Basic Policy of Corporate Governance
For the purpose of realizing the best corporate governance, the Company has constituted this Basic Policy according to the resolution of the Board of Directors, based on our management philosophy and in order to achieve Company’s sustainable growth and to enhance medium- and long-term corporate value and then to facilitate the shareholders to hold the Company’s shares on a medium- and long-term basis with confidence. When the Company revises this Basis Policy, it shall publish the content of the revision in a proper manner and timing.
Chapter 1. General
(Basic Idea of Corporate Governance)
- The Company shall seek the best corporate governance all the time and work continuously to enhance the corporate governance.
- Considering that it is important to increase vitality of the business through securing transparency and fairness of the decision making and utilizing fully and effectively the business resources the Company possesses from the view point of sustainable growth as well as enhancement of medium- and long-term corporate value of the Company, the Company shall work continuously to enhance the corporate governance in accordance with the following basic ideas:
- to respect the right of the shareholders securing their equality;
- to work with the stakeholders of the Company considering interests of the stakeholders including the shareholders;
- to disclose corporate information of the Company properly and to secure its transparency;
- to establish a system for the Independent Outside Directors to shoulder an important role (constitution of members of the Board of Directors, establishment of Nominating Committee and Compensation Committee, etc.) and to effectuate the audit function over the management of the Company; and
- to have dialogue with the shareholders embracing the investment policy to meet with the medium- and long-term interests of the shareholders.
Chapter 2. Securing Rights and Equality of the Shareholders
- The Company shall make efforts to dispatch early the notice of annual shareholders meeting and immediately after the dispatch disclose such notice on the homepage of the company in order to enable the shareholders to secure the time for studying fully the subjects of the meeting and to exercise their voting rights properly.
- The Company shall make efforts to maintain the environment, such as use of electronic voting platforms for all shareholders including absent shareholders, to exercise their voting rights properly.
(Securing Equality of the Shareholders)
- The Company shall treat any shareholder equally according to his/her number of shares, and disclose the information in a proper manner and timing so as not to create information gap among the shareholders.
(Cross-Shareholding and Basic Policy for exercise of such voting rights)
- The Company may hold shares of listed companies being its business connections for the purpose of enhancing its medium- and long-term corporate value through maintaining and strengthening business relationships with its business connections.
- The Company shall decide each cross-shareholding, studying economic rationality and future prospects such as (a) risk of holding the shares including price decline of the shares, (b) return expected from the maintaining and strengthening business relationship and (c) agreement with the Company’s basic idea on its capital policy. In addition, in principle, we will respect the intention if the companies holding the Company’s share as cross-shares (cross-shares holders) wish to sell the shares.
- With regard to exercise of voting rights of the cross-shareholding, the Company shall decide basically so as to contribute to sustainable growth and enhancement of medium- and long-term corporate value of the Company and its business connections, considering in a comprehensive way about conformity of the proposal with the Company’s shareholding policy as well as whether or not the proposal promotes efficient and sound operation of the business connections and eventually the Company can expect enhancement of corporate value therefrom.
Chapter 3. Consideration on Interests of Stakeholders
(Ethical Standard and Conflict of Interests)
- Requiring that the Directors, Corporate Officers, employees, etc. shall behave ethically at all times, the Company shall separately provide the Ethical Code of Conduct at its meeting of Board of Directors and disclose it.
- If the Company intends to start a transaction with its Directors, Officers, main shareholders, etc. (Transactions between Interested Parties) so as not to hurt common interests of the Company and the shareholders, or to start a transaction corresponding to a conflict of interests transaction stipulated in the Companies Act, the Company shall explain the transaction including its content and obtain approval from the Board of Directors. After obtaining approval, the Company shall periodically report on such transaction, including its progress and status.
- A Director shall promptly report to the Board of Directors and obtain approval from it, if a matter involving his/her own conflict of interests (including potential one) has occurred.
(Relationship with the Stakeholders)
- The Board of Directors shall consider the interests of not only its shareholders, but also its employees, customers, suppliers, creditors and local communities and other stakeholders.
- The Company shall provide expressly in its employment regulation and other related internal regulations, to the effect that it shall allow a variety of its stakeholders including employees to communicate their concerns about the Company’s illegal or unethical practices and that it shall not treat them unfavorably because of such communication.
- The Company shall develop and promote activities serving for issues and expectation of the society, aiming to realize a sustainable society and through dialogue and collaboration with various stakeholders.
- The Company shall develop appropriate human resources to invest corporate pension according to the fact that the operation of reserve fund of corporate pension affects our own financial condition in addition to stable asset formation of employees.
- The Company shall endeavor to properly manage conflicts of interest arising between the corporate pension and the company by periodically receiving reports on operational status and stewardship activities from investment managers entrusting operations.
