Message from Top Management
Basic Policies and Systems
The SHIMA SEIKI Group believes in the enhancement of corporate governance as an important issue and works to improve management efficiency, soundness, and transparency, and to practice management with an emphasis on stakeholders.
SHIMA SEIKI has a corporate auditor and has utilized the roles of the Board of Directors and the Audit & Supervisory Board, as well as introduced a new executive officer system, together with the corporate auditors, the Internal Auditing Division and the accounting auditor. While maintaining independence, auditors are managed in collaboration to establish a system that allows for appropriate and effective corporate governance to be carried out.
Directors/Board of Directors
The Board of Directors, comprised of nine directors, meets at least once each month to decide important matters concerning the management and to supervise the execution of business. This includes two outside directors in an attempt to strengthen the management structure through an external perspective. By the end of March 31, 2018, the Board of Directors had met 13 times.
By separating management decision-making and the supervisory function from the business executing function, we aim to clarify responsibility for business execution, to enhance the supervisory function over the Board of Directors, and to increase management efficiency by accelerating decision-making. The Executive Committee, comprised of nine executive officers, meets at least once each month.
As an optional advisory body of the Board of Directors, we established a Nomination/Remuneration Committee chaired by an outside director and more than half of the committee members consisting as outside directors, to make efforts to raise the objectivity and transparency of nomination and remuneration.
Audit & Supervisory Board/Audit & Supervisory Board Members
The Audit & Supervisory Board Members are comprised of four members, including two outside members, to monitor the execution of duties by directors and to audit the appropriateness of management. Outside Audit & Supervisory Board members provide advice from their specialist backgrounds, as one member is an attorney and another member is a certificated public accountant and tax attorney. In FY2018, the Audit & Supervisory Board Members met 13 times.
Internal Auditing Division
SHIMA SEIKI established an Internal Auditing Division to perform internal audits throughout the company's business operations, as well as to conduct internal control audits that determine the status of compliance, risk management, and financial reporting, based on an annual audit plan.
The Ohtemae Audit Corporation has been appointed as SHIMA SEIKI's accounting auditor. Regular accounting audits and internal control audits of the company by the auditing firm enhance the effectiveness of the audit system.
Standard for Independence of Outside Officers
In order to judge that the Company's outside director or outside auditor (hereinafter referred to as "outside officer") is highly independent from the Company, it shall meet any of the following requirements.
- In the present and the past, it must not be a business executor (Note 1) of the Company and its subsidiaries and affiliates (hereinafter referred to as "SHIMA SEIKI Group"). In addition, for outside auditors, they have never been directors who do not execute the business of the SHIMA SEIKI Group.
- None of the following applies to the present and past three years.
- A person who uses the SHIMA SEIKI Group as a major business partner (Note 2) or its business executor
- Major business partners (Note 3) of the SHIMA SEIKI Group or their business executors
- A major shareholder of the Company (a person directly or indirectly holding a voting right of 10% or more of the total voting rights) or its business executor
- The business executor whose major shareholder (person who directly or indirectly holds the voting rights of 10% or more of the total voting rights) is the SHIMA SEIKI Group
- Consultants, certified public accountants, or law experts attorneys (Those who are to obtain the property is an organization such as corporation and union, etc., means a person who belongs to the organization.) who obtains large amounts of money or other property (Note 4) other than director remuneration from the SHIMA SEIKI Group.
- A person who receives donation by large amount of money or other property (Note 4) from the SHIMA SEIKI Group or its business executor
- If the business executor of the SHIMA SEIKI Group is appointed as an outside officer, the executor of the other company
- In cases where a person meets (1) to (7) above is an important person, his/her spouse, relatives within the second degree, or family members who live together or live together
- A spouse, a relative within the second degree, or a relative living together of a person who executes an important task such as a director (excluding an outside director) of the SHIMA SEIKI Group and a department manager
- They do not have the other factors that are reasonably judged that they cannot fulfill their duties as independent outside officers.
