Basic Policy of Corporate Governance
Seikagaku Corporation views corporate governance as a core area of management priority, and endeavors to gather information accurately and adequately, speed up decision-making, and strengthen the supervisory function of business execution. We are profoundly aware of our social mission and responsibilities as a pharmaceutical company, and are committed to always earning the confidence of stakeholders, including our shareholders. In addition to establishing internal control system, such as for compliance and risk management, we are enhancing our corporate governance through mutual collaboration among departments within the company in order to create a management environment that meets the expectations of society.
Concrete Approach and Measures for Corporate Governance
Our corporate governance framework is summarized as below.
<<Board of Directors>>
The Board of Directors holds regular monthly meetings to make decisions on tasks stipulated in laws, the Articles of Incorporation and rules for the Board of Directors, such as basic management policy, mid-term management plan, annual management plan, and executive functions. Directors decide on important business, and supervise the performance of business operations. If necessary, additional meetings of the Board of Directors are convened.
The term of office for directors is one year with the aim of creating a management structure that would be able to adapt quickly and flexibly to changes in the business environment.
There are two outside directors in the Board of Directors, in order to enhance the supervisory functions of the Board. The outside directors are responsible for oversight from an objective standpoint, a perspective that incorporates the common interests of shareholders, and is based on expert knowledge and insights into corporate management. The outside directors also attend meetings held among the president, Audit & Supervisory Board members, and division and department managers to share views of the Company’s business issues and the external environment.
The two outside directors in the Board of Directors act as an “Independent Directors” under the TSE (Tokyo Stock Exchange) listing rules.
The documents and supplemental materials on the agenda are generally distributed to the members three days before the date of Board of Directors meetings in order to ensure review time for ample discussions.
The Board of Directors comprises four full-time and two outside directors. We enhance management oversight from an independent standpoint by appointing outside directors to one-third of Board seats.
In the procedure for determining compensation for directors and nominating candidates for directors and Audit & Supervisory Board members, representative directors implement prior explanations and exchange of opinions with the outside directors.
The Board of Outside Officers, comprising the outside directors and outside Audit & Supervisory Board members, evaluates the effectiveness of the Board of Directors and reports the evaluation results to the Board of Directors.
Seikagaku operates an executive officer system for enhancing the corporate governance. Under this system, executive functions are separated from the Board of Directors, the functions of which are limited to decision-making and the supervision of business operations. Seikagaku endeavors to build up an internal system, which is quickly able to respond to changes in the management environment, by improving the flexibility and efficiency of executive functions, expanding the executive officer system, and promoting the transfer of authority.
We hold weekly Management Committee meetings. At the meetings, full-time directors and managing officers confer and decide agenda of executive functions they have been tasked with implementing by the Board of Directors, based on the basic policy of the Board of Directors.
Seikagaku has established the Risk Management Committee with the aim of strengthening the internal control framework. The Committee, chaired by the director in charge of administration, comprises primarily directors and managing officers of various functions.
The Audit & Supervisory Board of Seikagaku comprises five members, two full-time and three outside members, and each member audits the directors’ execution of duties.
The outside members suitably perform supervision of the directors’ execution of duties from a perspective that incorporates the common interests of shareholders, based on insight and expertise of company management, and professional knowledge etc.
Out of five members, each one of full-time members and outside members have remarkable knowledge of finance and accounting.
The three outside Audit & Supervisory Board members act as an “independent officers" under the TSE (Tokyo Stock Exchange) listing rules.
To strengthen the oversight function, Audit & Supervisory Board members attend meetings of the Board of Directors, and the full-time members attend important meetings of the Management Committee, Compliance Promotion Committee, Risk Management Committee, and other management bodies and receive reports concerning the status of management and business execution.
The Audit & Supervisory Board increases audit effectiveness and efficiency by holding regular meetings with the president, Accounting auditor and Audit Department and by interviewing directors and managing officers in charge of divisions and managers.
<<Internal audit and accounting framework>>
Internal audits include audits performed by the Audit Department. The Department mainly verifies and ensures the reliability of financial reporting by all departments and subsidiaries. Quality audits and GCP audits are carried out by the Quality Assurance Department and the Regulatory Affairs Auditing Unit, respectively.
Seikagaku employs Deloitte Touche Tohmatsu LLC as the accounting firm. The firm performs audits on the Company as the need arises, even during a fiscal year, not being limited to the fiscal year closing.
The certified public accountants responsible for carrying out financial audit duties for Seikagaku are Ms. Keiko Hayashi and Mr. Masahiro Bando of Deloitte Touche Tohmatsu LLC., Four certified public accountants and nine others assist execution of the financial auditing duties.
Seikagaku institutes a compliance program, based on the management beliefs and code of conduct outlined in the corporate principles, in order to act as a socially ethical company and achieve compliance with the stringent regulations that surround the pharmaceutical industry. The Seikagaku Compliance Program Handbook is compiled and distributed to increase the awareness and understanding of managing officers and employees.
The Compliance Committee is chaired by the President and shares the same members as the Management Committee.There are also various programs to promote compliance on a company-wide basis.
Seikagaku controls subsidiary adequately by stipulating the rules for regularly reporting important events, such as compliance and risk status, in addition to management status and financial condition, ensuring adequate and efficient operation of subsidiaries
Seikagaku ensures that management decision and daily business execution are in compliance with laws and regulations by receiving advice and instructions from outside lawyers.
(As of June 30, 2017)