The Company understands that strengthening risk management and guaranteeing transparency in management are vital to continuous improvement of corporate value. The Company is a company with an Audit & Supervisory Board through which, along with the Board of Directors, it monitors risks related to business. It has also established a voluntary Nomination & Remuneration Advisory Committee mainly comprised of outside Directors, and works to strengthen managerial supervision functions.
The Company also conducts accounting and operational audits through internal audits and works on strengthening its ability to take remedial action while ensuring compliance.

The Company has built a corporate governance system that enlists the Board of Directors to serve as a managerial decision-making body, while also employing the Audit & Supervisory Board equipped with the managerial audit function, and an Executive Officer system to further strengthen the corporate structure.
The corporate governance system of our company is as shown in the figure below.

In addition, in order to ensure proper business operation and close coordination within the Group, the Company has built a framework where it has respective Group companies regularly provide relevant managers in charge with reports on matters such as business conditions and risks, pursuant to Rules on Management of Subsidiaries and Associates, and where it can effectively convey instructions and requests regarding matters such as internal rules and personnel affairs. In this way, the Company strives to strengthen its corporate governance.

When determining nominations of Director and Audit & Supervisory Board Member candidates, the Board of Directors resolves election proposals to be submitted to the General Meeting of Shareholders, based on the results of consultation with the Nomination & Remuneration Advisory Committee, which is a voluntary advisory body in which outside Directors make up a majority of the members (upon having gained preliminary consent of the Audit & Supervisory Board with respect to Audit & Supervisory Board Member candidates).

The Company has adopted a performance-linked remuneration system with respect to remuneration of the senior management and Directors in order to facilitate further improvement of the Company's business performance by providing them with greater incentive to improve business performance. However, outside Directors and Audit & Supervisory Board Members are entitled to basic remuneration exclusively due to their position independent of business execution.

The Board of Directors makes decisions on amounts of remuneration for Directors within a range determined at the General Meeting of Shareholders, based on the results of consultation with the Nomination & Remuneration Advisory Committee, which is a voluntary advisory body in which outside Directors make up a majority of the members. The amounts of remuneration for Audit & Supervisory Board Members are calculated per discussions among the Audit & Supervisory Board Members.

The Company has three outside Directors and two outside Audit & Supervisory Board Members.

The Company has appointed three outside Directors, both of whom have no material interest in the Company involving personal relationships or otherwise, and both of whom are equipped with longstanding experience in corporate management as well as experience in the practice of corporate legal affairs serving as attorneys at law. The Company expects that they will provide direction to business and checking function in an objective way, independent from the managers running the business, utilizing their extensive knowledge and achievements. Therefore, the Company has appointed them as outside Director. In addition, the two outside Audit & Supervisory Board Members also have no material interest in the Company involving personal relationships or otherwise, and both have official qualifications as attorney at law and certified public accountant, and are equipped with experience in the practice of corporate legal affairs and corporate accounting. The Company has appointed them in order to utilize their extensive knowledge and achievements to enhance and strengthen the Company's auditing system.

The Company appoints as outside Directors and outside Audit & Supervisory Board Members individuals equipped with extensive knowledge and achievements in various fields upon having deemed that their independence from management is assured, pursuant to regulations on independence such as those stipulated in regulations of the Tokyo Stock Exchange.