Basic Approach to Corporate Governance
Chapter 1 Ideals of FRONTEO
Bright Value Creator
FRONTEO creates “bright value” that brings a revolution at the frontier of technology for the future of humanity.
Bright Idea Always exploring new ideas in pursuit of lofty ideals Bright Humanity Putting people first in business Bright Business Developing value-creation businesses that grow companies and people Bright Technology Bringing revolutionary technology to human society Bright Service Delivering brilliant results to customers Bright Culture Creating a culture with everlasting brilliance
Chapter 2 Basic Approach to Corporate Governance
Until now, FRONTEO Inc. (referred to as “FRONTEO” or the “Company”) has been supporting customers in reducing litigation risk through our support services for litigation and investigation of illegal activities based on the ideal of “creating a bright future for society by leveraging the power of data analysis. '' Concerning the maintenance and enhancement of Asian companies' enterprise value in particular, FRONTEO has earned high regard as the pioneer of this field with its local support capability and R & D achievements regarding Asian-language analysis techniques.
As a “Bright Value Creator,” the FRONTEO Group is striving to resolve emerging social challenges by leveraging the proprietary artificial intelligence (AI) technology that it has developed through data analysis in the legal field.FRONTEO's KIBIT AI engine, which can learn tacit human knowledge, creates value for the future of advanced science based on big data, a challenge that was previously difficult due to the overwhelming flow of data, by replacing many work processes requiring human judgment.FRONTEO will conduct activity with the enhancement of its own enterprise value as its core principle so that it can contribute to the realization of an affluent society in a variety of fields and win stakeholders' trust.
FRONTEO believes that strengthening internal control by establishing a corporate governance system is essential for continuously enhancing enterprise value in the information industry, a sector that is facing a rapidly changing market environment.In order to achieve the core principle of enhancing its own enterprise value, FRONTEO will strive to establish a management system that ensures transparency and soundness, engage in close communication with stakeholders and continue to secure compliance within its expanding organization.The Company will keep taking on challenges in various fields so that it can work with its stakeholders to contribute to the creation of a bright future for society.At the same time, the Company will develop and expand necessary organizational systems.
Chapter 3 Relationship with Stakeholders
A message from CEO and Chairman of the Board
Since FRONTEO's listing on the Tokyo Stock Exchange's Mothers section in 2007, we have been striving to ensure prompt information disclosure and create opportunities for dialogue with all of you: our stakeholders, in order to immediately provide information that could bring significant change in our business environment .We are confident that FRONTEO has built a record of successful achievements in the legal field, which is our established business area, by making the most of feedback from stakeholders.
From now on, in addition to strengthening our activities in this established business field, we will advance into new business fields in the spirit of “always exploring new ideas in pursuit of lofty ideals” (Bright Idea) .We recognize that if the Company is to achieve growth in the established and new business fields, seeking proactive involvement by stakeholders will be essential.By establishing relationship with you, the stakeholders, and implementing measures necessary for doing so, we will work with you to continuously enhance FRONTEO's enterprise value and create a “culture with everlasting brilliance” (Bright Culture).
1. Relationship with shareholders
(1) General shareholders' meeting
- Positioning the general shareholders' meeting as its highest decision-making body, the Company ensures a sufficient period for shareholders to exercise their rights and develop an environment that enables them to exercise their rights in an appropriate manner.
- When inviting shareholders to a general shareholders' meeting, the Company strives to send a letter of invitation at least three weeks before the date of the meeting.
- Before sending an invitation to a general shareholders' meeting, the Company publishes a notice of invitation on its website in both Japanese and English.
- The Company ensures convenience for shareholders to exercise their voting rights by introducing e-exercise through the Internet.
- When institutional investors, etc.holding shares in the names of trust banks, etc.request in advance to exercise shareholders 'rights, including voting rights, at a general shareholders' meeting, the Company may hold consultations with the trust banks, etc.When institutional investors, etc. request to attend a general shareholders' meeting as observers, the Company may grant them observer status and an entry into the place of the meeting subject to the prior implementation of necessary procedures.
