1. Basic concept
At FGI, we believe that to realize our basic management policy and meet the expectations of stakeholders, from shareholders to clients, employees and local communities, it is important to adjust and improve on corporate governance as a building block for enhanced transparency and fairness, supervision of management, and quick and decisive decisions-making geared to social and economic changes.
2. Corporate Structure
At the ordinary general meeting of shareholders on December 19, 2019, shareholders approved a change to the Articles of Incorporation describing transition to a company with an audit and supervisory committee, and on this same date, the Company transitioned from a company with a board of company auditors to a company with an audit and supervisory committee.
The Board of Directors comprises six members, including the chairman, as described below. In principle, the Board of Directors meets regularly once a month and holds special meetings as necessary. The Board of Directors discusses and decides on basic business policy, important matters related to business, such as business strategies, as well as issues set forth by law in addition to hearing reports on important matters and supervising the status of business executed by directors.
Note that in line with provisions in the Articles of Incorporation and decisions by the Board of Directors, FGI delegates the execution of important business to directors, but not directors who are members of the Audit and Supervisory Committee, with the exception of such business issues as matters subject to approval by the Board of Directors by law, investments and loans above a certain limit, and organizational changes.
Chairman: Nobumitsu Tamai, President and CEO
Members: Seigo Washimoto, Executive Vice President; Fumiaki Kawasaki, Outside Director and full-time member of the Audit and Supervisory Committee; Kenichi Ota, Outside Director and member of the Audit and Supervisory Committee; Toru Ohyama, Outside Director and member of the Audit and Supervisory Committee; Takashi Kimura, Outside Director and member of the Audit and Supervisory Committee
The Audit and Supervisory Committee comprises four members, including the chairman, as described below, and all members of this committee are outside directors. In line with auditing standards set by the Audit and Supervisory Committee as well as auditing plans, members of the committee audit and supervise the execution of duties by directors through attendance at important meetings, such as those of the Board of Directors, as well as attendance by the full-time member at the Management Meeting and by exercising the right to express opinions at the general meeting of shareholders on the appointment and dismissal of and compensation for directors.
Chairman: Fumiaki Kawasaki, Outside Director and full-time member of the Audit and Supervisory Committee
Members: Kenichi Ota, Outside Director and member of the Audit and Supervisory Committee; Toru Ohyama, Outside Director and member of the Audit and Supervisory Committee; Takashi Kimura, Outside Director and member of the Audit and Supervisory Committee
The Management Meeting has the participation of directors with responsibility for executing business, the director who is a full-time member of the Audit and Supervisory Committee, executive officers and, as required, the managers of divisions that execute business and directors at subsidiaries. This is a venue where management hears reports on the status of each business activity and discusses concrete measures for the future.
Chairman: Nobumitsu Tamai, President and CEO
Members: Seigo Washimoto, Executive Vice President; Fumiaki Kawasaki, Outside Director and full-time member of the Audit and Supervisory Committee; executive officers and other participants as required
3. Status of Risk Management System
FGI established and enforces risk management rules, basic policy for risk management, and rules for contingency planning to control risks. Divisions are assigned risk categories and undertake measures to control respective risk, enabling the Company to realize a broad-based corporate risk management system.
To reinforce the corporate legal risk management structure for business management and day-to-day operations, the Company retains the services of a law firm for legal guidance, including fact-based opinions and advice.
The Company and its subsidiaries obtain legal assistance for each structured finance transaction and asset management services at the time of arrangement or undertaking, and put pertinent documentation through a legal check.
4. Status of Internal Audits and Audits by the Audit and Supervisory Committee
To facilitate internal audits, FGI established the Internal Audit Office, staffed by one person in a full-time position and two people in concurrent roles, under the direct supervision of the president. This office audits the operations of the Company and principal subsidiaries, with audits primarily intended to identify the risks inherent in each operating division and to promote improvement in operations to minimize risk while building a better legal compliance structure. The results of such audits are forwarded to the president as well as the Audit and Supervisory Committee and relevant divisions, with follow-up on any corrective measures implemented to address problems found. In addition, the Internal Audit Office reports to the Board of Directors and the Audit and Supervisory Committee on important matters, such as internal audit plans and the results of internal audits.
FGI has assigned three people to deal with the internal control reporting system, based on the Financial Instruments and Exchange Law, and assesses companywide controls and the design and implementation of business processes, in compliance with “Standards for Management Assessment and Audit Concerning Internal Control Over Financial Reporting.” The results of internal control assessment are reported to the president, the Board of Directors and the Audit and Supervisory Committee in a timely fashion.
The Audit and Supervisory Committee comprises four members, all of whom are outside directors. Each director who is a member of this committee audits the execution of duties by directors, except those who are members of this committee, according to audit policy and audit plans determined by the Audit and Supervisory Committee.
Note that Kenichi Ota supports corporate growth through venture capital. Toru Ohyama is active in the public underwriting department of a securities company and as a stock consultant. Takashi Kimura has certified public accountant and tax accountant qualifications and conducts various corporate accounting audits. Each of these outside directors brings considerable insights related to their area of financial and accounting expertise.
5. Cooperation among Internal Audit Office, Audit and Supervisory Committee and Accounting Auditor, and Relationship between These Auditors and Internal Control Division
The Audit and Supervisory Committee maintains close contact with the Internal Audit Office during the execution of audits to pinpoint the status of corporate activities and finances and in the execution of other auditing duties. The committee receives reports on audits undertaken by the Internal Audit Office.
FGI and Moomin Monogatari, a principal subsidiary, have engaged Ernst & Young ShinNihon LLC to provide accounting auditor services and entrusts this firm to execute audits in accordance with such laws as the Companies Act. SGI-Group B.V, an overseas subsidiary, entrusts audit certification work to a member firm of Ernst & Young, which falls under the same network as Ernst & Young ShinNihon. The Audit and Supervisory Committee and the Internal Auditing Office actively exchange opinions and information, including quarterly reports from the accounting auditor, and seek to improve the quality of audits. Meanwhile, the Accounting Department confirms with the accounting auditor ahead of each audit that accounting treatment is appropriate to the respective audit and that the audit properly adheres to established accounting standards.