Chapter 4, Securing Proper Disclosure of Information and Transparency
(Securing Proper Disclosure of Information and Transparency)
- For the purpose of securing transparency and fairness of the management, the Company shall announce its management philosophy and strategy, business plan, etc. and disclose the financial information relating to its business performance and management index based on the cost of capital etc. in a proper manner and timing.
- The Board of Directors shall resolve the Company’s policy relating to risk management of the Company and its group companies, internal control system, compliance, etc. and disclose it in a proper manner and timing in accordance with the Companies Act and any other applicable laws and regulations.
Chapter 5. Duties of the Board of Directors, etc.
Section 1 Responsibility of the Board of Directors as Supervisory Institution
(Role of the Board of Directors)
- Entrusted from the shareholders and for the interests of all the shareholders who intend to increase their own profit through maximization of medium- and long-term corporate value, the Board of Directors shall be responsible for the Company’s sustainable growth and maximization of medium- and long-term corporate value through the realization of effective and practical corporate governance.
- In order to achieve its responsibilities described in the preceding clause, the Board of Directors shall secure fairness and transparency of management by exercising supervisory function against all over the management and shall make the best decision for the benefit of the Company through election and dismissal, appraisal and decision of compensation of a chief executive officer and other top management, evaluation of major risks the Company faces and preparation of the countermeasure as well as decisions on important business execution.
(Role of Independent Outside Directors)
- Independent Outside Directors of the Company shall, as one of their main roles, inspect and evaluate the results of the business and the performance of the management of the Company in comparison with the business strategy and plan resolved by the Board of Directors and, from the view point of common interests of all shareholders, shall judge the merits and demerits of entrusting the business of the Company to the current management and express their opinions.
(Chairman of the Board of Directors)
- The Chairman of the Board of Directors shall endeavor to enhance quality of discussion at the meeting of the Board of Directors and then to proceed the meeting effectively and efficiently. In order to fulfill this responsibility, the Chairman of the Board of Directors is required to ensure that enough time is secured for all proposals (in particular for strategic proposals) and that each Director obtains proper information in a proper timing.
Section 2 Validity of the Board of Directors
(Constitution of the Board of Directors and the Board of Corporate Auditors)
- The number of the members of the Board of Directors of the Company shall be within the number stipulated in the Articles of Incorporation and at least two members shall be an Independent Outside Director.
- The number of the member of the Board of Corporate Auditors of the Company shall be within the number stipulated in the Articles of Incorporation and a majority of the members shall be Outside Corporate Auditors.
- The Company shall set up Nomination Committee and Compensation Committee as advisory committees to the Board of Directors. The Nomination Committee and Compensation Committee shall have three or more members respectively and secure fairness and transparency.
(Qualification of Directors and Nomination Procedure)
- A Director of the Company shall be required to be a person with excellent character, insight and capability as well as extensive experience and high ethical standard.
- In order to secure effectiveness of the Board of Directors, the Company shall decide candidates of the Directors, considering sex, age, nationality, skills and other constitution of the Board of Directors, so as to make their constitution a balanced one with diversified fields of knowledge, capability and professionalism.
- The term of every Director of the Company shall be one year; provided, however, that the Director may be reelected.
- Candidates of new Directors (including Substitute Directors) shall be determined at the Board of Directors according to the provisions of this Article after fair, transparent and strict review and recommendation by the Nomination Committee.
(Qualification of Corporate Auditors and Nomination Procedure)
- A Corporate Auditor of the Company shall be required to be a person with excellent character and high ethical standards as well as appropriate experience and capability and necessary knowledge relating to finance, accounting and legal matters. In particular, one or more persons with sufficient knowledge on finance and accounting shall be appointed.
- As an independent institution entrusted from the shareholders, a Corporate Auditor shall audit performance of duties of the Directors for the purpose of contributing to sound and fair management of the enterprise and responding to social trust.
- Candidates of new Corporate Auditors (including Substitute Corporate Auditors) shall be determined by the Board of Directors according to the provisions of this Article after a fair, transparent and strict review and recommendation by the Nomination Committee as well as consent from the Board of Corporate Auditors.
(Independence Standards and Concurrent Limitation of Outside Directors and Outside Corporate Auditors)
- The Board of Directors shall establish Independent Standards as described in the attached sheet and disclose them based on the requirement of Outside Directors stipulated in Companies Act and Independence Standards prepared by Financial Instruments Exchange.
- Outside Directors and Outside Corporate Auditors of the Company shall not concurrently hold more than three (3) offices of Directors or Corporate Auditors other than the offices of Directors or Corporate Auditors of the Company. The status of the concurrent offices of Directors and Corporate Auditors shall be described on the notice for the calling of the general meeting of shareholders.
- The Nomination Committee shall study the content of a proposal of election and removal of Directors and Executive Officers before determination of the proposal, and, after hearing the opinions of the Outside Directors, submit its recommendation to the Board of Directors. The Nomination Committee shall also submit recommendation on the content of Independence Standards to the Board of Directors.
