. In order to ensure the efficient execution of the duties of the directors, we clarify the duties of the directors, establish the Organization Rules and Policies of Administrative Authority, and clarify roles of the directors and employees, segregation of duties, and chain of command by resolution of the Board of Directors.
System for ensuring to ensure that the execution of the duties of the employees is in compliance with laws, regulations and the Articles of Incorporation
  1. We clarify the responsibilities and authority by defining administrative authority and establish a system of execution in each department.
  2. We prepare various necessary approval systems, internal regulations, and manuals, and disseminate and operate them.
System to ensure appropriateness of operations of the corporate group consisting of PIALA and subsidiaries
  1. To promote comprehensive and sound development of the Group and ensure appropriateness of the operations, we have established the Affiliated Company Management Regulations and Policies of Administrative Authority, and require approval for important matters related to the business operations of our subsidiaries.
  2. The Group manages the business operations of its subsidiaries and ensures appropriateness of the operations based on the Affiliated Company Management Regulations. We also centrally manage a variety of risks faced by the Group based on the PIALA Codes of Conduct and Compliance Regulations and have established the Compliance & Risk Committee to strengthen the risk management system.
  3. We have a system to dispatch our directors to the subsidiaries to have a common understanding of management issues of the Group and to manage the Group to maximize its corporate value.
  4. We provide guidance and support to our subsidiaries for the development of their legal compliance systems and other systems to ensure appropriateness of the operation through the PIALA Codes of Conduct, Compliance Regulations, and Affiliated Company Management Regulations.
  5. To prevent inappropriate dealings and accounting processes between parent-subsidiary companies, the Audit & Supervisory Board, accounting auditors, and Internal Audit Office cooperate with each other to develop an audit system and ensure appropriateness of operations of the corporate group.
Employees in cases where corporate auditors request to dispatch employees to support their duties
  1. If there is a request from the corporate auditors to assign employees to support their duties, we shall assign suitable employees as assistants as soon as possible.
  2. To enhance independence from the directors, performance assessment, personnel change, and reward and punishment decisions of the employees who support the duties of the corporate auditors are subject to the prior consent of the corporate auditors.
  3. The employees who support the duties of the corporate auditors may request other departments to ensure cooperation. They may also participate in important meetings, including attendance on behalf of the corporate auditors. They are also authorized to collect necessary information.
System for the directors and employees to report to the corporate auditors
  1. We request the participation of the corporate auditors in the Board of Directors meetings and other important meetings, and report regularly to the auditors on the status of the company’s business operations, including business performance from the departments in charge.
  2. The Audit & Supervisory Board holds a meeting once a month as a rule and special meetings as necessary, exchanges information and discusses the audit status and receives periodic reports on accounting audits from the accounting auditors and exchanges opinions.
  3. We have established an internal reporting contact to consult with the corporate auditors based on the Whistleblower Regulations.
  4. The corporate auditors may inspect approval documents and financial statements of the subsidiaries and ask the directors, employees, etc. of the subsidiaries for an explanation as necessary.
  5. The directors, employees, etc. of the subsidiaries immediately report to the corporate auditors if they discover a fact that may have a significant impact on the company.
  6. The corporate auditors may ask the Internal Audit Office to explain the status of internal audits and other matters as necessary.
Other systems to ensure that audits by the corporate auditors are conducted effectively
  1. In the Whistleblower Regulations, we take care to ensure that the reporter is not disadvantaged.
  2. When the corporate auditors make a request for advance payment or reimbursement of expenses incurred in the execution of their duties, the costs or obligations shall be processed promptly except when these are found to be unnecessary for the execution of their duties.
  3. The President and Representative Director shall exchange information with the Audit & Supervisory Board regularly to share information on the management status of the Group.
  4. When there is a request to inspect approval documents or other important documents by the corporate auditors, the department in charge shall directly respond to the request and report the details.
  5. We shall coordinate with the internal auditors and the accounting auditor to share information.
System to ensure the reliability and appropriateness of financial reporting

To properly record and report on accounting and improve the reliability of financial reporting, we comply with business accounting standards that are generally accepted as fair and appropriate and continue to maintain and improve the system and effectiveness of internal control over financial reporting.

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