Corporate Governance Policy
[Chapter 1] General Provisions
1.Basic Views on Corporate Governance
GMO Internet Group's mission is to contribute to the cultivation of Internet culture and the industry, to offer inspiration and make people smile, and to make a contribution to society and its people based on its management philosophy "Internet for Everyone." In addition, the Group has enshrined its Spirit Venture Declaration-which embodies the spirit on which it was founded-in the Articles of Incorporation, to clarify the basic principles of its business activities.
In this context, in order to gain the trust and meet the expectations of all stakeholders including not only our shareholders and creditors but also our customers, business partners and staff members, the Company places importance on corporate governance and, while improving management soundness and transparency, strives to carry out agile management decision-making and proper business operations in an aim to increase the Company's corporate value on an ongoing basis.
[Chapter 2] The Company's Code of Conduct
1.Relationship with Stakeholders
The Company states in its Spirit Venture Declaration that a company is a tool for colleagues, shareholders, customers and all others involved to become happier - Their smiles are what really mean to us. We are committed to increasing our corporate value by making stakeholders smile through our corporate activities.
1.2.Prevention of related party transactions
In cases where the Company is to perform transactions with officers, major shareholders, etc. ("related party transactions"), an internal committee (members of which consist of External Directors, etc.) or a third-party committee (members of which consist of lawyers, etc.) are established depending on the qualitative and monetary materiality, to verify the objectivity and validity of the transaction before submitting a proposal for approval of the transaction to the Board of Directors.
When a related party transaction is subject to a resolution for approval at the meeting of the Board of Directors, any Director who is related to such transaction may not participate in the resolution on the ground of being a person with special interest, and therefore is not included in the quorum.
2.Relationship with Shareholders
2.1.General Meeting of Shareholders
The Company positions the General Meeting of Shareholders as its supreme decision-making body, ensures a sufficient period for exercising voting rights, and has developed an environment in which rights can be exercised in an appropriate manner.
The General Meeting of Shareholders will be held on a date and time convenient for shareholders to attend, including on non-business days.
Efforts are made to provide an easy-to-understand explanation in the notice of convocation, and to dispatch it as early as possible. The content of the notice of convocation is disclosed in both Japanese and English at the stock exchange, the Electronic Voting Platform, the Company's website, etc.
To enhance convenience the exercise of rights for shareholders, the Company introduces a system for electronically exercising voting rights and the Electronic Voting Platform.
When institutional investors, etc. who hold shares under the name of a trust bank, etc. make a request in advance to exercise its shareholder rights such as exercising voting rights at the General Meeting of Shareholders, the Company will discuss on such issue with the trust bank, etc. Additionally, when such institutional investors, etc. wish to observe the General Meeting of Shareholders, such observance will be permitted solely at the Meeting venue after completing the prescribed procedures.
2.2.Securing the rights and equal treatment of shareholders
In order to substantially secure the rights of shareholders, the Company appropriately cooperates with them by giving due consideration to the smooth exercise of the rights of them. In addition to ensuring equal treatment of shareholders, the Company also gives due consideration to the exercise of rights of minority shareholders.
When a proposal made by the Company is approved at the General Meeting of Shareholders in spite of a considerable number of negative votes, the Board of Directors will analyze the reasons for such negative votes, and examine necessary measures to be taken accordingly.
2.3.Dialogue with shareholders
For the sustainable growth and increase of corporate value over the mid- to long-term, the Company believes that it is important not to generate a gap between the top management of the Company and capital markets in the understanding of the Company's situation, and therefore holds constructive dialogues with shareholders and investors on an ongoing basis. To bring about such dialogues, the Company has in place an investor relations structure centering on the Director in charge of investor relations (currently the Deputy CEO), and proactively creates opportunities to hold dialogues with shareholders and investors. In engaging in dialogues with shareholders and investors, the Company makes it a basic policy for the members of the top management to provide explanations in their own words and to also respond to questions in person in Q&A sessions.
Designation of a director who oversees the overall dialogues with shareholders and measures for positive collaboration among internal departments to support dialogues
The Director in charge of investor relations oversees dialogues with investors and shareholders, while taking charge of the Group IR/PR Department, the department in charge of investor relations, in an effort to promote departmental collaboration on a daily basis.
