Corporate Governance

1. Relations with Shareholders and Other Stakeholders

(1) Shareholders’ Meeting

• We recognize the General Meeting of Shareholders as the highest decision-making body, and we will ensure that shareholders have sufficient time to exercise their rights and create an environment in which they can do so appropriately.
  • We will endeavor to mail notices of convening well in advance so that shareholders have sufficient time to review the agenda items.
  • Prior to mailing the notice of convocation, we will post it on our website. We will also consider posting an English version based on factors such as the proportion of overseas investors.
  • We will introduce online voting to ensure the convenience of shareholders in exercising their voting rights. Furthermore, depending on factors such as the proportion of institutional and overseas investors, we will consider introducing an electronic voting platform.
  • If institutional investors and others who hold shares in the name of trust banks or similar entities wish to exercise their shareholder rights, such as voting, at a General Meeting of Shareholders in advance, we will consult with the trust banks or similar entities. Furthermore, if institutional investors or others wish to observe a General Meeting of Shareholders, we will permit their entry into and observation of the meeting venue provided they complete the prescribed procedures in advance.

(2) Safeguarding Shareholder Rights

• To accurately gauge the will of shareholders at the General Meeting of Shareholders and reflect it in management and dialogue with shareholders, we will analyze the factors behind votes for and against all proposals after the meeting and consider whether a response is necessary.
• By having the Board of Directors make decisions on important management matters, we enable agile decision-making and aim to enhance corporate value and provide appropriate returns to shareholders.
• We respect the rights of minority shareholders, and when minority shareholders exercise their rights against the Company or its officers, we will comply with laws and regulations and will not hinder the exercise of those rights.

(3) Constructive Dialogue with Shareholders

• To contribute to sustainable growth and the enhancement of corporate value, we have established a “Basic Policy on Dialogue with Shareholders” to promote constructive dialogue.

(4) Basic Policy on Capital Management

• With the aim of continuously enhancing corporate value, we will maintain a sufficient level of shareholders’ equity necessary to swiftly and reliably seize expanding business opportunities, and strive to optimize financial soundness, return on equity, and shareholder returns.Regarding our shareholder return policy, we will determine dividend amounts while taking into account the Company’s future funding needs for capital expenditures, research and development expenses, and other such requirements.
• In the event of a capital raise that would result in significant dilution, the Board of Directors will make a resolution only after thorough deliberation, taking into account the intended use of funds, the repayment plan, and market conditions.

(5) Policy on Shares Held for Strategic Purposes

• To achieve sustainable growth in corporate value, we hold shares with the aim of collaborating to further enhance social value and ensure more stable corporate operations.
• We will evaluate strategically held shares from a medium- to long-term perspective, taking into account their returns and risks, and review the purposes and rationality of holding major strategically held shares in light of these findings.
• With regard to the voting rights attached to strategically held shares, we will determine how to exercise them from the perspective of enhancing the medium- to long-term corporate value of the investee companies.

(6) Takeover Defense Measures

• The Company does not implement any takeover defense measures.
• In the event that the Company’s shares are subject to a tender offer, the Board of Directors will take the following actions:
  • We will request that the tender offeror or other relevant party explain their measures for enhancing the corporate value of our Group.
  • After the Board of Directors has considered measures to further enhance the corporate value of the Group, the Company will express its position to shareholders.

(7) Prevention of Transactions Among Related Parties

• With regard to transactions involving directors, auditors, and their close relatives, we require the preparation of a confirmation letter verifying the existence or absence of such transactions, and any material facts must be reported to the Board of Directors.
• We will disclose transactions with related parties in accordance with the Companies Act, the Financial Instruments and Exchange Act, other applicable laws and regulations, and the rules established by the Tokyo Stock Exchange.

(8) Medium-Term Management Plan

• The Company establishes medium-term management policies and plans and discloses them through our website and other channels. Furthermore, the Board of Directors reviews these plans as appropriate after confirming and analyzing their progress.

2. Relationships with Customers

• Based on our corporate philosophy, “Bright Service: Bringing Radiance to Our Customers,” we aim to improve customer satisfaction by delivering high-quality products and prompt service.

3. Relationships with Business Partners

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

4. Relationship with Society

• Based on our management philosophy, “Bright Technology: Bringing Innovative Technology to Human Society,” we view it as our mission to contribute to the sustainable development of society by solving social challenges through technology, and we will pursue the realization of a better society.
• We recognize that addressing sustainability challenges is a critical management issue that leads not only to risk reduction but also to revenue opportunities, and we will respond appropriately.

