Sustainability

Corporate Governance Policy

Basic concept to Corporate Governance

KONDOTEC recognizes that strengthening and enhancing corporate governance through increasing soundness, transparency and efficiency of management and maximizing corporate value is one of the most important management objectives. To realize this objective, our basic concept of corporate governance calls for reinforcing our compliance and internal audit systems, conducting timely disclosure of management information, operating results and other pieces of information via our website and other means, and strengthening functions for speedy decision-making and management supervision.

Basic policy concerning constructive dialogues with shareholders

KONDOTEC promotes constructive dialogues with shareholders through holding briefings for individual investors and financial results briefings, in addition to the general meeting of shareholders and participating in IR fairs.
We also appoint the Director who manages the General Affairs Division responsible for IR as the Director in charge of IR, and share information with other departments to strengthen cooperation.
In order to reflect the opinions of shareholders on management, when important feedback given from an objective viewpoint arises, we make an effort to report the matter to the Board of Directors as needed.
In addition, KONDOTEC has put in place its IR Policy, which defines the quiet period and other matters, and Internal Information Management Regulations, which set forth rules on communicating important facts and internal information, and performs accordingly in managing information.

Policy concerning cross-held shares
  • 1. Policy on cross-shareholding
    KONDOTEC maintains cross-held shares for the purpose of contributing to the improvement of corporate value in the medium to long term by maintaining and reinforcing relationships with important business partners.
  • 2. Verification on cross-held shares
    Each year, KONDOTEC’s Board of Directors verifies the reasonableness and necessity of cross-held shares in consideration of the return and risk associated with shareholding from the medium-to-long-term perspective. As of March 31, 2021, we held 6 issues of cross-held shares worth 39 million yen in book value and 239 million yen in market value, equivalent to 0.1% and 0.5% respectively of total assets of 49,426 million yen.
  • 3. Exercise of voting rights on cross-held shares
    KONDOTEC respects the management policy, strategies, etc. of investee companies, makes comprehensive judgment on whether the shareholding contributes to sustainable growth and medium-to-long corporate value, and exercises voting rights.

Corporate Governance System

Corporate governance structure summary table
Reasons for adopting the current corporate governance system

KONDOTEC believes that putting in place an Audit & Supervisory Committee and having an audit system where Audit & Supervisory Committee Members supervise management is effective and hence operates as a company with an Audit & Supervisory Committee system.
The Audit & Supervisory Committee comprises three directors who are Audit & Supervisory Committee Members, including one full-time outside directors who are Audit & Supervisory Committee Members, and two part-time directors who are Audit & Supervisory Committee Members with specialist knowledge on finance, accounting and laws, and carries out supervision from an objective and fair point of view.
The Board of Directors holds a regular monthly meeting as well as an extraordinary meeting whenever necessary, promotes efficiency of decision-making for the execution of important business activities and reinforcement of the supervision function.

Corporate governance system

KONDOTEC’s corporate governance system is shown in the diagram below.

Corporate governance system
KONDOTEC’s managing organ
Board of Directors

KONDOTEC holds a meeting of the Board of Directors at least once a month and complies with the policy of addressing all matters provided in the Board of Directors’ Regulations and those corresponding to agenda items to the Board of Directors in making decisions on important matters.
In addition, the Board of Directors receives reports on the status of business execution of KONDOTEC and its subsidiaries from each of the respective directors on a periodic basis and carries out supervision, etc. on the reasonableness and efficiency of business execution.
KONDOTEC conducts the Board of Directors assessment questionnaire based on self-assessments made by all Directors once a year. The Board of Directors deliberates on and considers the results of the questionnaire and makes necessary improvements to secure effectiveness and increase the quality of the Board of Directors as a whole.
KONDOTEC adopts an executive officer system and Executive Officers and Directors in charge of business operations promote speedy business execution.

Outside Directors

KONDOTEC appoints two Outside Directors (one lawyer and one law school professor), who supervise management and offer advice from an objective point of view in consideration of the corporate business community on the whole, including laws and regulations, in an effort to increase transparency of the Board of Directors and reinforce the supervision function.

