- Basic Views of Corporate Governance
- Corporate Governance Structure
- Composition of the Board of Directors and expertise of each Director
- Policies for constructive dialogue with shareholders
- Strategic Shareholdings
- Corporate Governance Report
Basic Views of Corporate Governance
The Company recognizes that it is one of our social responsibilities to ensure transparent and sound management, while emphasizing initiatives to achieve sustainable corporate growth and a medium- to long-term improvement in corporate value. Respecting the rights and interests of all of our stakeholders—shareholders, customers, local communities, and employees—we work to fulfill the trust they place in us, and aspire to contribute to a more prosperous society. To fulfill these social responsibilities, we engage in continuous initiatives to enhance corporate governance by boosting the activity of the Board of Directors, reinforcing the Audit and Supervisory Committee and the internal audit system, ensuring timely and appropriate disclosures of information, improving investor relations (IR), and related activities.
Appropriate collaboration with all stakeholders
In accordance with the Company's "Vision," which guides all of the Company's activities, and the "Mitsubishi HC Capital Group Code of Ethics and Code of Conduct," which serves as the standard for the decisions and behaviors of all employees, the Company strives to ensure appropriate collaboration with its various stakeholders, including shareholders, customers, local communities, and employees. In addition, the Company strives to foster a corporate culture that encourages respect for the diversity of our stakeholders, their rights and perspectives, and sound corporate ethics.
Appropriate information disclosure and securing of transparency
The Company strives for proactive and continuous information disclosure in order to gain trust and allow appropriate evaluations from stakeholders. The Company also develops and properly manages internal structures to accurately, promptly, and fairly disclose information regarding its management policy, business strategies, business activities, financial status, and other matters. In addition, the Company voluntarily and proactively discloses non-financial information which is useful for stakeholders, not just information for which disclosure is required in laws and regulations.
Ensuring the rights and equality of shareholders
The Company takes appropriate steps to ensure that the rights of shareholders are secured and can be exercised effectively, including furnishing the necessary environment for the exercise of such rights, and gives consideration to the fair treatment of all shareholders, including minority shareholders and foreign shareholders.
Dialogue with shareholders
Through events such as financial results briefings and other domestic and overseas investor relations (IR) events, the Company pursues proactive and constructive dialogue with shareholders.
We thereby seek to gain understanding from shareholders regarding matters such as the Company's business strategies, while responding to the shareholders in an appropriate manner based on an understanding of their perspectives.
Responsibilities of the Board of Directors
All members of the Board of Directors, including Outside Directors, call upon their experience and insight as they engage in free and open discussions, contributing to active proceedings of the meetings of the Board of Directors. In this manner, they adequately fulfill their duties and responsibilities to achieve the sustainable growth of the Company, medium- to long-term improvement of its corporate value, and enhancement of its earnings capacity and capital efficiency in an environment that supports appropriate risk-taking.
Corporate Governance Structure
Overview of Corporate Governance Systems
The Company conducted a business integration through the merger with Hitachi Capital Corporation as of April 1, 2021 (the "Business Integration"). In conjunction therewith, the Company transitioned into a company with an audit and supervisory committee in order to enhance the fairness and transparency of management, strengthen the supervisory functions of the Board of Directors, and enhance corporate governance.
Matters concerning the Board of Directors
The Company implements a system to manage and operate business in line with the basic policy decided by the Board of Directors. Each Outside Director has qualities appropriate for their positions, giving the Board of Directors a set of diversified and sufficient skills.
Matters concerning the Governance Committee, the Nomination Committee, and the Compensation Committee
The company has established the Governance Committee as an advisory body to the Board of Directors. The committee consists of the Outside Directors, Representative Directors, etc., and has exchanged a wide range of opinions on the improvement of the Board of Directors' effectiveness and other matters regarding the Board of Directors, in order to work on the improvement of the soundness, transparency, and fairness of the Company's management.
The Company has also established the Nomination Committee and Compensation Committee as advisory bodies to the Board of Directors, in order to strengthen the independence, objectiveness, and accountability of the Board of Directors' functions concerning the nomination, compensation, etc. of Directors. Independent Outside Directors comprise the majority of both the Nomination Committee and Compensation Committee, and their members and the chairperson are selected by the Board of Directors.
