Corporate Governance System
Organizationally, Daiwa House Industry (the Company) has selected the company with Audit & Supervisory Board structure. Additionally, to clarify the management decision-making and monitoring functions and the execution function of our business, the Company employs a system of Executive Officers. The Board of Directors and its constituent Directors are in charge of decision-making and the monitoring functions, while the business execution function is handled by the Executive Officers.
Directors and Board of Directors
- Through an optimal corporate governance system, the Board of Directors
aims to realize the Company's Corporate Philosophy, carry out the monitoring
functions and perform the best possible decision-making based on fair judgment.
The Board of Directors makes decisions on important items such as those
prescribed by law, the articles of incorporation, Board of Directors Regulations,
and supervises the execution of duties by Directors.
To augment maneuverability and flexibility in the execution of operations and maximize management dynamism, the Board of Directors delegates Directors to handle decision-making on the execution of operations other than the items described in the paragraph above.
- Recognizing that Medium-Term Management Plans constitute a commitment to shareholders, the Board of Directors explains to shareholders the foundations for and backgrounds of such plans, the operating environment and other items, and does its best to achieve the objectives of these plans.
- Each year, the Board of Directors analyzes and evaluates its effectiveness as a whole, taking into consideration the relevant matters, including the self-evaluations of each Director. A summary of the results is disclosed.
- Selection criteria of Director candidates and Directors' authority, responsibilities and others are prescribed separately in the Directors Regulations formulated by the Board of Directors.
- The Board of Directors is composed of Directors having specialist knowledge and experience from diverse backgrounds. To ensure the effective and efficient operations of the functions, the board has fewer than 20 members. The Board of Directors appoints two or more outside Directors who are independent and neutral.
- The Company has in place a "Nomination Advisory Committee" and "Remuneration Advisory Committee" that act as advisory bodies to the Board of Directors, enhancing independence and objectivity in nominating Directors and functions related to remuneration. In addition, the Company has established a "Corporate Governance Committee", which deliberates on vision, strategies and other items pertaining to overall management, including corporate governance (Board Committees).
Audit & Supervisory Board and Audit & Supervisory Board Members
- The Audit & Supervisory Board audits the execution of duties of Directors and Executive Officers, determines the content of proposals for submission to the General Meeting of Shareholders on the appointment or dismissal of financial auditors or against the reappointment of financial auditors, and conducts other items prescribed by financial auditing and other laws. The Audit & Supervisory Board receives in a timely and appropriate manner reports from Directors, employees and financial auditors on items necessary for auditing the execution of duties by Directors and Executive Officers. Additionally, the Audit & Supervisory Board shares necessary information with the financial auditors, Internal Audit Office and outside Directors in an effort to improve auditing quality and perform audits efficiently.
- Having received a mandate from shareholders as independent entities to audit execution of duties of Directors and Executive Officers, Audit & Supervisory Board Members fulfill their duty to ensure healthy and sustained corporate growth and establish a high-quality corporate governance system worthy of society's trust.
- In light of the characteristics of their full-time position, full-time Audit & Supervisory Board Members work proactively to put in place audit environments and collect information. In addition, they routinely monitor and verify the status of internal control system construction and operation.
- Outside Audit & Supervisory Board Members express their opinions frankly, being that they are appointed as part of a legal requirement for augmenting the independence and neutrality of the audit structure and taking into consideration the reason for their appointment, and recognizing that they are expected to express their audit opinions neutrally and objectively.
The Company has in place a core management trinity, which balances offense and defense, comprising a Chief Executive Officer (CEO), who oversees the decision-making function and the monitoring functions; a Chief Operating Officer (COO), in charge of the business execution function; and a Chief Financial Officer (CFO), who oversees the finance function. This arrangement is designed to promote sound and sustainable corporate development.
The chairman is the Chief Executive Officer (CEO), having topmost authority over the Board of Directors decision-making function and the monitoring functions. The CEO is responsible for realizing the Company's Corporate Philosophy, performing decision-making on the optimal execution of operations in order to augment corporate value and enhance the common interests of the shareholders over the long term, and supervising the execution of operations based on decision-making.
The CEO chairs the Board of Directors and provides adequate explanation to the Board of Directors on the supervisory status of the execution of operations. By making appropriate use of the outside Director and Audit & Supervisory Board functions, the CEO strives to create the management foundations to support the healthy and sustained growth of the Company and provides support to maximize the success of the president (COO) in the execution of operations.
The president is the Chief Operating Officer (COO), operating under the control of the Board of Directors and the Chief Executive Officer (CEO), with the topmost authority for the business execution function. The COO is responsible for overseeing and supervising the execution of operations related to business activities to fulfill management plans in accordance with the strategies and management policies determined by the Board of Directors.
The COO may determine the scope of control of individual Executive Officers related to the execution of operations and delegate authority to them. For this reason, the COO chairs the joint panel of Directors and Executive Officers (Joint Management Council). The COO refers Executive Officer candidates to the Board of Directors, forms a structure for the execution of operations and supervises and instructs other Executive Officers in their execution of duties.
The Chief Financial Officer (CFO) supervises and directs management decision-making, monitoring and the execution of operations functions from the corporate finance perspective. The CFO assists the CEO in sound decision-making and monitoring and, to enable the COO to conduct management proactively, takes charge of companywide capital efficiency and balancing corporate strength against risk. The CFO forms a core management, along with the CEO and COO. The CFO is accountable for medium- to long-term management strategy to shareholders and other providers of financial capital, and enacts a structure for ensuring management that delivers high capital productivity.