(Note 1) "Business executor" means a person who executes the duties of a business executive director, executive, executive officer, or employees who execute the business, and other similar officials and employees, etc. of corporations and other organizations.
(Note 2) A person who is a major business partner of the SHIMA SEIKI Group means a person whose transaction value with the SHIMA SEIKI Group exceeds 100 million yen per year or 2% of its consolidated sales.
(Note 3) Major business partners of the SHIMA SEIKI Group mean those whose transactions with the SHIMA SEIKI Group exceeds either 100 million yen per year or 2% of the SHIMA SEIKI Group's consolidated sales, or those who finance the SHIMA SEIKI Group exceeding 2% of the SHIMA SEIKI Group's consolidated total assets.
(Note 4) A large amount of money or other property means that the total value exceeds 10 million yen per year for individuals and 2% of annual sales for organizations.
Ensuring the effectiveness of the Board of Directors and Audit & Supervisory Board Members
To facilitate an effective and efficient Board of Directors function, the board comprises an appropriate amount of directors numbering 15 people or less in consideration of ensuring diversity and a balance of knowledge, experience, skills, and specialization throughout the entire Board of Directors.
With respect to independent outside director among directors, in order to contribute to sustainable growth of the company and improvement of the medium- to long-term corporate value, careful consideration should be given to appropriate number of people (at least two people) so that they can satisfy the standards concerning the independence of outside officers and fulfill required roles and responsibilities. Also, candidates for outside directors shall include those who have management experience.
Currently there are nine directors, two of whom are independent outside directors and business executives in different business fields. There are four auditors, two of whom are independent outside auditors, with expert knowledge in finance, accounting, and legal fields respectively.
In terms of diversity, regarding gender, one woman's director and one auditor are currently appointed. In terms of internationality, a highly experienced director is appointed.
In addition, we analyze and evaluate the effectiveness of the Board of Directors every year.
A questionnaire was distributed to directors and the Audit and Supervisory Board Members who used a graded evaluation and comments to evaluate the effectiveness of the Board of Directors. The results were analyzed and assessed by the Board of Directors.
Overview of evaluation results
Evaluation results determined that the Company's Board of Directors generally functioned suitably overall and provided appropriate supervision through deliberation and discussion. Therefore, the Board of Directors was deemed effective as a whole. On the other hand, as initiatives aimed at further raising effectiveness in the Board of Directors, we are maintaining awareness regarding the following issues:
- Composition of the Board of Directors (number and diversity of directors)
- Enhancement of discussions concerning our medium- to long-term management strategies
- The appropriateness of our directors' remuneration system
- Enhancement of discussions concerning risk management
Based on these evaluation results, the Company's Board of Directors will conduct further review aimed at enhancing and stimulating discussion within the Board of Directors and will work to further increase its effectiveness. In response to the issues listed above, we are promoting various measures such as reducing our number of directors by adopting an executive officer system and establishing a Nomination/Remuneration Committee.
- Evaluation method
Policies and Procedures for Determining Director Remuneration
Remuneration of directors is set as remuneration according to the roles and responsibilities of each director and as a remuneration system to raise incentives for directors to improve the Company's sustainable growth and medium- to long-term corporate value. As a result, director remuneration comprises fixed remuneration and a director incentive remuneration linked to performance in the applicable fiscal year. Stock options are also incorporated into remuneration to function as medium- to long-term incentive remuneration. Moreover, outside director remuneration is fixed remuneration only, based on consideration for the director's role and independence.
In determining director remuneration, we will deliberate at the Nomination/Remuneration Committee, chaired by an outside director, in order to enhance its transparency and objectivity, and upon resolution of the Board of Directors, it will be determined.
We engage in strategic shareholdings when they are determined to contribute to the Company's sustainable growth and enhance the medium- to long-term corporate value through importance to the business or trade relation maintenance, enhancement, or cooperation.
We will try to reduce the stocks that are deemed not necessarily meaningful enough.
