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Investor Relations

Corporate Governance

Basic philosophy
Matters relating to internal control systems
Basic approach to and improvement in exclusion of antisocial forces
Executive Team
Remuneration of directors
Reasons for appointing outside directors and outside members of the Audit and Supervisory Committee
Attendance of outside directors in the meetings of the Board of Directors and the Audit and Supervisory Committee
“Takeover defense measures”

Basic Philosophy

Artner’s No.1 business challenge is steadily improving shareholder value over the long term. So in addition to expanding our business and ensuring profitability, we want to grow as a “technical partner” together with our client companies in various industries, as a collective of engineers focused on developing more and more advanced levels of technical expertise. At the same time, with a constant awareness of what society needs most, and a desire to create a demand for it, we strive for business efficiency and soundness to help in the sustainable development of the company.

At Artner, we are highly conscious of our social responsibility as a company, so in addition to strictly observing all applicable laws and regulations, we strive to sustain and develop favorable relationships with shareholders, with our local community, with all of our client companies, and with all employees.

We are committed to further strengthening our internal control and risk management efforts through the application of business management systems (including internal control systems) to enable flexible adaptation to changes in the business environment. In this way, we will constantly improve our business management. Artner also will promptly disclose relevant information both inside and outside the company and enhance business transparency.

Company organization and internal control system

Matters relating to internal control systems

1. System to ensure that directors and employees execute their duties in compliance with applicable laws and regulations and the Articles of Incorporation

(1) At Artner, we have implemented Compliance and Risk Management Meetings chaired by the President & CEO as part of a system aimed at thoroughly educating employees regarding all applicable laws and regulations and the Articles of Incorporation, and also ensuring such compliance.

(2) We have set up an internal whistleblowing system, under which directors, employees, and other people engaged in work for the company can make whistleblower reports to a Whistleblowing Committee that has a duty of confidentiality. It is prohibited to subject persons who submit whistleblower reports using the system to any disadvantageous treatment as a result of such reporting. The system is designed to ensure the effectiveness of whistleblowing to prevent or quickly detect violations of applicable laws and regulations.

(3) The Internal Audit Office, operating independently of other divisions that execute business practices, conducts internal audits. Through such audits, it verifies the appropriateness and effectiveness of the internal management systems of each division, and by promoting the improvement of the systems, it ensures that all employees lawfully execute their duties.

2. System to ensure the appropriateness of financial reporting

(1) Directors and employees ensure the appropriateness of financial reporting by executing their duties in compliance with the “Basic framework of internal control related to financial reporting.”

(2) Directors and employees smoothly operate the system to ensure the appropriateness of financial reporting.

(3) The Internal Audit Office audits the operation of the system to ensure the appropriateness of financial reporting.

3. System to store and manage information relating to the execution of duties by directors

(1) Information and documents relating to the execution of duties by directors are appropriately stored and managed in accordance with the “Document Management Rules,” other applicable rules and regulations, and related information management system manuals.

(2) The Internal Audit Office conducts internal audits to confirm that this information and related documents are appropriately stored and managed.

4. Rules and system to manage risk of loss

(1) We have formulated guidelines, “Structure to Conduct Risk Management,” to define a clear system for managing different risks.

(2) We have classified and defined management risks in accordance with these policies, and each responsible division identifies and analyzes the risk situation for each type of risk. We have set up a system in which the various kinds of risks are managed through the Compliance and Risk Management Meetings. Management and countermeasures for each type of risk are clarified and managed in the meetings.

(3) The Internal Audit Office, which is directly overseen by the President & CEO, is responsible for audits in accordance with an internal audit plan. The office examines the method and details of audit implementation and revises the audit method as and when needed.

5. System to ensure that directors execute their duties efficiently

(1) Board of Directors meetings are held twice a month, as the basis of a system to ensure that directors execute their duties efficiently. The first board meeting of the month is a performance board meeting and the second is a regular board meeting. Special board meetings are also held as and when needed. The scope of authority of the Board of Directors is clearly defined in the “Board of Directors Rules.”

