Basic Policies and Systems
The Shima Seiki Group considers strengthening corporate governance important from the standpoint of efficient, sound, transparent and stakeholder-oriented management. Accordingly, we are striving to enhance our governance systems.
As a company with corporate auditors, we have formulated a framework for appropriate and effective corporate governance through the full functioning of a Board of Directors system and a Board of Corporate Auditors system. We also ensure that corporate auditors, the Internal Auditing Division and the accounting auditor are able to cooperate on audits, while at the same time maintaining their independence.
Governance Structure
Directors, Board of Directors
The Board of Directors, comprising 10 directors, meets at least once each month to resolve important management issues and supervise the execution of business. During the year ended March 31, 2011, the Board of Directors met 19 times.
Corporate Auditors, Board of Corporate Auditors
The Board of Corporate Auditors comprises four corporate auditors, including two outside auditors, and they monitor the execution of duties by directors and audit the appropriateness of management. The advice that outside auditors provide from their specialist backgrounds—one auditor is an attorney and another is a certified tax accountant—acts as a check on directors' activities. During the year, the Board of Corporate Auditors met nine times.
Internal Auditing Division
The Internal Auditing Division comprises three members, who conduct internal audits throughout the Company's business operations as well as internal control audits that cover the status of compliance and risk management and financial reporting.
Accounting Audits
The Company has appointed Ohtemae Audit Corporation as its accounting auditor. Regular accounting audits and internal control audits of the Company by the auditing firm enhance the effectiveness of the audit system.
Corporate Governance Organization
Internal Control System
Shima Seiki has constructed an internal control system, as stipulated by Japan's Companies Act. In addition to assuring thorough legal compliance, we recognize this system as essential to realize our corporate philosophy and targets by reviewing our operations and reinforcing our corporate structure.
We established a Committee for the Promotion of the Internal Control System and formulated and strive on an ongoing basis to enhance Basic Policies Related to Improvement of the Internal Control System.
In order to ensure the effective functioning of internal control, we have established a Compliance Committee, a Risk Management Committee and an Information Security Committee. Through the activities of these bodies, we endeavor to reinforce our internal control.
With regard to internal control over financial reporting, we have constructed a system to rationally ensure the reliability of financial reporting from the standpoint of protecting investors, and promote fair and impartial disclosure. The Company is also subject to internal control audits by the accounting auditor.
Compliance
The Shima Seiki Group formulated the Shima Seiki Group Code of Conduct in October 2006. The General Rules pledge the Company's resolution to comply with laws and regulations and corporate ethical standards, and we strive to comply with related statutes and respect social norms.
We have formulated a Compliance Program centered on the Compliance Committee, conducted regular checks on compliance status, and entrenched compliance systematically through induction courses, distribution of case studies and other initiatives. The Company also constructed a framework for audits to be conducted by the Internal Auditing Division.
In addition to these measures, Shima Seiki has introduced internal and external Corporate Ethics Helplines to communicate information about employees found to have violated laws or to have been involved in other serious misconduct, or to report cases of human rights violations, sexual harassment and other improprieties.
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