The TORIDOLL Group has a policy of demonstrating dynamism by accelerating decision making, increasing the pace of business expansion, and maintaining soundness and transparency and has established management organizational structures and mechanisms.
We also established an Audit and Supervisory Committee as a management audit and supervisory body. Members of the committee attend Board of Directors meetings to make statements, provide necessary advice, and exercise voting rights from the perspective of ensuring management soundness when managerial decisions are made. Members of the Audit and Supervisory Committee also share information at committee meetings and strive to achieve highly transparent management and timely disclosures of information.
Policy and Management System
Corporate Governance Systems
At TORIDOLL Holdings, we are reinforcing our governance systems to improve our corporate value in the medium- and long-term.
Our Board of Director consists of six members, including three directors and three outside directors. Thus, our governance systems enable decisions to be made flexibly by a small number of leaders. We have appointed three independent outside directors (including one woman), who are qualified as public accountants or lawyers, to ensure the execution of our business is supervised appropriately. We have also appointed all of the outside directors as Audit and Supervisory Committee members, in our efforts to reinforce our auditing systems.
Board of Directors
The TORIDOLL Holdings Board of Directors formulates and approves medium-term management plans and makes decisions on key matters of business execution in light of those plans.
Matters that must be determined by resolution of the Board of Directors are specified by laws, regulations, and the Company’s Articles of Incorporation as well as the Board of Directors Provisions.
Audit and Supervisory Committee
TORIDOLL Holdings established an Audit and Supervisory Committee to reinforce corporate governance systems. The committee is made up of the three independent, outside directors.
Audit and Supervisory Committee members attend meetings of the Board of Directors and other important bodies, receive business reports from the directors, audit the accounting audits of affiliated companies and the audit methods of the accounting auditors, hold monthly meetings with the Internal Audit Office, and engage in other audit activities to monitor the overall status of the execution of business. They report the results of audits to the Board of Directors and provide advice and recommendations for corrective action as necessary.
Attendance at Meetings of the Board of Directors and Audit and Supervisory Committee(FY2019)
|Title||Name||Board of Directors||Audit and Supervisory Committee|
|No. of meetings attended||Attendance rate (%)||No. of meetings attended||Attendance rate (%)|
|President and CEO||Takaya Awata||20||100||-||-|
|Executive Director and COO||Kimihiro Tanaka||20||100||-||-|
|Executive Director and CFO||Hiroyuki Kobayashi
|Director and CSCO||Masatoshi Kamihara||20||100||-||-|
|Director (Audit and Supervisory Committee member)||Toshiyasu Umeki||20||100||18||100|
|Director(Audit and Supervisory Committee member)||Hiroaki Umeda||20||100||18||100|
|Director (Audit and Supervisory Committee member)||Maki Kataoka||20||100||18||100|
Assessment of the Effectiveness of the Board of Directors
TORIDOLL Holdings analyzes and assesses the effectiveness of the Board of Directors as a whole once annually.
In fiscal year 2019, issues relating to the current effectiveness of the Board presented by the outside directors were examined based on prior discussions conducted in advance by all three of the outside directors (Audit and Supervisory Committee members) as discussed below.
- Issues examined in the assessment of effectiveness
- Effectiveness as a deliberative body
Although the Board engages in discussions with a focus on the outside directors, both the executive directors and outside directors should deliberate at meetings of the Board on the results of discussions conducted by each group of directors in advance and achieve deep understanding and engage in active exchanges on opinions on each resolution proposal.
- Individual specific issues
- With respect to governance by the Board from a primarily financial perspective in response to the expansion of business, the Board formulated and enacted Capital Management Provisions in 2016 and formulated and enacted Business Investment Provisions in 2019 to establish certain systems. It is necessary to appropriately enforce these provisions in the future.
- Director training should include case studies of crisis management relating to compliance at other companies as well as training on Group corporate management and the other responsibilities of directors in light of recent judicial decisions.
- Effectiveness as a deliberative body
Going forward, the Board will move toward implementation of measures taking into consideration these issues and will periodically confirm the status of operation.
