Independence Criteria for Outside Directors
To ensure the practical independence of our independent outside directors, our company has established the following criteria for the independence of outside directors. If an outside director is judged to meet none of the following criteria, we consider that the outside director has independence from our company and there is no risk of conflict of interest with our general shareholders.
1.
An executive (*1) of our company or any of our consolidated subsidiaries (hereinafter collectively referred to as the "Company Group"), or someone who has been an executive of the Company Group within the past 10 years.
2.
A party for whom the Company Group is a major business partner (*2) or an executive of such a party.
3.
A major business partner of the Company Group (*2) or an executive of such a business partner.
4.
A major lender to the Company Group (*3) or an executive of such a lender.
5.
A major shareholder of the Company (*4) or an executive of such a shareholder.
6.
A professional such as a lawyer, certified public accountant, or consultant who receives a large amount of money or other financial benefits (*5) from the Company Group in addition to executive compensation (if such financial benefits are received by an organization, such as a corporation or association, the individual belongs to such an organization).
7.
A person belonging to an auditing firm that is the accounting auditor of the Company.
8.
A person who receives large donations (*6) from the Company Group (if such donations are received by an organization, such as a corporation or association, the individual is an executive of such an organization).
9.
A close relative (*7) of an executive of the Company Group.
10.
A person whose close relative falls under any of items 2 through 8 above.
11.
A person who has fallen under any of items 2 through 9 above within the past three years.
12.
A person who, for any other special reasons, cannot perform the duties of an independent outside director due to a potential conflict of interest with the Company.
Even if a person falls under any of items 1 through 11 above, if it is determined that the person is substantially independent, we may judge that the person has independence by explaining and disclosing the reasons at the time of the appointment of the outside director.
Note:
- *1"Executive" refers to an executive as defined in Article 2, Paragraph 3, Item 6 of the Companies Act Enforcement Regulations, and includes executive directors, executive officers, and employees, but does not include non-executive directors and auditors.
- *2A "party for whom the Company Group is a major business partner" refers to a business partner whose payment amount from the Company Group in the most recent fiscal year exceeds 2% of the consolidated sales of the business partner. A "major business partner of the Company Group" refers to a business partner whose receipt amount from the Company Group in the most recent fiscal year exceeds 2% of the consolidated sales of the Company Group.
- *3A "major lender" refers to a financial institution whose outstanding loans to the Company Group at the end of the most recent fiscal year exceed 2% of the Company's consolidated total assets. However, even if it is 2% or less, financial institutions listed as lenders in statutory documents such as securities reports and business reports are included as major business partners.
- *4A "major shareholder" refers to a shareholder who holds 10% or more of the voting rights in their own or another's name at the end of the most recent fiscal year.
- *5"Large amount of money or other financial benefits" refers to benefits exceeding 10 million yen per year on average over the past three fiscal years from the Company Group.
- *6"Large donations" refers to donations exceeding 10 million yen per year on average over the past three fiscal years from the Company Group.
- *7"Close relative" refers to a spouse or a relative within the second degree of kinship.