FRONTEO Inc. Corporate Governance Basic Policy

Chapter 1　 FRONTEO Philosophy

Bright Value

"Don't miss risks and opportunities buried in records"
By making full use of AI and providing optimal solutions for not overlooking risks and opportunities buried in records, we will realize a fair world where people can find necessary and appropriate information in various social situations. To do.

　　 ・　Bright Idea
　　　　 Aiming for a good philosophy, always new ideas
　　 ・　Bright Humanity
　　 　　 Human first business
　　 ・　Bright Business
　　 　　 Value-creating business that nurtures companies and people
　　 ・　Bright Technology
　　 　　 Innovative technology for human society
　　 ・　Bright Service
　　 　　 Bring your customers to life
　　 ・　Bright Culture
　　 　　 A culture that continues to shine over time

Chapter 2　 Basic Concept of Corporate Governance

Based on the corporate philosophy of "Achieving Bright Value - Providing solutions that do not overlook risks and opportunities buried in records, and realizing fairness in the information society -", the Group has developed its own artificial intelligence (AI) engine " KIBIT”, “Concept Encoder” and “Looca Cross” are the XNUMX pillars of our business that makes full use of advanced information analysis technology.We have expanded our business from international litigation support and fraud investigations, which we have been developing since our founding, to various fields such as manufacturing, finance, retail, distribution, and medical fields. Our basic policy is to maintain and improve our own corporate value so that we can contribute to the resolution of social issues and earn the trust of all our stakeholders.

We believe that it is essential to enhance internal control by establishing corporate governance in order to continuously increase corporate value in the information industry, where the market environment is changing rapidly.In order to realize the continuous improvement of corporate value, which is the basic policy, we will establish a management system that ensures transparency and soundness, close communication with stakeholders, and adhere to compliance within our expanding company. Work on.Together with our stakeholders, we will continue to take on challenges in various fields in order to contribute to the creation of the future of society, and at the same time, we will develop and expand the organizational structure necessary for that purpose.

Chapter 3　 Relationships with Stakeholders

1. Relationship with shareholders, etc.

(1) General meeting of shareholders

  • Positioning the General Meeting of Shareholders as the highest decision-making body, we will secure a sufficient period for exercising shareholders' rights and create an environment in which shareholders can exercise their rights appropriately.
    • We will endeavor to send convocation notices as early as possible in order to secure sufficient time to consider the proposals for the General Assembly.
    • Prior to sending out the convocation notice, we will post it on our website.In addition, we will consider publishing an English version according to the ratio of overseas investors.
    • We will introduce electronic voting via the Internet to ensure the convenience of shareholders in exercising their voting rights.We will also consider introducing an electronic voting platform according to the ratio of institutional investors and overseas investors.
    • If an institutional investor, etc. holding shares in the name of a trust bank, etc. wishes to exercise shareholder rights, such as voting rights, at a general meeting of shareholders in advance, it will consult with the trust bank, etc.In addition, if institutional investors, etc. wish to attend the General Meeting of Shareholders, they will be permitted to enter and observe the General Meeting of Shareholders after completing the prescribed procedures in advance.

(2) Ensuring the rights of shareholders

  • In order to specifically grasp the intentions of shareholders at the general meeting of shareholders and reflect them in management and dialogue with shareholders, we will analyze the pros and cons of all proposals after the general meeting of shareholders and consider whether or not to respond.
  • The Board of Directors makes decisions on important management matters, enabling flexible decision-making, aiming to increase corporate value and return appropriate profits to shareholders.
  • In consideration of the rights of minority shareholders, if minority shareholders exercise their rights against the Company or its officers, the Company will comply with the law and will not prevent the exercise of the rights of the shareholders.

(3) Constructive dialogue with shareholders

  • In order to contribute to sustainable growth and increase corporate value, we will establish a "basic policy on dialogue with shareholders" and promote constructive dialogue.

(4) Basic policy of capital policy

  • Aiming for sustainable improvement of corporate value, based on maintaining a sufficient level of shareholders'equity necessary to quickly and reliably seize expanding business opportunities, financial soundness, shareholders' equity efficiency and shareholder returns We aim to optimize.As a shareholder return policy, we will determine the dividend amount while taking into consideration the future capital investment of the Company and the demand for funds such as R & D expenses.
  • When raising capital that results in large-scale dilution, the Board of Directors will make a resolution after thorough deliberation in consideration of the details of the use of funds, recovery plan, and market environment.