(2) Securing shareholders' rights
- In order to grasp shareholders 'intentions expressed at a general shareholders' meeting and reflect them in business management and dialogue with shareholders, the Company analyze the reasons behind the support and opposition to all proposals presented at the meeting and considers whether or not to take action in response.
- The Company facilitates prompt decision-making by giving the Board of Directors the authority to make decisions concerning important management matters and aims to enhance enterprise value and shareholders' return in an appropriate manner.
- In consideration of minority shareholders' rights, when such shareholders exercise their rights against FRONTEO or its executives, the Company complies with laws and regulations and refrains from taking actions to obstruct their exercise of rights.
(3) Constructive dialogue with shareholders
- In order to achieve sustainable growth and enhance enterprise value, the Company promotes constructive dialogue based on the “Basic Principles of Dialogue with Shareholders.”
(4) Basic Principles of capital policy
- In order to continuously enhance enterprise value, the Company aims to optimize financial soundness, capital efficiency and shareholders 'return through the principle of maintaining a sufficient level of equity capital to promptly and successfully capture increasing business opportunities.As for the policy for shareholders' return , the Company determines the amount of dividends in consideration of its future fund needs for such activities as capital investment and R & D.
- When implementing capital-raising measures that entail significant dilution of the share value, the Board of Directors makes a resolution after conducting sufficient deliberations in consideration of the usage of funds, recovery plans and the market environment.
(5) Policy concerning shares held for policy purposes
- In order to continuously enhance enterprise value, the Company holds shares for the purposes of cooperation in further enhancing social value and stable corporate management.
- The Company reviews shares held for policy purposes in consideration of the return and risks from medium- and long-term perspectives.The Board of Directors examines the purposes and rationality of holding major shares held for policy purposes in light of the review results.
- Regarding voting rights attached to shares held for policy purposes, the Company makes decisions as to whether or not to exercise the rights from the perspective of enhancing, in the medium to long term, the enterprise value of the companies in which it holds shares.
(6) Countermeasures against takeover bids
- The Company does not implement countermeasures against takeover bids.
- The Board of Directors takes the following actions when a takeover bid is launched against the Company's shares:
- Request explanations from the bidder and other relevant parties concerning measures to enhance the Company's enterprise.
- Consider measures to further enhance the FRONTEO group's enterprise value and explain the Company's intentions to shareholders.
(7) Prevention of transactions with interested parties
- The Company prepares documents concerning the presence or absence of transactions between the Company and its directors, statutory auditors or their relatives, and when there are important facts, it is required that they be reported to the Board of Directors.
- Regarding transactions with interested parties, the Company implements information disclosure in accordance with the Companies Act, the Financial Instruments and Exchange Act and other applicable laws and regulations as well as the rules set by the Tokyo Stock Exchange.
(8) Medium-term business plan
- Concerning its established business fields of litigation support and investigation of illegal activities, the Company sets and publishes medium-term business performance goals.While, concerning new business fields using the KIBIT AI engine, the Company refrains from publishing a medium- term business plan because the business environment could rapidly change given the uncertainties regarding the market size and demand.However, the Board of Directors sets medium-term business performance goals concerning both established and new businesses and revises them as necessary after checking and analyzing the progress .
2. Relationship with customers
- Based on the corporate ideal of “delivering brilliant results to customers” (Bright Service), the Company aims to enhance customer satisfaction by realizing high-quality products and speedy services.
3. Relationship with suppliers
- The Company strives to build relationship of mutual cooperation and trust with suppliers by complying with applicable laws, regulations and rules and conducting transactions in an appropriate manner based on corporate ethics.
4. Relationship with society
- Based on the management ideal of “bringing revolutionary technology to human society” (Bright Technology), the Company regards it as its mission to contribute to the sustainable development of society by resolving social challenges through its technology and seeks to realize a better society.
5. Relationship with employees
- The Company recognizes that in order to perform its social responsibilities and achieve sustainable growth, it is important to secure diverse personnel regardless of gender, age or nationality.
- In particular, women accounted for 50% of the Company's domestic workforce and 40% of its global workforce as of July 2016, so empowerment of women is essential.Therefor, from the perspective of achieving work-life balance, the Company reformed its short- hours work system in 2014.The Company will continue to make improvements to the working environment, including the enhancement of this system, and to promote the appointment of women for management positions.
