Corporate Governance Guidelines
Subaru Corporation (hereinafter referred to as the “Company”) has instituted and published the Corporate Governance Guidelines with the objective of clearly defining its basic policy on corporate governance, governance framework, and operating policy.
- Corporate Governance GuidelinesPDF/104kB (April 1, 2020)
Evaluation Results of the Effectiveness of the Board of Directors
In accordance with the Corporate Governance Guidelines, the Company's Board of Directors analyzes and evaluates the effectiveness of the Board, then considers and implements measures to improve any issues identified.
- Board of Directors Effectiveness in FYE2021: Evaluation ResultsPDF/1.3MB (April 16, 2021)
Basic Policy on Corporate Governance
- In accordance with the Corporate Statement, the Company has articulated the vision “Delivering happiness to all” and is working to enhance corporate governance to gain the satisfaction and trust of all its stakeholders by achieving sustainable growth and improving its corporate value in the medium to long term as a top management priority.
- The Company clearly separates management decision-making and oversight from business execution and aims to realize efficient management by expediting decision-making.
- The Company ensures proper decision-making and oversight of corporate management and the execution of business operations as well as enhancing its risk management system and compliance system through the monitoring of its management and operations and advice provided by outside officers.
- The Company provides proper and timely disclosure of information in order to improve transparency of management.
- Delivering happiness to all.
- 〈Value statement〉
- “Enjoyment and Peace of Mind”
- 〈Corporate statement〉
- We aim to be a compelling company with a strong market presence built upon our customer-first principle.
The Company has chosen a company with a board of corporate auditors as its corporate governance structure. The Board of Directors decides and supervises important matters of business execution, and the Board of Corporate Auditors audits the execution of duties by directors.
With regard to the business operation system, the Company has established the Executive Management Board Meeting as a preliminary consultation body to conduct deliberations on company-wide management strategies and the execution of important business before their presentation at the Board of Directors' Meeting. In addition, the Company has adopted a vice president system and established the Executive Board Meeting as the decision-making body of each business department, and converted the Aerospace division into an internal company in order to clarify responsibilities and accelerate the execution of business operations.
The Board of Directors is composed of nine directors, and the Company has sought to strengthen governance by appointing three outside directors among them. The outside directors provide sound advice about decisions on important matters of business execution and monitor all aspects of management on the basis of a wealth of knowledge and experience concerning corporate management.
The Board of Corporate Auditors is composed of four corporate auditors, two of whom are outside corporate auditors. The outside corporate auditors perform a management oversight function independent from senior management, performing a role of auditing from the viewpoint of legality and appropriateness on the basis of broad and advanced knowledge.
The Company appoints as outside directors and outside corporate auditors persons who meet the criteria for independence established by the Tokyo Stock Exchange and the Company's independently established criteria for independence.
Policy and Procedure for Nominating Candidates for Director and Corporate Auditor
For the purpose of realizing the Company's corporate philosophy, effective corporate governance, and sustained growth and improvement of corporate value in the medium and long term, the Board of Directors nominates as candidates for directors and corporate auditors persons with a wealth of experience, high levels of ability and insight, and advanced expertise appropriate to a director or corporate auditor of the Company. The Board of Directors considers matters such as diversity within the Board and appoints two or more independent outside directors in the interest of ensuring monitoring and oversight of management from an independent perspective, improving management transparency, and enhancing shareholder value.
The Company has established the Executive Nomination Meeting as a voluntary committee. To ensure fairness and transparency in decisions on executive appointments, the Executive Nomination Meeting, in accordance with inquiries from the Board of Directors, submits to the Board of Directors proposals on the nomination, appointment, and dismissal of officers sufficiently deliberated on and approved by its members, who include the independent outside directors.
These personnel matters are decided by resolution of the Board of Directors. Explanations of matters such as the candidate's background, the status of concurrent positions, insight, and expected roles at the Company are provided for each nomination and appointment. Approval of the Board of Corporate Auditors is obtained for nominations of candidates for corporate auditor The Executive Nomination Meeting consists of the three outside directors and the two directors of the Board, and is chaired by chairman of Board of Directors.