Every year, the Board of Directors considers comprehensively the risks that are held by individuals and the profits obtained through the maintenance, enhancement, or cooperation of transaction relationships, and it will verify the rationality of holding the strategic shareholdings from the perspective of medium- to long-term and determine whether to keep or reduce ownership.
With regard to the execution of voting rights involved with strategic shareholdings, proposals are carefully examined and executed appropriately after determining whether or not they contribute to an increase in shareholder value.
Transactions Between Related Parties
In the event of transactions conducted with Shima Seiki directors, legal entitles materially controlled by Shima Seiki directors or major shareholders, the matter is referred to the Board of Directors in advance to obtain approval, and for the approved transactions the results shall be reported.
Policies Concerning Constructive Interaction with Shareholders
The Company promotes constructive interaction with shareholders and investors to support improving medium- to long-term corporate value and sustainable growth.
Contents of policyPolicies Concerning Constructive Interaction with Shareholders
- In accordance with our disclosure policy, our president, accounting director, information disclosure officer (director of general affairs and personnel), and IR representative will serve as spokespersons for IR related matters.
- The General Affairs and Personnel Division, the department in charge of IR, will promote IR activities and support the management team's interaction with shareholders and investors through appropriate cooperation with the Accounting and Finance Division and collaboration with other relevant divisions.
- Except during quiet periods, the Company will conduct individual meetings with shareholders and investors, teleconferences, briefings for analysts and investors (at term ends and after second quarter earning announcements) and company information sessions for individual investors. We will also disseminate information in a way that is easy to understand through channels such as our homepage and disclosure documents. Through these IR activities, we will aim to promote interaction with shareholders and investors.
- We will promote information sharing by providing feedback concerning opinions and demands discovered through interaction to the management team and related divisions as needed.
- The Company will appropriately manage insider information according to regulations to prevent insider trading.
Internal Control System
Recognizing the importance of creating and operating an internal control system to realize our corporate philosophy and targets, we have formulated and are pursuing basic policies related to improvement of the Internal Control System. Additionally, for effective internal control, we have established a Compliance Committee, a Risk Management Committee, and an Information Security Committee in an effort to enhance internal controls. With regard to internal control over financial reporting, we have systems in place to promote fair and impartial disclosure, thereby ensuring the reliability of financial reporting.
Basic policies related to improvement of the Internal Control System
The Company has resolved at the Board of Directors as follows as "Basic policies related to improvement of the Internal Control System."
- System for ensuring that the execution of duties by directors and employees conforms to laws and regulations and the articles of incorporation
- Directors and employees shall comply with laws and regulations, the articles of incorporation, and social norms based on the "SHIMA SEIKI Group Code of Conduct."
- Under the Compliance Committee, we will promote compliance across the SHIMA SEIKI Group.
- In case of discovering important facts concerning law violation or other compliance, in addition to the usual reporting route, we have a system that reports and informs through the Corporate Ethics Helpline targeting group companies as well. The person who made the report shall not receive disadvantages due to the report.
- To ensure the reliability of financial reporting and achieve appropriate financial reporting, under the Internal Control System Promotion Headquarters, we will establish internal control over financial reporting and evaluate its effectiveness.
- We will take a firm attitude against anti-social forces and groups that threaten public order and safety, and eliminate any relations with them.
- The Internal Auditing Division conducts audits on the status of compliance.
- System concerning the preservation and management of information on the execution of duties by directors
- Information concerning the execution of duties by directors shall be appropriately and reliably recorded and managed in accordance with laws and regulations and document handling regulations and stored in a state of high searchability.
- Directors and auditors shall be able to inspect the information at all times.
- To recognize the importance of information assets and to prevent information leakage, and loss, etc., we will undertake appropriate management under the Information Security Committee based on information security policy.
- Regulations and other systems concerning the management of risk of loss
- Based on the risk management regulations that systematically define risk management, we will manage the risks of the entire Company Group under the Risk Management Committee.
- We will analyze and evaluate risks at the Risk Management Committee, rationally manage risks, consider countermeasures, and continuously monitor risks.