- Advocating the management ideal of “putting people first in business” (Bright Humanity) and “developing value-creation businesses that grow companies and people” (Bright Business), the Company aims to become an organization where individual employees are respected and where employees with diverse values and ideas can fully exercise their capabilities and professional expertise.
- The Company believes that employees 'growth leads to its growth.The Company strives to establish an environment where employees' growth and growth in corporate earnings can be achieved in a proportionate way.
- The Company strives to enhance the personnel management system and education and training programs so that employees can develop, improve and exercise their respective capabilities.
- The Company strives to provide opportunities for employees to exercise their capabilities with strong motivation and play a successful role in the global stage.
- The Company complies with labor laws and regulations, abolishes practices that impose excessive physical and mental burdens on employees and overly long working hours and unpaid overtime work, and strives to ensure a safe and comfortable working environment that gives consideration to worker health.
- The Company establishes a whistleblower office that is independent from the management team, accepts information related to acts that violate or may violate work rules, laws and regulations, keeps the contents of such information confidential, refrains from giving unfavorable treatment to whistleblowers and strives to promptly resolve reported problems.
Chapter 4 Enhancement of Information Disclosure
1. Standards of information disclosure
- Aiming to realize highly transparent business management, the Company actively reveal specific and useful information in an appropriate manner and in ways that provide added value to stakeholders by setting rules on information disclosure.
- In order to meet the needs for information disclosure expressed by shareholders and other stakeholders, the Company discloses financial and other information that must be disclosed in an appropriate and timely manner in compliance with its own rules on information disclosure, relevant laws and regulations and rules set by the Tokyo Stock Exchange (hereinafter referred to as the “laws, regulations and rules.”
- Regarding information not subject to disclosure under laws, regulations or rules, the Company also strives for active disclosure when the information is useful for understanding the Company's management status, business strategies and other related matters.
- In light of its listing on the US NASDAQ market, the Company reveal useful information in English in order to provide information to US investors.
Chapter 5 Corporate Governance System
A message from CEO and Chairman of the Board
We are accelerating our business expansion into new business fields such as healthcare, marketing and business intelligence, using the proprietary KIBIT AI engine, in addition to the established legal business.In 2015, we established new subsidiaries in the fields of healthcare and marketing, so from now on, we will need to respond to changes in the business environment in multiple business fields.
In order to make objective decisions and realize flexible and efficient business management in the rapidly changing external environment, we will establish a governance system intended to quickly implement appropriate management measures while minimizing business risks through enhanced management of the Board of Directors and the Board of Statutory Auditors.
1. Institutional design
Since immediately after the Company's listing on the Tokyo Stock Exchange, the Board of Directors has been comprised of directors in charge of business execution and two or more outside directors (including an independent outside director; the same shall apply just) as a way to ensure the integrity and transparency of business management.Therefore, as for its institutional design, the Company will choose to retain the status of a company with a Board of Statutory Auditors and will continue to strive to ensure integrity and transparency through the supervision of business management by both the Board of Directors and the Board of Statutory Auditors.
2. Board of Directors
(1) Roles and responsibilities of the Board of Directors
- The Board of Directors is responsible for formulating and revising the Company's corporate ideals and ensuring widespread awareness of the ideals among its group's employees both in Japan and abroad.The Board of Directors is also responsible for fully reviewing whether or not the corporate ideals are always respected. and followed by the Company's employees as a code of conduct.
- Based on its recognition of the Company as a global enterprise owning subsidiaries in Japan and abroad, the Board of Directors is responsible for developing and continuously enhancing systems to ensure that the subsidiaries are managed in a legal and appropriate manner and matters related to business management are shared between the subsidiaries and the Company.
- The Board of Directors recognizes that setting strategic directions for the Company as the final decision-making body concerning the execution of important businesses is one of its primary roles and responsibilities, and conducts constructive and appropriate deliberations concerning specific business strategies and plans and makes decisions based on the strategic directions in order to sufficiently perform the duty of accountability to stakeholders.