5. Relationship with Employees

• We believe that securing a diverse workforce, regardless of gender, age, nationality, or other factors, is essential for fulfilling our social responsibility as a company and achieving sustainable growth.
• Specifically regarding the employment of women, we have been certified at the highest level under the “Eruboshi” program as a company with exemplary initiatives based on the Act on Promotion of Women’s Active Participation in the Workforce. We will continue to strive to enhance systems such as maternity and childcare leave, reduced-hour work schedules, and telecommuting, improve the work environment, and promote women to management positions.
• Our management philosophy is “Bright Humanity: Business That Puts People First” and “Bright Business: Value-Creating Business That Nurtures Both the Company and Its People.” We respect each and every employee and aim to be a company where employees with diverse values and perspectives can fully demonstrate their abilities and expertise and thrive.
  • We believe that the growth of our employees directly contributes to the growth of our company. We are committed to building an environment where employee growth and corporate profits increase in tandem.
  • We are committed to enhancing our human resources systems and education and training programs so that employees can develop, improve, and fully utilize their individual abilities.
  • We are committed to providing opportunities for employees to demonstrate their abilities and motivation and to thrive on a global stage.
  • We will comply with labor laws and regulations, eliminate practices that place excessive physical or mental strain on employees, such as long working hours and unpaid overtime, and strive to ensure a safe and comfortable workplace environment that prioritizes employee health.
  • We will establish an internal whistleblowing hotline independent of management to receive reports of conduct that violates or may violate employment regulations or laws. We will keep the contents of such reports confidential, ensure that whistleblowers are not subject to any adverse treatment, and strive to resolve issues promptly.

1. Corporate Governance Structure

Since shortly after our listing on the Tokyo Stock Exchange, our Board of Directors has been composed of executive directors as well as several outside directors (including independent outside directors; the same applies hereinafter), and we have strived to ensure fairness and transparency in management.Therefore, regarding our corporate governance structure under the Companies Act, we have opted to maintain our status as a company with a Board of Auditors, as we have done to date, and will continue to oversee management through both the Board of Directors and the Board of Auditors, striving to ensure fairness and transparency.

2. Board of Directors

(1) Roles and Responsibilities of the Board of Directors

• The Company’s Board of Directors bears the responsibility for formulating and revising the Company’s philosophy, instilling it among the Company’s employees both domestically and internationally, and verifying, as appropriate, that the Company’s philosophy is consistently respected within the Group and serves as the standard of conduct for the Company’s employees.
• Recognizing that the Company is a global corporation with subsidiaries both in Japan and overseas, the Board of Directors is responsible for ensuring that the management of the Company’s subsidiaries is conducted in a lawful and appropriate manner, for establishing a system through which management-related matters are shared with the Company, and for continuously enhancing and strengthening that system.
• Recognizing that its primary role and responsibility, as the ultimate decision-making body for the Company’s important business operations, is to set the Company’s strategic direction, the Board of Directors shall conduct constructive and impartial deliberations on specific management strategies, business plans, and other matters, and make decisions based on the strategic direction, in order to fully fulfill its accountability to stakeholders.
• The Company’s Board of Directors recognizes that one of its primary roles andresponsibilities to create an environment that supports appropriate risk-taking by the Company’s executive directors. While welcoming proposals from executive directors based on sound entrepreneurial spirit, the Board will conduct multifaceted and thorough reviews of such proposals from an independent and objective standpoint to ensure accountability; furthermore, when approved proposals are implemented, the Board will respect the swift and decisive decision-making of the executive directors.
• The Company’s Board of Directors delegates to the Company’s Representative Director and President the execution of matters approved by the Board as important business operations of the Company, as well as other matters arising in the course of daily business. Based on this delegation from the Board of Directors, the Representative Director and President delegates authority to the decision-makers specified in the Decision-Making Authority Regulations, depending on the level of risk involved in the matter, and carries out business operations.
• To enhance and streamline the business execution structure of the directors, the Company has adopted an executive officer system. Executive officers who directly command and supervise the Group’s domestic and overseas companies and departments are appointed by the Board of Directors and fulfill the responsibilities established by the Board.When the Company’s Board of Directors, upon recommendation from the President and Representative Director, appoints Executive Officers or nominates candidates for Directors and Auditors, it first identifies the skills and other qualifications required in light of the Company’s management strategy. While placing emphasis on the recommended candidates’ specialized knowledge, experience, and abilities, the Board makes a comprehensive judgment that also takes into account their character, reputation,compliance awareness, moral standards, and ethical values, and make decisions that balance diversity—including gender, international representation, professional background, and age—with an appropriate size.Furthermore, when making such determinations, the Company may request that the relevant individuals attend Board of Directors meetings. In addition, the Company will disclose a skills matrix summarizing the knowledge, experience, and abilities of each director (and candidate) in the notice convening the General Meeting of Shareholders.
• The Company’s Board of Directors will appropriately evaluate the Company’s business performance and other factors, deliberate on such evaluations within the Board, and reflect them in personnel decisions—such as the appointment and removal of directors in charge of business execution and executive officers—through fair and highly transparent procedures.
• The Company’s Board of Directors explains the reasons for the nomination of directors and auditors in the Business Report.
• The Company has established policies for determining the individual compensation of directors; regarding the details of individual directors’ compensation, the Company consults with the Board of Directors on the compensation determination method—which is formulated based on an appropriate level commensurate with each director’s duties and within the compensation limit approved by the General Meeting of Shareholders—and makes decisions on compensation proposals while fully respecting the opinions of independent outside directors.
• The compensation system is linked to shareholder interests so that it functions effectively as an incentive to achieve sustainable growth in corporate value.When determining the compensation for individual directors, we compare and examine the levels of executive compensation data from external research institutions and set compensation at an appropriate level based on each director’s responsibilities. The compensation for executive directors consists of fixed compensation, performance-based compensation, and non-monetary compensation.For outside directors who perform supervisory functions, compensation consists solely of fixed compensation, in light of their duties.
• The Company’s Board of Directors has delegated the determination of each director’s compensation to the Representative Director and President; while the Company does not implement performance-based compensation or grant its own shares, it has established a system to review compensation at any time based on advice or observations from outside directors,full-time auditors, or the Board of Auditors point out or advise that remuneration is inappropriate, we have established a system to review such remuneration at any time based on that advice or feedback.
• The Company’s Board of Directors will establish a response system for cases where issues are pointed out by auditors or the independent auditors.
• The Company’s Board of Directors closely monitors and appropriately supervises the development of the Company’s human resources and the training of future senior executives.