- In case unforeseen circumstances occur, we will take prompt and appropriate response, prevent the expansion of damage, and develop a crisis management system to minimize the damage.
- The status of risk management is audited through the Internal Auditing Division.
- System for ensuring efficient execution of duties by directors
- In principle, the Board of Directors holds the meetings at least once a month, at any time as necessary, so that they can quickly and flexibly judge the business execution status of each director and to make business decisions swiftly and flexibly, and discusses not only the important matters on management but also the progress of performance, and decides management policy.
- The execution of duties by each director shall be properly and efficiently performed based on the responsibilities, authority, and decision-making rules based on internal regulations such as the regulations of the Board of Directors, the regulations of division of duties, and the official regulations of administrative authority.
- System for ensuring the appropriateness of operations in a corporate group comprising a stock company, its parent company, and its subsidiaries
- We will share the SHIMA SEIKI Group Code of Conduct with the SHIMA SEIKI Group and promote compliance.
- We will provide guidance and support to group companies concerning business operations, and risk management, etc. through divisions who are responsible for the SHIMA SEIKI Group, in order to establish an efficient internal control system for the SHIMA SEIKI Group.
- We will strengthen the supervisory function and management system concerning the management of the group company as well as the Company's directors as officers of the group companies to share information.
- Based on the management regulations of affiliated companies, we will manage group companies through decision-making and reporting system of important matters to the company.
- The Company's Internal Auditing Division will perform internal audits of the business execution status of Group companies, compliance with laws and regulations and internal regulations, and risk management status, etc.
- Matters concerning employees who should assist auditors in their duties
- The Internal Auditing Division shall assist the auditors in their duties at the request of the auditors.
- With regard to the duties required by the auditors, the Internal Auditing Division shall not receive instructions or orders from the directors and shall follow the instructions of the auditors.
- System relating to reports to auditors
- Directors, and employees, etc. of the Company and the SHIMA SEIKI Group will promptly report to the auditors about the matters that seriously affect the business or performance of the Company and the SHIMA SEIKI Group, acts in violation of laws and regulations and the articles of incorporation, implementation status of internal audits, and reports through Corporate Ethics Helpline, etc.
- Regardless of the foregoing, auditors may request reports from directors, and employees, etc. of the Company and the SHIMA SEIKI Group at any time as necessary, and those who are requested to report shall make a prompt respond.
- A person who made a report to auditors shall not receive disadvantages due to the report.
- Auditors shall be able to attend important meetings in order to understand the status of business execution by directors.
- Systems for ensuring expenses arising on the execution of duties by auditors, matters concerning policies relating to the settlement of debts, and effective audits by the auditors
- When an auditor has made a request for advance payment or redemption of expenses incurred in the execution of his/her duties, it shall promptly deal with such expenses or obligations, except in cases where it is deemed not necessary for the execution duties of such auditor.
- In order to conduct an effective audit, auditors may regularly hold an opinion exchange meeting with the Representative Director, the Accounting Auditor, and the Internal Auditing Division.
- Auditors can receive advice on their own independent audit service by outside experts.
We aim to contribute to society through all business by executives and employees of the SHIMA SEIKI Group and set out a "Code of Conduct" that expresses guidelines to be observed comprehensively in each business activity based on the management philosophy. To achieve these objectives, we have formed a Compliance Committee, which conducts regular checks on compliance status and entrenches systematic compliance through induction courses.
SHIMA SEIKI Group Code of Conduct
- General Rules
Corporate Conduct Based on the Corporate Philosophy
We strive to become an indispensable company to the society through sustainable business development. We do this under the motto of “Ever Onward” with “love,” “creation,” and “passion” as our mantra.
We contribute to society through our creative craftsmanship, which is friendly to both people and the environment. We strive to contribute to society through love for our work, people, country, community and the earth.
We aim to create world's firsts through our finely honed sensitivity and sense of creativity.
We tackle new challenges with passion and chart our own future course by putting our all into our products and services.
