Status to the Corporate Governance Code
Last updated: July. 19, 2018
In accordance with listing regulations, listed companies are required to "comply or explain" (either to comply with the principles or, if not complying, explain the reason why not to do so) with regard to the Corporate Governance Code*.
Daiwa House Industry (the Company), in its efforts to ensure sustainable growth and increases in corporate value over the medium to long term, has duly considered the basis and spirit of the Corporate Governance Code. The Company "complies" with each of the principles and "explains" with regard to certain principles. The Company provides explanations with regard to items that are required to disclose and explanations of principles that are not implemented, as follows.
Items that are required to disclose
The Company discloses the following information in order to contribute to constructive dialogue with its shareholders.
Explanations of principles that are not implemented
[Supplementary Principle 1.2.3]
The determination of the date of the General Meeting of Shareholder and any associated dates should be made in consideration of facilitating sufficient constructive dialogue with shareholders and ensuring the accuracy of information necessary for such dialogue.
The Company recognizes that the General Meeting of Shareholders is an important place for holding constructive dialogue with its shareholders and works to determine suitable schedules, such as by providing early notification of convocation. However the Company holds its General Meeting of Shareholders each year on a day on which many other companies hold shareholders meetings for the following two reasons.
- 1. Relation to the fiscal closing date
The Company determines its fiscal closing dates from the viewpoint of securing sufficient time for appropriate financial reporting and high quality audits. Accordingly, under the current system, it could prove difficult to bring forward the dates, including the date of the General Meeting of Shareholders, due to the consideration of the time required for the account closing tasks.
- 2. Venue issues
To enable many shareholders to attend the General Meeting of Shareholders, the Company convenes these meetings in venues that have good traffic access and have ample seating capacity. During the General Meeting of Shareholders season, the same venue may also be used by other companies. To avoid scheduling overlaps, the Company sets its meeting date in coordination with other companies. As dates for convening meetings have grown more diverse, it has become difficult to secure other venues of the same scale in the same area and offering the same easy access. For this reason, the Company plans to continue holding its meetings in the current location.
Considering the above issues, it is most likely that at this present time, the Company will continue to set its date of General Meeting of Shareholders on a day on which many other companies hold theirs. However, from the point of view of holding constructive dialogue with its shareholders, the Company will make efforts to resolve the reasons stated above in the medium to long term.
In order to ensure effective, independent and objective oversight of the management by the board, companies should consider utilizing Directors who are neither involved in business execution nor have close ties with the management.
As a company with an Audit & Supervisory Board, the Company's Audit & Supervisory Board Members and Audit & Supervisory Board monitor execution of duties by Directors and Executive Officers. Also, to enhance the Board of Directors' supervision of functions, the Company appoints two outside Directors. Furthermore, the Company's Chairman serves as its Chief Executive Officer (CEO) and its President as its Chief Operating Officer (COO). Although possessing representative rights to fulfill management responsibilities, the chairman is positioned a certain distance from the execution of business.
Accordingly, a total of nine people—the CEO (one), outside Directors (two) and the Audit & Supervisory Board Members (two internal, four outside)—monitor and supervise the Board of Directors. This arrangement functions sufficiently, and the Company maintains an appropriate number of Board of Directors Members, so the Company, at this point in time, has not appointed Directors who are not involved in the execution of operations.
Concerning this matter, it is the Company's policy to examine the suitability of this situation with respect to the size of the business and the management environment, etc. and it will follow the basic principle of ensuring the board has been provided with a balance between the executives' management function and the monitoring function.
The board should be well balanced in knowledge, experience and skills in order to fulfill its roles and responsibilities, and it should be constituted in a manner to achieve both diversity, including gender and international experience, and appropriate size. In addition, persons with appropriate experience and skills as well as necessary knowledge on finance, accounting, and the law should be appointed as kansayaku. In particular, at least one person who has sufficient expertise on finance and accounting should be appointed as kansayaku.
The board should endeavor to improve its function by analyzing and evaluating
effectiveness of theboard as a whole.
Basically, the board is composed of Directors with varying and diverse backgrounds with respect to their specialist knowledge, experience, etc. Presently, one of three outside directors is female, but the board isn't constituted in a manner to achieve the diversity of international experience. In the future, the Company will continue to review the necessity of the board diversity not only from the viewpoint of gender but also of international experience, considering the business strategy and the results of the evaluation on the Board of Director.