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Corporate Governance

Please see the Corporate Governance Report for details on Tri-Stage’s corporate governance philosophy and framework, etc. pursuant to stock exchange regulations.

Basic Policy on Corporate Governance

We recognize that ensuring sound and transparent management and continuously increasing corporate value are management issues, and that strengthening and enhancing corporate governance is an important issue to realize these issues. We will ensure the soundness and transparency of our management by strengthening our Board of Directors, Audit & Supervisory Board, and internal audits.

Basic Policy on Corporate Governance

Compliance with the Corporate Governance Code

We have established a corporate governance system that respects shareholders, consumers, business partners, creditors, employees and other stakeholders in accordance with our Corporate Philosophy, various regulations, and disclosure policies. At the same time, we disclose information in a transparent and fair manner and actively engage in dialogue and cooperation.

In addition, we comply with and implement all the basic principles of the Corporate Governance Code described below.

  •  1 Ensuring Shareholders' Rights and Equality
  •  2 Appropriate cooperation with stakeholders other than shareholders
  •  3 To ensure appropriate information disclosure and transparency
  •  4 Responsibilities of the Board of Directors, etc. in Consideration of Trustee Responsibilities and Accountability to Shareholders
  •  5 Constructive dialogue with shareholders

Organization of Internal Systems

(1) Board of Directors
Our Board of Directors consists of eight directors (of whom four are full-time directors). In addition to the regular monthly meetings of the Board of Directors, the Board of Directors holds extraordinary meetings as necessary to supervise business execution among the directors. Three Audit & Supervisory Board Members (of whom one is a full-time Audit & Supervisory Board Member) also attend to audit the execution of duties by Directors.
(2) Executive Officers
We have introduced an executive officer system to clarify the decision-making and supervisory functions of directors and the business execution functions of executive officers. The Executive Officers' Meeting is composed of Executive Officers and meets once a week on a regular basis to deliberate and resolve certain important matters.
(3) Management committee
We hold management meetings once a week at regular meetings attended by executive officers, full-time corporate auditors, and general managers of each division. The Executive Committee and the Executive Committee hold extraordinary meetings as necessary to share and discuss information based on reports from each division and Group companies, confirm the progress of operations, and conduct business operations and execution flexibly.
(4) Board of Corporate Auditors
We have adopted a Board of Corporate Auditors system. The Board of Corporate Auditors consists of three outside corporate auditors, one of whom is a full-time corporate auditor. The Audit & Supervisory Board members attend meetings of the Board of Directors, the Executive Committee, and the Management Committee in accordance with the Regulations of the Audit & Supervisory Board and the Audit & Supervisory Board Members' Audit Plan, etc., and express their opinions as necessary. In addition, the Audit & Supervisory Board members audit the execution of duties by the Directors by confirming the status of operations and assets.
(5) Internal auditing
Internal audits are conducted by the Internal Audit Department, which reports directly to the representative director. The Internal Audit Department regularly exchanges opinions on the status of internal controls in cooperation with the Audit & Supervisory Board Members and the Independent Auditors. The Internal Audit Department submits reports to the Representative Director on the results of audits of each division and group companies and on the points to be improved. Based on these reports, the Representative Director issues instructions for improvement to the relevant department.

Status of the Internal Control System

Based on the belief that an effective internal control system is essential for sound and continuous growth, we have established and operate an effective internal control system.

In addition, the Company has set the following four objectives as the basic framework for internal control.

  •  1 Ensuring Effectiveness and Efficiency of Operations
  •  2 Reliability of financial reports
  •  3 Promoting Compliance with Laws and Regulations Related to Business Activities
  •  4 Preservation of assets

These objectives have been incorporated into our operations, and we have established the following systems.

