FGI - FinTech Global Incorporated

Corporate Governance

1. Basic concept

At FGI, we recognize that management transparency is invaluable for good corporate governance. In addition to implementing procedures in accordance with applicable laws and regulations, such as the Financial Instruments and Exchange Law and securities exchange regulations for timely disclosure, we undertake timely investor relations (IR) activities to provide useful information from a stakeholder’s perspective. We efficiently disclose to shareholders, employees and the market in general such management information as financial position, business developments, fiscal performance, risk factors and structures that underpin good corporate governance practices.

While maintaining a high standard of management transparency and constantly tracking business activities from a compliance standpoint, FGI seeks to maintain a structure for corporate governance that emphasizes swift and accurate management decisions regarding the execution of operations. This focus supports appropriate pursuit of profits as well as improved long-term corporate value and return to shareholders—two of the most important tasks of any publicly listed company.

2. Corporate Structure

FGI subscribes to the auditor system.

The Board of Directors comprises six directors, including one outside director. In principle, the Board of Directors meets monthly, with special meetings held, if necessary, to discuss important issues facing the Company, to decide on appropriate courses of action and to supervise the execution of business operations. The Company has three Audit & Supervisory Board Members, who also attend these meetings to ensure that directors exercise good judgment in the decision-making process. FGI maintains an executive officer system, designed to separate executive decision-making and oversight functions from the business execution function, to expedite decision-making processes, and to reinforce day-to-day activities. The Company has seven executive officers, including three senior executive officers, and two of the executive officers also hold positions as directors.

The Audit & Supervisory Board comprises three Outside Audit & Supervisory Board Members. The Audit & Supervisory Board of Auditors meets once a month. The actions of directors are constantly monitored from an independent standpoint by the Members, who track progress in the execution of directors’ duties and ensure the legality of these activities in accordance with such criteria as auditing plans and auditing policy set by the Members. FGI has built an effective watchdog system that promotes communication and regular exchange of information among accounting auditors, the Internal Audit Office and the Audit & Supervisory Board.

The Management Meeting is an integral component of the corporate structure. It serves to support highly transparent management and underpins the implementation of flexible business strategies. These meetings are attended by directors, executive officers and division managers and provide opportunities to report on business-related developments, discuss pertinent items and determine suitable responses. The Company established the Risk Management Compliance Committee, which discusses issues related to risk management and compliance practices and assists the Board of Directors in an advisory capacity.

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. Internal audits and status of audits

Internal audits are conducted by a internal auditing officer in the Internal Audit Office under the direct supervision of the president. The officer is responsible for auditing the operations of divisions, including those of the Company and key members of the Group. These audits serve to pinpoint the status of business activities in each division and provide direction for addressing problem areas and building a better legal compliance structure. The results are forwarded to the president and Audit & Supervisory Board Members, and progress on corrective action is monitored. A structure is in place at FGI and Group companies whereby the Internal Audit Office reports to the Board of Directors and Audit & Supervisory Board Members regarding important issues, such as basic policy on internal audit plans and the results of audits.

Audit & Supervisory Board Members undertake monthly audits. Issues of concern are raised with the Board of Directors when necessary and improvement status is followed closely. In this way, Audit & Supervisory Board Members audit the execution of duties by members of the board at the company and Group companies through a review of business operations and confirmation of asset status.

5. Cooperation among internal, accounting auditor and audit & Supervisory board member

(1) Cooperation between Audit & Supervisory Board and Internal Auditing Office

Audit & Supervisory Board Members maintain close contact with the Internal Auditing Office during the implementation of audits to pinpoint the status of corporate activities and assets and also during the execution of other auditing duties. Audit & Supervisory Board Members receive reports on every audit undertaken by the Internal Auditing Office.

(2) Cooperation between audit & supervisory board members and accounting auditor

Audit & Supervisory Board Members maintain close contact with the accounting auditor through several means, including the receipt of quarterly reports. When required, Audit & Supervisory Board Members will actively exchange opinions and information with the accounting auditor, a level of cooperation that includes on-site audits and a presence at audit reviews.

(3) Cooperation between Internal Auditing Office and accounting auditor

The Internal Auditing Office reinforces lines of communication to the accounting auditor through exchange of opinions and information as needed. This improves audit quality.

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