(2) To ensure efficient business management by the directors, we have formulated “Organizational Rules,” “Administrative Authority Rules,” “Division of Duties Rules,” “Division of Duties (Administrative Authority) Statement,” and other internal rules.

6. System to ensure appropriate business practices in a corporate group consisting of companies, parent companies and subsidiaries

The company does not currently have any parent companies or subsidiaries.

7. Matters relating to employees who assist with the duties of the Audit and Supervisory Committee, independence of such employees from other directors (who are not members of the committee), and ensuring the effectiveness of the committee’s instructions to such employees

(1) If requested by the Audit and Supervisory Committee, an employee can be appointed to assist with the duties of the committee.

(2) The appointment or dismissal, reassignment, and performance evaluation of such employees require the approval of the Audit and Supervisory Committee.

(3) If the Audit and Supervisory Committee requests the appointment of an employee to assist with its work, the appointment of a suitable employee to assist with the work needed by the committee is made in consultation with the committee. The appointment is made with the prior approval of the committee, and with an assurance of independence. To ensure the effectiveness of the instructions of the Audit and Supervisory Committee to the applicable employee, the employee works exclusively for the committee, without being assigned any other work.

8. System to enable directors (who are not members of the Audit and Supervisory Committee) and employees to report to the Audit and Supervisory Committee

(1) Directors who are members of the Audit and Supervisory Committee attend meetings of the Board of Directors and other important meetings and receive reports on the state of business practice execution from other directors (who are not members of the committee).

(2) Directors who are members of the Audit and Supervisory Committee are able to view important internal decision request circulars, written decisions, and reports that are not discussed at the important meetings mentioned above, and they also receive explanation of the contents of such documents as and when needed.

(3) Directors or employees should report to the Audit and Supervisory Committee any of the following: a risk that may significantly harm the company; misconduct relating to execution of duties by directors (who are not members of the Audit and Supervisory Committee); significant violation of an applicable law, regulation, or the Articles of Incorporation; reports relating to the state of internal audits; facts reported based on the internal whistleblowing system; and any other matter requested for the purposes of the Audit and Supervisory Committee.

9. System to ensure that persons who make whistleblower reports to the Audit and Supervisory Committee are not subjected to any disadvantageous treatment as a result of such reporting

The operational status of the internal whistleblowing system is reported to the Audit and Supervisory Committee as circumstances demand, and, in accordance with internal rules, it is prohibited to subject persons who submit whistleblower reports using the system to disadvantageous treatment in retaliation for whistleblowing.

10. Matters relating to policies concerning procedures for prepayment or reimbursement of expenses arising from the execution of duties by the Audit and Supervisory Committee members or other processing of expenses or monetary obligations arising from the execution of such duties

The procedures for prepayment or reimbursement of expenses arising from the execution of duties by members of the Audit and Supervisory Committee or other processing of expenses or monetary obligations arising from the execution of such duties are carried out appropriately through applications made by members of the Audit and Supervisory Committee.

11. Other systems to ensure that audits of the Audit and Supervisory Committee are effectively conducted

(1) The President & CEO and Head of the Internal Audit Office strive to enable sufficient opportunities for consultation with the Audit and Supervisory Committee members to examine the establishment of a suitable working environment for the committee, in order to ensure the effectiveness of audits.

(2) To ensure the effectiveness of audits by the Audit and Supervisory Committee, the committee members demand that the President & CEO and the Board of Directors strive to make continuous improvements to the auditing system.

(3) The Internal Audit Office, which is the internal auditing division of the company, and the division responsible for oversight of compliance and risk management meet regularly with the Audit and Supervisory Committee to exchange opinions regarding issues to be addressed.

(4) If the Audit and Supervisory Committee deems it necessary to appoint legal advisors or other external advisors when conducting an audit, such advisors can be appointed.

