Our basic stance on corporate governance is to promote highly transparent management that is committed to the steady development of operations in our core business domain.
Our corporate philosophy is "We contribute to the health and happiness of people around the world through pursuit of excellence in life science in general and our research and experience in microorganisms in particular". In pursuing this philosophy, we believe it is important to implement transparent management with an emphasis on well-developed internal control functions. This includes efforts to ensure an appropriate management organization and decision-making processes. Corporate governance at the Company is also underpinned by the "company with Audit & Supervisory Board Members" system.
The distribution of ownership among shareholders (on a number of shares basis) and major shareholders is as follows:
The Board of Directors is composed of 15 members, including five outside directors, one of whom is female. The seven members of the Audit & Supervisory Board, which includes five outside members, one of whom is female, also attend meetings. The Board of Directors adopts resolutions and receives reports on matters within its jurisdiction as defined by law and the Rules of the Board of Directors, and is responsible for supervising the execution of duties by directors and executive officers. The Board of Directors holds meetings, in principle, seven times per year, in addition to convening special meetings as required.
The Company introduced the Executive Officer System in June 2011. This system strengthens the decision making of the Board of Directors and business supervision functions and clarifies responsibilities for business execution, thereby increasing the efficiency of these functions.
As a system of support for outside directors, the General Affairs Department functions as the secretariat for the Board of Directors, and serves in this capacity as a point of contact for all Company directors, including outside directors.
The five outside directors are listed in the chart below.
(As of June 19, 2019)
|Name||Outside Positions as Representative||Reason for Appointment as Outside Director|
|Ryuji Yasuda||Specially approved visiting Professor, Graduate School of Management, Hitotsubashi University; Outside Director, ORIX Corporation; Outside Director, Benesse Holdings, Inc.; Outside Director, Kansai Mirai Financial Group, Inc.; Outside Auditor, the Asahi Shimbun Company||Mr. Yasuda was appointed on the expectation that he would offer pertinent advice regarding the overall management of the Company that would further strengthen and enrich its management structure based on the expertise in business strategy he has accumulated over the years in wide-ranging positions including those of university professor, consultant and business manager.|
|Masayuki Fukuoka||Honorary Professor, Faculty of Law, Hakuoh University; specially approved visiting Professor, Tohoku Fukushi University||Mr. Fukuoka was appointed on the expectation that he would offer objective views to the Company's management that would lead to further reinforcement and enhancement of the management structure based on his expertise and experience as a university professor of political science studies.|
|Norihito Maeda||President of Yakult Kanagawa Tobu Sales Co., Ltd.||Mr. Maeda, the president of a Yakult sales company, was appointed on the expectation that he would continue to make a significant contribution to the development of the entire Yakult Group as he has offered a range of advice to improve customer services based on market conditions, leveraging his management experience at a Yakult sales company.|
|Pascal Yves De Petrini||Senior Vice President, Non-Executive Chairman, Danone Asia; Non-Executive Director, China Mengniu Dairy Co., Ltd.||Mr. Petrini was appointed on the expectation that he would offer pertinent advice from a broad perspective regarding overall management, which would lead to further strengthening and enhancement of the management structure based on his abundant management experience in foreign companies.|
|Naoko Tobe||Lawyer; Partner, Fukazawa Sogo Law Offices||Ms. Tobe was appointed on the expectation that she would offer objective views to the Company's management that would lead to further reinforcement and enhancement of the management structure, based on her abundant experience as a lawyer.|
Note: Mr. Ryuji Yasuda, Mr. Masayuki Fukuoka, and Ms. Naoko Tobe are independent Directors as specified by the Tokyo Stock Exchange.
The Company established the Management Policy Council, members of which include a representative director, six divisional general managers, and one senior Audit & Supervisory Board Member, as a meeting body designed to promote effective management activities and accelerate decision making with meetings convened, in principle, on a weekly basis. The Management Policy Council discusses and receives reports on management policies and measures as well as business operations.
The Company also established the Executive Officers Committee, comprised of 22 executive officers and two senior Audit & Supervisory Board Members, which meets on a weekly basis in principle to facilitate business execution. The Executive Officers Committee deliberates and receives reports relating to the full range of major business duties. It ensures close information sharing among the executive officers and adopts resolutions on matters stipulated by the Rules for Approval.
