Shareholders and investors have made the practical and effective functioning of internal control into a key issue amidst an epidemic of corporate misconduct in Japan and overseas. In this section, Capcom will explain the corporate governance structure and systems that it has initiated so far based on the key concepts of "effectiveness and visibility" in terms of the results of third party assessment.
(Assessment areas are highlighted in yellow.)
Capcom's basic policy for Japan's Corporate Governance Code (PDF: 728KB/49 pages)
- Structure and
- External Directors
- Information on Shareholdings
- Internal Control
- Information Security
Status of Internal Control System
Strengthening Risk Management through the Development of Our Internal Control System
As part of directors' due diligence, Capcom developed the following internal control system based on the Companies Act and its enforcement regulations to ensure that all Group company practices comply with regulations and are executed in an efficient manner.
1. Structure to Ensure that Directors Perform their Duties in Accordance with Laws and Regulations
To strengthen the management monitoring function and enhance corporate value, the Company strives to prevent illegal activities and ensure compliance through regular Compliance Committee checks etc., while attempting to invigorate and heighten the monitoring function of the Board of Directors in accordance with advice and recommendations from external directors.
2. Develop a System to Maintain Appropriate Business Practices
(1) Information Management and Storage related to Directors' Execution of Duties
The management and storage of documents and information related to directors' execution of duties, such as the minutes of the meetings of the Board of Directors is conducted in accordance with the "Document Management Rules."
(2) Risk Management Regulations and Other Systems
Efforts have been made so that the cross-sectional risk management system functions in accordance with the "Risk Management Rules," to proactively prevent crises and execute the appropriate actions if an emergency occurs.
(3) Structure to Ensure that Directors Perform their Duties Efficiently
The Company introduced a "Shikko Yakuin" (Corporate Officers) System under which the duties of the Board of Directors, who determine management policy, and the corporate officers, who carry out operations, are separated to enable smooth and flexible business operations and enhance efficient management.
(4) Structure to Ensure that Employees Perform their Duties in Accordance with Laws and Regulations
The "Capcom Code of Conduct" is the fundamental guidance to comply with laws and regulations. Preventive measures, including internal training and monitoring programs, are also in place.
(5) Structure to Ensure Compliance in Business Operations of the Company Group
The meetings of the Board of Directors of the Company's subsidiaries are held monthly, and are participated in by the Company's directors. In compliance with the "Management Regulations for Subsidiaries," etc., the Company developed close communication and collaboration between the Company and its subsidiaries, requiring reports on important information, including sales updates and business forecasts. Also to comply with the "Risk Management Rules," a group-wide compliance system is being promoted to ensure appropriate operations so that corporate governance functions effectively.
(6) Structure for the Audit and Supervisory Committee Assistants, Structure for their Independence of these assistants from Directors, and Structure to Assure the Effectiveness of Instruction given to them
For effective internal control, the Audit and Supervisory Committee strives to perform audits on the work of directors and employees based on the audit policy, report audit findings and make recommendations and advice as necessary. Accordingly, in order to enable the Audit and Supervisory Committee to perform its duties in a smooth and appropriate manner, the Internal Audit Division, etc., as organizations are directly supervised by the Audit and Supervisory Committee where nineteen dedicated staff members are in charge of performing tasks as assistants under the instructions of the Committee, and the Company ensures the consent from the Audit and Supervisory Committee is obtained regarding the personnel relocation of such staff members.
(7) Structure for Directors, the Audit and Supervisory Committee, Officers and Employees of the Company Group to Report to the Audit and Supervisory Committee, Structure to Report to the Audit and Supervisory Committee Other than the First Case, and Structure to Assure No Unfavorable Treatment will Result from the Reporting
Directors, the Audit and Supervisory Committee, Officers or employees of the Company Group, if asked for necessary information about the execution of their duties by the Audit and Supervisory Committee, respond quickly and appropriately to such requests, and properly report on required issues. Directors or employees who report to the Audit and Supervisory Committee will not be treated unfavorably because of such report.
