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Basic Approach to Corporate Governance

Basic Approach

The Lion Group’s top priorities for corporate governance are to increase management transparency, strengthen Supervisory functions, accelerate decision making and ensure compliance. By strengthening and enhancing its corporate governance system, Lion aims to increase its corporate value.

Policy

For information about Lion’s approach to corporate governance, governance initiatives and other related topics, please refer to the Basic Corporate Governance Policy.

Initiatives to Enhance Management Auditing and Supervision

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Corporate Governance System

Organizational Structure

Lion is a company with an Audit & Supervisory Board as defined in the Companies Act, with a system of corporate governance in which the Board of Directors provides adequate oversight of management while independently operating Audit & Supervisory Board members provide appropriate auditing. To reinforce the Board of Directors’ management oversight function and speed decision making, Lion has adopted an executive officer system. In addition, to increase management transparency and further enhance corporate governance, Lion has established a Nomination Advisory Committee and Compensation Advisory Committee comprising mainly external directors and external Audit & Supervisory Board members. In addition, to reflect the opinions and advice of third parties with regard to management policies and strategies, we have set up an Advisory Committee consisting of external experts.

Corporate Governance System

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Directors, Board of Directors and Executive Committee

The Board of Directors is composed of 11 directors. The Board of Directors regularly meets once a month and holds extraordinary meetings as necessary. In addition to matters stipulated by laws and regulations or the Articles of Incorporation, the Board of Directors determines important matters related to the business execution of the Company and supervises the business execution of directors and executive officers. Resolutions of the Board of Directors may be made at the regular Board of Directors meetings, as well as in writing in accordance with laws and regulations. For important corporate strategies such as the basic policies of medium- to long-term management plans, a system is established that enables the Board of Directors to make appropriate decisions upon deliberation by the Senior Executive Committee.
Additionally, the Executive Committee has a system in place to discuss and examine, from various angles, measures related to job execution that directly impact businesses.

Board of Directors

Audit & Supervisory Board Members and Audit & Supervisory Board

There are five Audit & Supervisory Board members, three of whom are external Audit & Supervisory Board members (independent Audit & Supervisory Board members) and two of whom are standing Audit & Supervisory Board members from within the Company. Two of the external Audit & Supervisory Board members and one of the standing Audit & Supervisory Board members possesses knowledge regarding finance and accounting. In addition, one dedicated staff person is designated to assist the Audit & Supervisory Board members.
The Audit & Supervisory Board comprises five Audit & Supervisory Board members. It holds regular meetings once every two months and extraordinary meetings and liaison meetings, as necessary. In accordance with the Audit & Supervisory Board’s standards, audit policy, audit plans and other stipulations of the Audit & Supervisory Board, each Audit & Supervisory Board member audits the reasonableness of Board of Director resolutions, as well as the lawfulness, appropriateness and efficiency of directors’ execution of duties. Specifically, Audit & Supervisory Board members attend meetings of the Board of Directors and other important meetings, conduct interviews with directors regarding the status of the execution of their duties (regular meetings three times a year with representative directors to exchange information, opinions and views, and including the status of the execution of directors’ duties pertaining to the development and operation of internal control of financial reporting), perform site visits to Lion’s headquarters and major offices and plants, and conduct audits of subsidiaries. Further, the Audit & Supervisory Board, the internal auditing division (the Auditing Office) and the accounting auditors regularly hold audit liaison meetings, as well as comprehensive themed audits of response to important management issues, with the aim of improving audit effectiveness.

Audit & Supervisory Boards

Advisory Committee (Since 2003)

The Advisory Committee comprises outside experts other than the external directors and external Audit & Supervisory Board members who possess extensive knowledge and insight. The committee considers the appropriateness and other aspects of Lion’s management policies and measures and serves to reflect objective opinions from a wide range of perspectives in management. In principle, the committee meets twice a year. The chairman of the Board of Directors reports a summary of the committee’s advice to the Board of Directors.

Advisory Committee

Compensation Advisory Committee (Since 2006)

Lion has established a Compensation Advisory Committee comprising external directors and external Audit & Supervisory Board members. Because of their independence, they enhance objectivity and transparency in matters related to director compensation. The Board of Directors consults the Compensation Advisory Committee regarding such matters as the compensation system, compensation levels and methods for calculating director and Audit & Supervisory Board member bonuses. The committee considers the matters in question and provides a response to the Board of Directors (or, for matters regarding Audit & Supervisory Board members, to the Audit & Supervisory Board). (Chairperson: External Director Kazunari Uchida)

Compensation Advisory Committee

Nomination Advisory Committee (Since 2016)

Lion has established a Nomination Advisory Committee comprising external directors and a representative director designated in advance by the chairman of the Board of Directors. The committee enhances objectivity and transparency in the process for nominating Company directors, Audit & Supervisory Board members and executive officers. The Board of Directors consults the Nomination Advisory Committee regarding the necessary qualities of directors and other officers, reasons for their selection or dismissal, and related processes, and the committee considers the matters in question and provides a response to the Board of Directors (or, for matters regarding Audit & Supervisory Board members, to the Audit & Supervisory Board). The committee also exchanges opinions on the development of future Group presidents. (Chairperson: External Director Takashi Shiraishi).

Nomination Advisory Committee

Accounting Audits

Lion has formed an audit agreement with Ernst & Young ShinNihon LLC, based on which the latter provides accounting audits as well as audits of Lion’s internal control reports based on the Companies Act and Financial Instruments and Exchange Act.

Internal Audits

The Auditing Office (currently consisting of 14 employees), which reports directly to the President, audits the status of job execution at each department and affiliated company based on the annual internal audit plan in addition to conducting audits related to internal control in terms of such factors as legality, fairness and efficiency as well as the implementation of compliance. In coordination with the audit by the Corporate Auditors, the results of the Internal Audit are reported to the President, the responsible executives, the Board of Directors, the Executive Committee and the Audit & Supervisory Board. In addition, the Company monitors and evaluates the status of internal control over financial reporting based on the Financial Instruments and Exchange Act and reports its findings to the President and the Audit & Supervisory Board.

Corporate Governance Report

For details about Lion’s corporate governance, please refer to the Corporate Governance Report submitted to the Tokyo Stock Exchange.

Corporate Governance Report (610KB)

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