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Corporate Governance Principles

Corporate Governance Principles(PDF: 84.3KB)

A company’s stakeholders consist of customers, shareholders, and employees as well as consumers, business partners, and local communities at large. The SBI Group is keenly aware that companies have a strong public dimension. As such, the Group considers it essential to contribute to the maintenance and development of society, uncompromisingly engage in customer-oriented businesses in accordance with the “Customer-centric Principle,” and to earn public trust in the course of business operations. Accordingly, the Group is working to maintain an organizational structure that can ensure transparency and fairness in decision-making and promptly respond to changes in the business environment and is also working to enhance appropriate corporate governance for the purpose of increasing corporate value.

I. The SBI Group’s Management Philosophy and its Definition of Corporate Value

1. Management Philosophy and Corporate Vision

The SBI Group makes a clear distinction between its Management Philosophy and its Corporate Vision. The Group considers a management philosophy to embody a company’s long-term, universal values and raison d’etre, which are not prone to change because of changes in top management or the business environment. The Group considers a corporate vision to be a concrete, realistic and obtainable description of how a company sees itself in the future. In this age of incessant change, a corporate vision is medium-term in nature.

(1) SBI Group’s Management Philosophies

Sound Ethical Values
We shall undertake judgements on actions based not only on whether they conform to the law or profit the Company, but also whether they are socially equitable.
Financial Innovator
We will transcend traditional methods and bring financial innovations to the forefront of the financial industry, utilizing opportunities provided by the powerful price-cutting forces of the Internet and developing financial services that further enhance benefits for customers.
New Industry Creator
We will work to become the leader in creating and cultivating the core industries of the 21st century.
Self-Evolution
We will continue to be a company that evolves of its own volition by forming an organization that flexibly adapts to changes in the operating environment and incorporates corporate “Ingenuity” and “Self-transformation” as part of its organizational DNA.
Social Responsibility
We will ensure that each company in the SBI Group recognizes its social responsibilities as a member of society, while fulfilling the demands of its stakeholders, contributing to the betterment of society.

(2) The SBI Group’s Corporate Vision

For detail, please refer to the following website.
http://www.sbigroup.co.jp/english/company/information/vision.html

2. The SBI Group’s Definition of Corporate Value

The SBI Group defines corporate value as an aggregation of customer value, shareholder value and human capital value.
The creation of customer value, which is the intrinsic value of goods and services a company provides to its customers, is the foundation of corporate value. Customer value, shareholder value and human capital value are mutually interconnected, and increase over time in a virtuous cycle.
Increase in customer value, by closely adhering to the “Customer-centric Principle” on a Group-wide basis, will contribute toward an improvement in business performance, and an increase in shareholder value. As a result, it becomes possible to recruit and retain superior personnel, which leads to an increase in human capital value. If it is able to recruit and retain superior personnel, better products and services can be created and will lead to an increase in customer value. By creating this type of virtuous cycle, the SBI Group is endeavoring to increase corporate value.

II. Relationships with Stakeholders

1. Basic Policy

(1) The SBI Group’s Code of Conduct
 In accordance with the Management Philosophy, SBI Holdings (“the Company”) has established the SBI Group Compliance Code of Conduct as a code of conduct pertaining to relations with stakeholders. All SBI Group officers and employees observe the Code of Conduct and endeavor to ensure that it is widely put into practice.

(2) Disclosure of Company Information
The Company’s basic policy on information disclosure is to fulfill its responsibilities as a listed company to all stakeholders through appropriate, prompt disclosure of important matters about the Company and to increase corporate value by ensuring management transparency and fairness.

2. Relationships with Customers

The SBI Group consistently adheres to the “Customer-centric Principle” in all Group businesses to maximize customer value, which is the intrinsic value of the goods and services a company provides to customers and the foundation of corporate value. The officers and employees of the SBI Group demonstrate leadership and endeavor to increase customer satisfaction, along with create and enhance customer value through the provision of customer services grounded in this basic principle.