(1)System to ensure that the execution of duties by directors and employees of the Company complies with laws and regulations and the articles of incorporation
①The Board of Directors has established the Tri-Stage Code of Conduct, which codifies the ethical standards, values, improprieties, and prohibitions on antisocial behavior that directors and employees should share. The Directors themselves comply with the Code of Conduct and the Representative Directors repeatedly communicate the spirit of the Code of Conduct to employees.
②The Board of Directors shall, in accordance with the provisions of the rules of the Board of Directors, make resolutions on matters concerning important business such as laws and ordinances, the articles of incorporation, and basic management policies, and shall receive reports from the Directors on the status of business execution and supervise the business execution of the Directors.
③In order to check whether the execution of duties by directors and employees is conducted appropriately without violating laws and regulations, the Articles of Incorporation, and the Company's internal rules, audits by corporate auditors and internal audits by internal auditors appointed by the representative directors are conducted.
④In accordance with the Risk Management Regulations and the Compliance Regulations, we have established a system to directly report internal information, such as internal improprieties, accidents, and relationships with anti-social forces, to the Group Hotline or the Risk Management Committee, an advisory body to the Board of Directors. At the same time, the Group takes measures to ensure that the reporter is not disadvantageous.
⑤The General Affairs Department has been designated as an anti-social forces response division in order to ban any relations with anti-social forces, and the Company has established a Manual for Responding to Unfair Requests by Anti-Social Forces and communicates the manual to all employees.
(2)Systems for the storage and management of information pertaining to the execution of duties by directors of the Company
Documents and information pertaining to the execution of duties by directors are preserved and managed in accordance with laws and regulations, the Articles of Incorporation, and the Document Control Regulations. When requested by directors and corporate auditors, documents and information pertaining to the execution of duties by directors are made available for perusal at any time.
(3)Rules and Other Systems Concerning the Management of Risk of Loss of the Company
The Risk Management Committee was established on 1 March, 2018 to plan, draft and investigate risk management plans, and implement comprehensive risk management, including risk prevention measures, accident countermeasures and improvement measures, in order to appropriately address various risks associated with corporate activities, in addition to the prevention and management of cross-sectional risks by the Sales Management Division, Accounting Division, Legal Division, General Affairs Division, Human Resources Division, Information System Division, and Corporate Planning Division.
(4)System to Ensure Efficient Execution of Duties by Directors of the Company

We hold regular meetings of the Board of Directors once a month, and extraordinary meetings of the Board of Directors are held as necessary. The Board of Directors determines important matters stipulated in the rules of the Board of Directors and supervises the execution of duties by directors.

At meetings of the Board of Directors, the Executive Committee and the Management Committee, the status of progress is monitored in comparison with monthly financial statements in order to ascertain the status of achievement of the business plan, and by analyzing and discussing whether operations are conducted efficiently and effectively, the goals of business activities are achieved by evaluating them.

(5)System for ensuring the appropriateness of business operations of the corporate group consisting of the Company and its parent company and subsidiaries

We have established the Management Regulations for Affiliated Companies, set up departments to supervise operations, communicate with our subsidiaries, and cooperate and cooperate with them. In addition, with respect to certain important matters, we obtain the prior approval of our Board of Directors and report to our Board of Directors on risk information.

We hold an Executive Officers' Meeting every week, which consists of full-time directors and executive officers. The Board of Executive Officers receives reports on the status of the execution of duties from subsidiaries and obtains prior approval for certain important matters before the Board of Directors meetings. Risk information is reported to the Board of Directors and to the Board of Executive Officers.

In addition, the Corporate Planning Division examines the prevention and management of risks at subsidiaries in order to respond appropriately to various risks associated with the corporate activities of subsidiaries.

The Board of Directors of subsidiaries meets every month to make decisions on important matters and supervise the execution of duties by directors together with the directors appointed by us.

We conduct internal audits of our subsidiaries, develop and operate regulations on a par with ours, and ensure that the execution of duties by directors and employees of our subsidiaries complies with laws and regulations and the Articles of Incorporation.