Internal Control Systems
TORIDOLL Holdings has formulated clear fundamental policies that the President and CEO must comply with, established various provisions necessary for the establishment of internal control systems, and positioned them for implementation as quickly as possible under the guidance of the responsible personnel. We continuously review and improve internal control systems and seek to create efficient and lawful corporate structures.
Internal Audit Systems
TORIDOLL Holdings has established Internal Audit Provisions and an Internal Audit Office which reports directly to the President and CEO. The Internal Audit Office formulates audit policies and annual plans, audits the status of business execution in accordance with the designated rules for Group companies and each headquarters division, evaluates the status of internal control development and operation, and makes proposals for improvements. Audit results are reported to the President and CEO and the Audit and Supervisory Committee members (outside directors).
TORIDOLL Holdings has an audit contract with KPMG AZSA LLC, which provides an environment in which independent and fair accounting audits are conducted, such as by providing correct management information.
The Audit and Supervisory Committee and the Internal Audit Office of the Company conduct audits in cooperation with KPMG AZSA LLC at least four times a year, coordinating and cooperating with each other.
The TORIDOLL Group does not hold listed shares as strategic shareholdings. Group policy is not to engage in such holdings in the future in principle in order to avoid the risks of fluctuations in share prices and to enhance capital efficiency.
Production of Group Management Book
As the TORIDOLL Group undergoes remarkable growth and expansion, reinforcing global Group
governance systems has become an important management issue.
In 2020, we prepared a Group Management Book summarizing points that require particular care, the types of action that will enhance business efficiency, and how to prevent errors and improper conduct when managers and other responsible personnel of Group companies carry out managerial duties.
The Group Management Book is used as a support tool (guidebook) for undertaking action tailored to the scale and culture of each Group company. In addition to the Japanese version, an English version will be prepared and distributed throughout the Group.
Election of Directors and Officer Compensation
Election of Directors, Audit and Supervisory Committee Members, and Other Officers
トTORIDOLL Holdings’ policy on the nomination of director candidates (excluding directors who are Audit and Supervisory Committee members) is to select individuals who have the qualities and experience to contribute to continued growth and increases in corporate value over the medium to long term, fully understand business, have the capabilities to properly carry out business management, have the ability to make timely and accurate decisions, and have appropriate risk management skills.
In addition, our policy on the nomination of candidates for director who will also serve as Audit and Supervisory Committee members is to select persons who have advanced knowledge in areas such as corporate management, finance and accounting, law, and so on and are capable of fully performing their duties relating to auditing the execution of work by directors and as members of the Audit and Supervisory Committee.
Independent Outside Directors
TORIDOLL Holdings made the transition to a company with an Audit and Supervisory Committee in order to reinforce its corporate governance systems and elected three independent outside directors with the qualities necessary in light of their expected roles and responsibilities. Based on the criteria for independence established by the Tokyo Stock Exchange and the Companies Act, the Company’s criteria for the independence of outside directors are defined as persons who satisfy the conditions set forth below.
The Company elects independent outside directors to half (three) of the seats on the six-member Board of Directors in order to appropriately reflect opinions that are independent from management when making various decisions on investment and other matters for the future growth of business.
TORIDOLL Holdings’ approach on the independence of outside directors
The Company has designated outside Directors Toshiyasu Umeki, Hiroaki Umeda, and Maki Kataoka as independent officers.
Persons who are not Executive Personnel of a key lender of the Company (a lender whose loan amount to the Company exceeds 2% of the Company’s consolidated total assets).
Persons who are not certified public accountants affiliated with an accounting firm that serves as the Company’s accounting auditor.
Persons who are not attorneys, certified public accountants, judicial scriveners, patent attorneys, or other professionals or consultants and the like (in the case of a corporation, partnership, or other group, persons affiliated with such group) that receive more than ¥10 million annually from the Company in compensation other than officer compensation.
Persons who did not fall under any of (b) to (f) in the three years prior to appointment.
Persons who are not spouses or family members within two degrees of consanguinity who falls under any of (a) to (g) (limited to an officer, general manager, Partner Staff member, associate, or other key person).