3. Relationships with Shareholders

(1) Shareholder Rights
The Company observes the following matters to enable all shareholders to secure and appropriately exercise shareholder rights.

(i) The Company discloses information concerning the General Meeting of Shareholders in a timely and appropriate manner.
(ii) In principle, the Company sends out a notice of convocation approximately three weeks before the General Meeting of Shareholders and publishes the notice on the Company’s website to allow sufficient time for consideration of proposals.
(iii) The Company arranges an environment in which shareholders are able to exercise voting rights via the website.
(iv) The Board of Directors analyzes proposals against which a substantial number of negative votes have been cast at the General Meeting of Shareholders.

(2) Basic Policy for Constructive Dialogue with Shareholders
 The Company has established a basic policy for the purpose of actively engaging in dialogues to establish good relationships with investors, including shareholders, through investor relations activities(see Attachment 1).

(3) Capital Policy
(i) The Company’s basic dividend policy is to pay a minimum annual dividend of JPY 10 per share, and endeavor to increase the dividend when it has determined that a further return of profits is possible, after a comprehensive consideration of the appropriate level of internal reserves required for sustained growth, along with a consideration of the ongoing business performance.
(ii) When implementing a capital policy that results in dilution of shares, to avoid causing unfair harm to existing shareholder value, the Company comprehensively considers the rationality of the policy and provides sufficient explanation to shareholders at the time of implementation./td>

(4) Cross-shareholding
(i) Cross-shareholding policy
When engaging in business alliances or cooperation that contribute to the SBI Group’s business development and enhancement of the Company’s corporate value, the Company may acquire and hold shares of business partners with a view to earning profits through their future sale if it is rational to do so for reasons such as prospective enhancement of the corporate value of business partners. The Board of Directors examines the effects of strategic cross-shareholdings and periodically examines the objective and rationale for cross-shareholdings.
(ii) Policy on exercise of voting rights
The Company exercises voting rights after confirming that the content of proposals submitted to General Meetings of Shareholders does not damage the SBI Group’s corporate value and taking into consideration the circumstances of investee companies.

(5) Anti-takeover Measures
In principle, the Company does not adopt anti-takeover measures.

(6) Related party Transactions
When the Company engages in a transaction with a principal shareholder (a shareholder holding 10% or more of voting rights) or when the Company engages in a transaction with a Director of the Company, approval of the Board of Directors shall be required.
Except for the above, when the Company or a subsidiary of the Company engages in a transaction with a related party, the Board of Directors shall appropriately monitor the details of the transaction.

4. Relationships with Employees

(1) Fair Remuneration Linked to Employees’ Motivation
Based on the Group’s policy to reward those who have merited success, and to offer positions to those who exhibit good sense and judgement, the processes that lead to results are evaluated, as well as the results themselves in determining the employees’ remuneration. The evaluations are based on a comprehensive range of other criteria, including experience, ability and contribution to business performance.

(2) Respect for Diversity
The SBI Group engages in initiatives to enable each employee to actively contribute regardless of ethnicity, religion, age, gender, or disability, focuses on creating a workplace environment in which employees can develop wide perspectives, autonomously build their careers, and actively contribute in various fields, and evaluates employees in accordance with their abilities, making no distinction based on gender in hiring, advancement, or promotion.

(3) Whistle-blowing System
(i) The Company has established a whistle-blowing system for SBI Group officers and employees to directly report violations of laws, regulations, or the Articles of Incorporation or other important compliance-related matters and periodically reports to the Statutory Auditors on the status and content of reports made via the whistle-blowing system.
(ii) The Company does not dismiss or subject to any other disadvantageous treatment persons who have made reports via the whistle-blowing system or SBI Group officers and employees or Statutory Auditors of subsidiaries who have reported to the Company’s Statutory Auditors any matter pertaining to the performance of duties by SBI Group officers and employees.
(iii) The Board of Directors supervises the status of whistle-blowing system operation.

