MJC has established a Basic Policy on Corporate Governance.
Basic Policy on Corporate Governance
The purpose of this Basic Policy on Corporate Governance (hereinafter “the Basic Policy”) is for MICRONICS JAPAN CO., LTD., (hereinafter “MJC”) and its Group companies (hereinafter “the MJC Group”) to realize the Management Philosophy and Management Policy in an effort for the MJC Group to achieve sustainable growth and increase its medium- to long-term corporate value through the pursuit of more ideal corporate governance.
Contribute widely to society with electronic measurement technology.
Provide the best benefit for customers with our accumulated technology and production expertise.
Pursue the establishment of new technology to focus continuously on development.
All of our employees must achieve self-realization by building up a creative corporate culture.
Unite all the employees' abilities to enhance and improve our QDCCSS.
Basic Approach to Corporate Governance
MJC is committed to boosting its corporate value and to fulfilling its corporate social responsibility. An important issue toward that end is to enhance the checking function of the management setup from the standpoint of ensuring the appropriateness and transparency of management decision-making. Accordingly, MJC will enhance its corporate governance through proper fulfillment of the current roles and duties of the Board of Directors and the Audit & Supervisory Board and based on the Basic Policy for Establishing Internal Control Systems.
Ensuring Shareholder Rights and Equality
MJC respects the importance of the rights of shareholders and maintains an environment that ensures that the exercise of those rights is guaranteed in real terms, including the exercise of voting rights at the general meeting of shareholders.
Exercise of Rights at the General Meeting of Shareholders
- MJC respects the rights of shareholders and maintains an environment that enables the proper exercise of shareholders' rights at general meetings of shareholders.
- MJC strives to send out/disclose convocation notices of ordinary general meetings of shareholders early to ensure shareholders have enough time to consider the agenda items to be brought up at general meetings of shareholders.
- To enable more shareholders to participate in general meetings of shareholders, we secure venues with considerable capacity and set the dates for meetings after giving full consideration to public holidays and other days off.
- Where organizations such as institutional investors holding stock not in their own name but in the name of another organization such as a trust company indicate that they would like to exercise their own voting rights before the general meeting of shareholders, we shall respond appropriately after discussing and examining the request with the trust company, etc.
- Besides the matter set forth in paragraph 4 above, we shall maintain an appropriate environment for the exercise of shareholder rights and ensure real equality by establishing internal rules that prescribe such things as the handling of situations where an agenda item receives a considerable number of “no” votes at a general meeting of shareholders, the use of a platform for the electronic exercise of voting rights, and internal standards for producing English translations of convocation notices.
Basic Capital Policy
MJC recognizes the return of profits to shareholders as one of the most important management issues. We strive to establish a stable business base and improve return on equity. Also, it is our basic policy to continuously provide a stable dividend after giving full consideration to matters including business performance and payout ratio. By making use of internal reserves for capital investment associated with business expansion and for research and development expenses, we will endeavor to improve our business performance and strengthen our financial standing.
Policy on Cross-Shareholdings
We may retain cross-shareholdings in situations where it is deemed necessary for MJC's medium- to long-term development and the enhancement of its corporate value. We will periodically and continuously verify the medium- to long-term economic rationality of cross-shareholdings. Voting rights on cross-shareholdings shall be exercised based on comprehensive judgments, so as to contribute to improvement of corporate value and shareholder returns.
Transactions between Related Parties
When MJC conducts related party transactions, approval is obtained from the Board of Directors in accordance with company rules. Also, in order to ascertain the existence of transactions with directors, routine annual checks are made for the existence of transactions between directors or their close relatives (within relatives in the second degree) and the MJC Group.
Appropriate Cooperation with Stakeholders Other Than Shareholders
MJC strives for appropriate cooperation with various stakeholders such as employees, customers, business partners, creditors, and local communities, fully aware that MJC's sustainable growth and the creation of medium- to long-term corporate value is the result of the provision of resources and contributions from these stakeholders.
Ensuring Appropriate Information Disclosure and Transparency
MJC discloses financial and non-financial information in conformity with Tokyo Stock Exchange's Timely Disclosure Rules. Also, besides the statutory disclosure documents such as securities reports, we have prepared a dedicated page on our website and strive to actively disclose information that is useful for understanding MJC.
