Governance | Structure and Initiatives
Shareholders and investors have made the 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 Corporate Governance Guidelines (June 23, 2022)
Corporate Governance Report (June 23, 2022)
Corporate Governance Structure
Enhancing management soundness and transparency while responding to changes in the environment
Capcom is aware that comprehensive corporate governance ranks among management’s most important priorities. Because of this, in addition to enhancing management soundness and transparency, we are increasing corporate value by building a trusting relationship with our stakeholders. These stakeholders include shareholders, business partners, employees and regional societies.
Shareholders’ Meeting(Convened on June 22, 2021)
Determines important matters as the highest decision-making body
The general shareholders’ meeting serves as Capcom’s highest decision-making body and determines important matters prescribed by laws, regulations, and the Company’s Articles of Incorporation, as well as serves as a place for communicating the audit results of divisional reports and consolidated financial statements.
Invitations to the general shareholders’ meeting are issued approximately three weeks before convening the session, and efforts are made to allow for greater attendance by having the session about 10 days before the date on which most other companies hold their meetings. We have also made it possible for shareholders to exercise their voting rights over the internet using a computer, smartphone or mobile phone. In addition, we participate in an electronic voting rights exercise platform for institutional investors so that they will have sufficient time to review the proposals.
Board of Directors(Convened 10 times in the year ended March 31, 2021)Supervision
Management decisions that incorporate external directors’ opinions
The Board of Directors is composed of 11 directors (chaired by the Representative Director and Chairman of the Board), with five of the directors being external directors.
The Board deliberates on important matters stipulated by laws, regulations, and the Rules of the Board of Directors, and strives to strengthen supervisory functions through the guidance, suggestions, and active comments of external directors.
In order to enrich deliberations, a portion of decision-making authority for the execution of important business is entrusted to the representative directors and others, while matters brought before the Board are narrowed to those of high importance, and the number of times the Board of Directors is convened is reduced. As a result, the efficiency of business execution has increased due to quick decision making and dynamic management practices.
Audit and Supervisory Committee
(Convened 10 times in the year ended March 31, 2021)Audit
Cooperating with accounting auditors and the internal audit department to audit and supervise
The Audit and Supervisory Committee (chaired by an external director) is composed of three directors (two of whom are full-time members), with two of the three directors being external directors.
In principle, the committee meets before a Board of Directors’ meeting is convened. The committee deliberates on important matters stipulated by the Rules for the Audit and Supervisory Committee and strives to strengthen audits and supervision.
Audit and Supervisory Committee members selected by the same committee carry out on-site audits themselves and, in order to increase the efficacy of audits, carry out dynamic organizational audits, including issuing instructions and other actions as necessary to, among others, the Internal Audit Division (directly under the control of the Audit and Supervisory Committee). The Internal Audit Division strives to ensure that audits function effectively by reporting the status of audits and improvements, and other issues to Audit and Supervisory Committee members.
The Nomination and Remuneration Committee
(Convened three times in the year ended March 31, 2021)
Selection of candidates for director and deliberating and recommending details of director compensation
The voluntary Nomination and Remuneration Committee (chaired by an external director) is composed of five directors (two of whom are internal directors and three of whom are external directors), with a majority of members being external directors.
Each committee member is selected based on the Board of Directors’ appraisal of his or her knowledge, insight, experience, and other qualities.
When selecting candidates to be nominated for director (excluding directors who are members of the Audit and Supervisory Committee) and candidates to be nominated for director who are members of the Audit and Supervisory Committee, the Board of Directors makes its decisions after consulting with the Nomination and Remuneration Committee and takes their recommendations into account in order to increase transparency and objectivity. The consent of the Audit and Supervisory Committee is obtained when selecting candidates to be nominated for director who are members of the Audit and Supervisory Committee.
In addition, when determining individual compensation of top management and directors, the Board of Directors makes its decisions after consulting with the Nomination and Remuneration Committee, which deliberates and makes recommendations based on the policy for determining compensation, and takes their recommendations into account in order to ensure fairness and transparency. Individual compensation of directors who are members of the Audit and Supervisory Committee is determined through discussion with each director who is a member of the Audit and Supervisory Committee, taking into account such factors as whether they are full time or part time. In order to ensure their independence, the compensation is fixed and not linked to performance of the Company.
The Compliance Committee
(Convened four times in the year ended March 31, 2021)
Focusing on Compliance as an Important Management Issue
The Compliance Committee is composed of 10 directors (five of whom are external directors, and the committee chairman is an attorney and external director).
In principle, the committee convenes once per quarter. Its primary activities are to analyze and assess risks to Capcom Group compliance and consider what action to take. In addition, the committee strives for early detection and prevention of legal violations or inappropriate conduct by finding internal risks and reporting their probability of materializing to the Board of Directors.
Ensuring and Verifying Accounting Transparency
Capcom has concluded an auditing contract with KPMG AZSA LLC for financial audits as prescribed by the Companies Act and financial audits as prescribed by the Financial Instruments and Exchange Law. There is no special relationship involving financial or other interests between Capcom and this audit corporation or the engagement partners at this firm who perform audits at Capcom.
Auditor Remuneration (Year ended March 31, 2021)
Delivery company 50 million yen – Consolidated subsidiary – – Total 50 million yen – Auditing Company Names of Certified Public Accountants KPMG AZSA LLC,
a limited liability audit corporation
Designated Limited Liability Partners Yasuhito Kondo Tomohiro Yamanaka
Note: The financial audit team was composed of: certified public accountants (14 members), and candidates for CPA who passed the new CPA exam, plus associates in charge of system audits (eight members).
Internal Audit Division
Ensuring and verifying legal compliance and operating efficiencies
In order for effective audits to be carried out, Capcom has established an Internal Audit Division and determines auditing policies, schedules, methods, and the allocation of duties after the end of the shareholders’ meeting.
The main activities of the Internal Audit Division are verifying and evaluating the status of employees’ execution of duties and the efficacy (and status of operation) of internal control systems, and reporting to the Audit and Supervisory Committee. When needed, division members also accompany selected Audit and Supervisory Committee members and carry out on-site audits of offices and subsidiaries inside and outside Japan.
Corporate Management Council (Convened 15 times in the year ended March 31, 2021)Implementation
Supporting the Board of Directors’ decisions
The Corporate Management Council (chaired by the Representative Director and Chairman of the Board) is composed of six internal directors and, in principle, is convened several days before a meeting of the Board of Directors, or whenever necessary.
In addition to meeting to carry out preliminary deliberations of Board of Directors agenda items, it also deliberates other important items.
Board of Corporate Officers
(Convened 12 times in the year ended March 31, 2021)Implementation
Executing operations based on management policy
Capcom utilizes a Corporate Officer System. In addition to clarifying the roles and responsibilities of directors focused on management and corporate officers focused on business execution, the system boosts management efficiency by allowing officers to swiftly execute business following instructions from executive directors regarding important matters determined at the Board of Directors.
The Board of Corporate Officers is composed of 15 corporate officers (four of whom serve concurrently as directors), and in principle, convenes once a month. Each corporate officer reports on the status of business execution and works to ensure that information is shared, while also exchanging opinions on business items and issues that require resolution.