Persons who have not received donations exceeding ¥10 million annually form the Company and are not Executive Personnel of such a recipient.
Persons who do not have a reciprocal dispatch relationship with the Company for the dispatch of directors, executive officers, or corporate auditors.
Further to (a) to (j), there is no likelihood of conflicts of interest with the Group occurring.
List of outside directors
Reason for election
Mr. Umeki was elected as an outside director based on the Company’s determination that he is suitable for this position as he can provide insightful opinions based on his specialized knowledge as a certified public accountant and he is familiar with the Company’s internal operations as a result of serving as an advisor to the Company. The Company determined that Mr. Umeki has no interests in the Company and can perform supervision from an independent standpoint, and there is no likelihood of a conflict of interests with general shareholders, and accordingly, elected him as an independent director.
Mr. Umeda was elected as an outside director based on the Company’s determination that he is suitable for this position as he can provide insightful opinions based on his specialized knowledge as a certified public accountant and he is familiar with the Company’s internal operations as a result of serving as an advisor to the Company. The Company determined that Mr. Umeda has no interests in the Company and can perform supervision from an independent standpoint, and there is no likelihood of a conflict of interests with general shareholders, and accordingly, elected him as an independent director.
Ms. Kataoka was elected as an outside director based on the Company’s determination that she is suitable for this position as she can provide insightful opinions based on her specialized knowledge as an attorney. The Company determined that Ms. Kataoka has no interests in the Company and can perform supervision from an independent standpoint, and there is no likelihood of a conflict of interests with general shareholders, and accordingly, elected her as an independent director.
Based on the criteria for independence established by the Tokyo Stock Exchange and the Companies Act, the Company’s criteria for the independence of outside directors are defined as persons who satisfy the conditions set forth below.
Policy on Determination of Officer Compensation
TORIDOLL Holdings makes comprehensive determinations regarding the compensation of directors other than directors who are members of the Audit and Supervisory Committee taking into account the degree of contribution to the Company’s performance and enhancement of corporate value. The ratios of compensation linked to medium- to long-term performance and stock-based compensation has been increased since 2017. The new compensation scheme described below was introduced to provide incentives to eligible directors to sustainably enhance the Group’s corporate value and align the interests of directors with those of shareholders.
- Base compensation
- Short-term incentive compensation (performance-linked bonuses)
- Long-term incentive compensation (transfer-restricted shares and stock options)
Officer compensation is determined by the Board of Directors within the range of the maximum amount of director compensation set by resolution of the General Shareholders Meeting. When making decisions on compensation, the Board receives advice based on officer compensation survey data from a specialized outside agency to ensure objectivity in director compensation levels.
Also, the Audit and Supervisory Committee members deliberate on the appropriateness of director compensation and so on in light of performance and the status of execution of duties.
Total amount of director and Audit and Supervisory Committee Member compensation(FY2019)
|No. of persons||Total amount (million yen)|
|Directors (exc. Audit and Supervisory Committee members)||4||132|
|Directors (Audit and Supervisory Committee members)||3
(of which 3 are outside directors)
(of which 3 are outside directors)
- The above compensation amounts include amounts reported as expenses during the relevant fiscal year relating to share subscription rights granted in the form of stock options pursuant to resolutions of the General Shareholders Meeting and the Board of Directors meeting adopted on June 28, 2018 (¥2 million for directors excluding Audit and Supervisory Committee members and zero yen for directors who are Audit and Supervisory Committee members). They also include amounts reported as expenses during the relevant fiscal years relating to shares granted as transfer-restricted shares pursuant to resolutions of the General Shareholders Meeting and the Board of Directors adopted on June 29, 2017, resolutions of the Board of Directors adopted on July 9, 2018, and resolutions of the Board of Directors adopted on July 9, 2019 (¥7 million for directors excluding Audit and Supervisory Committee members).
- A determination is made that the compensation of directors (excluding directors who are Audit and Supervisory Committee members) is appropriate in light of the fairness of calculation of that compensation, the connection to performance, and other factors through an exchange of opinions by the three outside directors (who are Audit and Supervisory Committee members) with the President and CEO and deliberations by the Audit and Supervisory Committee.