The Company has seven Audit & Supervisory Board Members, including five outside Audit & Supervisory Board Members. All Audit & Supervisory Board Members attend meetings of the Board of Directors and other important company meetings and audit the operational execution of the directors by examining documents related to decision making and other matters. The Audit & Supervisory Board Members strive to enhance the effectiveness of their audits by forging close ties with the Internal Audit Department and the accounting auditor. At the same time, the Audit & Supervisory Board Members monitor and verify that the accounting auditor conducts audits appropriately.
The system of support for the Audit & Supervisory Board consists of staff assigned exclusively to the Audit & Supervisory Board Members that function as the secretariat for the board. Furthermore, the Audit & Supervisory Board convenes prior to meetings of the Board of Directors and other important meetings to discuss the proposed agenda for the meetings, and to share information gathered from materials provided by relevant department and division heads, as well as information gained from explanations received firsthand and by other means. Furthermore, with respect to systems for conveying information to outside Audit & Supervisory Board Members, the full-time Audit & Supervisory Board Members issue progress reports on a regular basis, and provide the outside Audit & Supervisory Board Members with a range of materials, including those from important company meetings and decision making and audit-related materials.
The five outside Audit & Supervisory Board Members are listed in the chart on the right.
(As of June 19, 2019)
|Name||Outside Positions as Representative||Reason for Appointment as Outside Audit & Supervisory Board Member|
|Akihiko Okudaira||Lawyer||Mr. Okudaira was appointed on the expectation that his abundant experience as a lawyer would be reflected in auditing of the Company that would lead to further reinforcement and enhancement of the Company's management structure. While he has no experience of being directly involved in the management of a company except as an outside director, the Company believes that he will be able to continue to perform the duty as an outside Audit & Supervisory Board Member appropriately for the above reason.|
|Seijuro Tanigawa||President of Yakult Kobe Sales Co., Ltd.||Mr. Tanigawa was appointed on the expectation that his long record of managing a Yakult sales company would be an advantage when performing audit operations primarily on the legality of the directors' execution of duties, thus contributing significantly to the development of the entire Yakult Group.|
|Setsuko Kobayashi||Chairperson of Yakult Joetsu Sales Co., Ltd.||Same as above.|
|Kouichi Yoshida||Chairman of Yakult Ishinomaki Sales Co., Ltd.||Same as above.|
|Seno Tezuka||Certified Public Accountant||Mr. Tezuka was appointed on the expectation that his expertise as an accountant and abundant experience in corporate accounting would be reflected in auditing of the Company that would lead to further reinforcement and enhancement of the Company's management structure. While he has no experience of being directly involved in the management of a company except as an outside director, the Company believes that he will be able to perform the duty as an outside Audit & Supervisory Board Member appropriately for the above reason.|
Note: Mr. Akihiko Okudaira and Mr. Seno Tezuka are independent Audit & Supervisory Board Members as specified by the Tokyo Stock Exchange.
Internal audits are conducted by the Auditing Department, an organization that reports directly to the Company's President and that performs financial and operational audits, including those of Group companies in Japan and overseas. The head of the Auditing Department currently oversees a 15-member staff responsible for risk avoidance and other internal audit functions. These personnel conduct internal audits spanning the operations of all internal departments and Group companies, as well as issuing concrete advice and warnings with respect to operational improvements.
The Company has appointed Deloitte Touche Tohmatsu LLC to serve as the accounting auditor for the audit of its business accounts as required by law. Compensation is paid to the accounting auditor based on an auditing contract signed with Deloitte Touche Tohmatsu.
The Company resolved at the Board of Directors' meeting on May 19, 2006 to establish an internal control system as mandated for a large company with a Board of Directors by the Companies Act and its enforcement regulations. The Company revises the details of this resolution promptly in response to changes inside and outside the Company. At the current time, the details are as follows:
The Company aims to proceed with its business activities in accordance with its corporate philosophy, "We contribute to the health and happiness of people around the world through pursuit of excellence in life science in general and our research and experience in microorganisms in particular". To achieve this, the Company believes that it is important to implement management that places emphasis on strengthening and enhancing internal control functions as a company that is widely trusted by society.
Based on this perspective, the Company has made the following resolutions on basic policies regarding building internal control systems after reconfirming the current situation at the Company in relation to the development of internal control systems.