(2) Composition of the Board of Directors

• In light of the fact that the Board of Directors is the body responsible for supervising management and making final decisions, the Company’s Board of Directors shall consist of one or more executive directors and multiple outside directors.

(3) Internal Control System

• To ensure that business operations are executed promptly under appropriate controls, the Company’s Board of Directors establishes basic policies regarding the development of the internal control system. While utilizing the internal audit department for its operation, the Board supervises the development and operational status of the system at the Company and its domestic and overseas subsidiaries as a global corporation.

(4) Analysis, Evaluation, and Disclosure of the Board of Directors’ Effectiveness

• The Company’s Board of Directors makes important management decisions following active discussion and deliberation, including with outside directors and outside auditors, and strives to ensure its effectiveness. The Company will consider disclosing the results of analyses and evaluations of the Board’s overall effectiveness as necessary in the future.

3. Board of Corporate Auditors

• In fulfilling its roles—such as auditing the execution of duties by directors and exercising authority regarding the appointment, dismissal, and audit compensation of external auditors—the Company’s Board of Corporate Auditors is keenly aware that it has been entrusted by shareholders and other stakeholders with the oversight of overall management, and bears the responsibility to make appropriate judgments from an independent and objective standpoint.
• The Company’s Board of Corporate Auditors will strive to establish systems to ensure the effectiveness of audits.
• The Company’s Board of Auditors will collaborate with the Internal Audit Department, exchanging opinions and information as appropriate, and will strive to enhance the effectiveness of audits.
• The Company’s Board of Auditors shall provide outside directors with information obtained through audit activities.
• The Company’s Board of Auditors shall take the following measures to ensure that the accounting auditor conducts an appropriate audit.
  • The Company’s Board of Auditors will ensure a system is in place that allows the independent auditors to conduct sufficient and appropriate audits so that they can perform high-quality audits.
  • The Company’s Board of Auditors shall establish evaluation and appointment criteria to properly assess the external auditors and verify their independence and expertise.
  • The Company’s Board of Corporate Auditors will request explanations from the external auditors regarding their compliance with the quality control standards necessary for the proper conduct of financial audits.
  • The Company’s Board of Corporate Auditors will establish a response system for cases where the external auditors detect irregularities and request appropriate action, or point out deficiencies or issues.
  • The Company’s Board of Corporate Auditors conducts meetings as appropriate with the external auditors, the Company’s Representative Director and President, and the executive in charge of finance.
  • Our Board of Auditors will hold regular meetings with the external auditors.