(8) Structure to Ensure Effective Audit by the Audit and Supervisory Committee and Other Issues
Expenses incurred for executing the duties of the Audit and Supervisory Committee are budgeted. Directors who serve as members of the Audit and Supervisory Committee may request a cash advance on such expenses.
(9) Summary of operating status of system to ensure proper business execution
The Company has transformed from a "Company with Kansayaku Board" into a "“Company with Audit and Supervisory Committee" at the conclusion of the 37th ordinary general meeting of shareholders held on June 17, 2016. Accordingly, the operating status of system under the Audit and Supervisory Committee after the Company's transformation into a "Company with Audit and Supervisory Committee" is stated; of note, Corporate Auditors before said transformation also had the same operational structure as the Audit and Supervisory Committee.
(i)In addition to each system mentioned above, the Company holds the quarterly meeting of the Compliance Committee chaired by an external director and reports recognized inherent risks and the probability of such risks to be actualized to the Board of Directors, thereby aiming at the early detection and prevention of any violation of laws and regulations and wrongful acts.
(ii)Furthermore, the Company ensures that compliance is thoroughly understood by officers and employees, including the prevention of insider trading and information leakage and the ensuring of information security, by confirming effectiveness using e-learning and the periodic compliance check sheet in order to help officers and employees obtain sufficient knowledge on compliance.
(iii)With respect to affiliate companies, the Company also undertakes effective functioning of the group-wide internal control system by continuously monitoring the status of subsidiaries’ businesses through measures such as communicating the Company’s management policies to the management of subsidiaries and gathering information from the Company’s officers holding concurrent officer positions at subsidiaries and employees assigned from the Company.
(iv)The Audit and Supervisory Committee performs stringent checks as to whether or not the internal control system is being implemented effectively through organizational audits including periodically receiving reports from the Internal Audit Division, etc. and giving instructions as necessary.
(v)In conjunction with the Company's transformation into a "Company with Audit and Supervisory Committee", the Company has established, revised and abolished various rules, including revising the Board of Directors Rules and the Job Authority Regulations with the aim of partially delegating important matters on business execution to the representative director, in addition to establishing the Audit and Supervisory Committee Rules and abolishing the Board of Corporate Auditors Rules.
(vi)In order to reduce prolonged work, the Company is striving to manage working hours and make supervision more stringent. In addition to formulating measures to promote changes in the mindset of officers and employees and encourage them to take paid holidays, the Company holds monthly Health and Safety Committee meetings and is making other such efforts to maintain and enhance the health of employees.
3. Basic Views on Eliminating Anti-Social Forces
The Company has a firm stand against antisocial forces that threaten social order and the safety of citizens, and strictly prohibits any association with such groups at the organizational, employee and individual levels. If we are contacted by such groups, in addition to swift organizational measures, we will cooperate with the police and other relevant authorities to firmly refuse unlawful demands.
While the Company attempts to remain aware of information related to these groups in order to avoid contact or involvement, if we discover that we have unknowingly become involved with them, we will immediately terminate the association with help from the police and other relevant authorities.
Related Principles of the Corporate Governance Code
Initiatives to Strengthen Compliance
Focusing on the Viability and Effectiveness of Our Compliance System
Capcom has established the Compliance Committee chaired by an external director who is qualified as a lawyer and consisting of directors and directors who serve as members of the Audit and Supervisory Committee to prevent any violation of laws and regulations. In addition, the Company is working to improve the effectiveness of compliance on a group-wide basis by measures to maintain the functionality of the department responsible for accepting the consultation requests and whistleblower reports such as announcing necessary matters through the Company's intranet.
Furthermore, the "Capcom Code of Conduct" was formulated to strengthen our compliance system. Capcom is dedicated to proactively preventing illegal acts and misconduct, and ensuring legal compliance through the promulgation of corporate ethics and principles.
Compliance is the foundation of corporate governance and the basis for the fulfillment of corporate social responsibility.
Capcom will continue to instill this understanding in all its officers and employees.
Related Principles of the Corporate Governance Code