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Basic approach to and improvements to the exclusion of antisocial forces

1. Basic approach to the exclusion of antisocial forces

(1) To fulfill its obligations of corporate social responsibility and to protect the company, any relations with antisocial forces are cut off.

(2) In the event that the company is subjected to any unreasonable demands by antisocial forces, we respond resolutely by legal means.

(3) We set up a “System for Cutting off Relations with Antisocial Forces” based on the manual for dealing with antisocial forces.

(4) In preparation for unreasonable demands by antisocial forces, we are building close partnerships with an external specialized agency, and in the event that we are subjected to an unreasonable demand by antisocial forces, we will consult with the agency regarding how to respond, or request a response from the agency.

(5) Under no circumstances do we, for the sake of convenience, respond by engaging in behind-the-scenes dealing with or providing money to antisocial forces.

(6) We regularly inform directors and employees of our “System for Cutting off Relations with Antisocial Forces” and promote awareness of it.

2. Internal system for exclusion of antisocial forces

(1) Under the Head of the Management Division, the General Affairs Group, as division responsible for exclusion of antisocial forces, strives to prevent the company from being subjected to any unreasonable demands from antisocial forces.

(2) We have concluded advisory agreements with a legal advisor and retired police officers, and collaborate with a specialized agency.

(3) In collaboration with the Head of the Management Division, the General Affairs Group receives guidance and advice from the legal advisor as circumstances demand, and maintains a database of information on antisocial forces. As and when needed the group also reports the details of such information to the Board of Directors. Based on the information, each division and the Compliance and Risk Management Meetings examine approaches to the exclusion of antisocial forces.

(4) We distribute a manual for dealing with antisocial forces to all employees and promote awareness of it.

(5) The General Affairs Group raises awareness of issues relating to the exclusion of antisocial forces regularly at internal training sessions.

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Executive Team

Click here to see photographs and brief biographies of the members of the company’s executive team. 》 Executive Team

Remuneration of directors

Policies for determining the remuneration of directors and calculation methods for the fiscal year ended January 31, 2021

The remuneration of directors consists of a basic remuneration and a performance-linked bonus. The upper limits of the remuneration established by resolution at the general meeting of shareholders held on April 27, 2017, are ¥200 million for five directors who are not members of the Audit and Supervisory Committee and ¥30 million for three directors who are members of the Committee.

The company has not established an advisory board that includes outside directors, responsible for determining the remuneration of its directors. However, the company ensures objectivity and transparency in determining their remuneration by seeking involvement and guidance from independent directors.

The Board of Directors and the Audit and Supervisory Committee have the authority over the remuneration of directors. This authority extends to deliberating and determining the amount of a basic remuneration and a performance-linked bonus for each director.
The remuneration of directors who are not members of the Audit and Supervisory Committee is determined solely by the Board of Directors, whereas the remuneration of Audit and Supervisory Committee members is determined by deliberation among the members of the Committee.

The basic remuneration is determined based on the amount established for each director position, with the company’s business performance, relative weight against employee salaries, and remuneration levels at other companies taken into consideration. However, if it is not appropriate to pay a remuneration calculated in such a manner due to a significant decline in the company’s business performance or other factors, the company reserves the right to reduce the amount of basic remuneration.

The metrics for performance-linked bonuses is calculated using a formula based on the company’s annual profit, as this is judged to be the most reasonable way to measure the performance of directors. For the fiscal year ended January 31, 2021, the target metrics for performance-linked bonuses had been set at ¥677 million, and the result was ¥642 million.

The processes that the Board of Directors and the Audit and Supervisory Committee went through to determine the remuneration of directors for the fiscal year ended January 31, 2021, are summarized as follows:

With regard to the remuneration for directors who are not members of the Audit and Supervisory Committee, the amount of basic remuneration was determined by resolution of the Board of Directors on April 26, 2018, and has since remained unchanged. The amount of a performance-linked bonus for each director was determined by resolution of the Board of Directors on February 26, 2021.

