Corporate Governance

Corporate Governance

NuFlare Technology,Inc.(“NuFLare Technology”) aims to be a company trusted not only by shareholders and investors but also by customers, business partners, local communities, and employees. For this objective, we regard the improvement of our managerial efficiency, soundness and transparency, maintenance of compliance, and other factors as important managerial tasks and implement robust corporate governance by implementing the “NuFlare Technology Corporate Principles,” “NuFlare Technology Standards of Conduct,” “Risk and Compliance Management Rules,” and “Business Risk Management Rules,” as well as by other means.

<< NuFlare Technology Standards of Conduct >>

Governance Structure

Governance structure

*For further details on the governance structure, please see IR documents, such as securities reports.

Basic Policy and Current Status of Internal Control Systems

NuFlare Technology adopted basic policies on internal control at the Board of Directors meeting on May 24, 2006 and adopted a partial revision of the basic policies in accordance with the revision on May 1, 2015 of the Companies Act. The basic policies, in accordance with which we seek to ensure appropriate operations, are described in the following.

1. System to ensure directors’compliance with laws and regulations and the Articles of Incorporation

  • Directors of NuFlare Technology shall:
  • (1)Carry out their job duties in accordance with the NuFlare Technology Group Corporate Principles and NuFlare Technology Group Standards of Conduct, which stipulate the company’s ethical policies, action guidelines, legal compliance standards, etc.
  • (2)Assume authority and responsibility for constructing systems for assuring compliance with relevant laws and regulations, etc., in their respective areas of responsibility.
  • (3)Periodically report to the Board of Directors on the execution of their duties. Director are also required to report on necessary items concerning legal compliance to the Board on an as-needed basis.

2. System for retention and management of information concerning directors’ execution of duties

  • (1)In accordance with all applicable laws and regulations and the Rules concerning the Storage and Management of Documents, NuFlare Technology creates and stores minutes of various meetings and appropriately records and also stores information related to important job duties and decision making.
  • (2)Management of information shall be conducted in accordance with the Basic Policies on information security management, Personal Information Protection Rules, and other relevant rules.

3. Rules and other systems concerning risk management

  • (1)NuFlare Technology has established the Risk and Compliance Management Rules, appoints a Chief Risk and compliance Management Officer (CRO), who is in charge of risk and compliance management for the whole company, and has the Risk and Compliance Management Committee, which discusses important matters, makes recommendations, etc., to help the CRO implement his or her missions. The General Affairs Department is given overall control of risk and compliance management. As for business risks, the Business Risk Management Rules have been established and the Management Planning Department holds overall control of such risks.
  • (2)Directors of NuFlare Technology formulate and promote measures necessary for continuously clarifying business risk factors and minimizing loss in the event that risk is realized in accordance with the Risk and Compliance Management Rules.

4. System to ensure that directors efficiently execute their duties

NuFlare Technology seeks to increase the efficiency of execution of duties by its directors through the following mechanisms.

  • (1)Directors run Board of Directors meetings, management strategy meetings, monthly debriefing meetings, etc. in accordance with the Rules of the Board of Directors, Guidelines for Top Management Meetings, etc. They also carry out their duties by following the appropriate procedures set forth in the rules, etc.
  • (2)The Board of Directors determines the basic management policy, mid-term business plan, and annual, semi-annual, and monthly budgets.
  • (3)The Board of Directors delegates authority and responsibilities to directors in an appropriate manner, and directors clarify the authority and responsibilities of employees in accordance with the Rules concerning Division of Duties and the Decision-making Authority Standards.
  • (4)Directors appropriately evaluate the performance of the NuFlare Technology Group.
  • (5)Directors follow up annual, semi-annual, and monthly budget implementation and appropriately evaluate performance.
  • (6)Directors shall use the Toshiba Self Assessment Program (TSAP) or other self-audit systems to self-audit the implementation of their duties to ensure rational and legitimate operations.

5. System to ensure that employees’ perform their duties in conformance with laws and regulations and the Articles of Incorporation

  • (1)Our president ensures that employees observe the NuFlare Technology Group Standards of Conduct through continued provision of education and training, etc.
  • (2)The Chief Risk and Compliance Management Officer (CRO) formulates and promotes measures concerning compliance and risks in line with the Risk and Compliance Management Rules established by the CRO.
  • (3)The Board of Directors delegates authority and responsibilities to directors in an appropriate manner and directors clarify the authority and responsibilities of employees in accordance with the Rules concerning Division of Duties and the Decision-making Authority Standards.
  • (4)The Internal Audit Department performs internal audits in order to monitor the appropriateness of execution of duties of employees and improve the same.