- The Board of Directors regards it to be one of its primary roles and responsibilities to develop an environment that supports appropriate risk-taking by the Company's directors in charge of business execution and conducts a multi-faceted and thorough study from an objective standpoint on proposals presented by those directors in the spirit of sound entrepreneurship, in order to ensure accountability while welcoming such proposals.When approved proposals are implemented, the Board of Directors respects quick and bold decision-making by directors in charge of business execution.
- The Board of Directors delegates the execution of matters approved by it as important business matters and other matters that arise as part of day-to-day operation to the Company's President and Representative Director.Based on the delegation by the Board of Directors, the President and Representative Director executes business by way of delegating those matters to the persons with the decision-making authority as specified by the rules concerning the decision-making authority in accordance with the level of risks involved therein.
- In order to enhance and streamline the system of business execution by directors, the Company has adopted a corporate officer system.Corporate officers, who are responsible for directly directing and supervising domestic and foreign subsidiaries and subsidiaries and affiliates of the Company's group, are elected by the Board of Directors and fulfill the responsibilities prescribed thereby.The Board of Directors, when electing corporate officers and nominating directors and statutory auditors based on recommendations from the President and Representative Director, makes such election and nomination – electing six or seven corporate officers and nominating four or five candidates for directors – in light of the size of the Company and its subsidiaries as a whole.The Board of Directors makes decisions on the election and nomination so as to keep the balance between the diversity and size of the management team by comprehensively taking into account the candidates' personal characte r, reputation, compliance awareness, ethical and moral values, while attaching importance to their professional expertise, experiences and capabilities.When the decisions are being made, the candidates may be asked to attend a meeting of the Board of Directors.
- The Board of Directors appropriately evaluates the Company's business performance and reflects the results in personnel appointments, including the election and dismissal of directors in charge of business execution and corporate officers through appropriate and highly transparent procedures, including deliberation by the Board on the results of the evaluation of business performance.
- The Board of Directors explains the reasons for nominating directors and statutory auditors by describing them in annual business reports.
- The Board of Directors delegates the decision on remuneration for individual directors to the President and Representative Director and is not involved in such matters as introduction of performance-linked remuneration or grants of shares in the Company.However, in order to prevent overly generous remuneration, the Company has established a system to ensure that when an outside director, a standing statutory auditor or the Board of Statutory Auditors has pointed out inappropriate remuneration or has made a suggestion concerning such remuneration, the remuneration in question may be promptly reviewed at any time.
- The Board of Directors develops a system to respond to problems pointed out by statutory auditors and the accounting auditor.
- The Board of Directors keeps a careful watch on the status of the Company's training of employees, including that for senior management positions, and appropriately supervises such training through hearings with officers in charge of personnel management and other means.
(2) Composition of the Board of Directors
- The Board of Directors is comprised of one or more directors in charge of business execution and two or more outside directors in light of its management supervisory role and its position as the final decision-making body.
(3) Chairman of the Board of Directors
- The President and Representative Director serves as the Chairman of the Board of Directors in order to clarify management responsibility.
- Recognizing that the Board of Directors is the body responsible for supervising business management, the Chairman of the Board manages meetings of the Board in an appropriate manner by taking due care to ensure free and active expression of opinions.
(4) Internal control
- In order to ensure prompt execution of business activities under appropriate internal control, the Board of Directors prescribes the `` Basic Principles of Development of Internal Control Systems '' and supervises the status of development and operation of such systems at the Company and its domestic and foreign subsidiaries as a global enterprise.
- The Board of Directors requires periodic reports concerning awareness of and response to risks from the risks management committee that has been established to deal with risk management and related matters.
- Regarding the Compliance Manual, which prescribes compliance and related matters, the Board of Directors requires reports on the results of examination and audit of compliance conducted by the Internal Audit Office.
- The Board of Directors requires reports on the evaluation of the development and operation of internal control systems conducted by the Internal Audit Office based on the Basic Principles of Internal Control concerning Financial Reports that prescribe matters concerning the appropriateness of financial reporting.
(5) Relationship with the Accounting Auditor
- The Board of Directors secures a system to enable adequate and appropriate audits so that the accounting auditor can conduct high-quality audits.