Role of the Board of Directors and Directors
- The Board of Directors is responsible for MJC's sustainable growth and enhancement of medium- to long-term corporate value. As the decision-making body for the management of MJC, it deliberates and decides on matters stipulated by law and regulations or the Company's Articles of Incorporation as well as management policies, business goals, other basic matters covering all aspects of general management, and important matters in the conduct of business.
- Each director shall strive to ensure that the Board of Directors fulfills the duties specified in paragraph 1.
Composition of the Board of Directors and the Term of Directors
- The Board of Directors shall consist of no more than 13 members, of which at least two, in principle, shall be outside directors.
- The composition of the Board of Directors shall achieve both diversity and appropriate size, taking into account the overall balance of directors' knowledge, experience, and abilities.
- The term of office for directors shall be one year, and reappointment shall be allowed.
Selection Requirements for Directors
MJC shall select director candidates who have a management intuition enabling them to exhibit an entrepreneurial spirit globally and who can be expected to contribute to frank, lively, and constructive discussions in the Board of Directors.
Role of Audit & Supervisory Board Members
As an independent body charged by shareholders, audit & supervisory board members contribute to the sound and fair management of the Company and audit directors' performance of duties with the objective of meeting social confidence.
Composition of the Audit & Supervisory Board
MJC shall have no more than four audit & supervisory board members.
Selection Requirements for Audit & Supervisory Board Members
MJC shall select audit & supervisory board member candidates who are suitable for the role of audit & supervisory board member by virtue of being able to conduct audit work appropriately while maintaining objectivity and neutrality and having both excellent character and insight.
Criteria of Independence for Outside Directors and Outside Audit & Supervisory Board Members
The criteria for judging the independence of MJC's outside directors and outside audit & supervisory board members are as given below. MJC strives to select candidates for independent outside directors who can be expected to contribute to important decision-making of the Board of Directors by offering frank, lively, and constructive opinions and suggestions in meetings of the Board of Directors.
Criteria for Judging Independence
Those persons are deemed independent who fulfill the statutory requirements of an outside officer and for whom none of the following items apply:
- Executive officers at MJC or a subsidiary of MJC;
- Directors or corporate auditors at a subsidiary of MJC;
- Large shareholders who hold 10 percent or more of all voting rights in MJC or, where those shareholders are corporations or other organizations (hereinafter “corporations, etc.”), their executive officers;
- Persons who count the MJC Group as a major business partner (persons whose payments received from MJC or its subsidiaries totaled 2 percent or more of that business partner's annual consolidated net sales for the most recent business year) or his or her executive officers;
- Major business partners for the MJC Group (persons whose payments to MJC or its subsidiaries totaled 2 percent or more of MJC's annual consolidated net sales for the most recent business year) or his or her executive officers;
- Executive officers of financial institutions or other large creditors that are indispensable to MJC's financing arrangements, and upon which MJC relies to such an extent that they are irreplaceable;
- Executive officers of companies to which MJC or a subsidiary of MJC has sent a director;
- Consultants, accounting professionals, or legal professionals who have earned ¥10 million or more in cash or other property benefits per year on average over the last three years, besides officer's compensation, from MJC or a subsidiary of MJC;
- Persons for whom any of the above items 1 to 8 applied during the past five years;
- Persons who were executive officers at MJC or a subsidiary of MJC in the past (including persons who, for the position of outside audit & supervisory board members, were a director at MJC or a subsidiary of MJC in the past); or
- The spouse or relatives within the second degree of a person for whom any of the above items 1 to 10 apply.
Role of the Remuneration and Nomination Advisory Committee
MJC shall establish a Remuneration and Nomination Advisory Committee as an advisory body to the Board of Directors.
The Remuneration and Nomination Advisory Committee is established as an advisory body to the Board of Directors based on board resolution, in order to achieve the objectives indicated below.
- To confirm that the decision-making process and distribution balance of director remuneration is in accordance with the law and regulations, articles of incorporation, resolutions of the general meeting of shareholders, and basic policy on director remuneration, and to contribute thereby to ensuring the appropriateness and objectivity of director remuneration.