The Nomination Committee discusses the appointment of Directors, the succession plan for the Representative Director, President & CEO, knowledge, experience and skills that Directors should have, and other matters.
Meanwhile, the Compensation Committee regularly monitors the Directors' compensation system of the Company in comparison with the market standard by using an external specialized agency, and discusses policies concerning the systems, standards, etc. for Directors' compensation.
It has been agreed that the decisions on particularly important matters such as nomination and compensation to be made by the Board of Directors shall respect the resolutions of each committee, based on the understanding that appropriate involvement of Independent Outside Directors is extremely important.
Matters concerning business execution
As a company with an audit and supervisory committee, the Company delegates many business execution decisions to the Executive Committee, a body which will deliberate and decide on important management matters, and expedites the decision-making process, with the aim of strengthening the supervisory functions of the Board of Directors. In addition, the Company has introduced an executive officer system, in order to further enhance and invigorate the functions of the Board of Directors by clarifying the responsibilities related to the execution of business.
Matters concerning auditing
The Company has established the Audit and Supervisory Committee Office, which assists activities of the Audit and Supervisory Committee, and cooperates with the internal audit offices to achieve effective auditing.
The Company's internal audit is implemented by the Internal Audit Department. In order to ensure independence and objectiveness, the Internal Audit Department adopts a structure under which its members do not concurrently perform the operations of the executive division. The Internal Audit Department systematically implements internal audits based on an annual audit plan, and reports the audit results to the Representative Directors and the Audit and Supervisory Committee.
Selection and Dismissal of Directors
The Board of Directors resolves the appointment of candidates to serve as Directors after the Nomination Committee, of which Independent Outside Directors comprise the majority, holds discussions in advance based on the selection standards described below. The Board of Directors also resolves the appointment of candidates to serve as Directors who are also Audit and Supervisory Committee Members after the Nomination Committee discusses it and the Audit and Supervisory Committee agrees to it.
In addition, if Directors are found to meet the dismissal standards described below, their dismissal is deliberated by the Nomination Committee in a timely manner and decided by the Board of Directors.
- Directors and Audit and Supervisory Committee Members should have the mental and physical soundness sufficient to execute business.
- Directors and Audit and Supervisory Committee Members should be persons who are well respected, possess excellent integrity and hold themselves to high ethical standards.
- Directors and Audit and Supervisory Committee Members should have a law-abiding mentality.
- Directors and Audit and Supervisory Committee Members should be expected to make objective judgments regarding management and have excellent insight and perspicacity.
- It is reasonable to consider that the candidates will help strengthen the functions of the Board of Directors in view of their knowledge, experience, capabilities, and similar factors.
- In addition to 1. to 5. above, candidates for Outside Directors should (i) have experience, achievements, and knowledge in their fields of specialization, (ii) be able to contribute to the implementation of appropriate decision making and management supervision of the Board of Directors, , and (iii) be expected to secure the time necessary to fulfill their duties.
- Candidates for reappointment should have had roles expected of them during each of their previous assignments.
- The Director significantly damaged the value of the Company by neglecting their duties.
- The Director violated laws, articles of incorporation, or other regulations/rules of the Company, or conducted an act against public order and/or morals, which caused serious damage to the Company or hindrance to the business of the Company as a result.
- The Director is deemed to not meet the selection standards for Directors.
Compensation of Officers
The overview of compensation for the Directors' of the Company is as follows.
The amount of compensation is determined based on prescribed standards resolved by the Board of Directors after discussion in advance by the Compensation Committee, of which Independent Outside Directors comprise the majority. Decisions relating to the amount of compensation for each individual have been entrusted entirely to the Representative Director, President & CEO, and the fairness of such decisions is guaranteed by an ex-post verification of the specific amount to be paid by the Compensation Committee.
|Classification||Ratio||Details||Evaluation Method/Ratio||Range Based
on KPI Achievement
Company-wide performance evaluation: 100%
|0 - 150%|
(other than Representative Directors)
Company-wide performance evaluation: 70%
Evaluation of responsible duties: 30%
Type Stock Options
(Medium- to Long-
Term Incentive)Stock Compensation
Non-Executive Officers (Director (Audit and Supervisory Committee Member), Outside Director)
Evaluation of the Effectiveness of the Board of Directors
The Company's Board of Directors every term evaluates its effectiveness throughout the year based on the review and evaluation by all of the Directors on their activities, and implements the PDCA cycle for further improving the effectiveness.
