As a bank that owns and operates an ATM network that manages deposits from a large number of customers and has a nature similar to that of public infrastructure, the Bank recognizes that ensuring disciplined corporate management is vital in responding to social trust and seeks to ensure effective corporate governance. This is achieved by maintaining and improving corporate governance and compliance systems to ensure transparent, fair and swift managerial decision making; clarifying the roles and responsibilities of executives and employees; strengthening management oversight functions; and ensuring equitable operations.
The Bank adopts the organizational form of a Company with Audit & Supervisory Board Members. At the Board of Directors, the Bank ensures effective corporate governance through decision making by Directors with executive authority over operations who are well versed in the Bank’s operations and Outside Directors who have considerable experience and insight in their areas of expertise as well as through the audits by the Audit & Supervisory Board Members.
Corporate Governance Guidelines
In order to put the Basic Policy on Corporate Governance into practice, we have established the Corporate Governance Guidelines to clarify what we should do specifically and to fulfill our accountability to shareholders.Corporate Governance Guidelines（PDF／393KB）
Corporate Governance Report
We submit a Report on Corporate Governance describing our corporate governance system to the Tokyo Stock Exchange and post it on our website.Corporate Governance Report（PDF／655KB）
Corporate Governance System Overview
|Organizational Design||Company with Audit & Supervisory Board Members|
|Number of Directors (Number of Outside Directors)||11 (4) *as of June 19, 2018|
|Number of Audit & Supervisory Board Members
(Number of Outside Audit & Supervisory Board Members)
|4 (2) *as of June 19, 2018|
|Number of Meetings of Board of Directors
(Average Attendance by Outside Directors)
|13 (92%) *Fiscal 2017|
|Number of Meetings of Audit & Supervisory Board
(Average Attendance by Outside Audit & Supervisory Board Members)
|14 (100%) *Fiscal 2017|
|Directors’ Terms of Office||One year|
|Optional Committees of Board of Directors||Compensation Committee|
|Auditor||KPMG AZSA LLC|
Board of Directors
As of June 19, 2018, the Bank’s Board of Directors consisted of eleven Directors, including four Outside Directors. The Board of Directors meets, in principle, once a month to decide on the Bank’s basic management policies and important operational issues and to supervise the execution of duties by Directors with executive authority over operations and Executive Officers.
The Board of Directors has established the Executive Committee as a decision-making body concerned with operational implementation within the scope delegated by the Board of Directors. In principle, the Executive Committee meets on a weekly basis to deliberate on the implementation of important operations, including the formulation or amendment of important business plans; the acquisition and disposal of important assets; important credit provision-related issues; the payment of large debts and expenses; important credit management issues; rewards and sanctions for employees; important issues related to employees’ working conditions and benefits; the establishment, change and abolition of important elements of the organization; and the formation, revision and elimination of important rules and policies, in addition to conferring on issues to be deliberated by the Board of Directors prior to its meetings. Since June 2006, the Bank has adopted an executive officer system, and the Executive Committee comprises Executive Officers and others nominated by the Board of Directors.
Analysis and Evaluation of Effectiveness of the Board of Directors
The Bank has been conducting an evaluation of the effectiveness of the Board of Directors annually since fiscal 2015.
Concerning the effectiveness of the Board of Directors for fiscal 2017, the Bank conducted a questionnaire study for Directors and Audit & Supervisory Board Members and, based on a summary of the results, discussion and evaluation took place at the Board of Directors meetings. The results of the evaluation are described below.
Audit & Supervisory Board
As of June 19, 2018, the Bank’s Audit & Supervisory Board consisted of four Audit & Supervisory Board Members, including two Outside Audit & Supervisory Board Members. The Audit & Supervisory Board meets, in principle, at least once a month to receive reports regarding important auditing-related issues and deliberate and make decisions thereof. The Audit & Supervisory Board convenes with Representative Directors, the Internal Audit Division and the Accounting Auditor on a regular basis to exchange opinions and make requests as necessary on issues to be addressed by the Bank, the status of improvements to the Audit & Supervisory Board Members’ auditing environment and important auditing-related issues. In addition, the Audit & Supervisory Board Members oversee and verify from the following perspectives the status of fulfillment of legal obligations, including the duty of diligence of a good manager and the duty of loyalty, with regard to resolutions of the Board of Directors and other decision making by Directors.