(5) Policy on strategically held shares

  • In order to continuously improve corporate value, we will collaborate to further improve social value and hold shares for the purpose of more stable corporate management.
  • We will examine cross-shareholdings from a medium- to long-term perspective based on their returns and risks, etc., and examine the purpose and rationale for holding major cross-shareholdings that reflect this.
  • We will determine the exercise of voting rights for strategically held shares from the perspective of improving the corporate value of investee companies over the medium to long term.

(6) Takeover defense measures

  • We do not implement takeover defense measures.
  • The Board of Directors will take the following actions when the shares are tendered.
    • We request the Tender Offerors, etc. to explain the measures to improve the corporate value of the Group.
    • After the Board of Directors considers measures to further improve corporate value as the Group, we will express our thoughts to shareholders.

(7) Prevention of transactions between related parties

  • Regarding transactions with directors, corporate auditors and their close relatives, we will prepare a confirmation of the investigation regarding the existence of transactions and report any important facts to the Board of Directors.
  • We will disclose the transactions of related parties in accordance with the Companies Act, the Financial Instruments and Exchange Act and other applicable laws and regulations, and the rules established by the Tokyo Stock Exchange.

(8) Medium-term management plan

  • We will establish a medium-term management policy and management plan and publish them through our website and other means.In addition, the Board of Directors confirms and analyzes the progress, and makes appropriate revisions.

2. Relationship with customers

  • Based on our corporate philosophy of "Bright Service to shine our customers," we aim to achieve high product quality and prompt service, and improve customer satisfaction.

3. Relationship with business partners

  • We will strive to build mutual cooperation and relationships of trust by complying with applicable laws and regulations and conducting fair transactions based on corporate ethics.

4. Relationship with society

  • Based on our management philosophy, "Bright Technology, Innovative Technology for Human Society," we believe that it is our mission to contribute to the sustainable development of society by solving social issues through technology, and to realize a better society.
  • We recognize that responding to issues related to sustainability is an important management issue that leads not only to risk reduction but also to profit opportunities, and we will respond appropriately.

5. Relationship with employees

  • We believe that securing diverse human resources regardless of gender, age, nationality, etc. is important for fulfilling our social responsibilities as a company and achieving sustainable growth.
  • In particular, regarding the employment of women, we have acquired the highest level of "Eruboshi" certification as a company that has excellent initiatives based on the Act on Promotion of Women's Participation and Advancement in the Workplace, and we will continue to provide systems such as maternity leave, childcare leave, shortened working hours, and telecommuting. We will strive to improve the working environment, improve the working environment, and appoint women to managerial positions.
  • Our management philosophy is "Bright Humanity, a human-first business" and "Bright Business, a value-creating business that nurtures companies and people." We respect each and every employee and share diverse values ​​and ideas. We aim to be a company where the employees who have it can fully demonstrate their abilities and specialties and play an active role.
    • We believe that the growth of our employees directly leads to our growth.We will endeavor to create an environment in which the growth of employees and the improvement of corporate profits grow in proportion.
    • We will endeavor to enhance our personnel system, education and training so that our employees can develop, improve and demonstrate their abilities.
    • We will endeavor to provide a place where employees can demonstrate their abilities and motivation and play an active role globally.
    • We will comply with labor-related laws and regulations, eliminate acts that place an excessive physical and mental burden on employees, work long hours, and work overtime, and strive to ensure a safe and comfortable work environment that takes health into consideration.
    • We will set up a whistleblower window independent of management, accept reports on acts that violate or may violate work rules and regulations, keep the content of the report confidential, and do not treat the whistleblower unfavorably. At the same time, we will strive to resolve issues at an early stage.

Chapter 4 Enhancement of Information Disclosure

1. Information Disclosure Criteria

  • By establishing information disclosure rules, we aim to realize highly transparent management, and actively disclose useful information that is appropriate, specific to stakeholders, and has high added value.
  • Information that should be financed and disclosed in compliance with the Company's information disclosure rules, related laws and regulations, and the rules established by the Tokyo Stock Exchange (hereinafter referred to as "decree / rules") in order to meet the needs of information disclosure from shareholders and other stakeholders Will be disclosed in a timely and appropriate manner.
  • We will endeavor to proactively disclose information that is not stipulated by laws and regulations, but that is useful for understanding our business situation and management strategy.

Chapter 5 Corporate Governance System

1. Engine design

Immediately after listing on the Tokyo Stock Exchange, the Board of Directors of the Company is composed of executive directors and multiple outside directors (including independent outside directors, the same shall apply hereinafter), which ensures fairness and transparency of management. We have endeavored to secure it.Therefore, as an institutional design under the Companies Act, we will continue to select companies with a board of auditors, and continue to supervise management by both the board of directors and the board of auditors to ensure fairness and transparency.