- The Board of Directors develops a system to make a response when the accounting auditor has identified illegal activities and demanded response or when they have pointed out inadequacies and problems.
- The Board of Directors holds hearings with the accounting auditor as appropriate with the participation of the Company's President and Representative Director and the Chief Financial Officer (CFO).
- The Board of Directors develops a system to give the accounting auditor access to statutory auditors, the internal audit division and outside directors.
(6) Analysis and evaluation of the effectiveness of the Board of Directors and disclosure of the results
- The Board of Directors makes important management decisions after holding active discussions and deliberations involving outside directors and outside statutory auditors, thereby striving to conduct effective management.In the future, the Company will consider disclosure of the results of the analysis and evaluation of the effectiveness of the Board of Directors as a whole as necessary.
3. Board of Statutory Auditors
(1) Roles and responsibilities of the Board of Statutory Auditors
- The Board of Statutory Auditors, when performing its roles such as exercising its powers concerning the audit of the execution of job duties by directors, election and dismissal of accounting auditors, and audit fees, is responsible for making appropriate judgment from an independent and objective standpoint while maintaining strong awareness of the authority to supervise overall business management that has been delegated to it by shareholders and other stakeholders.
- The Board of Statutory Auditors strives to develop a system to ensure the effectiveness of audits.
- The Board of Statutory Auditors strives to enhance the effectiveness of audits by cooperating and exchanging opinions and information with the Internal Audit office.
- The Board of Statutory Auditors provides outside directors with information obtained through its audit activities.
- The Board of Statutory Auditors holds consultations regarding remuneration and makes decisions on remuneration for individual statutory auditors within the total amount of remuneration for statutory auditors determined by way of a resolution made at a general shareholders' meeting.
(2) Chairman of the Board of Statutory Auditors
- The Chairman of the Board of Statutory Auditors is appointed from among statutory auditors by way of a resolution of the Board.
- The Chairman of the Board of Statutory Auditors performs job duties commissioned by the Board.
- The Chairman of the Board of Statutory Auditors does not for any reason obstruct the exercise of audit authority by individual statutory auditors.
(3) Relationship with statutory accounting auditors
- The Board of Statutory Auditors secures a system to enable adequate and appropriate audits so that the accounting auditor can conduct high-quality audits.
- The Board of Statutory Auditors sets the criteria for the evaluation and election of the accounting auditor and checks the independence and professional expertise there.
- The Board of Statutory Auditors requires explanations from the accounting auditor as to its compliance with the quality management standard necessary for conducting accounting audits in an appropriate manner.
- The Board of Statutory Auditors develops a system to make response when the accounting auditor has identified illegal activities and demanded response or when they have pointed out inadequacies and problems.
- The Board of Statutory Auditors holds hearings with accounting auditors with the participation of the Company's President and Representative Director and the Chief Financial Officer (CFO).
- The Board of Statutory Auditors periodically holds meetings with the participation of the accounting auditor.
(4) Relationship with the Internal Audit Office
- The Board of Statutory Auditors periodically holds meetings with the participation of the Internal Audit Office.
- The Board of Statutory Auditors requires reports on the results of internal audits and also evaluation of internal control conducted by the internal audit office and on the status of whistleblowing, among other matters.
4. Accounting auditor
(1) Roles and responsibilities of the accounting auditor
- The accounting auditor takes appropriate actions to secure appropriate audits based on the awareness of the responsibilities it owes to shareholders and investors.
- The accounting auditor plays the important role of ensuring the credibility of disclosed information and owes the responsibility to do so to the Company's shareholders.
- The accounting auditor secures a system to enable appropriate audits in cooperation with the Board of Statutory Auditors and the Internal Audit Office.
- The accounting auditor secures its own independence and professional expertise.
- The accounting auditor complies with the quality management standard necessary for conducting appropriate accounting audits.
- The accounting auditor implements measures to prevent any of its accounting personnel from being involved in the Company's accounting audit beyond a prescribed period.