- The Compensation Committee shall study the content of the policy relating to compensation and others of Directors (including selection of indices of business results to be reflected on Performance-Linked Compensation and grant criteria of Stock-Based Compensation, etc.), individual specific compensation and others of the Directors, and, after hearing opinions of the Outside Directors, submit its recommendation to the Board of Directors.
(Indices of Performance Evaluation)
- After proper consultation with Nomination Committee and Compensation Committee, the Board of Directors shall from time to time set such management indices and target figures for a medium-term business plan that is used for performance evaluation of each Director by the Board of Directors, the Nomination Committee or Compensation Committee.
(Duties of Directors)
- The Board of Directors shall resolve important business execution and also supervise execution of the business by Directors.
- Except for the items enumerated in the Regulation of the Board of Directors of the Company and laws and ordinances as matters to be discussed in the meeting of the Board of Directors, the Company shall delegate decisions on business execution of the Company to its representative director(s) and other management.
- A Director shall demonstrate his/her expected ability, collect enough information to perform his/her duty, actively express his/her opinion, spend enough time for the Company for discussion, and perform his/her duty.
- A Director of the Company shall, upon his/her assumption of the office, understand related laws and regulations, the Articles of Incorporation of the Company, the Regulation of the Board of Directors and other internal regulations of the Company, and also is required to understand his/her duty fully.
- Materials related to the agenda and proposals at the meeting of the Board of Directors of the Company shall be distributed to each Director including Outside Director sufficiently prior to the date of the meeting (provided, however, that this shall not be applied where top secret proposals are made) so that in-depth discussion is made at each meeting of the Board of Directors.
(Training by Directors and Corporate Auditors)
- The Company shall provide each Director and Corporate Auditor with opportunity to learn about the business, finance, organization, etc. of the Company upon assumption of his/her office and continuously thereafter, so that each Director and Corporate Auditor fulfill his/her role and duty required respectively for him/her.
- Directors and Corporate Auditors of the Company shall proactively collect the information related to financial status, compliance of laws and regulation, corporate governance and other items and shall train themselves all the time.
(Access to Internal Information by Independent Outside Directors and Corporate Auditors)
- An Independent Outside Director and Corporate Auditor may seek explanation and report from inside Directors, Executive Officers and employees when necessary or he/she thinks it is appropriate, or may seek submission of the internal materials.
- The Company shall establish a staff office of the Board of Corporate Auditors with proper personnel and budget as needed in order to facilitate proper performance of the duty by the Board of Corporate Auditors and each Corporate Auditor.
(Exchange and Sharing of Information by Independent Outside Director and Corporate Auditor)
- Independent Outside Directors and Outside Corporate Auditors shall discuss freely, exchange and share information relating to the business, corporate governance and others by way of meetings and other proper means.
- Independent Outside Directors and Outside Corporate Auditors shall elect the head from among them. The head shall lead the meetings and others and consult with the management, the Board of Corporate Auditors, Accounting Auditors and Internal Audit Department as needed.
- Independent Outside Directors and Outside Corporate Auditors may, independently and at the expense of the Company, use advisers of legal, accounting, finance and others who are independent from the Company.
- The Company shall, based on self-evaluation of each Director, analyze, evaluate and disclose effectiveness all over the Board of Directors with regard to items considered to be important in order for the Board of Directors to effectively fulfill its roles and duties, such as size, constitution, running method and deliberation status.
Section 3 Compensation Plan
(Compensation of Directors and Others)
- Compensation and others of Executive Directors shall be linked with medium- and long-term profit of the shareholders and shall enable to further motivate the Directors aiming maximization of corporate value of the Company and shall be proper, fair and balanced ones.
- The Company shall disclose, in a proper manner and timing, a Policy relating to Compensation and others (including a policy relating to fixation of rate of stock-based compensation and other performance linked compensation) that has been resolved at the Board of Directors based on the recommendation made by Compensation Committee.
- Compensation and others of Independent Outside Directors shall reflect time spent by each Independent Outside Director to engage in the business of the Company and his/her responsibility and shall include an element of stock-based compensation and other performance linked compensation.
- As for compensation and others of Directors, the Board of Directors shall resolve content of the proposal submitted to general meeting of the shareholders as well as an individual amount of compensation and others.
- When Compensation Committee recommends an individual amount of compensation and others of Directors, it shall consider a type of business, refer to appropriate comparable level of compensation and others of other companies, and shall judge the appropriateness of the amount of compensation and others. In this case, the Compensation Committee shall consider level, etc. of compensation and others of other officers of the Company as well as of officers of other companies within the company group the Company belongs.