Compliance with Laws, Regulations and Corporate Ethics
As a member of the SHIMA SEIKI Group (the “Group”), and as a member of society, each of us will act in a sensible manner with the highest ethical standards.
In case of any act in violation of laws, regulations or corporate ethics, we will promptly respond to it and correct it, and take the appropriate measures to prevent its recurrence.
In conducting business activities in various countries or regions, we will respect the cultures, customs and other aspects of the relevant countries or regions, and comply with applicable local laws and regulations as well as social norms. Each of us will avoid any lack of transparency and act in a fair and sound manner as a member of the Group, which is always trusted by the society. If the appropriate means to protect the environment or society have not yet been addressed by law or through the enforcement thereof in the relevant country or region, we will strive to at least respect international norms of conduct. In a country where any of its national or local laws, or the enforcement thereof, is contrary to international norms of conduct, we will still strive to respect international norms of conduct to the utmost extent.
- Corporate Conduct Based on the Corporate Philosophy
- Chapter 1. Business Activities
Development of Products with the Most Advanced Technologies
Aiming to grow with our customers, and based on the fundamental principle “that seeks to develop products with the most advanced technologies and offer them at the most affordable prices” through creativity and ingenuity, we will contribute to the development of the user industry through continuous efforts to create original products that anticipate customers’ needs.
Assurance of Product Safety
We will pay full attention throughout all of our business activities, including the development, manufacture and sales activities, to provide products and services that give full consid
Fair Public Relations Activities
We will provide accurate and fact-based information in our public relations activities to avoid causing any misunderstanding among our customers, shareholders, investors and other stakeholders.
Fair Transactions with Suppliers
We will treat suppliers of materials and services in an equal and fair manner in activities to procure such materials and services, and always carry out sound and transparent transactions with such suppliers in compliance with the spirit of the laws on fair and proper transactions with subcontractors.
Promotion of Fair and Free Trade
We will comply with all applicable laws, regulations and rules on fair competition and fair trade, and provide customers with products and services developed with the most advanced technologies at a fair price, through a fair and free market competition.
Promotion of Proper Import and Export Transactions
We will comply with applicable trade laws and regulations, and carry out the appropriate customs clearance procedures for import and export. Especially, with respect to national security, we will carry out a strict export control.
Appropriate Accounting Practice
We will comply with applicable laws, regulations and internal rules on corporate accounting, and properly and promptly implement accounting procedures and make accounting reports, thereby striving to enhance the transparency of management, and ensure the reliability of financial reports.
Protection of Intellectual Property, etc.
We will always be mindful of the fact that for the Group, which makes creation of unique technological developments as its principle, intellectual property rights are the main source of creating corporate value, and hence, we will strive for the proper protection and effective use of intellectual property rights.
Prohibition of Insider Trading
We will not unfairly trade stocks or other marketable securities by using non-public inside information of the Group or other companies that we have come to know in the course of the performance of our duties, before such information is publicly disclosed (insider trading).
- Development of Products with the Most Advanced Technologies
- Chapter 2. Relations between the Company and Society
Contribution to Society
We will develop business activities beneficial for the society, including the development of useful products, and proactively promote corporate social responsibility activities or other related activities as a corporate citizen of society.
To achieve the proper understanding and trust of shareholders, investors, customers, local communities, etc., we will strive to disclose information in a fair, timely, appropriate and continuous manner with respect to business conditions or general corporate activities.
Initiatives for Global Environmental Protection
For global environmental protection, we will comply with environmental laws, regulations and other similar rules, and proactively promote environmentally-conscious business activities.
Relations with the Government and Public Agencies
With respect to relations with the government and public agencies, we will comply with the relevant laws and regulations, and maintain sound and proper relations. We will always keep a high level of transparency and will not engage in any act that may cause any misunderstanding.
Firm Attitude against Anti-Social Forces
We will take a firm attitude against anti-social forces and groups that threaten public order and safety, and eliminate any relations with them.