The Company appoints two or more outside Directors who are independent and neutral. In addition to outside Directors who meet the requirements for outside Directors as prescribed in the Companies Act, in principle outside Directors are appointed who also satisfy the Independence Standards for Outside Executives formulated by the Nomination Advisory Committee. Outside Directors take the initiative to increase the level of fairness of judgments and activities by the Board of Directors and each committee and realize the best possible level of corporate governance and fill their responsibilities.
The Company promotes the management function with the Board of Directors comprised of Directors who are also Executive Officers, while setting itself as the organizational structure which exercises the monitoring function centering on the independent outside Directors, Audit & Supervisory Board Members and the Audit & Supervisory Board. In addition, the establishment of voluntary committees enhances the transparency of the Board of Directors. This arrangement results in a hybrid structure that balances the operational execution function and the advisory function and the Company increases its' autonomous functionality.
Nomination Advisory Committee
The Nomination Advisory Committee receives explanations from the representative
Director on General Meeting of Shareholders proposals regarding the appointment
of Directors, as well as the evaluation of individual Directors, and discusses
their appropriateness and states its opinion, ensuring the objectivity
of Director nominations. Also, the Nomination Advisory Committee formulates
the Independence Standards for Outside Executives on the appointment of independent and neutral outside Directors and elects,
as a principle, outside directors who satisfy the criteria.
(Chair: Independent Outside Director)
Remuneration Advisory Committee
The Remuneration Advisory Committee receives advice on the policies for
determining the remuneration of Directors, as well as the content of individual
remuneration, and states its opinion regarding the remuneration of Directors
and Executive Officers, in order to ensure objectivity. Also, the Remuneration
Advisory Committee proactively seeks out external research and other data,
examines the appropriateness of the process for determining remuneration.
(Chair: Independent Outside Director)
Corporate Governance Committee
The Corporate Governance Committee is composed of outside Directors, outside
Audit & Supervisory Board Members and full-time Audit & Supervisory
Board Members, the CEO, COO and CFO and Representative Directors. This
committee conducts exchanges of views on vision, strategies and other items
related to corporate governance and overall Company management from diverse
perspectives and based on a long-term viewpoint. By incorporating into
corporate management the full extent of the knowledge and wisdom of outside
Directors and outside Audit & Supervisory Board Members, the Corporate
Governance Committee aims to create a "better company," convening
with the principal purpose of contributing to corporate value creation
over the medium to long term.
Furthermore, this committee exchanges opinions about the Company's initiatives related to SDGs and ESG, in addition to receiving information regarding important matters from following committees.
The Company's system to promote initiatives related to Environmental and Social initiatives
The Company aims to succeed in contributing to creating a sustainable society. To realize that, The Company has established following committees to specify management policies, strategies, and high-priority issues from a medium- to long-term perspective, and is operating a system to promote initiatives related to Environmental and Social initiatives.
Companywide Environment Committee
The Companywide Environment Committee is established to realize the Company's social responsibility and roles related to nature capital, in line with the Environmental Vision. This committee deliberates and decides fundamental items related to the Company's environmental activities and acts as the body providing companywide instruction and management on environmental activities.
(Chair: Officer in charge of Environment)
In order to improve the effectiveness of the visions and strategies designed to improve corporate value over the medium to long term, this committee will provide information to the Corporate Governance Committee regarding important matters concerning the Company's initiatives related to SDGs and ESG, particularly those related to the environment.
The Sustainability Committee is established to stay up to date with and make improvements in response to high-priority issues among ESG issues such as the Company's relationship with employees and business partners, and particularly those related to society. This committee deliberates and determines how to make improvements in relation to high-priority issues, particularly those related to society that the Company should address, and acts as the body providing companywide instruction and management on social activities.
(Chair: the head of Management Administration)
In order to improve the effectiveness of the visions and strategies designed to improve corporate value over the medium to long term, the Sustainability Committee will provide information to the Corporate Governance Committee regarding important matters concerning the Company's initiatives related to SDGs and ESG, particularly those related to society.
Committee Structure Related to Execution of Operations
The Company establishes the following committees related to the execution of operations in order to contribute to the execution of operations by Executive Officers and to execute accurately and swiftly decisions determined by the Board of Directors.
Joint Membership Council.
The Company establishes a joint panel of Directors and Executive Officers
in order to fulfill their responsibilities for the operation and encourage
mutual communications, as well as to appropriately execute decisions determined
by the Board of Directors.
(Chair: Representative Director, President (COO))
Internal Control Committee
The Company has revised its Basic Policy on Construction of the Internal Control System in line with the Revised Companies Act, which went into effect in May 2015.
The Board of Directors establishes an Internal Control Committee to implement internal controls in accordance with the Basic Policy on Construction of the Internal Control System formulated, and requests reports on the system's operational status and provides supervision.
(Chair: Head of Management Administration)
Risk Management Committee
The Board of Directors establishes a Risk Management Committee as the organization to construct and maintain a risk management system to prevent and curtail the manifestation of risks related to the management of the Daiwa House Group, as well as to reduce the amount of damage when risks materialize.
(Chair: Head of Management Administration)
Real Estate Investment Committee
The Company establishes a Real Estate Investment Committee, for the purpose of assessing the feasibility of investments and evaluating risks, to contribute to decision-making of the rational and effective investment of capital in real estate development and investment business.
(Chair: Representative Director, President (COO))