5. Relationships with the Community

The SBI Group’s approach to business is not solely guided by the profit motive, but by its belief in contributing to a society that is safe, fair, comfortable and environmentally friendly. Based on this belief, it not only proactively commercializes and practices the ideals of social justice, but also through direct social contributions to meet the needs of its stakeholders, for the preservation and development of society, and in aspirations of becoming a strong and respected company.

III. Basic Policy on the Governance System

The Company has selected a Company with Board of Statutory Auditors system as its organizational structure and has established a Board of Directors and Board of Statutory Auditors.
The Board of Directors decides important matters, supervises the status of business execution, and recruits Outside Directors who pose no risk of conflict of interest with general shareholders to strengthen supervision of management appropriateness. The Board of Statutory Auditors has the responsibility to establish a good corporate governance system that maintains the trust of society by auditing the Directors’ performance of duties as an organization independent from the executive bodies. In particular, the Statutory Auditors are directly elected by the shareholders and have the authority to conduct investigations of subsidiaries or audits at their sole discretion in the pursuit of responsibility of Directors. The Standing Statutory Auditors play a central role in appropriately ensuring collaboration between the Statutory Auditors or Board of Statutory Auditors and the Outside Directors and Accounting Auditor and endeavor to realize a more effective corporate governance system.

1. Directors and the Board of Directors

(1) Roles and Responsibilities of Directors
The Directors shall recognize their fiduciary duty to shareholders and act in the common interest of the Company and shareholders while ensuring appropriate cooperation with stakeholders. The Directors have the following responsibilities.

(i) The Directors comprise the Board of Directors and supervise the execution of business by the Representative Director, Executive Officers and other persons who execute business.
(ii) The Directors have the obligation to perform their duties with the duty of care of a prudent manager and duty of loyalty toward the Company.
(iii) The Directors collect information considered sufficient to contribute to the performance of duties and decision-making and strive for self-improvement to appropriately fulfill their roles and responsibilities.
(iv) (iv) The Directors contribute to enhancing the Company’s medium- to long-term corporate value by actively engaging in constructive, vigorous discussion and exchange of opinions based on their knowledge and experience.
(v) The Outside Directors who meet the independence criteria established by the Company as Outside Directors who pose no risk of conflict of interest with general shareholders (see Attachment 2; hereafter “Independent Outside Directors”) recognize that they, in particular, are expected to make judgments from an independent and objective standpoint and endeavor to appropriately express their views to the Board of Directors.

(2) Roles and Responsibilities of the Board of Directors
(i) The Board of Directors, consisting of the Company’s Directors, decides important matters relating to business execution and supervises the Directors’ performance of duties.
(ii) The Board of Directors holds ordinary Board of Directors Meetings once a month, in principle, and extraordinary meetings as necessary.
(iii) The Board of Directors makes decisions on matters stipulated by laws and regulations and matters stipulated as important matters and, to rapidly and flexibly respond to changes in the business environment, delegates business execution authority for other matters to authorized persons designated by the Representative Director in accordance with rules for delegation of authority decided by the Board of Directors.
(iv) In the interest of enhancing the Company’s medium- to long-term corporate value, the Board of Directors promotes constructive, vigorous discussion and exchange of opinions and engages in multifaceted, thorough consideration when making decisions.
(v) The Board of Directors has established the Basic Policy on Internal Control Systems and supervises the status of development and operation of systems to ensure compliance, risk management, and the reliability of financial reporting.

(3) Compensation for Directors
(i) Procedure
When deciding Directors’ compensation, the Board of Directors decides the amount of compensation for each Director within the total compensation amount approved at the General Meeting of Shareholders following discussion about the amount of compensation between the Representative Director and the Independent Outside Directors. However, if the Board of Directors has left the decision to the discretion of the Representative Director, the Representative Director decides the amount of compensation.
(ii) Policy
The amount of compensation (excluding bonuses) is decided for each Director taking into consideration the following matters.