Means of dialogues other than individual meetings
The Company makes it a basic policy to hold a financial results briefing targeted at analysts, shareholders and investors on a quarterly basis, where members of the top management provide explanations and respond to questions in Q&A sessions, both in person. For analysts, shareholders and investors who are unable to come to the venue in person, the Company provides real-time streaming in Japanese, as well as streaming of recorded video in both Japanese and English.
Measures to relay shareholders' opinions and concerns
The Director in charge of investor relations periodically reports opinions and concerns gathered through dialogues with shareholders to the senior management.
Measures to control insider information
When engaging in dialogues with shareholders, in accordance with the IR Policy, information is managed properly and consideration is given so that insider information will not be conveyed to them.
2.4.Basic policy for capital strategy
The Company is committed to increasing its profits. In order to achieve sustainable profit growth, we consider proactive investments both in domestic and foreign investment domains to be necessary. The Company will maintain sufficient shareholders' equity for future investments for growth and to tolerate risks.
With respect to shareholder returns, the Company targets a total shareholder return ratio of 50%. 1) The target for dividend payout ratio is set at 33% or more of consolidated net income, while 2) we take a flexible approach towards repurchasing our shares according to the share price, by comprehensively taking into account our business performance and financial structure, etc., with a target amount of 50% of consolidated net income less total dividends paid.
In case of a financing, etc. that may cause a change in control or a significant dilution of shares, the Company will carefully consider the necessity, rationale, use of capital, plan to recover the amount invested and other matters concerning the financing, etc. so as not to harm the interests of shareholders and provide a sufficient explanation to them.
2.5.Policy for cross-shareholding
The Company makes investments solely for the purpose of pure investment, and does not have a policy to hold shares for cross-shareholding. In cases where the Company invests in shares, the Group Investment Strategy Office takes charge of cases involving alliances, whereas the Incubation Division takes charge of minority investment cases. Whether or not to make investments will be determined after careful deliberation at the meeting of the Board of Directors or the Management Council depending on the qualitative and monetary materiality according to the materiality of each case, taking into account detailed examination by each department.
The Company believes that the transaction of the Company's shares shall be left to the market, and that decision on whether to accept or reject a large-scale purchase by a large-scale purchaser shall be made by shareholders.
For the Company, the following attributes are essential to its operation: management expertise premised on the Company's business characteristics and highly specialized knowledge; staff with superior technologies and skills to catch up with technological innovations; Group companies in charge of each business in the organically-integrated enterprise group; and relationships built with stakeholders including clients and customers.
Without the understanding of the Company's businesses, it is difficult to gain an understanding of its corporate value. When shareholders make a decision on the large-scale purchase by a large-scale purchaser, information provided by the large-scale purchaser shall not suffice, and we believe it is extremely important that the Company's Board of Directors with sufficient understanding of the Company's business characteristics, etc., to appropriately provide its assessment and opinions on the large-scale purchase to shareholders.
Based on the above views, in addition to stipulating a rule for the large-scale purchase of shares, we believe that to collect and provide shareholders with necessary and sufficient information for them to make an appropriate judgment by themselves, and to disclose the assessment and examination of such information by the Board of Directors, will contribute to the common interests of shareholders.
[Chapter 3] Disclosure of Information
The Company endeavors to distribute corporate information in a prompt, fair, accurate and easy-to-understand manner to all stakeholders including shareholders, investors, institutional investors, and analysts.
2.1.Results forecast and future outlook
The Company will disclose its detailed financial results on a quarterly basis for the convenience of all stakeholders. Future forecasts such as results forecasts announced by the Company are forecasts made at the time of the announcement, and therefore their validity is not guaranteed. The Company does not endorse any third-party forecasts of the Company's results.
Information disclosed at meetings with securities analysts and institutional investors
Information announced at meetings with securities analysts and institutional investors held by the Company will be limited to facts disclosed to the public in the financial results, facts that are in the public domain, general business environment, etc. No reference whatsoever will be made to undisclosed "material facts."
