Corporate
Governance

Fundamental Thought Process Related to Corporate Governance

Driven by its desire to enrich people's lives and unlock new experiences, the Company has upheld its vision, Magnify Life, and strived to generate new corporate value for contributing to society. While the environment surrounding the Company is changing rapidly, we intend to capture these changes and promote a sustainable business in international and local societies to fulfill our corporate social responsibility.
To this end, it is essential for the Company to earn the trust of shareholders, customers, and other stakeholders, as well as local society. We believe that strengthening corporate governance is the most important and crucial means of building trustful relationships.
That is why we are proactively carrying out such initiatives as the establishment of supervisory functions to ensure promptness in our decision-making as well as appropriateness and efficiency in the execution of our operations, and the enhancement of internal conformity systems to minimize risks which could cause damage to our corporate value. In order to achieve creation of corporate value over the medium to long term, we will ensure more effective corporate governance by developing an organizational governance system rather than a system supported solely by individual ethics, and establish a sound and transparent management structure.

Corporate Governance Report

2021.12.07 Corporate Governance Report

Corporate Governance System

The Company is a company with a board of auditors and an accounting auditor. While we are working to strengthen our corporate governance system, the Company's corporate governance is operated by a governance structure centered on the Board of Directors and coordinated by the Board of Auditors, the department in charge of auditing, the Accounting Auditor, etc.

[Reasons Why Principles of the Corporate Governance Code Are Not Implemented]

(Supplementary Principle 3-1-3)

The Company discloses the state of initiatives on sustainability on its corporate website and in its ESG data books. We recognize that, in sustainability management, the impact of climate change on our business is particularly an important theme. In accordance with the TCFD recommendations, we have considered disclosing the financial impact of risks and opportunities related to climate change, and begun making a partial disclosure. The Company has addressed Governance and Risk Management in the TCFD recommendations as follows.
As for Governance, the Company has established a Sustainability Committee under the supervision of the Board of Directors, which periodically makes reports and recommendations to the management and the Board of Directors on the state of progress in sustainability initiatives including climate change.
As for Risk Management, the Company has identified six material factors based on both perspectives of significance for stakeholders and business impact to the Company, which are shown on the Company's corporate website, and we are appropriately identifying, assessing, and managing climate change risks.
Furthermore, regarding Metrics and Targets in the TCFD recommendations, the Company discloses Scope 1 and Scope 2 greenhouse gas (GHG) emissions and reduction targets for 2030 and 2050 on the corporate website and in the ESG data books, along with other data related to the environment. We have also begun working on calculating Scope 3 GHG emissions.
As for Strategy in the TCFD recommendations, upon calculating Scope 3 GHG emissions, we will determine the business risks and opportunities presented by climate change through means such as scenario analysis, and consider specific financial impact and responses.

(Supplementary Principle 4-1-2)

Currently, the Company publishes the business plan for each business year; however, we do not disclose the medium-term business plan. The Company seeks to achieve business innovation and to achieve sustainable growth. Therefore, even if we have formulated a medium-term business plan and published numerical targets, we believe that said numerical values have limited effectiveness. Rather, we do not publish a medium-term business plan because we believe that the disclosure of numerical targets could cause shareholders and investors to make judgments which are in contrast to intentions of the Company. Conversely, regarding the difference between the single-year business plan and the actual figures, we discuss appropriate measures through monitoring at the Board of Directors and the meetings composed of management executives, and then incorporate the measures in our future business development. Based on this series of processes, we explain our business plans and future business development to shareholders and investors at financial results briefings and other channels.

(Supplementary Principle 4-1-3)

The Company recognizes that a succession plan for the Chief Executive Officer (CEO) is an important decision as we aim for sustainable growth and enhancement of corporate value over the medium to long term. Although the Company has not defined a clear succession plan for the CEO at this time, we intend to develop a systematic framework at the Nomination and Compensation Committee in the future based on the Practical Guidelines for Corporate Governance Systems and suggestions from Independent Outside Directors.

[Disclosure Based on Each Principle of the Corporate Governance Code]

(Principle 1-4: Cross-shareholdings)

The Company's basic policy is not to own listed shares as cross-shareholdings. At this time, the Company owns three issues of unlisted shares as cross-shareholdings.

(Principle 1-7: Transactions between related parties)

Competitive transactions by Directors and transactions involving conflicts of interest between Directors and the Company require a resolution by the Board of Directors based on applicable laws and the Board of Directors Regulations.