6. System to ensure the appropriateness of business operations of the corporate group that consists of NuFlare Technology, its parent company, and its subsidiaries

  • (1)NuFlare Technology requests its subsidiaries to adopt and implement the NuFlare Technology Group Code of Business Conduct and to establish a whistleblowing system suitable for individual countries.
  • (2)System for reporting to NuFlare Technology concerning performance of duties by subsidiaries' directors, executive officers, employees who execute business, employees who are to perform duties pursuant to Article 598 (1) of the Companies Act or any other persons in comparable positions (hereinafter called "directors etc." in (3) and (4) below)
  • NuFlare Technology requests subsidiaries to report to it in accordance with the Operational Communication Arrangement in the event that material issues arise in their business operations.
  • (3)Rules and other systems concerning risk management for subsidiaries
  • NuFlare Technology requests subsidiaries to establish a risk and compliance management system in accordance with its Risk and Compliance Management Rules.
  • (4)System to ensure that directors etc. of subsidiaries efficiently execute their duties
  • NuFlare Technology puts in place a system to maximize the corporate value of the NuFlare Technology Group by establishing an internal control system in its subsidiaries to enhance management efficiency and ensure risk management and thorough compliance with laws and regulations in accordance with the Group Governance Management Rules.
  • (5)System to ensure that directors etc. and employees of subsidiaries perform their duties in conformance with laws and regulations and Articles of Incorporation
  • NuFlare Technology performs management audits of subsidiaries in accordance with the Group Governance Management Rules.
  • (6)System to ensure the appropriateness of business operations of the corporate group that consists of NuFlare Technology, its parent company, and its subsidiaries
  • NuFlare Technology puts in place a system to ensure the appropriateness of business operations through appropriate collaboration with its parent company while securing and maintaining its independence.

7. Employees assigned to assist auditors in the performance of their duties

  • (1)At present, there are no employees assigned to assist auditors in the performance of their duties. However, if the need arises to appoint auditing staff to assist auditors with their auditing duties, directors shall consult with the auditors on the selection of staff.
  • (2)In the event that employees are assigned to assist auditors, they shall follow the instructions of auditors, not those of directors, to assist auditors in the performance of their duties. Decisions on transfer, evaluation, disciplinary measures, etc. concerning the said employees shall be made based on consultation with auditors in advance.

8.System for reporting to auditors

  • (1)System for reporting to auditors by directors, accounting advisors and employees
  • 1) Directors and employees shall report to auditors as soon as practicably possible in accordance with the Rules concerning Reporting to Auditors in the event that any material issue arises that may significantly affect management or financial performance.
  • 2) The president shall provide auditors with opportunities to attend important meetings, including Top Management Meetings, as deemed necessary by auditors.
  • (2)System for reporting to auditors by subsidiaries' directors, accounting advisors, auditors, executive officers, employees who execute business, employees who are to perform duties pursuant to Article 598 (1) of the Companies Act or any other persons in comparable positions, and other employees, or employees who have received a report from the above-mentioned persons
  • Subsidiaries' directors, auditors, employees who execute business, and any other employees in comparable positions, and other employees or employees who have received a report from the above-mentioned persons shall report to the risk owner stipulated in the Risk and Compliance Management Rules as soon as practicably possible in accordance with the Operational Communication Arrangement in the event that any material issue arises that may significantly affect management or financial performance. The risk owner who received the report shall report to auditors via the head of the General Affairs Department in accordance with the Rules concerning Reporting to Auditors.
  • (3)System to ensure that employees who have made a report pursuant to 8. (1), (2) are protected from unfair treatment
  • NuFlare Technology prohibits its employees from being treated unfairly on the grounds that they have made a report to auditors pursuant to 8. (1), (2). NuFlare Technology ensures that its employees and those of subsidiaries are thoroughly aware of this rule.

9. Policy concerning the procedure for advance payment or reimbursement of costs incurred by auditors in performing their duties, and the procedure for payment and reimbursement of other costs incurred by auditors in performing their duties

  • In the event that the need for any of the following arises, directors and auditors shall exchange their opinions each fiscal year on the procedure to be implemented, secure the budget, and implement the procedure: 1) procedure for advance payment or reimbursement of costs incurred by auditors in performing their duties; 2) processing or reimbursement of other costs incurred by auditors in performing their duties.

10. System to ensure that audits by auditors are conducted effectively

  • (1)The president shall periodically exchange information with auditors
  • (2)Directors and employees shall report to auditors concerning execution of their duties through interview or other means at the request of auditors.
  • (3)Each time an internal audit is carried out, directors shall report the results to auditors.

Mesures against Antisocial Forces

NuFlare Technology clearly states, in the NuFlare Technology Standards of Conduct, that it shall reject any involvement by antisocial forces in its business activities, and it has in place a system to deal effectively with this matter both inside and outside the company in cooperation with the police and lawyers in accordance with the External Affairs Administration Policy. In addition, the company provides employees with training on this matter at regular intervals to make sure that all employees are aware of this issue.

Audit of Governance

NuFlare Technology is subject to external audits by the Board of Auditors and accounting auditors, in addition to self-audits by the Board of Directors and the Internal Audit Department, as well as attendance of outside directors at Board of Directors meetings. In addition, we have introduced a whistle-blowing system for employees, provides a consultation service to allow employees to ask for advice on compliance violations, and makes every effort through education, training, and meetings to alert all our directors and employees of the importance of not committing any act that could raise suspicions of compliance violations.

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