2. Board of directors

(1) Roles and responsibilities of the Board of Directors

  • The Board of Directors of the Company is responsible for formulating and revising the Company's philosophy, instilling the Company's philosophy widely among employees of the Group in Japan and overseas, and as appropriate, the Company's philosophy is always respected by the Group. We are responsible for verifying that it is a code of conduct for our employees.
  • Recognizing that the Company is a global company with subsidiaries in Japan and overseas, the Board of Directors of the Company manages the subsidiaries of the Company legally and appropriately, and shares management-related matters with the Company. We are responsible for building a system and continuously enhancing and strengthening that system.
  • As the final decision-making body for the Company's important business execution, the Company's Board of Directors recognizes that its main role and responsibility is to set the company's strategic direction, and fully fulfills its accountability to stakeholders. To this end, we conduct constructive and fair deliberations on specific management strategies, management plans, etc., and make decisions based on our strategic direction.
  • The Board of Directors of the Company regards one of its main roles and responsibilities as creating an environment that supports appropriate risk-taking by the Company's Executive Directors, and welcomes proposals from Executive Directors based on sound entrepreneurship. At the same time, in order to ensure accountability, such proposals shall be examined from multiple perspectives and sufficiently from an independent and objective standpoint. Respect decisions.
  • The Board of Directors of the Company delegates to the President and Representative Director of the Company the execution of matters approved by the Board of Directors as important business executions of the Company and other matters that occur in daily operations.Based on the delegation of the Board of Directors of the Company, the President and Representative Director delegates to the approver who is stipulated in the Approval Authority Regulations according to the magnitude of the risk of the matter and executes the business.
  • The Company has adopted an executive officer system in order to enhance and improve the efficiency of the business execution system of directors.Executive officers who directly direct and supervise domestic and overseas companies and divisions of the Group are appointed by the Board of Directors and carry out the responsibilities determined by the Board of Directors.When the Board of Directors of the Company receives a recommendation from the President and Representative Director and appoints Executive Officers and nominates candidates for Directors and Audit & Supervisory Board Members, it identifies the skills, etc. that it should possess in light of management strategies. , While emphasizing the professional knowledge, experience, and abilities of the nominee, comprehensively consider personality, popularity, law-abiding awareness, moral awareness, and ethics, etc., gender, internationality, work history, age We will decide in a way that balances diversity and appropriate scale, including aspects ofThe Target may be requested to attend a meeting of the Board of Directors when making a decision.In addition, the skills matrix, which lists the knowledge, experience, abilities, etc. of each director (candidate), will be disclosed in the general meeting of shareholders convocation notice.
  • The Board of Directors of the Company appropriately evaluates the Company's business performance, etc., and deliberates on the evaluation at the Board of Directors, and appoints and dismisses executive directors and executive officers through fair and highly transparent procedures. to be reflected in the personnel affairs of
  • The Board of Directors of the Company will explain the reasons for nominating directors and corporate auditors in the business report.
  • The Company has established a policy for determining individual director compensation, etc. The details of individual director compensation, etc., shall be within the compensation limits resolved at the General Meeting of Shareholders and appropriate in light of each job responsibilities. The Board of Directors consults on the method of determining remuneration based on the appropriate standards, and determines the remuneration plan by fully respecting the opinions of the independent outside directors.
  • The remuneration system shall be linked to shareholder interests so that it functions adequately as an incentive to continuously improve corporate value.When determining the compensation of individual directors, after comparing the level of executive compensation data, etc. from an external research organization, an appropriate level will be set based on each job responsibility. Compensation consists of performance-linked compensation and other non-monetary compensation.Outside directors who are responsible for supervisory functions shall receive only fixed remuneration in light of their duties.
  • The Company's Board of Directors entrusts the determination of each director's remuneration to the President and Representative Director. In addition, if outside directors, full-time corporate auditors, or the Board of Corporate Auditors point out or advise that remuneration is inappropriate, we have established a system to review remuneration at any time based on the advice or indication.
  • The Board of Directors of the Company will ensure a response system when a problem is pointed out by an Audit & Supervisory Board Member or an Accounting Auditor.
  • The Company's Board of Directors will closely monitor and appropriately supervise the development of human resources at the Company and the development of future executives.

(2) Composition of the board of directors

  • The Board of Directors of the Company is composed of one or more executive directors and multiple outside directors, considering that the Board of Directors is the oversight of management and the decision-making body for final decisions.