(Supplementary Principle 2-4-1)

The Company believes that, in planning, manufacture, and sales, the development of a working environment for employees working at headquarters and stores as well as in the supply chain is an important theme. We are advancing initiatives with the understanding that we have a responsibility to respect the human rights of all employees involved in the Company and to ensure their physical and mental health and safety.
To create an environment in which diverse employees feel comfortable to work, we are implementing various initiatives to promote diversity, such as LGBT training, career training, and systems to help female employees succeed (childcare leave system, super-flex workhours system without fixed core time, and working from home). We also focus on creating an environment for generating new value by internalizing diverse values and ways of thinking through these initiatives.
In human resource development, we actively hire mid-career employees as immediate assets and hire new graduates on an ongoing basis, while striving to enhance training systems of all kinds for store staff and headquarter employees according to their capabilities and careers.
On our corporate website and in ESG data books, we disclose our initiatives on promoting diversity and developing human resources, as well as the current state of childcare leave and other various systems, the ratio of female employees, the ratio of managers, and the ratio of employees with foreign nationalities, and our goals and directions for 2030 and 2050.

(Principle 2-6: Roles of corporate pension funds as asset owners)

100% of the Company's corporate pension funds are defined contribution pension funds, and employees eligible for corporate pension funds manage their assets individually.

(Principle 3-1: Enhancement of information disclosure)

  1. The Company's management philosophy and management strategy are listed on our website. With regard to the business plan, the earnings forecast for each fiscal year is announced at the financial results briefing.
  2. The Company's fundamental thought process related to corporate governance is described in "4-4. Corporate Governance" of the Annual Securities Report.
  3. The policy for determining the compensation of Directors is described in the "[Director Remuneration] Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods" section of the Corporate Governance Report. Compensation of Executive Officers is determined by the Board of Directors in accordance with the Executive Officer Regulations.
  4. As for candidates for Director and Auditor, the most qualified candidates are appropriately selected based on a comprehensive consideration of factors including experience, insight, expertise, and career by the Nomination and Compensation Committee (comprised of the Representative Director and Independent Outside Directors with Independent Outside Directors comprising a majority), a voluntary advisory body to the Board of Directors. After a resolution is passed by the Board of Directors, the selected candidates are put before the General Meeting of Shareholders for election.
  5. The reasons for the selection and nomination of candidates for Director and Auditor, the career background of each candidate, and the skill matrix of each Director are described in the convocation notice of the General Meeting of Shareholders. Appointments and dismissals of Executive Officers are resolved by the Board of Directors in accordance with the Executive Officer Regulations, taking into account business expertise, management execution ability, innovation, and leadership. At the time of each appointment or dismissal, the reasons for the appointment or dismissal are fully explained at a meeting of the Board of Directors.

(Supplementary Principle 4-1-1)

In addition to the matters stipulated in applicable laws and the Articles of Incorporation, the details of the resolutions of the Board of Directors are stipulated in the Board of Directors Regulations. With respect to important matters other than those resolved by the Board of Directors, standards for decision-making authority are defined in the Management Committee Regulations and the Business Authority Regulations, and decisions are made promptly.

(Principle 4-9: Criteria for judging the independence of Independent Outside Directors and attributes of Independent Outside Directors)

The Company deliberates the independence of Outside Directors at meetings of the Board of Directors based on standards in accordance with the independence standards of the Tokyo Stock Exchange to select candidates for Independent Outside Director.

(Supplementary Principle 4-10-1)

The Company has appointed three Independent Outside Directors among six Directors. The nomination and compensation of Directors and Auditors are appropriately managed, having established the Nomination and Compensation Committee (comprised of the Representative Director and Independent Outside Directors with Independent Outside Directors comprising a majority), which is a voluntary advisory body to the Board of Directors. Meetings of the Nomination and Compensation Committee are held three times, with decision-making policy on the compensation of officers, election of new Directors and Auditors, and determination of Director compensation as subjects.

(Supplementary Principle 4-11-1)

The Articles of Incorporation stipulate that the Company shall have no more than eight Directors. The Company's Board of Directors is composed of six Directors (including three Outside Directors) who are human resources possessing diverse knowledge and experience, and possessing the knowledge and ability to innovatively create medium- to long-term corporate value. The Company shall maintain an appropriate size of the Board of Directors to ensure the most efficient functioning of decision-making and supervision of overall management. For Inside Directors, the Company appoints human resources who possess a high level of expertise in the Company's business and are able to accurately and fairly supervise overall management. For Outside Directors, the Company appoints human resources who possess a wide range of knowledge necessary for management and a high level of insight in specific fields, and who have the qualities to provide accurate and fair supervision from an objective perspective independent of business execution. The Company has disclosed the skill matrix of its Directors in the convocation notice of the General Meeting of Shareholders held on November 25, 2021.

