Governance System

　Recognizing that strengthening corporate governance functions is an important management issue, we strive to ensure that we not only comply with the law but also to have transparent management, make fair and rational decisions, and strengthen their supervisory functions.
We respect the principles of the Corporate Governance Code set forth by the Tokyo Stock Exchange, and aim to achieve sustainable growth and increase corporate value over the medium to long term while constantly strengthening and reviewing our corporate governance functions.

* Ranks of Senior Corporate Officer and higher among our Corporate Officers

Being a company with an Audit & Supervisory Committee, we have increased both the number and proportion of Outside Directors with voting rights on the Board of Directors to strengthen the Board’s supervisory function and improve management transparency. Furthermore we delegate part of the Board’s decision-making authority over business execution to the Directors to improve the flexibility of the execution, thereby continuing with our aim to shift the Board’s function more toward a monitoring one. In addition, by positioning Corporate Officers as people who are responsible for business execution, the company makes a clear distinction between the business execution function and the supervisory function.
While a majority members are outside directors, the Board of Directors, given the nature of the Company’s business and social mission, which is to ensure transportation safety, includes an appropriate number of internal directors who have extensive experience in the railway business and transportation safety management. The Company has established both a Nominating Committee and Compensation Committee, each of with is comprised of a majority of outside Directors, including Audit & Supervisory Committee members, to ensure fairness, objectivity, and transparency in the decision-making process on key management matters, including director nomination and compensation.
The company strives to strengthen the supervision of the management by the Board of Directors and the Audit & Supervisory Committee by regularly reporting to the Board of Directors and the Audit & Supervisory Committee on the status of internal control system operations, including internal audit plans and results.

The Board of Directors (chaired by the Representative Director, and chairman, with the Department of General Affairs & Public Relations as the Secretariat) consists of 15 Directors including eight Outside Directors (six of whom are Directors who are Audit & Supervisory Committee Members) and meets once a month, in principle, to make decisions on basic management policies and the execution of the company’s business and to supervise the Directors’ performance of their duties. In accordance with the provisions of the Articles of Incorporation and resolutions of the Board of Directors, the company delegates important business execution decisions to the Directors, thereby enhancing the agility of business execution.

The Top Management Meeting (presided over by the President) consists of the Chairman, President, and Head of the Executive Division and meets once a week as a deliberative body for the President to make decisions on important business based on the basic management policies set by the Board of Directors.

The Nominating Committee has been established to ensure fairness, objectivity, and transparency in the nomination process. The following matters shall be discussed and approved by the Committee in an advisory capacity to the Board of Directors:

The Compensation Committee has been established to ensure fairness, objectivity, and transparency in the process of determining compensation. Regarding the determination of compensation for individual Directors (excluding Directors who are Audit & Supervisory Committee Members) and compensation for Executive Corporate Officers, the Representative Director and Chairman, CEO is entrusted with the responsibility of making such decisions through resolutions of the Board of Directors; however, the following matters shall be discussed and approved by the Committee in an advisory capacity to the Board of Directors:

　The Committee meets once a month, in principle, and selects members to investigate the status of operations and assets of the Company and its subsidiaries, and deliberates and makes resolutions at Audit & Supervisory Committee meetings to audit the execution of duties by Directors. In addition, full-time staff are assigned to assist with the duties of the committee, and in order to ensure the independence of such full-time staff, their transfer, evaluation, and other relevant matters are discussed in advance with full-time Audit & Supervisory Committee members.

Outside Directors are encouraged to use their insight, experience, and expertise as corporate executives, certified public accountants, consultants, business owners, and lawyers for the management of the company. They are expected to provide precise advice on the Group’s overall management and refine the effectiveness of audits and supervision from an independent standpoint without any relationship with the Company’s management in which one could exert significant control over the other.
When appointing Outside Directors, we assume that they have no material interests in the Company and that they meet the criteria for independence set forth by the Tokyo Stock Exchange when they are registered as independent officers. Based on these assumptions, the requirements for Outside Directors include having the insight and experience necessary to supervise or audit the execution of the diverse range of duties in our Group business, including our railway business (in which the assurance of safe transportation is our social mission).

To ensure effective supervision or auditing by Outside Directors, the Chief Manager of the Department of General Affairs & Public Relations, who serves as the secretariat of the Board of Directors, distributes materials of the Board of Directors meetings to Outside Directors in advance to the extent possible, and, if necessary, provides opportunities for officers in charge, etc., to explain the proposals and their contents in advance. The Secretariat of Audit & Supervisory Committee is in charge of communicating the date and time of the Audit & Supervisory Committee meetings, providing advance notice of the agenda, and assisting with on-site audits at each business location as necessary. Additionally, full-time Audit & Supervisory Board members provide explanations and reports to Outside Directors and Audit & Supervisory Committee Members from time to time on useful information for conducting audits, such as information discussed at the Top Management Meeting and information obtained from other documents approved by the Management Committee.