- There shall be no material and careless errors in recognizing the facts on which a decision is made.
- The decision-making process shall be reasonable.
- The content of a decision shall not violate laws and/or the Articles of Incorporation.
- The content of a decision shall not be apparently unreasonable from an ordinary corporate manager’s perspective.
- The interest of the Bank shall be considered first, not the interest of Directors or a third party, in making a decision.
To assist the Audit & Supervisory Board Members and facilitate the operation of the Audit & Supervisory Board,
the Audit & Supervisory Board Members’ Office has been established and employees have been positioned in place.
Corporate Governance Structure
Nomination & Compensation Committee
As an auxiliary organization to the Board of Directors, the Bank has established the Compensation Committee, chaired by an independent Outside Director. The committee is delegated by the Board of Directors to recommend candidates for Director to be put on the agenda at a General Meeting of Shareholders, to recommend candidates for Executive Officer to be put on the agenda at a Board of Directors meeting and to supervise a plan on successors to the position of Director, etc.
The Compensation Committee shall deliberate the following matters regarding the Bank’s Directors and Executive Officers.
- Compensation and bonuses
- Selection of candidates for Director or Executive Officer
- Other important matters concerning compensation
- Other important personnel matters regarding Directors
Reasons for Appointment of Outside Officers
|Name||Reasons for Appointment|
|Outside Directors||Makoto Kigawa||The Bank can expect that Mr. Makoto Kigawa’s experience and insight as Representative Director of YAMATO HOLDINGS CO., LTD., etc., will contribute to the management of the Bank.|
|Toshihiko Itami||Mr. Toshihiko Itami possesses insight on corporate legal affairs, etc., nurtured for many years through his career as a prosecutor. We can expect his expertise to contribute to the management of the Bank.|
|Koichi Fukuo||The Bank can expect that Mr. Koichi Fukuo’s experience and insight as a manager at Honda Motor Co., Ltd., etc., will contribute to the management of the Bank.|
|Yukiko Kuroda||The Bank can expect that Ms. Yukiko Kuroda’s experience as a corporate manager and her insight related to the development of human resources who can handle global business will contribute to the management of the Bank.|
|Outside Audit & Supervisory Board Members||Naomi Ushio||The Bank can expect Ms. Naomi Ushio to utilize her expertise and insight gained as a university professor, and her experience as an outside director and outside corporate auditor at other companies, to contribute to improved corporate governance.|
|Kunihiro Matsuo||The Bank can expect Mr. Kunihiro Matsuo to utilize his insight accumulated over many years as a prosecutor, and his experience as an outside director and outside corporate auditor at other companies, to contribute to improved corporate governance.|
Independence Standards for Independent Outside Directors
The Bank’s Independence Standards for Outside Officers are as follows.
- Is not a person with executive authority over operations of the Bank’s parent company or fellow subsidiary
(or has been in such position in the past, hereinafter, the same applies to each item);
- Is not a person for which the Bank is a major business partner or a person with executive authority over such entity’s operations, or a major business partner of the Bank or a person with executive authority over operations of such entity’s operations;
- Is not a consultant, an accounting professional, a legal professional or a person belonging to an organization that receives a significant amount of monetary compensation from the Bank, other than officers’ compensation;。
- Is not a major shareholder of the Bank or a person with executive authority over operations of such shareholder; or
- Is not a close relative to a person that falls under any of the above or a relative by blood or marriage within the second degree to a person with executive authority over operations of the Bank.
