Governance

Corporate Governance Report

Basic Stance on Corporate Governance

The basic policy of our group regarding corporate governance is to ensure transparency and fairness in corporate management and to recognize that the establishment of corporate governance is indispensable to promote continuous growth.

Specifically, it is fundamental that each director, corporate auditor, and employee recognize his or her own roles and responsibilities in corporate management. This will earn the trust of shareholders and other stakeholders and promote the continuous growth of the Group.

Corporate Governance Structure

Basic Policy on Internal Control System

Enacted on August 19, 2019
Revised on December 24, 2024

1. Scheme to ensure that execution of duties by the directors and employees are in compliance with applicable laws and regulations and HENNGE articles of incorporation

1. The board of directors consists of directors including outside directors and resolve important matters as well as supervise the execution of duties by the directors in accordance with the applicable laws and regulations, articles of incorporation, and the Rules for the Board of Directors.
2. Directors shall, based on the roles determined by the board of directors, supervise the duties they are in charge in accordance with the applicable laws and regulations, articles of incorporation, resolutions by the board of directors, and the company internal rules.
3. Executive Officer System shall be adopted in order to strengthen the decision-making mechanism and to make execution of duties of the board of directors efficient.  Executive officers shall execute their duties under the decision by the board of directors, based on the delegation by the board of directors and the Representative Director.
4. HENNGE Compliance Basic Policy and Rules for Compliance (hereinafter “Rules for Compliance, etc.”) shall be set in order that all the directors and the employees shall be aware of the company’s social responsibility and act as they respect the general social norms, not to mention explicitly stipulated laws, regulations, and rules, and so that compliance-aware management of the company shall be implemented.
5. In accordance with the Rules for Compliance, etc., the director who is in charge of compliance matters shall be appointed. Then, the Compliance Committee, having such director who is in charge of compliance matters as a chairperson thereof, shall be established in order to monitor, investigate, and manage compliance\related matters and prevent violations as well as the possibilities thereof of relevant laws and regulations by the directors and the employees, as the committee meetings are periodically held and in cooperation with the whistleblowing contact offices.
6. A scheme to facilitate reporting to the Chief Executive Officer, board of directors, and Audit & Supervisory Committee, as well as consultation and reporting to the company legal counsel in the event of any violations of compliance matters, shall be created, with the Compliance Committee’s initiative.

2. Preservation and management of information related to the execution of duties by the directors

Important documents related to management of the company, confidential information and personal information shall be recorded, maintained, and managed appropriately based on the applicable laws and regulations, the Rules for Information Management, Rules for Management Concerning Confidential Information and Trade Secrets, Rules for Handling of Personal Information and the Information Security Management Rules.

3. Rules related to management of risk of loss and other schemes

The Risk Management Rules and the Rules for Crisis Management shall be set up in order to prevent that risks arise and a scheme to take prompt and appropriate measures in the event that risks actualize shall be established.

4. Scheme to ensure effectiveness of the execution of duties by the directors

1. In order to ensure that the directors’ duties are executed effectively, matters related to the operation of the board of directors shall be set forth in the Rules for the Board of Directors. Board meetings shall be summoned once a month periodically as well as anytime as needed.
2. Directors shall make efforts to stay up-to-date with timely and precise management information, leveraging the information technology.

5. Scheme to ensure the overall appropriateness of the operations of HENNGE and its subsidiaries as an enterprise group

1. HENNGE board of directors shall receive periodic reports with respect to matters related to execution of duties by the directors of its subsidiaries to ensure the appropriateness of their operations.
2. HENNGE subsidiary board of directors shall assess the risk items which are set forth in the Risk Management Rules to prevent that risks arise and establish a scheme to take prompt and appropriate measures in the event that risks actualize.
3. HENNGE Audit and Supervisory Committee members designated by the Audit and Supervisory Committee shall pay attention whether the HENNGE subsidiaries’ internal control systems are appropriately set up and may exercise their authorities which are prescribed by the applicable laws and regulations to investigate the operations of the subsidiaries as needed.
4. Company auditors who are in charge of internal audits shall periodically and/or in a timely manner conduct internal audits of the subsidiaries to further strengthen their internal control systems and provide guidance, assistance, and suggestions for improvements.

6. Matters related to a director and an employee who assists the Audit and Supervisory Committee’s duties; matters related to the independence of such director and employee from the directors(excluding Directors who are Audit and Supervisory Committee members); and a scheme to assure the effectiveness of directions given to such director and employee

1. In the event that the Audit and Supervisory Committee desires to have an assistant, directors and the Audit and Supervisory Committee shall exchange opinions and appoint such director and employee to assist the company auditors’ duties.
2. In the event of appointing a director and an employee to assist the Audit and Supervisory Committee, such director and employee shall not be under the instruction and within the chain of command by the directors(excluding Directors who are Audit and Supervisory Committee members) and their supervisors with respect to requests made by the Audit and Supervisory Committee.
3. Job transfers as well as disciplinary actions to a director and an employee who assists the Audit and Supervisory Committee shall require prior consent by the Audit and Supervisory Committee.

7. Reporting scheme by the directors and employees to the Audit and Supervisory Committee

1. Directors and employees of HENNGE and HENNGE subsidiaries shall, upon request by the Audit and Supervisory Committee, promptly report the execution status of their duties to the Audit and Supervisory Committee.
2. Directors of HENNGE and HENNGE subsidiaries shall immediately report to the Audit and Supervisory Committee in the event of finding any facts that may cause material harm to HENNGE or HENNGE subsidiaries.
3. HENNGE and HENNGE subsidiaries shall set up a scheme so that employees of HENNGE and HENNGE subsidiaries may immediately report to the Audit and Supervisory Committee through the whistleblowing contact offices or by other means in the event that they find any facts that may cause material harm to HENNGE or HENNGE subsidiaries.
4. HENNGE and HENNGE subsidiaries shall set up a scheme so that employees who reported to Audit and Supervisory Committee based on the preceding paragraph shall not be treated disadvantageously.
5. The Director who is in charge of compliance matters shall report to the Audit and Supervisory Committee as necessary and without delay with respect to the contents reported through the whistleblower system.

8. Other schemes to ensure the effectiveness of the audit by the Audit and Supervisory Committee

1. The Audit and Supervisory Committee members have the authority, in order to stay informed with respect to important decision-making in addition to decisions made by the board of directors and the status of execution of duties, to attend important meetings, to provide their opinions, as well as to go through important documents such as those requesting major approvals and those related to execution of other duties and may request to the directors and employees for explanation as necessary.
2. In the event that an Audit and Supervisory Committee member requests for advancement of expenses and so on with respect to the execution of their duties based on Article 399-2, paragraph 4 of the Companies Act of Japan, the company shall promptly process such expenses or debt.