Corporate Governance

MJS's main business is to provide business management systems and management expertise services. We recognize developing and building management systems and internal control systems and implementing necessary measures as the essential basis for corporate governance initiatives, and regard corporate governance as one of the most important management issues.

Going forward, we will continue to enhance the governance of both MJS and its subsidiaries, and strive to increase the corporate value of the Group as a whole.

MJS is a company with Audit & Supervisory Board members, and has instituted a General Meeting of Shareholders, Board of Directors, Audit & Supervisory Board members, Audit & Supervisory Board, and Accounting Auditors as stipulated by the Companies Act. We also maintain the Group's corporate governance system and strengthen its functionality under the system shown in the diagram below.

The Company's decision-making bodies are the Board of Directors and the Management Committee. The Board of Directors meets once or twice a month on a regular basis to deliberate and decide upon matters stipulated under laws, regulations and the Articles of Incorporation, and important management matters as provided for under the Board of Directors Regulations. Seventeen regular meetings and one extraordinary meeting of the Board of Directors were held during the last fiscal year. The Management Committee is hosted by the President and CEO, and is composed of full-time directors and other persons nominated by the President. Meetings are held twice a month in principle. The Management Committee exists as an important decision-making body for the purpose of proactive deliberations on policies regarding prompt management decisions, business operations and management, and matters to be discussed by the Board of Directors. Twenty-five regular meetings and one extraordinary meeting of the Management Committee were held during the last fiscal year.

The Company also appoints outside directors and outside Audit & Supervisory Board members for the Board of Directors to receive advice and guidance as appropriate, with the aim of further enhancing supervisory functions. All outside directors and outside Audit & Supervisory Board members are appointed as independent officers to make decisions that take into account the interests of general shareholders by making recommendations for management from an objective and neutral perspective, as part of our efforts to further enhance corporate governance.

When nominating candidates for director positions, the Company selects persons who are familiar with the Company's business, have extensive networks and a wide range of knowledge both inside and outside the industry, and can make appropriate decisions and management judgments. Candidate nominations are validated and finalized by the Board of Directors after initial deliberations by the Nomination Advisory Committee. In addition to the criteria for determining the independence of independent directors as set forth by the Tokyo Stock Exchange, the criteria for determining the independence of outside directors include the following: the director must be able to offer opinions, advice, and criticism from a fair and impartial standpoint outside the company, unrestricted by the company's internal chain of command or practices, and must have an opinion from a broad perspective, broad insight, a sensitivity to market opinions, and a wealth of knowledge and experience in his or her field of expertise. The Nomination Advisory Committee deliberates on the nominees, and the Board of Directors verifies and decides on their qualifications. In principle, independent outside directors include persons with management experience at other companies.

When nominating candidates for Audit & Supervisory Board members, the Company selects persons who excel in financial, accounting and legal knowledge, risk management skills, and management oversight capabilities. Nominations are validated and finalized by the Board of Directors after obtaining the consent of the Audit & Supervisory Board. When nominating candidates for outside Audit & Supervisory Board members, in addition to the aforementioned abilities, the Company chooses candidates equipped with wide-ranging opinions, broad insights, and abundant knowledge and experience in the field from which they originate. Again, nominations are validated and finalized by the Board of Directors after obtaining the consent of the Audit & Supervisory Board.

In determining remuneration for senior management and directors, the Board of Directors determines a policy for deciding the details of remuneration, etc., for each individual director. Resolutions by the Board of Directors on remuneration are made based on reports by the Remuneration Advisory Committee, which is consulted in advance regarding the details of the resolution. Details of the policy for determining details of remuneration, etc., for individual directors are as follows.

Outside directors of the Company are responsible for raising opinions from a fair position outside the company that is not bound by the company's chain of command and practices and providing advice and criticism from the standpoint of a third party in establishing a compliance system.

The main activities of outside directors in the previous fiscal year were as follows:
Hirofumi Gomi attended all 18 meetings of the Board of Directors held during the last fiscal year. He has a high level of knowledge and extensive experience in financial administration, management strategy and governance developed through his experiences in an important position at the Ministry of Finance, the Financial Services Agency, and as an outside officer at other companies, and actively expresses his opinions from these perspectives at meetings of the Board of Directors. He plays an appropriate role in ensuring the validity and appropriateness of decision making. As a member of the Nomination Advisory Committee and the Remuneration Advisory Committee, he attended four meetings of the Nomination Advisory Committee and two meetings of the Remuneration Advisory Committee during the last fiscal year, and fulfilled his supervisory function in the process of selecting the Company's director candidates and determining director remuneration, etc. from an objective and neutral standpoint.

Takao Kitabata attended 17 of the 18 meetings of the Board of Directors held during the last fiscal year. He held important positions at the Ministry of Economy, Trade and Industry and served as an outside officer at other companies, and has a high level of knowledge and extensive experience in new business development, human resources development, and governance developed through his experience as university president, and actively expresses his opinions from these perspectives at meetings of the Board of Directors. He plays an appropriate role in ensuring the validity and appropriateness of decision making. As a member of the Nomination Advisory Committee and the Remuneration Advisory Committee, he attended all five meetings of the Nomination Advisory Committee and all two meetings of the Remuneration Advisory Committee during the last fiscal year, and fulfilled his supervisory function in the process of selecting the Company's director candidates and determining director remuneration, etc. from an objective and neutral standpoint.