Officers’ compensation is determined by comprehensively taking into account factors including contribution to the Bank, content and importance of duties, and performance of duties. The Bank has established the Compensation Committee as an organization under the Board of Directors to propose specific amounts of officers’ compensation. The committee is chaired by an independent Outside Director and consists of two Outside Directors and two Representative Directors. The specific amount of compensation for Directors is proposed to the Board of Directors by the Compensation Committee within the annual limits for compensation approved by the General Meeting of Shareholders, and the final decision is made by resolution of the Board of Directors. Compensation for Audit & Supervisory Board Members is determined through discussion at the Audit & Supervisory Board within the annual limits for the compensation approved by the General Meeting of Shareholders.
Internal Audit and Audit by Audit & Supervisory Board Members
The Bank has in place the Internal Audit Division, which is independent of the Bank’s other divisions engaging in business operations, and directly reports to the President and Representative Director.
The Internal Audit Division annually sets a basic policy for internal auditing plans and priority issues to be addressed, which are to be approved by the Board of Directors. Individual internal auditing plans are formulated by the General Manager of the Internal Audit Division, and approval of these plans is obtained from the President and Representative Director, who is the officer in charge of the Internal Audit Division.
Individual internal audits are conducted by investigating and evaluating the following items to discover problems, if any, and suggest how to address them. The results of these audits are reported to the President and Representative Director, the Executive Committee and the Audit & Supervisory Board Members.
- Systems for and the current status of legal compliance
- Appropriateness and effectiveness of internal controls over financial reporting
- Systems for and the current status of customer management, including customer protection
- Systems for and the current status of risk management
- Internal management systems at each operational department and appropriateness and effectiveness thereof
- Appropriateness and effectiveness of internal management systems as a whole, based on items A. through E. above.
Internal audits are conducted on all of the Bank’s divisions and systems, including those of its subsidiaries. Audits are also conducted on the operations of the Bank’s major outsourcing contractors regarding the status of management by its relevant internal divisions, as well as on the outsourcing contractors themselves, within the scope agreed with them.
Audit & Supervisory Board Members perform audits on the execution of duties by Directors by attending the Board of Directors meetings or other means. In addition to conducting their own operational and accounting audits of the Bank and its subsidiaries, Audit & Supervisory Board Members receive reports on results of external audits by the Accounting Auditor and check the appropriateness thereof.
Audit & Supervisory Board Members receive periodic reports from the Internal Audit Division on its audit plans and results, and request investigations as necessary to ensure that the audit results of the Internal Audit Division are effectively utilized for internal control system audits by Audit & Supervisory Board Members. In addition, Audit & Supervisory Board Members receive reports on the status of improvement and operation of internal control systems regularly or as necessary from the divisions in charge of internal control functions, and ask for detailed explanations as necessary.
The Audit & Supervisory Board prepares audit reports for each fiscal year based on audit reports submitted by individual Audit & Supervisory Board Members. The Audit & Supervisory Board and the Accounting Auditor hold regular meetings to exchange opinions for mutual collaboration.
The Bank has an audit contract with KPMG AZSA LLC, which conducts accounting audits of the Bank. The names of the certified public accountants who performed duties during fiscal 2017, as well as the composition of the supplementary personnel who were involved in the accounting audit duties, are as follows:
Names of the certified public accountants who performed accounting audit duties
Hiroyuki Yamada, Designated Limited Liability Partner, Engagement Partner
Hiroshi Umetsu, Designated Limited Liability Partner, Engagement Partner
Composition of the supplementary personnel who were involved in accounting audit duties
Seven certified public accountants and nine other persons
Status of Improvement and Operation of the Internal Control Systems
Concerning the system upgrades stipulated in Article 362, Paragraph 4, Item 6 of the Companies Act, the Board of Directors made a resolution on May 8, 2006, on matters to be implemented by the Bank. Progress of the details of this resolution is reviewed each fiscal year. Based on this resolution, Seven Bank strives for good corporate governance and internal control, while ensuring appropriateness in the Seven Bank Group’s operations.
Seven Bank Management Team
Details can be found on the following links.