・ The maximum amount of employee salary
・ Compensation paid to Directors of the same rank in the past
・ The Company’s business performance outlook
・ The going rate for Director compensation
・ The degree of contribution to the Company’s business performance, etc.
・ The circumstances of accession to office
・ Other matters
Directors’ bonuses are determined for each individual Director on the basis of the status of performance of duties.
The Company nominates persons who fully recognize their fiduciary duty to shareholders and act in the common interest of the Company and shareholders as Directors. Although the Company recognizes that holding shares has a certain incentive effect to further increase motivation to enhance the Company’s medium- to long-term corporate value, in light of the fact that development of schemes for stock-based compensation is incomplete at this time, the Company shall consider issuing paid-in stock options in a timely and appropriate manner.
(4)Nomination of Director Candidates
(i) Procedure
At the time of selection of Director candidates, the Representative Director selects candidates deemed qualified through their professional duties. At the time of nomination, the Board of Directors nominates candidates for Directors following discussion among the Independent Outside Directors of a policy for determining candidates that includes consideration of qualities and abilities considered necessary for a Director or business executive.
(ii) Policy
At the time of determining Director candidates, the Board of Directors nominates candidates considering the following matters, having taken into account the number of Directors that make it possible for the Board of Directors to expeditiously meet and engage in open-minded discussions and the balance of Directors’ knowledge, experience and roles.

・ Director candidates recognize their fiduciary duty to shareholders and have qualities that enable them to appropriately perform their duties with the care of a prudent manager and loyalty toward the Company.
・ Director candidates possess sufficient professional knowledge and a wealth of experience in management or management supervision and are able to engage in appropriate decision-making to contribute to enhancing the Company’s corporate value.
・ If Outside Director candidates concurrently hold positions as officers of other companies, it is possible for them to appropriately fulfill the abovementioned role in the Company.
・ Director candidates the Company plans to appoint as executives (President, Senior Executive Vice President, Senior Managing Executive Officer, or Managing Executive Officer) are expected to be able to contribute to enhancement of the Company’s corporate value utilizing their knowledge and experience of the SBI Group as a whole or the SBI Group’s important businesses.
(5) Nomination of Statutory Auditors Candidates
(i) Procedure
At the time of selection of Statutory Auditor candidates, the Representative Director selects candidates deemed qualified through their professional duties. At the time of nomination, the Board of Directors nominates candidate for Statutory Auditors with the consent of the Board of Statutory Auditors following discussion among the Independent Outside Directors of a policy for determining candidates that includes consideration of qualities and abilities considered necessary for a Statutory Auditor.
(ii) Policy
At the time of determining Statutory Auditor candidates, the Board of Directors nominates candidates considering the following matters, having taken into account that at least one person with knowledge of finance and accounting be appointed.

・ Statutory Auditor candidates are capable of making appropriate decisions from an independent and objective standpoint in accordance with their fiduciary duty to shareholders.
・ Statutory Auditor candidates endeavor to maintain an independent stance, always maintain a fair and unbiased attitude, and are able to act on the basis of their own convictions.
・ Statutory Auditor candidates have a wealth of knowledge and experience or have extensive accomplishments in professional fields necessary for performing the audit function.

(6) Outside Director Liaison Committee
The Company periodically holds meetings of a Liaison Committee organized around the Independent Outside Directors. The purpose of the Liaison Committee is to make possible appropriate and active discussion at Board of Directors Meetings by promoting information exchange and common understanding based on the objective stance of Outside Directors and ensure transparency and objectivity in Board of Directors decisions through appropriate involvement of Outside Directors in matters such as the nomination of Director candidates, selection of management executives, and Directors’ compensation.
Statutory Auditors may participate in Liaison Committee Meetings as necessary.

(7) Board Evaluation
Board of Directors annually conducts an evaluation to verify the effectiveness of the Board of Directors and discloses a summary of the evaluation results.

2. Statutory Auditors and the Board of Statutory Auditors

(1) Roles and Responsibilities of Statutory Auditors
The Statutory Auditors shall recognize their fiduciary duty to shareholders and act in the common interest of the Company and shareholders while ensuring appropriate cooperation with stakeholders. The Statutory Auditors have the following responsibilities.