Development of Internal Control Systems
The Company has adopted, by resolution of the Board of Directors, a basic policy on development of a system to ensure that execution of duties by directors complies with laws and regulations and the Articles of Incorporation, as well as on the development of other systems stipulated by ordinance of the Ministry of Justice as necessary to ensure the properness of operations of a stock company and a corporate group consisting of the stock company and its subsidiaries. The Company plans, develops, and applies revisions to this basic policy as needed.
Status of Development of the Risk Management System
The SUBARU Corporate Planning Department, which is responsible for functions common to each business, plays a central role in efforts by the corporate departments to strengthen risk management in close collaboration with each business unit.
As a system to promote thorough risk management and compliance Group-wide, the Company has established the Risk Management and Compliance Committee chaired by the director and Chief Risk Management Officer (CRMO) appointed by the Board of Directors, to conduct deliberations and discussions, make decisions, and engage in information exchange and communication with regard to important matters relating to risk management and compliance. The Company has assigned risk management officers and staff to each business unit and organized a system for meticulously practicing risk management and compliance at the workplace level. The Company systematically and routinely provides compliance-related education and training for officers and employees and promotes compliance awareness through in-house publications and other means as necessary. To promote the practice of compliance in the Group, the Company provides education and training and compliance information through those in-house publications to affiliated companies and increases the effectiveness of compliance by promoting participation in the SUBARU internal reporting system (Compliance Hotline).
Status of Auditing by Corporate Auditors
The Company's corporate auditors attend meetings of the Board of Directors and other important meetings, inspect business sites and subsidiaries, interview members of the Internal Audit Department, and audit the execution of duties by directors and others in accordance with the audit policy and audit plan established by the Board of Corporate Auditors.
(Status of initiatives by the corporate auditors to ensure effectiveness of auditing)
The Company's corporate auditors attend meetings of the Board of Directors, Executive Management Board Meeting, Risk Management and Compliance Committee, CSR Committee, and other important meetings, express their opinions as necessary, and ensure the effectiveness of auditing. They also conduct executive interviews with directors and vice presidents, perform on-site audits of important business sites and affiliated companies, and confirm the status of development and operation of internal control systems. The corporate auditors receive monthly reports from the Internal Audit Department and Legal Department and receive reports on the status of subsidiaries from the departments in charge as needed. In addition, they hold conferences with the corporate auditors of major subsidiaries. The corporate auditors cooperate with the accounting auditors through quarterly exchanges of information and opinions and discuss the appointments of the accounting auditors.
Status of Internal Auditing
The Company has established the Internal Audit Department as an internal auditing organization and conducts internal audits of business execution at the Company and its domestic and overseas Group companies. At the beginning of the fiscal year, the department prepares an internal audit plan for the fiscal year that takes into consideration the internal control status of the Group as a whole and systematically implements the plan. The department prepares and distributes to the directors, corporate auditors, and concerned parties audit reports on the results of internal audits and reports on a quarterly basis at the Executive Management Board Meeting.
The Internal Audit Department and corporate auditors work to deepen collaboration and strengthen the auditing function through monthly internal audit report meetings held by the department and quarterly dialogues about internal control that include the director in charge of the department. The department and corporate auditors endeavor to strengthen the auditing function through quarterly information sharing with the accounting auditors.
Evaluation of Internal Control System for Financial Reporting
An evaluation of the internal control system related to financial reporting in connection with the internal control reporting system based on Japan's Financial Instruments and Exchange Act is conducted using the final date of the fiscal year of the consolidated financial statements as the reference date. The evaluation conforms to the standards for evaluation of internal control related to financial reporting that are generally accepted to be fair and reasonable.
The Chief Executive Officer (CEO) and the Chief Financial Officer (CFO) evaluated the status of the development of the internal control system related to financial reporting as of March 31, 2021 and affirmed that it has been established properly and functions effectively and issued an internal control report audited by the Accounting Auditors to that effect.