- To strengthen the independence, objectivity, and accountability of the function of the Board of Directors in the nomination of representative directors, directors, and others.
Composition of the Remuneration and Nomination Advisory Committee
- The Remuneration and Nomination Advisory Committee is composed of at least three members, the majority of whom are outside directors and outside audit & supervisory board members.
- The members shall choose the chairperson of the Remuneration and Nomination Advisory Committee from among the outside directors.
Policy on Determining Director Remuneration
MJC determines the amount of remuneration, etc., for directors in a given fiscal year and the method of its calculation based on the following policy:
- Director remuneration shall be of a level suitable to maintain and secure managerial talent that can exhibit an entrepreneurial spirit globally as part of MJC's executive team.
- Director remuneration shall be made into a system functioning as a sound incentive to achieve medium-term business goals toward MJC's sustainable growth.
- The Board of Directors shall determine the amount of remuneration, etc., within the scope of total remuneration established by resolution of the general meeting of shareholders, through discussion in the board and after deliberation by the Remuneration and Nomination Advisory Committee.
- Where a person holds concurrent posts as a director and employee, only his or her remuneration, etc., as a director shall be determined according to this policy.
Policy on Determining Audit & Supervisory Board Member Remuneration
MJC determines the amount of remuneration, etc., for audit & supervisory board members in a given fiscal year and the method of its calculation is based on the following policy:
- Audit & supervisory board member remuneration shall be of a level suitable to maintain and secure persons who are suitable for the role of audit & supervisory board member by virtue of being able to conduct audit work appropriately while maintaining objectivity and neutrality and having both excellent character and insight.
- The Audit & Supervisory Board shall determine the amount of remuneration, etc., for each audit & supervisory board member, within the scope of total remuneration established by resolution of the general meeting of shareholders, through discussion among the audit & supervisory board members or when all audit & supervisory board members are in agreement.
Remuneration Structure for Officers
MJC has adopted the following remuneration structure for officers:
- Remuneration, etc., for full-time directors shall consist of fixed pay, single year performance-based bonuses, and medium- to long-term performance-based remuneration (stock options). The percentage of each kind of remuneration shall be established within an appropriate scope and in conformity with items 1 and 2 of the Policy on Determining Director Remuneration.
- Remuneration, etc., for outside directors shall consist of fixed pay and single year performance-based bonuses.
- Remuneration, etc., for audit & supervisory board members shall consist only of fixed pay.
Training for Directors and Audit & Supervisory Board Members
MJC shall provide opportunities for outside training and provide training information to contribute to acquisition of knowledge required by the respective roles and work responsibilities of directors and audit & supervisory board members.
Policy on Constructive Dialogue with Shareholders
MJC shall put in place a system and make efforts to facilitate constructive dialogue with shareholders and investors under the following policy, in order to contribute to MJC's sustainable growth and enhancement of its medium- to long-term corporate value.
- IR personnel shall be appointed in the Corporate Planning Office and the officer in charge of IR shall have control over dialogue as a whole with shareholders and investors.
- The Corporate Planning Office, Accounting Department, and Human Resources and General Affairs Department shall cooperate as departments supporting dialogue, actively explore a direction for IR and prepare disclosure materials, and support the realization of constructive dialogue with shareholders.
- Opportunities shall be established for active dialogue, including financial results briefings for analysts organized by securities companies and factory tours in addition to semi-annual results briefings for analysts. Importance shall be attached to the president engaging directly in dialogue within a reasonable and feasible limit at results briefings. Also, efforts shall be made to actively disseminate company information by regularly disclosing information useful for dialogue on the company's website.
- Opinions and questions obtained at results briefings and other events shall be suitably summarized and reported to the responsible director for use in supporting MJC's sustainable growth and enhancement of its corporate value. Also, important matters shall be reported to and discussed by the Board of Directors.
- Internal rules shall be established and managed, and made known to all members of the Group, in an effort to prevent insider trading. Also, a certain period before the announcement of the financial results shall be defined as a silent period. During the period, dialogue shall be restricted.
Established May 10, 2016
Revised September 1, 2016