We have decided to request opinions from all the Directors for the evaluation of the Board of Directors' effectiveness for FY2021, the first year of business integration, based on the discussion in the Governance Committee held in February 2022 involving Outside Directors.
The Governance Committee and the Board of Directors discussed and evaluated the effectiveness of the Board of Directors based on the opinions heard in March. The details of the discussion are as follows.
- In FY2021, the first year of business integration, the Board of Directors mainly deliberated topics that are important management matters and contribute to the improvement of the corporate value, such as the overall policy, company-wide PMI, execution of synergy initiatives (business investment), governance, sustainability, and the status of each Committee activities.
- Although the meetings were held online, all of the Directors actively participated in the deliberations. A number of opinions and questions based on each Director's knowledge were raised, active discussions were held, and the supervision of business execution and decision making were carried out appropriately.
- In consideration of the results above, it was evaluated that the Company's Board of Directors is sufficiently performing its role.
- On the other hand, challenges that should be considered were identified, such as discussions on business strategies along with the formulation of the new Medium-term Management Plan, securing sufficient time for deliberation, enhancement of information sharing with Outside Directors, and mutual understanding among executive officers.
In FY2022, we will strive to further enhance corporate governance and improve the effectiveness of the Board of Directors by implementing improvement plans making use of the survey.
The Company is working on management strategies and the like based on discussions on business portfolio management, business evaluations with awareness of capital cost, investment deal evaluations with awareness of capital cost, and initiatives including sustainability efforts.
Regarding individual discussion items, the Investment Strategy Committee discusses investment strategies based on profitability with awareness of capital cost, and the Sustainability Committee discusses sustainability efforts. The Board of Directors regularly deals with such matters as agenda items in consideration of the discussions made in the committees. In this way, we review the business portfolio of the entire MHC Group and strategically allocate management resources.
Composition of the Board of Directors and expertise of each Director
The Company assumes that the Board of directors shall possess skills in "general corporate management," "financing," "financial accounting," "legal, compliance and risk management," "international business" and other areas.
The Company recognizes that diversity of Directors is important for purposes of strengthening the function of the Board of Directors, and that gender, nationality, and race are factors which should be considered. On the other hand, the Company believes that it is not necessarily desirable, for purposes of strengthening the functions of the Board of Directors, to elect a Director with a certain attribute merely to comply with formal and external diversity requirements even when they lack the qualities and abilities that are required for the role. Therefore, the Company believes, as a desirable way of achieving diversity within the Company, that it is necessary to consider whether such Director is expected to perform the necessary skills and possesses the ability in light of the respective management environment as a top priority, and electing a desirable person without restrictions on gender, nationality, race, age, career, etc. Based on such a view, the Company will continue to determine the appropriate composition of the Board of Directors.
Currently, we assume that the Company's Board of Directors consists of Directors from a variety of business categories and industries, and has an appropriate number of members to ensure a balanced composition of appropriate skills and diversity.
The Company has currently elected two female Directors while no foreign Director has been elected. However, the Company acknowledges that the Board of Directors has been performing a sufficient supervisory function, as it has elected several Directors who possess a wealth of international business experience, and has received valuable opinions on global business development.
as of June 28, 2022
|Name||Current position and responsibility at the Company||Areas of expertise|
|Overall management||Finance||Financial accounting||Legal affairs,compliance,and risk management||Global business|
|Seiji Kawabe||Representative Director, Chairman||○||○|
|Takahiro Yanai||Representative Director, President & CEO||○||○|
|Kanji Nishiura||Representative Director, Deputy President, Business in general||○||○|
|Kazumi Anei||Director, Deputy President, Customer Solutions Unit||○|
|Taiju Hisai||Director, Deputy President, Corporate Center
Global Business Unit
|Haruhiko Sato||Director, Managing Executive Officer, Head of Corporate & Strategic Planning Division
Deputy Head of Treasury & Accounting Division
Independent DirectorOutside Director
Independent DirectorOutside Director
|Akira Hamamoto||Director (Audit and Supervisory Committee Member)||○||○||○|
|Koichiro Hiraiwa||Director (Audit and Supervisory Committee Member)
Independent DirectorOutside Director
|Hiroko Kaneko||Director (Audit and Supervisory Committee Member)
Independent DirectorOutside Director
|Masayuki Saito||Director (Audit and Supervisory Committee Member)
Independent DirectorOutside Director
Policies for constructive dialogue with shareholders
The Company strives to engage in proactive dialogue with shareholders, with the recognition that conducting transparent and sound management is one of its social responsibilities, while focusing on sustainable growth and enhancement of its medium- to long-term corporate value.