Takuma Ishiyama attended all 18 meetings of the Board of Directors held during the last fiscal year. He has advanced knowledge and extensive experience in the legal and accounting fields gained as an academician, lawyer, and university president, and actively expresses opinions from such perspectives at meetings of the Board of Directors. He plays an appropriate role to ensure the validity and appropriateness of decision making. As a member of the Nomination Advisory Committee and the Remuneration Advisory Committee, he attended all five meetings of the Nomination Advisory Committee and all two meetings of the Remuneration Advisory Committee during the last fiscal year, and fulfilled his supervisory function in the process of selecting the Company's director candidates and determining director remuneration, etc. from an objective and neutral standpoint.

Aki Yamauchi attended 13 of the 14 meetings of the Board of Directors held during the last fiscal year after her appointment on June 29, 2023. She has a high level of knowledge and extensive experience in the accounting field cultivated as an academician, and actively expresses opinions from such perspectives at meetings of the Board of Directors. She plays an appropriate role to ensure the validity and appropriateness of decision making. As a member of the Nomination Advisory Committee, Remuneration Advisory Committee, and Compliance Committee, she attended all three Nomination Advisory Committee meetings, two Remuneration Advisory Committee meetings, and one Compliance Committee meeting during the last fiscal year since her appointment, and fulfilled her supervisory function in the process of selecting the Company's director candidates and determining director remuneration, etc. and in the compliance system from an objective and neutral standpoint.

The Audit & Supervisory Board consists of three Audit & Supervisory Board members, including two outside board members, and holds meetings once a month in principle.

Audit & Supervisory Board members attend important meetings including meetings of the Board of Directors and the Management Committee, view important approval documents and audit directors' execution of duties, the decision making of the Board of Directors, status of the development of internal control systems and competing transactions, etc., based on the Audit & Supervisory Board Regulations, Audit & Supervisory Board Audit Standards, Audit Practice Standards for Internal Control Systems, etc.

Audit & Supervisory Board members receive reports from directors and accounting auditors on the status of their execution of duties as necessary, coordinating closely with the internal audit department and requesting explanations as necessary.

With regard to subsidiaries, the Audit & Supervisory Board members communicate and exchange information with directors and auditors of subsidiaries, and receive business reports as needed.

Hiroshi Makino is a full-time Audit & Supervisory Board member who has been involved in the operations of the Company's sales and management divisions for many years, and has served as the head of the Internal Audit Office. He has extensive experience and considerable knowledge of compliance and risk management issues. Outside Audit & Supervisory Board member Keiichi Tadaki has served as a public prosecutor, Vice-Minister of Justice, and Prosecutor General. He has extensive knowledge and insights in law and compliance, in his current capacity as an attorney. Outside Audit & Supervisory Board member Hiroshi Nakahara has held important positions including Commissioner of the National Tax Agency and representative director of a financial institution, and has extensive knowledge and management experience in taxation and finance.

The Internal Audit Office consists of six members, including the department manager, and was established as an organization under the direct control of the President, independent of other administrative and business divisions.

Based on MJS Group Internal Audit Regulations and the annual business audit plan, the Internal Audit Office conducts audits of the head office division, branches and subsidiaries with an emphasis on rationality and efficiency in overall business activities and the effectiveness of information management and risk management systems, and evaluates internal controls related to financial reporting. When internal control issues are discovered in accounting audits, the office cooperates with accounting auditors to monitor the state of improvements.

The Internal Audit Office regularly reports to the Board of Directors and the Audit & Supervisory Board and closely coordinates with directors, Audit & Supervisory Board members and accounting auditors to improve the effectiveness and efficiency of audits.

The Company outsources its statutory accounting audits to BDO Sanyu & Co., an auditing corporation, and consults and obtains advice as necessary. The duration of the continuous audit period, names of certified public accountants who carried out the audit, and membership of the team of assistants aiding in auditing work are as follows.

The Company has nominated and submitted notices for two outside Audit & Supervisory Board members as independent officers. For the reasons for the appointment of such independent outside Audit & Supervisory Board members, please refer to "Audit & Supervisory Board Members" in "II. 1. Organizational Composition and Operation" of the report.

The main activities of outside Audit & Supervisory Board members in the previous fiscal year were as follows:
Keiichi Tadaki attended all 18 meetings of the Board of Directors and all 14 meetings of the Audit & Supervisory Board held during the last fiscal year, and as a member of the Nomination Advisory Committee and the Compliance Committee, attended all five meetings of the Nomination Advisory Committee and one meeting of the Compliance Committee held during the last fiscal year, and made comments as appropriate on deliberations of proposals.
Hiroshi Nakahara was newly appointed and assumed office at the 47th Annual General Meeting of Shareholders on June 27, 2024, and therefore had no activities in the last fiscal year.

In accordance with Article 427 Paragraph 1 of the Companies Act, the Company and its outside directors and outside Audit & Supervisory Board members have entered into agreements (called limited liability agreements) to limit liability for damages when falling under the requirements stipulated by law with regard to liability for damages under Article 423 Paragraph 1 of the Act. The maximum amount of liability for damages under these agreements is the minimum liability limit stipulated by law.