Basic Views on Corporate Governance
JAFCO's basic views on corporate governance are as outlined below. With an eye to increasing corporate value over the medium to long term, JAFCO will make continuous efforts for its enhancement.
- Build respectful relationships with stakeholders
- Maintain transparency and fairness in decision making
- Establish an appropriate supervising structure
- Establish an operating structure that ensures effective and swift business execution
Corporate Governance Policy
Based on the above basic views, JAFCO has established the "Corporate Governance Policy" that outlines our concrete corporate governance measures.
Corporate Governance Structure
Board of Directors/ Board-Audit Committee
JAFCO has adopted the "company with board-audit committee" structure for its corporate governance system.
JAFCO has established the Board of Directors and the Board-Audit Committee, through which it makes important management decisions and audits/ supervises business execution by directors.
In principle, a majority of the Board of Directors of JAFCO consists of independent directors to enhance the effectiveness of corporate governance. As members of the Board of Directors and/or the Board-Audit Committee, independent directors supervise management from a neutral and objective standpoint.
JAFCO shall select independent director candidates who have abundant experience and deep insight into corporate management or specialist fields, and can be expected to fulfill the roles and responsibilities of an independent director. The selection is in accordance with the "Standards for Independence of Independent Directors" of JAFCO.
Nomination and Remuneration Committee
In deciding important matters related to the nomination and remuneration of directors, corporate officers and partners, the Nomination and Remuneration Committee carries out prior deliberations to ensure transparency and objectivity of such nomination and remuneration. Based on the contents of deliberations, the Board of Directors carries out discussions and makes final decisions.
The Evaluation of the Effectiveness of the Board of Directors
The Board of Directors analyzes and evaluates its effectiveness every year and discloses the summary of the result. The summary of the results of the evaluation of the effectiveness of the Board of Directors for the fiscal year ended March 31, 2020 is as follows:
The Board of Directors ("BOD") has been evaluating the effectiveness of the BOD on an annual basis since the fiscal year ended March 31, 2016. In the fiscal year ended March 31, 2020, deliberations over items such as composition, operation, role, duties, etc. of the BOD were held as in previous years based on questionnaires administered to all directors and
preliminary interviews with each director by the full-time Director serving as Board-Audit Committee member.
As the majority of the BOD consisted of independent directors in the fiscal year ended March 31, 2020, it was confirmed that the BOD composition was appropriate in terms of internal-external balance and size to fulfill its function to supervise business executions. Also, given that the majority consisted of independent directors, efforts were made to enhance advance briefings of the agenda items of Board meetings. This allowed independent directors to reorganize and clarify main issues, share mutual recognition, and conduct substantial and efficient deliberations. As a result, it was confirmed that the BOD needs to further enhance discussions on the Company's business direction.
With regard to the issues identified in the previous year's evaluation (improve reporting/ presentation efficiency and information provided at Board meetings) it was confirmed that efficient reporting was achieved within a limited timeframe in the year under review.
Based on the above results, it was confirmed that the effectiveness of the BOD increased in general. We will continue to address issues that have been identified, while regularly conducting effectiveness evaluations to further increase the effectiveness of the BOD.
(updated as of Mar. 13, 2020)
The Investment Committee composed of the President and partners has an authority to make investment decisions to allow quick decision-making. Directors serving as Board-Audit Committee members also participate in the Investment Committee on an as-needed basis.
JAFCO has appointed Ernst & Young ShinNihon LLC as its external auditor.
The Internal Audit Division, independent from other business operations, audits overall business activities. The Internal Audit Division reports internal audit results to the President and the Board-Audit Committee.
Cooperation among Board-Audit Committee, External Auditor and Internal Audit Division
The Board-Audit Committee holds regular discussions with the Internal Audit Division and External Auditor to exchange information and opinions.
The Board-Audit Committee conducts audits based on internal audit results when available. The Internal Audit Division conducts internal audits at the request of the Board-Audit Committee and reports the result to the Committee.
Nomination and Remuneration of Directors, etc.
Nomination of Directors, etc.
- Directors, including CEO, and corporate officers are appointed by the Board of Directors after deliberations by the Nomination and Remuneration Committee.
- All directors (excluding directors serving as Board-Audit Committee members) are subject to election/re-election every year at the General Meeting of Shareholders. The Board-Audit Committee expresses its opinion on directors' election/ dismissal at the General Meeting of Shareholders when it deems it necessary.
- JAFCO shall select director candidates who have business skills, insight, experience, and expertise to serve as a director to allow the Board of Directors to fully exercise its operational and supervisory functions. JAFCO proactively selects suitable candidates from diverse background regardless of gender and nationality.
- In a case where a director has caused JAFCO to incur a tremendous loss or operational problems by committing a wrongful act, or violating laws, regulations, the Articles of Incorporation or JAFCO's internal rules, or has become difficult to execute duties by other reasons, such director shall be subject to dismissal proposal.
- A Partner is nominated with consensus of all partners and appointed upon the approval of the Board of Directors after deliberations by the Nomination and Remuneration Committee.
Reasons for the appointment and nomination regarding each director are described in the Notice of Convocation of the Annual General Meeting of Shareholders.
General Meeting of Shareholders
Remuneration of Directors, etc.
- The Board of Directors decides the remuneration of directors (excluding directors serving as Board-Audit Committee members), corporate officers and partners after deliberations by the Nomination and Remuneration Committee. The decision on remuneration adequately reflects evaluation of JAFCO's business results, fund performance, and the degree of individual contribution.
The remuneration of directors (excluding directors serving as Board-Audit Committee members) and corporate officers comprises a basic salary and an extraordinary compensation. Part of the basic salary corresponds to JAFCO's ordinary income and other business results, while the extraordinary compensation additionally takes into account fund performance.
- The Board-Audit Committee expresses its opinion on directors' remuneration at the General Meeting of Shareholders when it deems it necessary.
- Partners invest individually in JAFCO-operated funds and receive a return pro rata to their respective interests. They are also entitled to an allocation of success fees based on the funds' investment performance.
Disclosure and Constructive Dialogue with Shareholders
JAFCO shall make timely and appropriate information disclosures in compliance with laws and regulations, including the Companies Act, Financial Instruments and Exchange Act, and Timely Disclosure Rule of the Tokyo Stock Exchange.
In addition to the above, JAFCO shall actively provide information that is deemed essential or useful to understand about JAFCO (except for personal information, customer information and information that may violate the rights of others).
JAFCO ensures fair disclosure of information.
Constructive Dialogue with Shareholders
JAFCO has established the policy for constructive dialogue with shareholders as shown below.