4. Directors and Auditors

(1) Executive Directors

• As members of the Company’s Board of Directors, the Company’s Executive Directors understand the responsibilities of the Board and perform their duties as directors for the mutual benefit of the Company and its shareholders, while ensuring appropriate collaboration with stakeholders.
• The Company’s executive directors consistently put the Company’s philosophy and motto into practice, maintain a high level of compliance, moral integrity, and ethical standards, and conduct business without ever losing sight of a fair and comprehensive perspective.
• The Company’s executive directors shall not neglect to gather the information necessary for the execution of their duties.
• The Company’s executive directors recognize that published earnings forecasts are a commitment to shareholders and will make their best efforts to achieve them. In the event that targets are not met, they will thoroughly analyze the causes and the Company’s response, explain the situation to shareholders, and reflect the analysis in future plans.
• Our executive directors shall constantly strive to improve their skills in order to properly fulfill their roles and responsibilities.

(2) Outside Directors

• As members of the Company’s Board of Directors, the Company’s outside directors will oversee the execution of business operations, particularly by the executive directors,. Furthermore, while ensuring appropriate collaboration with stakeholders, they bear the responsibility of providing advice to the executive directorsand to ensure that the views of the Board of Auditors and stakeholders are reflected in the Board of Directors’ deliberations.
• The Company’s outside directors exchange information regarding the Company’s management by holding regular meetings with other outside directors and the Board of Auditors.
• In order to fulfill their responsibilities, the Company’s outside directors may request information from the Company at any time as necessary.
• The criteria for determining the independence of independent outside directors are based on the standards established by the Tokyo Stock Exchange.
• The Company’s outside directors constantly strive to improve their skills in order to properly fulfill their roles and responsibilities.

(3) Auditors

• As members of the Company’s Board of Auditors, the Company’s auditors understand the responsibilities of the Board of Auditors and perform their duties as auditors for the mutual benefit of the Company and its shareholders, while ensuring appropriate collaboration with stakeholders.
• The Company’s auditors possess the professional expertise in law, finance, accounting, and management necessary for their roles, as well as a strong sense of compliance, morality, and ethics, and perform their duties without ever losing sight of a fair and comprehensive perspective.
• The Company’s auditors conduct operational and accounting audits in accordance with laws and regulations; to fulfill their roles, they exercise their authority proactively and actively, and express their opinions to the Board of Directors or to individual directors.
• The Company’s auditors conduct legality audits and adequacy audits regarding the directors’ performance of their duties and the Board of Directors’ fulfillment of its supervisory obligations.
• The Company’s auditors audit the performance of directors’ duties, exercise authority regarding the appointment and dismissal of accounting auditors, and determine audit fees.
• The Company’s auditors monitor and verify the Board of Directors’ decision-making processes and the establishment and operation of the internal control system.
• The Company’s auditors constantly strive to improve their professional skills in order to properly fulfill their roles and responsibilities.

(4) Full-time Auditors

• Among the Company’s auditors, full-time auditors, given their status as full-time employees, actively strive to improve the audit environment—including by exercising their investigative authority under applicable laws and regulations—and endeavor to gather internal information by attending important internal meetings, such as management meetings, and conducting on-site inspections at domestic and overseas subsidiaries.
• The Company’s full-time auditors share information obtained in the course of performing their duties with the other auditors.

(5) Outside Auditors

• Among the Company’s auditors, outside auditors, given their relatively high degree of independence, provide the Board of Directors with more impartial and appropriate opinions.
• The Company’s outside auditors independently exercise their investigative authority in accordance with laws and regulations and strive to gather internal information.

(6) Support System

• To ensure that directors and auditors can engage in thorough discussions at Board of Directors meetings, the Company has established a Board of Directors Secretariat and operates it as follows.
• Regarding the scheduling of Board of Directors meetings, we prepare an annual meeting schedule before the start of the fiscal year to ensure that directors can easily attend meetings.
• We will prepare appropriate materials and facilities to ensure that sufficient discussion can take place at Board of Directors meetings.
• When a resolution involves the approval of a substantial volume of documents, materials related to the matters under deliberation will be distributed a reasonable number of days prior to the Board meeting.
• In addition to the above, the Board Secretariat shall provide directors and auditors with the information necessary for decision-making as appropriate.
• When directors and auditors request information necessary for deliberations at Board of Directors meetings, each department of the Company will actively support them, for example, by designating a person in charge.
• The Company will arrange regular opportunities for the Internal Audit Office and the directors and corporate auditors to exchange information.
• Upon request from directors and auditors, the Company will bear the costs of obtaining advice from external experts.

(7) Training Policy

• The Company will provide, as appropriate, the training and information necessary for directors and auditors to properly fulfill their roles and responsibilities.
• As necessary, we will conduct lectures and training sessions on our business operations, management philosophy, management policies, laws, accounting, and corporate governance.
• The Board of Directors will provide a monthly opportunity to discuss the progress of the Company’s business and business challenges.