5. Directors and statutory auditors
(1) Directors in charge of business execution
- Directors in charge of business execution, as members of the Board of Directors, understand the responsibilities of the Board and perform job duties for the common interests of the Company and shareholders while ensuring appropriate cooperation with stakeholders.
- Directors in charge of business execution implement the Company's ideals and mottos, possess high compliance awareness and moral and ethical values and always execute business from a comprehensive and impartial standpoint.
- Directors in charge of business execution never neglect to collect information necessary for executing business.
- Directors in charge of business execution recognize that a published forecast of business results is a commitment to shareholders and do their utmost to achieve the forecast results.If the Company fails to achieve the forecast results, they adequately analyze the cause of the failure and the company's response and provide explanations to stockholders.They also reflect the results of the analysis in future plans.
- Directors in charge of business execution constantly make self-improvement efforts in order to perform their roles and responsibilities in an appropriate manner.
(2) Outside directors
- Outside directors, as members of the Company's board of directors, supervise the execution of business by directors in charge of business execution in particular.They are also responsible for giving advice to directors in charge of business execution and reflecting the opinions of the Board of Statutory. Auditors and stakeholders in the management of meetings of the Board of Directors for the common interests of the Company and investor based on the management policy and their own knowledge concerning management improvements from the perspective of promoting the Company's sustainable growth and enhancing its enterprise value in the medium to long term while securing appropriate cooperation with stakeholders.
- Outside directors exchange information concerning the Company's business management with each other and with the Board of Statutory Auditors, for example, by periodically holding meetings.
- Outside directors may request the Company to provide information at any time as necessary in order to perform their responsibilities.
- The criteria for judging the independence of independent outside directors are in accordance with the criteria set by the Tokyo Stock Exchange.
- Outside directors constantly make self-improvement efforts in order to perform their roles and responsibilities in an appropriate manner.
(3) Statutory auditors
- Statutory auditors, as members of the Board of Statutory Auditors, understand the responsibilities of the Board and perform their job duties for the common interests of the Company and shareholders while securing appropriate cooperation with stakeholders.
- Statutory auditors possess necessary professional expertise concerning laws, finance, accounting and business administration, have high compliance awareness and moral and ethical values and execute business always from a comprehensive and impartial standpoint.
- Statutory auditors conduct business and accounting audits based on laws and regulations, and in order to perform their role, they also exercise their rights proactively and assiduously and express opinions both at meetings of the Board of Directors and to individual directors as well.
- Statutory auditors conduct audits regarding legality and appropriateness with respect to directors 'performance of job duties and the Board of Directors' fulfillment of supervisory responsibilities.
- Statutory auditors exercise their rights related to the audit of directors' performance of job duties, election and dismissal of accounting auditors, and audit fees.
- Statutory auditors monitor and review the Board of Directors' decision-making and development and operation of internal control systems.
- Statutory auditors constantly make self-improvement efforts in order to perform their role and responsibilities in an appropriate manner.
(4) Standing statutory auditors
- Standing statutory auditors make active efforts to develop an audit environment, including exercising their investigative authority based on laws and regulations in accordance with their characteristics as standing officers. They also strive to collect internal information by attending important internal meetings, including management meetings, and by visiting domestic and foreign subsidiaries to audit them.
- Standing statutory auditors share information obtained through their performance of job duties with other statutory auditors.
(5) Outside statutory auditors
- Outside statutory auditors express highly impartial and appropriate opinions to the Board of Directors given their relatively high degree of independence.
- Outside statutory auditors strive to collect internal information independently by exercising their investigative authority based on laws and regulations.
(6) Support systems
- The Company establishes the secretariat of the Board of Directors and operates it as follows in order to enable directors and statutory auditors to hold adequate discussions at meetings of the Board.
- Prepare the annual schedule of meetings of the Board of Directors before the start of each business year in order to facilitate attendance at the meetings.
- Prepare appropriate reference materials and equipment in order to enable sufficient discussions at meetings of the Board of Directors.
- When there is a substantial amount of documents to be approved at a meeting of the Board of Directors, distribute reference materials concerning matters of deliberation a reasonable number of days before the meeting.
- In other cases as well, the secretariat of the Board of Directors provides information necessary for decision-making by directors and statutory auditors as appropriate.