(i) The Statutory Auditors have a responsibility to secure the sound, sustained growth of the Company and establish a good corporate governance system that maintains the trust of society by auditing the Directors’ performance of duties as members of an organization independent from the executive bodies.
(ii) The Statutory Auditors endeavor to maintain an independent stance, always maintain a fair and unbiased attitude, and act on the basis of their own convictions.
(iii) The Statutory Auditors constantly strive for self-improvement to improve the quality of auditing.
(iv) The Statutory Auditors strive to deepen their awareness of management issues from an overall management viewpoint and to ascertain changes in the management situation and in the environment surrounding the Company in order to form an appropriate auditing perspective.
(v) The Statutory Auditors communicate with Directors and employees of the Company and subsidiaries and endeavor to improve an environment for conducting audits and collect information.
(vi) In light of the characteristics of Standing Statutory Auditors as full-time corporate officers, the Standing Statutory Auditors endeavor to improve an environment for conducting audits and collect information within the Company and constantly supervise and verify the status of development and operation of internal control systems.
(vii) The Standing Statutory Auditors endeavor to share information learned in the performance of their duties with the other Statutory Auditors.

(2) Roles and Responsibilities of the Board of Statutory Auditors
(i) The Board of Statutory Auditors, consisting of all of the Company’s Statutory Auditors, appoints Standing Statutory Auditors.
(ii) In light of the fact that the Board of Statutory Auditors is the sole consultative body and decision-making body for forming opinions concerning auditing, each Statutory Auditor reports the status of performance of duties to the Board of Statutory Auditors and strives to ensure the effectiveness of auditing utilizing the Board of Statutory Auditors. However, resolutions of the Board of Statutory Auditors do not impede the exercise of the authority of each Statutory Auditor.
(iii) The Board of Statutory Auditors expresses its opinion to Directors or the Board of Directors as necessary.
(iv) The Board of Statutory Auditors determines criteria for evaluating the Accounting Auditor from the perspective of the Accounting Auditor’s independence and expertise, the appropriateness of the status of performance of duties, and the status of communication with the Statutory Auditors, and it determines the appropriateness of reappointing the Accounting Auditor.
(v) The Statutory Auditors and Board of Statutory Auditors strive to ensure cooperation with the Outside Directors to enable them to strengthen their ability to collect information without the independence of the Outside Directors being affected.

3. Accounting Auditor

The Company recognizes that the Accounting Auditor has an important role of ensuring the reliability of financial information and has a duty toward shareholders and investors. In addition, to prepare an environment that makes it possible for the Accounting Auditor to appropriately conduct audits, the Company endeavors to secure an audit schedule and prepare a conference room for the exclusive use of the Accounting Auditor, arranges regular interviews between the Accounting Auditor and the Company’s Representative Director and CFO, and secures a framework for liaison with the Statutory Auditors, Internal Auditing Department and Outside Directors.
If the Accounting Auditor discovers misconduct and requests an appropriate response or identifies any defect or problem, it immediately liaises with the Board of Directors and Statutory Auditors, and the Directors in charge take the lead in examining and correcting the situation under the direction of the Representative Director.

4. Support Systems

(1) Board of Directors Operating Policy
The Board of Directors has established the following policy for operation of Board of Directors Meetings for the purpose of stimulating deliberation and discussion.

(i) Board of Directors Meeting materials are distributed to the Directors and Statutory Auditors well in advance of meetings.
(ii) The Company provides sufficient information to the Directors and Statutory Auditors as necessary concerning matters to be deliberated.
(iii) The annual Board of Directors Meeting schedule and expected matters to be deliberated are notified in advance.

(2) Access to Information and Support Framework
The Company has developed and operates a framework for information sharing and otherwise providing appropriate support at the request of Directors and Statutory Auditors. The Company supports appropriate information sharing with the Internal Auditing Department, Directors, and Statutory Auditors to ensure the effectiveness of the roles and responsibilities of the Directors and Statutory Auditors.