Disclosure pursuant to laws such as the Companies Act and the Financial Instruments and Exchange Act will be duly conducted according to the method prescribed by laws and regulations. In regards to disclosure that falls under the rules for timely disclosure, the Company will provide an explanation in advance to Tokyo Stock Exchange, Inc. (TSE) in accordance with said rules, register the information on the "Timely Disclosure network (TDnet)" provided by TSE and provide the same information promptly to the news media. The Company will promptly post the information disclosed via TDnet on its website after announcing the information to the news media and confirming that it is posted on the "Company Announcements Disclosure Service" on TSE's website, in accordance with the Financial Instruments and Exchange Act and the rules for timely disclosure.
For information that does not fall under the rules for timely disclosure, it shall be delivered to shareholders and investors in an accurate and fair manner by an appropriate method in accordance with laws and regulations such as the Financial Instruments and Exchange Act, etc.
Mid-term business plan
The Company neither formulates nor publishes a mid-term business plan, based on its view that in a rapidly-changing Internet industry, the validity of a mid-term business plan would be limited even if time and effort is spent on its formulation, and that numerical targets contained therein may likely mislead shareholders and investors.
On the other hand, the Company has in place a monitoring function that involves sufficient analysis and evaluation on a weekly basis of discrepancies between a single-year business plan and actual results at the executive meeting consisting of Directors and senior management. The outcome is the highly effective execution of the business plan, which translates into the Company's growth. The Company conducts analysis and takes measures as appropriate through such monitoring, formulates an action plan based thereon, reflects them in the business plan for the following fiscal year, and explains it to shareholders and investors at the financial results briefings and on other such occasions.
[Chapter 4] Corporate Governance Structure
The Company has adopted the organizational structure of a Company with Audit and Supervisory Committee under the Companies Act. The Audit and Supervisory Committee, in which External Directors account for the majority of Members, takes charge of audit and oversight of the legality and appropriateness of business execution to realize greater transparency in management, with the ultimate aim of building a structure that can more precisely meet the expectations of all stakeholders.
In order to realize agile decision-making, the Company has established certain monetary standards in its Rules of the Board of Directors and Management Council Regulations, and delegates part of the authority of the Board of Directors to the Management Council according to said standards in order to separate the decision-making authority into the Board of Directors and the Management Council.
2.Board of Directors and Management Council
In order to build a highly agile business execution structure, in addition to matters to be resolved by the Board of Directors pursuant to laws and regulations or the Articles of Incorporation, etc., the Company has individually set standards for matters to be resolved at the Board of Directors, and clarified the matters that are considered appropriate for resolution by the Board of Directors in the Rules of the Board of Directors. As a body to discuss on matters with managerial importance but are not designated as matters to be resolved at the Board of Directors, the Company established the Management Council consisting of executive directors including the Representative Director, full-time Audit and Supervisory Committee Members and other members of the senior management.
2.1.Roles and responsibilities of the Board of Directors
The Board of Directors is responsible for enhancing corporate value in a sustainable manner as well as increasing the common interests of shareholders, and will exercise its oversight function and make appropriate decisions based on fair judgment.
In order to fulfill its fiduciary responsibilities, the Board of Directors will exercise its oversight functions over overall management to ensure fair and transparent management through the appointment of Directors and Audit and Supervisory Committee Members, determination of the remuneration for Directors and Audit and Supervisory Committee Members and making decisions on important business executions.
As a specific standard for determining matters to be submitted to the Board of Directors, the Rules of the Board of Directors prescribes the monetary standards, etc. and clarifies the scope of decision-making.
The Board of Directors delegates the authority of decision making on matters other than those to be decided by the Board of Directors to the Management Council, Representative Director, etc. in accordance with the standards prescribed in the Management Council Regulations and other internal rules.
To enhance corporate governance, the Board of Directors makes a monthly report including a report on the oversight of execution of duties of Directors, and a quarterly report on internal audit and compliance.
The Board of Directors has established a system to appropriately respond to cases in the event Audit and Supervisory Committee Members and/or the Financial Auditor discover a misconduct and request the Company to take appropriate actions, or in case where they identify a deficiency or a problem.