(3) Internal control system

  • The Board of Directors of the Company has established a basic policy regarding the establishment of an internal control system in order to ensure prompt business execution under appropriate control. Oversees the maintenance and operational status of the Company and its domestic and overseas subsidiaries.

(4) Implementation and disclosure of effectiveness analysis and evaluation of the Board of Directors

  • The Board of Directors of the Company, including outside directors and outside corporate auditors, makes important management decisions through lively discussions and deliberations, and strives to be effective.Disclosure of the results of analysis and evaluation of the effectiveness of the entire Board of Directors will be considered as necessary in the future.

3. Board of Corporate Auditors

  • The Audit & Supervisory Board of the Company is responsible for auditing the execution of duties by directors, appointing and dismissing external accounting auditors, and exercising authority related to audit compensation. We strongly recognize that we have been entrusted with
  • The Board of Corporate Auditors of the Company will endeavor to establish a system to ensure the effectiveness of audits.
  • The Board of Corporate Auditors of the Company will cooperate with the Internal Audit Office to exchange opinions and information as appropriate and strive to improve the effectiveness of audits.
  • The Board of Corporate Auditors of the Company provides outside directors with information obtained through audit activities.
  • The Board of Corporate Auditors of the Company will take the following measures to ensure proper audits by accounting auditors.
    • The Audit & Supervisory Board of the Company ensures a system that enables the accounting auditors to conduct sufficient and appropriate audits so that they can conduct high-quality audits.
    • The Board of Corporate Auditors of the Company formulates evaluation criteria and appointment criteria for the proper evaluation of accounting auditors, and confirms their independence and expertise.
    • The Audit & Supervisory Board of the Company will request the Accounting Auditor to explain whether the Accounting Auditor complies with the quality control standards necessary to properly conduct accounting audits.
    • The Board of Corporate Auditors of the Company will ensure a response system when the accounting auditor discovers fraud and requests an appropriate response, or points out deficiencies or problems.
    • From time to time, the Board of Corporate Auditors of the Company will hold interviews with the Accounting Auditor, the President and CEO of the Company, and the Chief Financial Officer.
    • The Board of Corporate Auditors of the Company holds regular meetings with accounting auditors.

4. Directors and Audit & Supervisory Board Members

(1) Executive Director

  • As a member of the Board of Directors of the Company, the Executive Directors of the Company understand the responsibilities of the Board of Directors of the Company, ensure appropriate collaboration with stakeholders, and serve as directors for the common benefit of the Company and shareholders. Perform the duties of.
  • Our executive directors always practice our philosophy and motto, have a high level of legal compliance, morality, and ethics, and execute our business without forgetting a fair and bird's-eye view.
  • Our executive directors do not neglect to collect information necessary for business execution.
  • The Company's executive directors recognize that the announced performance forecast is one of our commitments to our shareholders, and we will do our best to achieve it.If the target is not achieved, we will fully analyze the cause and the details of the response we have taken, explain it to our shareholders, and reflect the analysis in our plans for the future.
  • Our executive directors always strive for self-improvement in order to properly fulfill their roles and responsibilities.

(2) Outside director

  • As a member of the Board of Directors of the Company, the Outside Directors of the Company supervise the execution of business by the Executive Directors in particular. Based on his own knowledge of improving profitability and capital efficiency, he provides advice to executive directors, the Board of Corporate Auditors, and stakeholders from the perspective of promoting sustainable growth of the company and improving corporate value over the medium to long term. Responsible for reflecting the opinions of the Board of Directors in the proceedings of the Board of Directors.
  • Our outside directors exchange information about our management by holding regular meetings with other outside directors and the Board of Auditors.
  • Our outside directors may request us to provide information at any time as necessary to fulfill our responsibilities.
  • The criteria for determining the independence of independent outside directors are based on the criteria set by the Tokyo Stock Exchange.
  • Our outside directors always strive for self-improvement in order to properly fulfill their roles and responsibilities.