- When directors and statutory auditors have been asked to provide information necessary for deliberation at a meeting of the Board of Directors, the Company's individual divisions provide active support, for example, by appointing personnel responsible for such support.
- The Company periodically creates opportunities for an exchange of information between the internal audit office and directors and statutory auditors.
- The Company may bear the financial cost of receiving advice from outside experts when asked by directors and auditors to do so.
(7) Policy for training
- The Company provides, as appropriate, training and information necessary for directors and statutory auditors to perform their roles and responsibilities in an appropriate manner.
- When directors and statutory auditors take office, the Company provides lectures and seminars concerning the contents of its businesses, management ideals, management policies, law, accounting and corporate governance.Afterwards, lectures and seminars are provided as necessary.
- The Board of Directors creates opportunities to explain the progress of business activities and business challenges on a monthly basis.
Chapter 6 Stock option program
- The Company periodically grants stock options to directors, statutory auditors, corporate officers and employees of the Company and its subsidiaries as a sound incentive program to promote sustainable growth.
Chapter 7 System to exclude anti-social forces
- The Company prescribes in the basic principles of the Compliance Manual that it severs all relationships with any anti-social forces that threaten the order and safety of civil society and that it deals with such forces with a resolute attitude and ensures the enforcement of this principle.
Basic Principles of Dialogue with Shareholders
- The Company also actively engages in dialogue to develop good relationship with shareholders through IR activities.The Company also strives to identify the composition of shareholders and conducts IR activities in accordance with the characteristics of shareholders.
- The division in charge of IR is responsible for dialogue with shareholders and the President oversees the dialogue.When a shareholder has requested a meeting, the Company strives to arrange a meeting with a director, corporate officer, the head of the division that oversees IR. etc., on a reasonable date through a reasonable method while comprehensively taking into account the matters of interest that the shareholder would like to discuss in the meeting and the Company's schedule, among other factors.
- In order to hold dialogue with shareholders in an effective and smooth manner, the division in charge of IR will play the central role in ensuring coordination among relevant divisions.
- For institutional investors, the Company holds “earnings briefings”, which are intended to provide explanations concerning the Company's medium- and long-term management policy, earnings and individual businesses, among other matters.For individual investors, the Company holds ”briefings for individual investors, ”which are intended to explain the contents of the Company's businesses, among other matters.
- Briefing materials used at earnings briefings and briefings for individual investors are published on the Company's website.
- When formulating and publishing business strategies and plans, the Company considers presenting earnings plans and the basic principles of the capital policy as well as targets for earnings and capital efficiency.
- Opinions and questions received through dialogue with shareholders are reported to the Board of Directors as appropriate and are reflected in business management in order to enhance the Company's enterprise value.
- Regarding the management of insider information, the Company complies with the rules on the prevention of insider trading and the Compliance Manual and strives to ensure appropriate information disclosure through thorough information management.
Corporate Governance System
A. Overview of the corporate governance system
FRONTEO is a company with a board of auditors (as specified by the Companies Act) .As of the date of submission of this report, FRONTEO's organization of governance is composed of five directors (including two outside directors) and three statutory auditors (including three outside auditors) .The board of directors holds a periodic meeting once each month, where all important matters are deliberated and the status of business execution is reported as necessary.The board of directors is ready to flexibly hold an extraordinary meeting as necessary when an important agenda item comes up.As the organization with management decision-making and supervisory functions, the board of directors considers the appropriateness, efficiency, fairness, etc. of business management as necessary and adopts resolutions concerning important business matters and the matters prescribed by laws and regulations as well as the articles of incorporation.
In order to enhance and improve the efficiency of business execution by directors, FRONTEO has adopted a corporate officer system.Corporate officers who directly directly and supervise individual business divisions are elected by the board of directors and fulfill the responsibilities prescribed by the board.
The board of auditors holds a periodic meeting once each month and also holds an extraordinary meeting as necessary.Stututory auditors participate in important meetings, including meetings of the board of auditors and the executive committee, so that they can monitor the execution of duties by directors .
The figure below describes FRONTEO's corporate governance system.