Audit & Supervisory Committee/Outside Audit & Supervisory Committee Members

KONDOTEC adopts the Audit & Supervisory Committee system. Two of the three Directors who are Audit & Supervisory Committee Members are Outside Directors who are Audit & Supervisory Committee Members (one lawyer and one CPA) who exchange opinions on audit methods and audit standards from their professional points of view at the meeting of the Audit & Supervisory Committee which is held at least once a month in order to improve the appropriateness and efficiency of the audit. In this way, we strive to enhance and reinforce our audit system.
Furthermore, the Members receive a report on the results of the accounting audit from the Accounting Auditor at each financial closing. If needed, Directors who are Audit & Supervisory Committee Members accompany the Accounting Auditor in the audit of an office, exchange information and opinions.
Moreover, Audit & Supervisory Committee Members receive reports on financial results for every quarter from internal control sections, as well as reports on other matters related to internal control as necessary.

Internal audit

Our Internal Audit Department is placed as a unit directly under the President. There are two full-time staff members. These internal auditors audit the status of compliance with laws, regulations and internal rules and the appropriateness and efficiency of business processes, etc. of each division, provide guidance for improvement and perform follow-ups.
In addition, they conduct audits to continuously verify whether the system to ensure the reliability of financial reporting functions appropriately and makes corrections where necessary.

Accounting Auditor

KONDOTEC has appointed Deloitte Touche Tohmatsu LLC as the Accounting Auditor and establishes an environment in which the Accounting Auditor is able to perform audits from a fair and unbiased perspective, by providing the auditor accurate management information in a timely manner.

Compliance & Risk Management Committee

The Compliance & Risk Management Committee, led by the President as the committee chairman, is in place.
The Compliance & Risk Management Committee promotes the dissemination of awareness to comply with relevant laws, regulations, corporate ethical standards and internal regulations among all employees and creates a structure to prevent scandals and other problems by developing plans and measures on compliance, including education and guidance for practicing compliance. The Committee also collects information on various risks surrounding KONDOTEC and its subsidiaries and analyzes the information to develop specific preventive measures. It also puts in place a structure to minimize the impact of risks should any such risk becomes apparent, in an effort to reinforce the corporate platform.

Nomination and Compensation Committee

KONDOTEC has established the Nomination and Compensation Committee ,as a voluntary advisory organization, composed of Independent Outside Directors(excluding Directors who are Audit & Supervisory Committee Members), and the President & Representative Director to strengthen the transparency and objectiveness of the decision-making process for remuneration of Directors.

Outside Executive members’ Council

The Outside Executive members’ Council comprising Outside Directors has been established. The Council meets periodically to promote the exchange of opinions among outside Executive members.

Officers and Board of Directors

Directors and Audit & Supervisory Committee Members
Terms of Executive members

KONDOTEC appoints candidates for Directors(excluding Directors who are Audit & Supervisory Committee Members), by considering individuals who fulfill respective statutory requirements, who are excellent both in terms of personality and insight, who can carry out their professional responsibilities, and who are capable of making accurate and timely decisions and of cooperating and working with and covering each function and division of the Company. Such individuals are deliberated on by the Nomination and Compensation Committee -- a voluntary advisory organization composed of Independent Outside Directors -- based on whose report the Board of Directors determines a proposal for the General Meeting of Shareholders.
KONDOTEC appoints candidates for Directors who are the Audit & Supervisory Committee Members by considering individuals who have expertise in legal, financial and accounting matters, who hold knowledge on the business activities of the Company, and who maintain diverse perspectives concerning corporate management, in a comprehensive manner. Such individuals are deliberated on by the Nomination and Compensation Committee, based on whose report the Board of Directors determines, with prior the consent of the Audit & Supervisory Committee, a proposal for the General Meeting of Shareholders.