(3) Audit & Supervisory Board Member

  • As a member of the Board of Corporate Auditors of the Company, the Audit & Supervisory Board Members of the Company understand the responsibilities of the Board of Corporate Auditors of the Company, ensure appropriate cooperation with stakeholders, and audit for the common interests of the Company and shareholders. Performs duties as a role.
  • The Company's Audit & Supervisory Board Members have the legal, financial, accounting, management, and other specialized knowledge required of an Audit & Supervisory Board Member, as well as a high level of awareness of legal compliance, morality, and ethics, and have a fair and comprehensive perspective. Do your business without forgetting.
  • The Company's Audit & Supervisory Board Members shall conduct business audits and accounting audits in accordance with laws and regulations, exercise their authority actively and proactively, and express their opinions at Board of Directors meetings or to individual Directors in order to fulfill their duties. increase.
  • Our Audit & Supervisory Board Members conduct legality audits and adequacy audits on the execution of duties by the Directors and the fulfillment of the supervisory duties of the Board of Directors.
  • The Audit & Supervisory Board Members of the Company audit the execution of duties by directors, appoint and dismiss accounting auditors, and exercise authority related to audit compensation.
  • Our corporate auditors monitor and verify the decision-making of the Board of Directors and the construction and operation of the internal control system.
  • Our corporate auditors always strive for self-improvement in order to properly fulfill their roles and responsibilities.

(4) Full-time Audit & Supervisory Board Member

  • Among the corporate auditors of the Company, full-time corporate auditors actively strive to improve the audit environment, including exercising investigative authority based on laws and regulations, based on their characteristics as full-time employees, and are important within the company such as the management meeting. We will endeavor to collect in-house information by attending various meetings and visiting domestic and overseas companies.
  • Our full-time corporate auditors share the information they have learned in performing their duties with other corporate auditors.

(5) Outside Audit & Supervisory Board Member

  • Of the Audit & Supervisory Board Members of the Company, the Outside Audit & Supervisory Board Members have a relatively high degree of independence, so they give a fairer and more appropriate opinion to the Board of Directors.
  • Our outside corporate auditors independently exercise their authority to investigate in accordance with laws and regulations and strive to collect information within the company.

(6) Support system

  • The Company has established the Board of Directors Secretariat and operates as follows so that directors and corporate auditors can have sufficient discussions at the Board of Directors.
  • Regarding the meeting of the Board of Directors, we will create an annual meeting schedule before the start of the fiscal year to ensure that it is easy to attend the Board of Directors.
  • We will prepare appropriate materials and equipment so that the Board of Directors can have sufficient discussions.
  • If the resolution is the approval of a significant amount of documents, we will distribute the materials on the agenda at least a considerable number of days before the date of the Board of Directors.
  • Not limited to the above, the Board of Directors Secretariat will provide information necessary for directors and corporate auditors to make decisions as appropriate.
  • When directors and corporate auditors are requested to provide information necessary for deliberation at the Board of Directors, each division of the Company will proactively support them by appointing a person in charge.
  • The Company regularly sets up opportunities for information exchange so that the Internal Audit Office and directors / corporate auditors can exchange information with each other.
  • We will bear the cost of obtaining the advice of outside experts when requested by directors and corporate auditors.

(7) Training policy

  • The Company will provide training and information necessary for directors and corporate auditors to properly fulfill their roles and responsibilities.
  • If necessary, we will give lectures and training on our business content, management philosophy, management policy, law, accounting, and corporate governance.
  • The Board of Directors provides an opportunity to explain the progress of our business and business issues every month.

Basic Policy on Dialogue with Shareholders

  • We will actively engage in dialogue through IR activities to build good relationships with shareholders.In addition, we will strive to understand the composition of shareholders and carry out IR activities according to the characteristics of shareholders.
  • The IR department is in charge of dialogue with shareholders, and the president is in charge of it.If a shareholder requests an individual interview, the directors, executive officers or IR will take into consideration the matters of interest of the shareholders at the time of the interview and the Company's prescribed schedule, etc., at a reasonable date and time. The head of the department that has jurisdiction over the above will endeavor to hold an interview.
  • In order to effectively and smoothly engage in dialogue with shareholders, the department in charge of IR will play a central role in coordinating with related departments.
  • For institutional investors, we hold financial results briefings to explain medium- to long-term management policies, financial results, and individual businesses.For individual investors, we will actively disseminate information to shareholders, such as providing information on our website and explaining business reports, etc. at general meetings of shareholders.In addition, explanatory materials at financial results briefings, etc. will be published on the Company's website.
  • When formulating and disclosing management strategies and management plans, we will consider presenting the basic policies of profitability plans and capital policies, and presenting goals related to profitability and capital efficiency.
  • Opinions and questions obtained through dialogue with shareholders will be reported to the Board of Directors in a timely manner, and useful opinions will be reflected in management to improve corporate value.
  • Regarding the management of insider information, we will endeavor to thoroughly manage information and disclose it appropriately in accordance with the "Insider Trading Prevention Regulations" and "Compliance Regulations".

 

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