For human resources development to foster successors to the senior management including the Chief Executive Officer, based on certain rules and frameworks and in light of the management philosophy and management strategy, the Board of Directors engages in autonomous organizational operation and corporate management that do not rely on a specific corporate manager.
The Company offers opportunities to its staff members to gain knowledge and understand the roles and responsibilities required for a successor by taking part in management through participation in the meetings of Board of Directors and the Management Council.
As a characteristic of Group management, the members of the Board of Directors and the Management Council are comprised of founders or representatives of major Group companies, all of whom have been brought together under the Company's management philosophy, i.e., Spirit Venture Declaration.
Accordingly, the senior management is comprised of a group of corporate managers who share the common management philosophy. The Company has thus created a program to develop successors to the senior management of the Company as a listed company, through the participation of such corporate managers in the meetings of the Board of Directors and the Management Council.
2.2.Composition of the Board of Directors
Upon the appointment of Internal Directors, the Company gathers persons with specialized knowledge of business segments and business administration from within the Group, based on the criteria and selection method unique to the Company.
The representatives of the Group's business segments are appointed as members of the Board of Directors to deliberate and decide on material facts concerning the Company and its Group companies.
For the appointment of External Directors, persons with a high level of expertise such as lawyers are appointed, thereby realizing balance and diversity in the composition of the Board of Directors as a whole in terms of knowledge, experience and skills.
The Company believes that, for the purpose of holding effective discussions while ensuring balance and diversity in terms of knowledge, experience and skills for Group management, the appropriate number of Directors would be up to 19 persons, or up to 5 persons for non-executive Directors who are Audit and Supervisory Committee Members, and has stipulated in the Articles of Incorporation to that effect.
2.3.Roles, responsibilities and composition of the Management Council
To strategically and efficiently implement corporate management with agility, the Management Council deliberates and decides on important matters relating to the Company and its Group companies within the scope of authority delegated by the Board of Directors in principle on a weekly basis.
The Management Council is comprised of executive directors including the Representative Director, full-time Audit and Supervisory Committee Members and other members of the senior management.
2.4.Structure to support the Board of Directors and the Management Council
The Company establishes a secretariat to the Board of Directors and the Management Council to enable sufficient discussions at their meetings
The secretariat has developed an environment in which members of the Board of Directors and the Management Council can participate in deliberation and decision-making from remote locations, including distribution of meeting materials using special tools.
The secretariat prepares the annual schedule for the Board of Directors and the Management Council.
The secretariat sets an appropriate time for deliberation so that sufficient discussions can be held at the meetings of the Board of Directors and the Management Council.
To ensure that sufficient discussion takes place at the meetings of the Board of Directors and the Management Council, the secretariat sends out meeting materials well in advance of the meeting date for the convenience of the attendees.
The secretariat provides information required for decision-making by Directors and Audit and Supervisory Committee Members as needed.
2.5.Evaluation of the Board of Directors
The Audit and Supervisory Committee analyzes and evaluates the effectiveness of the Board of Directors in a timely manner to improve the functions of the Board of Directors.
Analysis and evaluation is also conducted including the introduction of self-evaluation by Directors and Audit and Supervisory Committee Members.
3.Audit and Supervisory Committee
3.1.Roles, responsibilities and composition of the Audit and Supervisory Committee and Audit and Supervisory Committee Members
The role of the Audit and Supervisory Committee, the majority of which consists of External Directors, is oversight of management.
The Audit and Supervisory Committee periodically receives reports from the Internal Audit Office on the implementation status of internal audits and the results thereof, and is authorized to order and/or instruct additional audits as necessary as well as necessary investigations.
The Audit and Supervisory Committee collaborates with the Financial Auditor to audit and oversee the status of execution of duties by Directors and execution of duties of departments in charge of business execution.
The Audit and Supervisory Committee Members attend meetings of the Board of Directors and other important meetings, and as necessary, request reports from departments in charge of business execution to collect information on the status of execution of business of the Company.
3.2.Structure to support the Audit and Supervisory Committee
The Audit Operation Office has been established in the Company as an organization dedicated to assisting the duties of the Audit and Supervisory Committee Members, and takes measures to improve the effectiveness of audit practice.