Status of attendance by Outside Directors/Outside Audit & Supervisory Committee Members

69th term (April 1, 2020 to March 31, 2021)

Outside Directors Board of Directors
(12 board meetings)
Michiko Kanai Attended 11 meetings
(92%)
Takashi Maruyama -
(taking office as of june 22, 2021)
Outside Audit & Supervisory Committee Members Board of Directors
(12 board meetings)
Audit & Supervisory Board
(3 board meetings)
Audit & Supervisory Committee
(15 committee meetings)
Kana Yasuda Attended all 12 meetings
(100%)
Attended all 3 meetings
(100%)
Attended all 15 meetings
(100%)
Taku Tokuda Attended all 10 meetings since taking office as of june 24,2020
(taking office as of june 24, 2020)
Attended all 15 meetings
(100%)
Minako Yamaoka
(taking office as of june 22, 2021)
Same as on the left Same as on the left
Standards and qualities for Independent Outside Directors

KONDOTEC appoints Independent Outside Directors by considering individuals who fulfill the requirements under the Companies Act and the independence standards set forth by the Tokyo Stock Exchange. The Company elects individuals who are capable of carrying out supervision and giving advice based on abundant experience and insights as Outside Directors.
KONDOTEC registers all four Outside Directors as independent Executive members based on the rules of the Tokyo Stock Exchange with the said exchange.

Remuneration For Executive members

Remuneration for Director (excluding Directors who are Audit & Supervisory Committee Members) is to be decided by the Board of Directors based on report from the Nomination and Compensation Committee within the limit on the amount of remuneration for Directors (excluding Directors who are Audit & Supervisory Committee Members) approved by the General Meeting of Shareholders. The Nomination and Compensation Committee is a voluntary advisory organization and mainly composed of independent outside directors.
Furthermore, a performance-based stock compensation plan, “Board Benefit Trust (BBT)”, was introduced based on a resolution at the 65th ordinary general meeting of shareholders held on June 27, 2017, for the purpose of increasing incentives for Directors (excluding Outside Directors) and Executive Officers of the Company to contribute to the improvement of medium to long term earnings and corporate value.

Position Total
(million yen)
Total compensation by type
(million yen)
Number of persons
Fixed compensation Stock compensation Performance-based
stock compensation
Directors
(excluding who are Audit & Supervisory Committee Members and Outside Directors)
192 169 23 - 9
Audit & Supervisory Committee Members
(excluding who are Outside Directors)
11 11 - - 1
Audit & Supervisory Board Members
(excluding who are Outside Audit & Supervisor Board Members)
3 3 - - 1
Outside Directors 22 22 - - 5

※Changed to a company with an Audit & Supervisory Committee on June 24, 2020.

Analysis and assessment of effectiveness of the entire Board of Directors

KONDOTEC makes decisions on important matters at the regular meeting of the Board of Directors held every month based on discussions by attendees, including Outside Directors and Outside Audit & Supervisory Board Members who state their opinions. In this way, we make an effort to heighten the effectiveness of the Board of Directors.
Once a year, we conduct an analysis and assessment of the effectiveness of the entire Board of Directors.
In April 2021, we made an assessment of the effectiveness of the Board of Directors. We discussed and made considerations on the results of the assessment at the meeting of the Board of Directors in May 2021.

  • 1. Period: April 2021 to May 2021
  • 2. Method: Anonymous self-assessment by all Directors(including outside Executive members)
  • 3. Assessment items : Structure and operation of the Board of Directors, deliberation, governance system, Promotion of Digital Transformation general assessment of the Board of Directors
  • 4. ・All executive members evaluated that the effectiveness of the Board of Directors was secured as a whole.
    ・Board materials should be distributed earlier.
    ・The Board of Directors should appropriately discuss and audit the plan for succession of representative director.
    ・Remunerations for management should be further discussed.
    We would like to continue to make improvements based on these opinions.
Training policy for Directors and Audit & Supervisory Board Members

KONDOTEC offers opportunities for Directors and Audit & Supervisory Board Members to participate in various training programs, including training sessions and lectures by internal and external instructors, external seminars, and web-based seminars, in an effort to have Executive members gain necessary knowledge and understand/promote duties and responsibilities.