Basic Approach and Structure

Basic Approach

The MEC Group believes that to maximize stakeholder return, continuous initiatives toward reinforcing corporate governance, thereby enhancing corporate value, are crucial. Specifically, we will promote initiatives for fair and transparent management, speedy and accurate information disclosure, and thorough accountability, and are acting in accordance with the concept of the Corporate Governance Code.
Under the policy of promoting diversity in management, we actively invite and appoint outside officers and women. We are also working on establishing rules to provide strict decision-making criteria in case management lacks independence.
Moreover, aiming to gain value from diversity, the Group has a policy to encourage the activities of diverse competent personnel. We will continue to support promotion of diverse personnel to executive or management positions and enhance various systems to enable all those who take childcare leave to return to work.

Corporate Governance Report (As of March 22, 2024)

Conceptual diagram of corporate governance

Organizational Composition and Operation

Organization Form

Company with audit and supervisory committee

Chairperson of the Board

President

Number of Directors

7 (The number specified under the articles of incorporation : 12), including 4 Outside Directors

Appointment of independent officers

4 Outside Directors

Board of directors

The Company has given a structure to the Board of Directors while comprehensively taking into account factors such as the environment surrounding the Company and its business characteristics, so that the members can conduct proper and agile decision-making and supervision. In addition, the Board of Directors is composed of members having a variety of knowledge and experience, regardless of their gender or whether they are from inside or outside the Company. Independent directors make up the majority of the board.
By holding the Board of Directors every month, oversees decisions of important matters related to management and the execution of duties by Directors. The Company has also established an operating officer system and a system in which Operating Officers can focus on business execution. In these ways, we are working to accelerate the decision-making of the Board of Directors.
In addition, the Company also makes recommendations to the Board of Directors and makes recommendations. The Nomination and Compensation Advisory Committee (the majority of independent outside members), the ESG Committee (the majority of independent outside members), and the Internal Control Committee and its subordinate organizations has established the J-SOX Committee, Compliance Committee, Risk Management Committee, etc., and has established a governance system.

Nomination Compensation Advisory Committee

Provides advice and recommendations to the Board of Directors and Audit Committee regarding the appointment, dismissal, and remuneration of Directors (excluding Directors who are Audit Committee members), Directors and Executive Officers who are Audit Committee members, etc. The purpose of the committee is to ensure that Directors, Executive Officers, etc., who are members of the Board of Directors or the Audit Committee are appointed, dismissed, and remunerated appropriately.
The majority of the members are independent outside members.

The Audit and Supervisory Committee

The Audit Committee audits the execution of duties by Directors and prepares audit reports, determines the content of proposals regarding the appointment, dismissal, and non-reappointment of accounting auditors, determines the opinions of the Audit Committee regarding the appointment, dismissal, or resignation of Directors (excluding Directors who are Audit Committee Members), and determines the opinion of the Audit Committee regarding the remuneration, etc., of Directors.

Composition of members and attributes of the chairperson

ESG Committee

The purpose of this committee is to formulate and propose management strategies (ESG management strategies) to promote corporate governance reform (G), the fulfillment of social responsibilities (S), and environmental conservation (E) in an integrated and coordinated manner. Based on these proposals, the Company will expand and diversify its management strategies, creating corporate value over the medium to long term through rich relationships with employees, customers, society, and the natural environment. The majority of the members are independent outside members.

J-SOX Committee

The purpose of this committee is to establish basic matters concerning the operation of J-SOX internal controls in the Group and contribute to ensuring appropriate information disclosure and transparency in financial reporting in accordance with the Financial Instruments and Exchange Act of Japan, where the exchange on which the Company lists its shares is located.

Compliance Committee

In accordance with the spirit of the MEC Group’s Charter of Corporate Behavior and Corporate Code of Conduct, we have established a system for ensuring compliance within the Company and handling related matters, aiming to fulfill our social responsibility as a company by appropriately conducting business.

Risk Management Committee

The purpose of this committee is to appropriately implement risk management in the Group, establishing a basic policy regarding the development of a management system to prevent the occurrence of any risks that hinder the execution of business within the Group, and how to respond to any risks that do arise.

The Evaluation of the Effectiveness of the Board of Directors

We have been conducting questionnaires and interviews with all internal and external directors regarding “evaluation of the effectiveness of the Board of Directors” in order to improve the functions of this. From that report, we evaluate that the board of directors of the company is functioning effectively in accordance with its roles and responsibilities.

Board Skills Matrix

Criteria for Independence and Qualification of Independent Outside Directors

The Company has established strict criteria for use if Outside Directors have no independence from the Company. If a person applies to any of the below, we determine that they do not have independence.

1. Has work experience in an organization that is our major shareholder which holds 5% or more of the voting rights, or is a major shareholder.
2. Has work experience in the Company's main bank or major lender.
3. Has work experience in our major trading partner or an organization that we position as our major trading partner.
4. Has work experience in our audit corporation, law firm, or main securities firm.
5. There have been cases where compensation in the form of consulting fees, attorneys' fees and tax accountant remuneration has been paid by the Company in addition to executive compensation.
6. The corresponding period for 1 to 5 is within the past 5 years from the present time.
7. Person who is next of kin to a person listed in 1 to 6 above.
8. Person who is a close relative of someone who executes business, non-executive person who does not execute business, or employee at the Company or its subsidiaries or affiliates.

When selecting candidates for such independent Outside Directors, it is determined in cooperation with other directors whether the candidate has the required knowledge, experience and ability to contribute to frank, lively and constructive studies which he or she can be expected to make as a member of the Board of Directors. This is done in the Nomination and Compensation Advisory Committee in the course of reviewing the structure or organizational design of bodies like the Board of Directors, and the result is reported to the Board of Directors.

Corporate Governance Report, Sustainability Report

For more information on our governance, please see our Corporate Governance Report and Sustainability Report.

Corporate Governance Report

Sustainability Report