Chapter 6 Dialogue with Shareholders
(Dialogue with Shareholders)
- In order to promote sound dialogue with the shareholders, the Company shall endeavor to prepare the system and to engage in it in accordance with the following basic policy:
- The Company shall appoint a Director who presides over all activities for dialogue with the shareholders and also establish a department (department in charge of IR) specialized in their implementation.
- In order to promote dialogue with the shareholders such as announcement meetings of financial results and explanatory meetings for investors, the Company shall have the department in charge of IR establish system to coordinate company-wide with relevant departments, and shall provide the shareholders with correct information.
- Based on shareholding status, opinions of the shareholders, etc., the Company shall endeavor to realize close communication with the shareholders through holding announcement meetings of financial results, IR events, seminars, guided visits of showrooms and factories of the Company, etc.
- The Company shall have the department in charge of IR organize and analyze opinions and concerns obtained through dialogue with the shareholders, and shall report to the Board of Directors depending on their importance and nature.
- The Company shall ensure that substantial information gap among the shareholders will not be created. The Company shall disclose important information that should be disclosed, in a proper timing and manner, and shall endeavor to thoroughly control the information so as not to provide the information to only a part of the shareholders.
Chapter 7 Authority of Revision and Abolishment
(Authority of Revision and Abolishment)
- The Board of Directors shall resolve revision and abolishment of this Basic Policy; provided, however, that the Director or officer in charge of Corporate Planning Department shall have authority to make minor modification of this Basic Policy.
Enacted on December, 2015
Revised on June 29, 2017
Revised on December 7, 2018
Representative Director OGAWA Hirotaka
SHIP HEALTHCARE HOLDINGS , INC.
Independence Standards of Directors and Corporate Auditors
≪Independence Standards of Directors and Corporate Auditors≫
The Company shall regard an Outside Director and Outside Corporate Auditor (herein collectively referred to “Outside Officer”) or a candidate of Outside Officer as independent one when reasonably possible investigation brings a judgment that neither of the items below is applicable:
- Executive Officer*1 of the Company and its affiliated companies (hereinafter collectively referred to “the Company Group”);
- a person*2 who regards the Company Group as its main business connections, or its Executive Officer;
- main business connections*3 of the Company Group, or their Executive Officers;
- major shareholders (a person who directly or indirectly owns not less than 10% of total voting rights) of the Company, or their Executive Officers;
- a person of whom the Company Group directly or indirectly owns not less than 10% of total voting rights, and its Executive Officer;
- a person who belongs to an Audit Firm being an Accounting Auditor of the Company Group;
- a lawyer, certified public accountant, tax accountant or other (if the receiver of such economic benefit is an organization such as legal entity or union, a person who belongs to the organization) who receives a considerable amount*4 of money or economic benefit other than executive compensation from the Company Group;
- a natural or legal person or organization such as union who receives a considerable amount*4 of donation or subsidy from the Company Group, and director or Executive officer of such organization,
- if Executive Director or Full-time Corporate Auditor concurrently holds office of Outside Director or Outside Corporate Auditor of other corporation, Executive Director, Operating Officer, Executive Officer, General Manager or other employee of such other corporation,
- a person to whom item a above is applicable in the past ten (10) years
- a person to whom item b through item i above is applicable in the past three (3) years, or
- If a person to whom a through item i above is applicable is an important person*5, its spouse or relative within the second degree of kinship.
- “Executive Officer” shall mean a Director, Operating Officer, Executive Officer, Corporate member who executes a business, trustee and other similar position of person and employee as well any person who has been in the Company Group in the past.
- “a person who regards the Company Group as its main business connections” shall refer to a person who receives payment amounting to not less than two (2) percent of yearly consolidated sales of such person in the immediate prior business year.
- “main business connections of the Company Group” shall refer to persons who make payment to the Company amounting to not less than two (2) percent of yearly consolidated sales of the Company in the immediate prior business year, or persons who lend money to the Company amounting to not less than two (2) percent of consolidated gross assets in the immediate prior year.
- “Considerable Amount” shall refer to, in terms of average amount of the past three (3) business years, 10 million yen per year for an individual natural person and the amount exceeding two (2) percent of consolidated sales or gross revenue of the organization for an organization such as legal entity and union.
- An “important person” shall refer to a Director (except Outside Director), Corporate Auditor (except Outside Corporate Auditor), Executive Officer and senior level employees with qualification of senior manager and higher.
(For reference: Ground for Disclosure)
[Principle 4 – 9. Independence Standards and Qualification of Independent Outside Director]
Based on the Independence Standards prepared by Financial Instruments Exchange, the Board of Directors should prepare and disclose Independence Standards whose main purpose is to substantially secure the independence of a person who becomes Independent Outside Director. The Board of Directors also should endeavor to elect a person who is expected to contribute to candid, active and constructive discussion at the Board of Directors as a candidate of Independent Outside Director.