(6)In cases where a company auditor requests an employee to assist in his/her duties, matters relating to such employee, matters relating to the independence of such employee from the directors of the company, and matters relating to ensuring the effectiveness of instructions given by the company auditors to such employees;
Currently, there are no employees who assist Audit & Supervisory Board Members in their duties. However, the Company will appoint employees to assist Audit & Supervisory Board Members in their duties as needed, and the representative directors and Audit & Supervisory Board Members will exchange opinions and make decisions regarding such personnel. Employees may also serve concurrently, but in the event that they perform their duties, they shall not be ordered by the directors, and the effectiveness of such duties shall be ensured through the timely exchange of opinions between the representative directors and the auditors.
(7)Systems for Corporate Directors and Employees to Report to Corporate Auditors and Other Systems for Reporting to Corporate Auditors, and Systems for Ensuring that Persons Who Report to Corporate Auditors Are Not Adversely Treated

Audit & Supervisory Board members participate in important decision-making meetings, including the Board of Directors, and receive reports on important matters from directors and employees. The Board of Directors also exchanges opinions with directors and employees of subsidiaries as appropriate and receives reports on important matters related to subsidiaries. In addition, the Group Hotline System Operation Rules have been established, and the Risk Management Committee has been established to ensure that directors and employees of the Company and its subsidiaries are able to promptly report any facts that may have a material impact on the operations and business performance of the Company and its subsidiaries to corporate auditors, external lawyers and outsourcees.

The Corporate Auditors manage the information so that the person who made the report will not be treated disadvantageously because of the report.

(8)Procedures for prepayment or reimbursement of expenses arising from the execution of the duties of auditors of the Company and other matters concerning the policies pertaining to the processing of expenses or obligations that arise from the execution of such duties
Audit & Supervisory Board Members have put in place a system that enables them to request expenses incurred in the execution of their duties to the Company except for those not necessary for the execution of their duties.
(9)Systems for ensuring the effectiveness of audits by other corporate auditors;

Audit & Supervisory Board Members receive reports on important matters of the Company and hold regular meetings with directors and employees to hear the status of business operations. The Internal Audit Department also exchanges information with personnel in charge of internal audits and accounting auditors, and collaborates with each other to effectively perform audits.

Reasons and Independence of Outside Directors

We have three outside directors and three outside corporate auditors.
Toshiyuki Kashima, Outside Director, has no business relationships or interests other than the position of Outside Director.
Hirotaka Sugiyama, Outside Director, has no business relationships or interests other than the position of Outside Director.
Osamu Chujo, Outside Director, has no business relationships or interests other than the position of Outside Director.
Joji Ota, Outside Auditor, has no business relationships or interests other than the position of Outside Audit.
Mikiharu Fujii, Outside Auditor, has no business relationships or interests other than the position of Outside Audit.
Hiroshi Shomura, Outside Auditor, has no business relationships or interests other than the position of Outside Audit.

Outside directors are responsible for overseeing management from an objective perspective based on a wide range of experience and a wealth of insights. Outside Audit & Supervisory Board Members perform appropriate auditing functions based on their extensive experience and wealth of insight. The Company appoints outside directors and outside corporate auditors with experience and knowledge to fulfill these roles.

In selecting candidates for Outside Directors and Outside Audit & Supervisory Board Members, we have not established standards or policies regarding the independence of Outside Directors and Outside Audit & Supervisory Board Members. However, each Outside Director and Outside Audit & Supervisory Board Member retains a neutral and fair position as an individual and is aware that there is no risk of conflicts of interest with general shareholders.

Outside Directors Toshiyuki Kashima, Hiroshi Sugiyama and Osamu Chujo, and Outside Auditor Joji Ota, Mikiharu Fujii and Hiroshi Shomura have been appointed as Independent Directors because they have a high degree of independence with no risk of conflict of interest with General Shareholders.

Outside directors and outside corporate auditors maintain close collaboration with the Sales Management Division, Accounting Division, Legal Affairs Division, General Affairs Division, Human Resources Division, Information Systems Division, Corporate Planning Division, Internal Audit Division, and Accounting Auditors to deepen mutual collaboration and improve the effectiveness and efficiency of management monitoring and auditing.

Officer Remuneration, etc.