With regard to the remuneration for directors who are members of the Audit and Supervisory Committee, the amount of basic remuneration was determined by deliberation among the members of the Committee on April 26, 2018, and has since remained unchanged. The amount of a performance-linked bonus for each director was determined by deliberation among the members of the Committee on February 26, 2021.

Total amount of remuneration by type of director, amount by type of remuneration, and the number of corresponding directors for the fiscal year ended January 31, 2021

Type of
director
Total amount of
remuneration
(in thousands
of yen)
Amount by type of
remuneration
(in thousands of yen)
Number of
corresponding
directors
Basic
remuneration
Performance
-linked bonus
Directors who
are not members
of the Audit and
Supervisory
Committee or
outside directors
107,204 95,412 11,791 5
Directors who
are members of
the Audit and
Supervisory
Committee but
are not outside
directors
Outside
directors
24,448 23,400 1,048 3

Total amount of remuneration for each director paid for the fiscal year ended January 31, 2021

We have omitted providing information here as no directors were paid remuneration of ¥100 million or more.

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Reasons for appointing outside directors and outside members of the Audit and Supervisory Committee

The company has three outside directors, and one of them holds shares of the company. Apart from this shareholding position, none of the three outside directors has any vested interests in the company, including personal, capital, or business relationships.

Each outside director plays a role in ensuring that highly effective audits are conducted, from an objective and neutral view point, and we believe that the current system satisfactorily fulfills its management monitoring and advisory functions. The three outside directors are designated as independent directors as defined by the Tokyo Stock Exchange and they are registered with the exchange.

Although the company does not have any specific standards or policies regarding independence for the appointment of outside directors, when making such appointments we not only meet the regulatory requirements established by the Companies Act, but also take into account the Tokyo Stock Exchange’s criteria for ensuring the independence of independent directors.

Reasons for appointment
TERAMURA Yasuhiko,
Director and member
of the Audit and
Supervisory Committee
He has been appointed as Outside Director as he has a wealth of experience and expertise gained from years of service in key roles and positions at financial institutions, and as he is expected to deliver well-rounded judgments based on his unique career and provide impartial and objective oversight. He has been also appointed as Independent Director as he has no current or past relationships with the company that might give rise to any conflict of interest with general shareholders.
MITANI Takaaki,
Director and member
of the Audit and
Supervisory Committee
He has been reappointed as Outside Director as he has wide-ranging expertise gained from his knowledge and experience in the fields of accounting and finance, and as he is expected to continue to deliver well-rounded judgments based on his unique career and provide impartial and objective oversight. He has been also appointed as Independent Director as he has no current or past relationships with the company that might give rise to any conflict of interest with general shareholders.
MORII Shinichiro,
Director and member
of the Audit and
Supervisory Committee
He has been appointed as Outside Director as he has a wealth of experience and expertise gained from his career at key positions at Takara Standard Co., Ltd., and as he is expected to deliver well-rounded judgments based on his unique career and provide impartial and objective oversight. He has been also appointed as Independent Director as he has no current or past relationships with the company that might give rise to any conflict of interest with general shareholders.

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Attendance of outside directors in the meetings of the Board of Directors and the Audit and Supervisory Committee

Attendance for the fiscal year ended January 31, 2021

Attendance
MITANI Takaaki,
Director and member
of the Audit and
Supervisory Committee
Attended 30 of the 31 meetings of the Board of Directors and all 25 meetings of the Audit and Supervisory Committee.
Hiroki Kanai,
Director and member
of the Audit and
Supervisory Committee
Attended 30 of the 31 meetings of the Board of Directors and all 25 meetings of the Audit and Supervisory Committee.
Kozaburo Fukumuro,
Director and member
of the Audit and
Supervisory Committee
Attended all 31 meetings of the Board of Directors and all 25 meetings of the Audit and Supervisory Committee.

“Takeover defense measures”

In order to respond to the mandate of its shareholders, the company recognizes that its most important challenges are to continue the company’s sustained growth and to increase corporate value. We presently have no plans to introduce “takeover defense measures.”

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