- Contribution to Society
- Chapter 3. Relations between the Company and the Employees
Respect for Human Rights
We will respect fundamental human rights, and strive to maintain a sound workplace environment free from discrimination or harassment based on nationality, race, creed, religion, sex, age, disability, social status or other matters, or any other unfair treatment.
Prohibition of Sexual Harassment and Power Harassment
To secure and maintain a healthy workplace environment, we will not commit any act of sexual harassment such as unwanted or unwelcome sexual language or conduct offensive to other persons. In addition, we will not commit any act of power harassment by taking advantage of our authority in the workplace such as making the work environment of a co-worker difficult or causing a co-worker employment anxiety by constant language or conduct that denies the integrity and dignity of such co-worker and goes beyond the appropriate scope of work.
Protection of Privacy
We will respect the privacy of individuals. We will handle personal information discreetly and manage it strictly.
Compliance with Employment Rules, etc.
We will comply with the Employment Rules and other internal rules.
Maintenance and Securing of Safe Workplace Environment
We will comply with laws, regulations and other rules on workplace safety and health, take the appropriate measures for security and disaster prevention at the workplace, and thereby maintain and ensure a safe and comfortable workplace environment.
Prohibition of Acts that Involve Conflicts of Interest
We will not commit any act that conflicts with the interests of the Group (act involving a conflict of interest) without obtaining the required approval through the appropriate procedure.
- Respect for Human Rights
- Chapter 4. Relations with Company Assets
Management of Confidential Information
We will appropriately manage and use the confidential information of the Group and prevent the external leakage thereof.
Appropriate Use and Management of Company Assets
We will appropriately and efficiently use and manage the company assets, whether tangible or intangible, and will not use the company assets for any purpose other than the performance of our duties.
Appropriate Use of Information Systems
We will make use of the information systems of the company as beneficial tools to enhance operational efficiency.
- Management of Confidential Information
- Chapter 5. Other Provisions
Scope of Application
This Code of Conduct shall apply to all officers and employees of SHIMA SEIKI MFG., LTD. and its subsidiaries. SHIMA SEIKI MFG., LTD. and its subsidiaries shall promptly adopt this SHIMA SEIKI Group Code of Conduct (including its amendments (if any)) as their own code of conduct at their respective decision making bodies such as boards of directors, and take the appropriate steps to ensure that it is read and understood by all of their respective officers and employees. Each company may amend or add provisions to this Code of Conduct to reflect the requirements of local laws and regulations or social customs in the relevant country or region, or the characteristics of its business operations, as necessary. However, no amendment or addition may contradict this Code of Conduct or be contrary to the effect thereof.
- Scope of Application
- Enforced on September 15, 2006
- Revised on July 18, 2008
- Revised on September 18, 2015
Internal Reporting Systemm
We set up a "Corporate Ethics Helpline" inside and outside the company as a reporting counter for violations of laws and regulations, violations of human rights, in-house fraud, etc. In addition to guaranteeing that the whistleblower will not receive disadvantages, it is also possible to report with anonymity.
A Risk Management Committee is established based on regulations systematically defined for risk management and the committee is held periodically. We created a system to continuously monitor risks through the Risk Management Committee. Furthermore, upon occurrence of serious events such as unforeseen circumstances or large-scale disasters, we will set up the Crisis Management Headquarters to respond.
Information Security Activities
In recognition of the importance of information assets, we establish an Information Security Committee to prevent leakage/loss of information, and we are engaged in activities to promote the use of appropriate information systems based on the information security policy.
Business Continuity Plan (BCP)
The SHIMA SEIKI Group established a system that can minimize interruption of business activities while ensuring the safety of employees, their families, and stakeholders even in the event of major disasters or accidents, while still fulfilling the responsibility to supply products to customers.
We are preparing emergency manuals assuming Tonankai/Nankai earthquakes, earthquake resistance measures of factory buildings, stockpiling of food, evacuation drills, employee safety confirmation system, etc.
Also, assuming the case that the company suffers a disaster, we will prepare to recover the business at the early stages. When a disaster occurs, we will launch the "Crisis Management Headquarters" based on the business continuity plan and respond promptly.