At Capcom Board of Directors Meetings, three external directors take the lead in offering aggressive opinions and advice to ensure management transparency and corporate health. (As of March 31, 2016) In addition, they focus on promoting growth strategies utilizing corporate governance, vigorously discuss the ideal state of the Company's organizational design related to corporate governance and their accountability to shareholders and investors. The heated discussion with external directors produced numerous suggestions, two of which are presented in this section.
Note:Light blue highlights indicate external director comments.Mr. Iechika was appointed to the board as an external director for five years beginning in 2002. Legally, he was not an external corporate auditor, but in practice, he conducted audits in the same capacity as an external corporate auditor.
Going forward, each company must disclose their response to the Code. I think some companies will disclose only the bare minimum, while others will take the opportunity to carefully disclose their point of view. Considering the risk of mistakenly assuming a company is in compliance, from the perspective accountability, Capcom believes it appropriate to disclose descriptions of all items.
I don't object to Capcom adopting this stance, but it appears there are several incomplete descriptions. For example, in supplementary principle 4.11.3 "Analysis and Evaluation of Board of Director Effectiveness," there is a description of internal control systems, but there is no description regarding Board of Director deliberations, thus from a self-evaluation perspective this response is insufficient. I would like to see disclosure pertaining to analysis and evaluation packed with concrete details, including preparations for Board of Director meetings, the provision of materials, explanation of items for deliberation as well as agenda selection policies and board discussions aimed at improving efficacy. Furthermore, operations after the Code is submitted are critical, thus I would like Capcom to continue making improvements in areas where there are deficiencies going forward.
Rather than an end in itself, governance is a means to an end. To achieve results, we need to use the code appropriately rather than wave it around.
Management entails taking on risk. Use of the code is the means by which to control risk. We must constantly review our governance structure and control risks to develop a future vision and move forward.
In addition to auditing focused on legality up to now and internal auditing of execution, there is merit in this transition as it will strengthen the monitoring function by enabling validity monitoring. As a result, as we execute growth strategies, we will be able to ensure a system for monitoring deviations in budgetary and financial management.
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