(1) Total amount of remuneration, etc. by officer category, total amount of remuneration, etc. by type, and number of officers subject to remuneration, etc.
Officer Classification Total Remuneration
(Thousands of yen)
Total amount of remuneration by type (thousand yen) Number of Officers Subject
Base compensation Stock Option Bonuses Retirement bonuses
Representative director
(excluding outside directors)
119,118 112,807 6,310 - - 4
Auditor
(Excluding Outside Corporate Auditors)
- - - - - -
Outside directors 33,300 33,300 - - - 6
(2) Total Remuneration for Persons Who Have Total Remuneration of 100 Million Yen or More
No person in the current fiscal year received a total of 100 million yen or more in remuneration, etc.
(3) Details of policies and methods for determining the amount of remuneration, etc. for officers and the calculation method thereof
Our basic policy regarding executive compensation is to serve as an incentive to continuously increase corporate value and improve our business performance. Remuneration levels are set in line with the roles and responsibilities of our directors.
Compensation for directors consists of "fixed compensation," "change compensation" and "stock compensation." Fixed remuneration is determined according to the position and duties. "Change compensation" and "Share-based compensation" are determined based on comprehensive consideration of profit levels and the degree to which various management indicators have been achieved.
Remuneration for Outside Directors and Audit & Supervisory Board Members consists solely of "Fixed Remuneration," and performance-based remuneration such as "Variable Remuneration" and "Share Remuneration" is not paid. Fixed remuneration is determined based on experience, insight and roles.
The remuneration of directors is decided by the Board of Directors in response to the opinion of the Compensation Committee, and the remuneration of corporate auditors is decided by the discussions of the corporate auditors.

Elimination of Relationships with Anti-Social Forces

In the Tri-Stage Action Guidelines and other guidelines, we clearly state that we will eliminate relationships with anti-social forces and ensure that all employees are aware of the details. In addition, the Company has formulated a Manual for Responding to Unjust Requests by Anti-Social Forces and has specified specific measures to deal with anti-social forces.

In addition, the General Affairs Department is the department that responds to anti-social forces, and meets with the Federation of Special Violence Prevention Measures under the jurisdiction of the Police Department, which has a strict system for eliminating relations with anti-social forces.

Takeover defense

Institution of takeover defense policy
We believe that those who control our decisions on our financial and business policies must fully understand our corporate philosophy and management philosophy, the sources of our corporate value, and our relationships of trust with our stakeholders, such as our clients, and ensure and improve our corporate value and the common interests of our shareholders. On the other hand, as a person who is listed on a financial instruments exchange, we respect the free trading of our shares in the market, and even a large-scale purchase of our shares by a specific person involving the transfer of control of the company, etc. will not be denied in general as long as it contributes to the securing and enhancing of our corporate value and, in turn, the common interests of our shareholders. In addition, we believe that it should ultimately be left to the decisions of our shareholders as to whether or not to accept our Large-scale Purchase Offer. However, some of the large-scale purchase proposals for shares are likely to have a clear infringement on the corporate value and the common interests of shareholders in light of their objectives, etc., may effectively force shareholders to sell their shares, may not provide the Board of Directors with the time and information necessary for the Board of Directors to review the content of the tender offer and proposal, and may not sufficiently reflect our corporate value. We believe that those who make large-scale purchases, including the above examples, which may infringe our corporate value and the common interests of our shareholders, are inappropriate as those who control our decisions on our financial and business policies. We believe that it is necessary to secure information and time for shareholders to consider whether or not to respond to large-scale purchases by taking necessary and reasonable countermeasures against large-scale purchases of our shares by such persons, as well as to protect our corporate value and the common interests of our shareholders.
Adoption of Takeover Defense Measures

At the Board of Directors meeting held on 13 December, 2012, we adopted countermeasures (anti-takeover measures) for large-scale purchases of our shares, and subsequently, with the approval of the 7th Ordinary General Meeting of Shareholders held on 29 May, 2013, the 10th Ordinary General Meeting of Shareholders held on 26 May, 2016 and the 13th Ordinary General Meeting of Shareholders held on 28 May, 2019, we renewed such countermeasures (the "Plan"). The Plan is designed to ensure and enhance our corporate value and the common interests of our shareholders by clarifying the procedures for large-scale purchases of our shares, securing sufficient information and time to enable our shareholders to make appropriate decisions, and securing opportunities for negotiations with the purchaser. For details of anti-takeover measures, please refer to the Timely Disclosure Materials from the link below.

Timely disclosure materials: https://www.tri-stage.jp/data/fileup_s/9999-1080542142.pdf pdf

Shareholdings

We do not hold any strategic shareholdings.

Corporate Governance Report (Japanese) (224KB)pdf