(3) Training for Directors and Statutory Auditors
The Company has prepared a training environment for the acquisition and updating of knowledge that each Director and Statutory Auditor is required as a business executive. In addition, the Company has prepared a training environment for newly appointed Directors and Statutory Auditors to deepen their understanding of the SBI Group.

Establishment and revision history:
Established: December 22, 2015
Date of Amendment: April 1, 2016

Attachment 1

Basic Policy for Constructive Dialogue with Shareholders

The Company has established the following basic policy for the purpose of actively engaging in dialogues to establish good relationships with investors, including shareholders, through investor relations activities.

The Company has set up a dedicated an investor relations department under the control of the Representative Director to plan and implement activities for dialogue with shareholders and investors. The investor relations department is responsible for individual meetings with shareholders and investors. When there are requests for individual meeting, the Representative Directors, Directors (including Outside Directors) and Executive Officers attend as necessary.
To rationally and smoothly engage in dialogues with shareholders and investors at financial results announcements and investor briefings, the investor relations department plays a central role in providing accurate, unbiased information to shareholders and investors while closely liaising with involved departments.
The Company holds quarterly financial results presentations, semi-annual presentations for individual shareholders, Current Management Information Briefings after the General Meeting of Shareholders, and other events as means of dialogue other than individual meetings and actively arranges opportunities for the executive team to engage in direct communication with shareholders and investors, such as participation from time to time in conferences held by securities companies in Japan and overseas. In addition, the Company endeavors to actively provide information to shareholders and investors by means including posting explanatory material for investors and presentation videos in Japanese and English on its corporate website.
The Company endeavors to ascertain the composition of its shareholders and makes use of opinions, concerns, and other feedback obtained through dialogues with shareholders and investors to continuously increase corporate value by sharing and utilizing this information by means such as providing feedback to executive management and involved departments as appropriate.
The investor relations department personnel who engage in dialogues with shareholders and investors receive training in the handling of insider information and confidential information, carefully manage unreleased material facts in accordance with the Rules for Management of Insider Trading, and appropriately engage in dialogues with shareholders and investors.
In addition, to prevent leakage of unannounced financial results information during the results announcement preparation period and ensure the fairness of investor relations activities, the Company observes a quiet period during which it refrains from dialogue concerning results information from the day after each quarterly closing until the date of the results announcement.

Attachment 2

SBI Holdings’ Independence Criteria for Outside Directors

The Board of Directors has established the following criteria for Outside Directors who pose no risk of conflict of interest with general shareholders.
A) A person who is not now and was not for a period of ten years before taking office an officer[1] or employee of the Company or any of its subsidiaries.
B) A person who is not now and was not for a period of five years before taking office a principal shareholder[2] of the Company (if the principal shareholder is a corporation, association, or other organization, an officer[1] or employee of said organization).
C) A person who is not now and was not for a period of five years before taking office a person having transactions or a person who executes business[3] of a company having transactions with the Company exceeding 2% of the Company’s consolidated revenues.
D) A person who is not now and was not for a period of five years before taking office a person who executes business[3] of a principal lender (more than 2% of consolidated total assets) of the Company or any of its subsidiaries.
E) A person who is not now and was not for a period of five years before taking office a consultant, accounting professional, or legal professional receiving from the Company a large sum of money (in an amount exceeding ¥10 million per year) excluding compensation for duties as an officer (if the entity receiving said assets is a corporation, association, or other organization, a person affiliated with said organization who is involved with the Company).
F) A person who is not now and was not for a period of five years before taking office a person who executes business[3] of a corporation, association, or other organization that has received from the Company large donations (in an amount exceeding ¥10 million per year).
G) A person who is not a relative within the second degree of kinship of a person mentioned in A) to F) above[4] or a person who depends upon such person for his or her livelihood.
H) A person whom the Board of Directors determines poses no risk of any other conflict of interest.

1 Directors (excluding Outside Directors) and Statutory Auditors (excluding Outside Statutory Auditors).
2 Shareholders holding 10% or more of voting rights.
3 Directors (excluding Outside Directors) and employees.

4 If a corporation, association, or other organization, a person in a position at the officer or department manager level.