Directors are aware of their fiduciary responsibilities and execute the duties as Directors to increase corporate value in a sustainable manner.
Directors respect the Spirit Venture Declaration.
Directors fully understand the Company's policy to respect compliance, and comply with laws and regulations, the Company's rules, etc.
Full-time Directors are dedicated to their duties as Directors, without having any involvement in commercial activities conducted by competitors or other third parties.
Full-time Directors will not assume the position of director, auditor, executive (shikkoyaku) or any other officer or employee of competitors except those approved by the Board of Directors or the Management Council.
Independent directors, based on their standpoint of independence, fulfill their oversight function over business execution, advisory function and oversight function over conflict of interest matters, and reflect stakeholders' opinions at the meetings of the Board of Directors, in an effort to enhance corporate governance.
Independent directors exchange information and share views on management of the Company with Audit and Supervisory Committee Members.
Independent directors request the provision of information as necessary in order to fulfill their roles.
The status of concurrent positions held by independent directors is stated on the corporate governance report and the Notice of the Annual General Meeting of Shareholders.
Independent directors are appointed based on independence requirements stipulated under the Companies Act and independence requirements formulated by the Company.
The independence requirements are formulated by the Board of Directors subject to deliberation by the Audit and Supervisory Committee Members, and are published in the corporate governance report, etc. The details of the independence standards prescribed by the Company can be found in the "Corporate Governance Policy" posted on the Company's website.
5.3.Nomination of Directors
Nomination of a Director assumes self-nomination by each individual, and is decided by the Board of Directors taking into consideration factors including the following items: the nominee is capable of embodying the Spirit Venture Declaration; the results of an anonymous questionnaire survey targeted at all officers of the Group; the quality, attitude, administrative capability, etc. as a member of the senior management and/or a Director.
Remuneration of Directors is determined based on a remuneration system linked to business performance, the level of achievement of performance targets and other such factors, so as to provide a healthy incentive for sustainable growth.
In addition, the amount of remuneration for Directors is determined automatically based on multifaceted evaluations which include the rate of fulfillment of quantitative targets such as performance figures set for each period at the Company as well as qualitative targets that consist of the level of attainment of management philosophy, etc. Based on the level of achievement of the targets of each Director, the amount of remuneration is determined by either increasing or decreasing the base amount of the remuneration.
The authority for deciding on the amount of remuneration is delegated to the Board of Directors by the General Meeting of Shareholders.
The Company's policy for training to Directors is based on the idea that each officer, as a professional of management, must endeavor to gain necessary knowledge and brush up one's skills at one's individual discretion, and thereby deepen and share knowledge and skills through in-depth discussions at the meetings of the Board of Directors and the Management Council.
Future candidates for Directors are given opportunities for training to gain necessary knowledge and understand the roles and responsibilities required by Directors by such means as attending the meetings and participating in discussions of the Board of Directors and the Management Council. The Company also provides training to each officer by inviting external specialists.
At the Company, the Board of Directors resolves on the "system for ensuring proper operation of business" prescribed in the Companies Act and the Ordinance for Enforcement of the Companies Act. The overview is provided as follows.
In order to ensure swift execution of business based on appropriate controls, the Board of Directors oversees whether the legality and appropriateness of business execution by Directors and employees and the proper operation of business of the Group are ensured, as well as the structure and operational status of the Group's other compliance and risk management matters.
The details are stated in the "System for ensuring proper operation of business and implementation status of the system" in the Notice of the Annual General Meeting of Shareholders.
To ensure the reliability of information disclosure and responsibilities with respect to shareholders and investors, the Financial Auditor ensures and provides adequate time for conducting high-quality audits, a structure for collaborating with the Internal Audit Department and Directors who are Audit and Supervisory Committee Members, and access to the senior management.
The Financial Auditor collaborates with the Audit and Supervisory Committee to secure a structure that enables proper audits.
The Financial Auditor ensures independence and expertise.
The Financial Auditor abides by quality control standards required for proper accountings audits.
Update on June 5, 2017
Established on May 9, 2016