The Head of the Engagement Division is responsible for coordination, and the Corporate Communications Department and the Governance Control Department serve as the primary point of contact, implementing a system for coordination with the relevant internal departments, such as planning, accounting, and general administration.
The Company takes the following initiatives:
- Financial results briefings are held twice each year, once for second quarter financial results and once for full-year financial results, during which the Company's management provide explanations and also answer any questions that are asked.
- The Company's management (including Outside Directors), the Corporate Communications Department, and the Governance Control Department conduct individual interviews with domestic and foreign institutional investors, and IR and SR activities, such as participation in briefings and various conferences.
- The Company provides a wide range of information such as the movies of financial results briefings and materials with scripts, and summaries of Q&A sessions on the corporate website to investors including individual investors. In conjunction with this, the Company participates in IR events and various briefings for individual investors which are organized by securities companies and stock exchanges.
Regarding opinions and concerns expressed in the dialogue with shareholders, the Corporate Communications Department and the Governance Control Department, which serve as the points of contact, promptly provide reports to the Company's management, as necessary, to ensure the sharing of information.
The Company appropriately and carefully manages insider information, in accordance with the Company's internal rules, and also discloses such information in accordance with the information disclosure policy.
The Information Disclosure Policy is available on the Various Policies page of the Company website:
- Policy for strategic shareholdings
Under the corporate policy for enhancing its corporate value, the Company holds listed shares (strategic shareholdings) for purposes other than pure investment (targeting gains primarily through fluctuations in the value of shares and the receipt of dividends), with a view toward developing stable and long-term relationships with business partners and promoting business, along with strengthening such relationships based on capital/business alliances, and creation of new business opportunities.
In its strategic shareholding practice, the Company's basic policy is to regularly examine if it is rational to hold each stock and sell such strategic shares that are judged no longer rational to hold. Even when it is judged rational to hold shares, the Company may sell such shares in consideration of the impact of the risk of mark-to-market valuation fluctuation of the shares on the Company's finance, capital efficiency, etc.
- Method for verifying the rationality of strategic shareholdings
(i) A quantitative evaluation based on factors including the size of business transactions/profit, dividends received, and capital costs;
(ii) A qualitative evaluation of the business activities to date; and,
(iii) Potential business opportunities in the future.
The Board of Directors verifies the rationality of strategic shareholdings effectively by adjusting the focus on each of the items above for each investee in accordance with the significance of holding each stock and the benefits expected therefrom.
- Verification of the rationality by the Board of Directors
The Board of Directors examined the listed stocks using the method in 2. above at the Board of Directors meeting for the fiscal year ending March 31, 2022.
It was confirmed that stocks subject to this examination and that were judged no longer reasonable to hold would be sold.
- Basis for exercising of voting rights
The Company is dealing appropriately with the exercise of the voting rights of strategically held shares, in light of the aforementioned purposes of strategic shareholding (such as the development of stable and long-term relationships with business partners, as well as the promotion of business).
The Company is dealing appropriately with the exercise of voting rights that may affect the enhancement of our corporate value over the medium- to long- term, the corporate value of our business partners, or shareholder interests, after verifying the circumstances and the potential impact with particular care. The Company believes that the exercise of voting rights would have a potential impact on the corporate value and the shareholders' interests in the Company, as well as its business partners, insofar as such an exercise of voting rights concerns the following agendas:
- Agenda on the disposal of surplus
- Agenda on the election of directors and auditors
- Agenda on organizational restructuring, etc.