Meanwhile, the contents of the resolutions will be revised on a timely basis in line with revisions to laws and environmental changes inside and outside the Company, aiming to further strengthen and enhance internal control systems.
Systems to ensure that the performance of duties by directors and employees complies with laws and articles of incorporation
As standards for executives and workers to properly perform business activities, the Company has established the Yakult Code of Ethics and Code of Practice. The Yakult Code of Ethics and Code of Practice have been distributed to all persons concerned, aiming to familiarize them with the details of the codes. At the same time, the Company is continuously offering in-house training programs regarding compliance.
In addition, a meeting of the Compliance Committee, which consists of external knowledgeable persons, is held on a regular basis to receive advice regarding the development of the Company's compliance system.
Furthermore, the Company has established an "internal reporting system", aiming to improve the self-cleaning functions by which it detects its own violations of law and takes corrective actions.
In addition, the Company will resolutely block and repudiate anti-social forces that pose a threat to business activities. We will also maintain a close relationship with the police under normal circumstances. At the same time, we will endeavor to supervise transactions through the Corporate Ethics Committee, which consists of external experts as the main committee members, and will tackle any unreasonable claims organizationally and take all possible legal measures.
Systems regarding preservation and management of information related to the performance of duties by directors
Minutes of general shareholders meetings and Board of Directors meetings are preserved properly in accordance with law.
In addition, in line with the Rules for Handling Documents, information related to the performance of duties by directors is recorded and preserved in documents or electromagnetic media (hereinafter referred to as "documents and other media").
Directors and Audit & Supervisory Board Members can look through the minutes and the documents and other media at any time.
Furthermore, the Rules for Handling Documents include rules regarding maintaining confidentiality and we are taking preventive measures against information leakage.
Rules and other systems regarding the management of risks for losses
The Administrative Division plays a central role in supervising the conditions of cross-sectional risk and making company-wide responses. The department concerned handles the management of risks related to the operations of each department.
In addition, to respond to crises that appear suddenly, there are the Risk Management Rules, which include a rule to have the Company's President or divisional managers serve as the head of various task forces set up in accordance with the details of crisis situations.
Furthermore, to provide safe products to customers and establish a quality assurance system, the Quality Assurance Committee has been established and its meetings are being held. In addition, the Food & Beverages Quality Assurance Department has been established as an independent department to carry out exclusive company-wide supervisory operations related to food quality assurance.
Systems to ensure that the performance of duties by directors is efficient
The Company has introduced the Executive Officer System to strengthen the functions of the Board of Directors to make decisions and supervise as well as to define the responsibilities in executing operations, and ultimately to improve the efficiency of these functions.
In addition, the Company's decision-making methods are stipulated in the Rules for Decision-Making, aiming to make decisions in line with the level of importance. At the same time, a management policy meeting and the Executive Officers Committee are held every week in principle, aiming to speed up decision making.
Moreover, to carry out business operations efficiently, the organizational structure of the Company and its management standards are stipulated in the Organization Rules and the Table of Division of Duties.
Systems to ensure that operations at the corporate group consisting of the Company and subsidiaries are appropriate
The Company seeks to ensure that operations at its subsidiaries are appropriate and efficiently executed by sending its executives or employees to the subsidiaries and having them serve as executives of the subsidiaries.
In addition, the Rules for the Management of Affiliates and the Rules for the Management of Overseas Operations include provisions to require the subsidiaries and affiliates to obtain advance approval and provide reports. At the same time, the Auditing Department, which is the Company's internal auditing department, carries out audits.
Furthermore, the Company has secured the appropriate operations throughout the Group by drawing up the Group's strategies and targets in the medium-term management plan as well as establishing an internal support system by setting up a department in charge of the management of the subsidiaries, in addition to implementing training and education programs for its subsidiaries. At the same time, the Rules for Risk Management include provisions to respond to any crisis that suddenly occurs throughout the Group.
Matters regarding employees who support the duties of Audit & Supervisory Board Members in cases in which Audit & Supervisory Board Members make a request to assign such employees
Employees who have a thorough knowledge of the Company's business operations and can properly support the duties of Audit & Supervisory Board Members serve as full-time staff members who support Audit & Supervisory Board Members. In terms of the organizational structure, the staff members serve as "auditing officers" and are independent of the Auditing Department, which is an internal auditing department. They carry out operations under the direct supervision of Audit & Supervisory Board Members.
Matters regarding the independence of employees who support the duties of Audit & Supervisory Board Members, who are mentioned in the previous item, from directors, and systems to ensure the effectiveness of instructions given to these employees by Audit & Supervisory Board Members
To secure the independence and effectiveness of instructions of full-time employees who support the duties of Audit & Supervisory Board Members from directors, such employees do not belong to any department in the organization and are not under the supervision of directors.
In addition, full-time Audit & Supervisory Board Members directly evaluate the performance of such employees to respect their independence.
Systems for directors and employees to provide reports to Audit & Supervisory Board Members and other systems regarding reports provided to Audit & Supervisory Board Members
Audit & Supervisory Board Members attend Board of Directors meetings and other important meetings and read minutes of such meetings on an as-needed basis. In addition, Audit & Supervisory Board Members confirm the details of important requests. There is a system in which Audit & Supervisory Board Members can be apprised of the details of such requests.
Furthermore, reports regarding the results of internal audits of the Company and subsidiaries are provided to Audit & Supervisory Board Members on a regular basis. The Rules for Audits by Audit & Supervisory Board Members also stipulate that Audit & Supervisory Board Members can request directors to provide business reports and request related departments, subsidiaries, and other parties to provide reports if necessary.
Systems to ensure that reporting parties do not receive unfair treatment as a result of such reports
The Company prohibits any retaliation against the directors and employees who provide reports to Audit & Supervisory Board Members as a result of such reports. At the same time, the Rules for the Internal Reporting System include provisions to prohibit any other actions or behavior that infringe the whistleblower's rights.
Other systems to ensure that audit operations of Audit & Supervisory Board Members are carried out effectively
The Rules for Audits by Audit & Supervisory Board Members ensure that Audit & Supervisory Board Members effectively exercise the authority to "attend Board of Directors meetings and other important meetings", "ask for explanations in cases of failure to attend meetings and read minutes and documents", "read documents necessary to investigate business conditions and request related departments to provide reports", and "request subsidiaries and affiliates to provide reports and investigate business and asset conditions".
In addition, they can hear opinions from lawyers, certified public accountants, consultants, and other outside experts if necessary. Expenses related to hearing such opinions from these outside experts and other audits are the responsibility of the Company.
Basic approach regarding timely disclosure
With respect to information disclosure, especially in a timely manner, in the Yakult Code of Ethics and Code of Practice, the Company makes the following commitment: "The Company will actively disclose all relevant information to all stakeholders, including our customers, shareholders, employees, business partners, local communities, industry groups, government, and non-profit organizations, and increase the transparency of management, to gain the full trust of society through our corporate activities". Based on this approach, the Company is disclosing information in a timely manner.
Facts and data appropriate for public disclosure from each department within the Company (including subsidiaries) are compiled by the Public Relations Department. In parallel, each department within the Company, pursuant to the Rules for Decision-Making, decides items for disclosure based on prescribed decision-making procedures. Facts and data not vetted in this manner are not publicly disclosed. When making final decisions, the disclosing department liaises with the General Affairs Department, the body responsible for coordinating timely disclosure, as it moves decision-making procedures forward, during which time a determination is made of the necessity for timely disclosure. The General Affairs Department refers to two standards in making this determination: the Rules for Timely Disclosure and the status of other finalized disclosure decisions within the Company. The decision is then made to officially conduct the timely disclosure of facts and data meeting these criteria.
The Company is listed on the Tokyo Stock Exchange (TSE). Any information from the Company marked for timely disclosure is registered on TDnet, a system for timely disclosure provided by the TSE. The registration of information for timely disclosure and responses to inquiries from TSE personnel are conducted by the General Affairs Department, the body responsible for coordinating timely disclosure. Following registration, information targeted for timely disclosure is quickly transmitted simultaneously to all relevant media outlets, with related materials disclosed at the same time on the Company's website.
The Company has considered a variety of risk scenarios, including those in which information marked for timely disclosure is inadvertently overlooked; information is prematurely disclosed; and data pertaining to sudden crises are not promptly disclosed. A single department, the General Affairs Department, which is responsible for coordinating timely disclosure, acquires and shares information about the criteria for determining the necessity of timely disclosure, and checks information pertaining to final decisions made internally, as well as primary information when sudden crises and incidents arise. This configuration allows check functions to work and enables timely disclosure without any omissions.