(Supplementary Principle 4-11-2)

Concurrent appointment as officers of other listed corporations for the Directors and Auditors of the Company shall be within a reasonable scope. Furthermore, the status of important concurrent positions is disclosed annually in the convocation notice of the General Meeting of Shareholders and the Annual Securities Report.

(Supplementary Principle 4-11-3)

The Company evaluated the effectiveness of the Board of Directors as follows with the aim of enhancing the effectiveness and functionality of the Board of Directors as a whole.

  1. Evaluation process
    As a voluntary advisory body to the Board of Directors, the Board of Directors Effectiveness Evaluation Committee (hereinafter, "the Committee") consisting of Independent Officers was established to evaluate the effectiveness of the Board of Directors. The Committee shared evaluation results and issues with the Board of Directors, and confirmed future initiatives.
    (Evaluation method)
    • The Committee analyzes and evaluates the following evaluation items by exchanging opinions, and summarizes issues requiring future action.
    • At a meeting of the Board of Directors, the Committee shares its analysis/evaluation results and identified issues with the Board of Directors to make decisions on future initiatives.
    (Evaluation items)
    • Appropriate size of the Board of Directors (the size of the Board of Directors over the medium term)
    • Composition of the Board of Directors (the need for Independent Outside Directors to comprise a majority)
    • Separation of the CEO and the Chairperson of the Board
  2. Overview of evaluation results
    As a result of discussions on the size of the Board of Directors over the medium term, the need for Independent Outside Directors to comprise a majority in the composition of the Board of Directors, and the separation of the roles of the CEO and the Chairperson of the Board based on the evaluation process described above, the Committee determined that the Company's Board of Directors has generally been operating and functioning appropriately, and that the effectiveness of the entire Board of Directors has been ensured.
    Regarding the size of the Board of Directors over the medium term, the Committee has determined that an appropriate size for the time being is now ensured with the six-person structure after the increase of two Directors (including one female Outside Director) at the General Meeting of Shareholders held on November 25, 2021. Opinions expressed include that the current size, which encourages active exchanges of opinions, is actually better for the current state of the Company comprised of a single business with limited risks, despite the expansion in business scale. If the scale of new business fields expands, additional human resources well-versed in such business fields would be required, but for the time being, the Committee has determined that the six-person structure is sufficiently efficient. With respect to the need for Independent Outside Directors to comprise a majority, the Committee members expressed opinions including that they don't see it as a problem because Independent Outside Directors comprise a half of Directors even under the current composition and operation, and that many of the measures contribute to the benefit of minority shareholders rather than prioritizing the benefit of major shareholders, and thus there is no problem. Although the request to make Independent Outside Directors comprise a majority is understandable from the governance perspective, the Committee has determined that, in the Company's case, the composition of the Board of Directors should not be decided based solely on headcounts, because the CEO is an executive who listens to the opinions of Outside Directors.
    As for the need to separate the roles of the CEO and the Chairperson of the Board, the idea that separating the CEO and the Chairperson of the Board enables further checks and balances in terms of governance is understandable, especially for owner-managed companies. However, as a practical matter, the CEO fully respects the opinions of Outside Directors and there has been no conflicts, and thus the Committee has determined that there is no need to separate the CEO and the Chairperson of the Board at this time. That said, should a conflict actually occur or the Company's business domains further expand, the separation of the two roles must be considered. Regarding deliberations for the medium- to long-term direction of each business, as well as on the status of corporate governance, which were presented as issues in the previous fiscal year, the periodic reporting on each business has steadily improved with ample information and inclusion of timely topics. Accordingly, it is the Committee's opinion that effectiveness in FY2021 was valid. By continuously deepening discussions on the medium- to long-term direction of each business and the state of corporate governance including sustainability, the Company will strive to further enhance information provided to the Board of Directors and develop an even more advanced and optimal corporate governance system.

(Supplementary Principle 4-14-2)

In response to requests by Directors and Auditors, the Company shall provide Directors and Auditors with the opportunity to acquire knowledge necessary for their duties, with the aim of enabling them to fully engage in management oversight and auditing functions. In such cases, the Company shall pay for the costs associated with knowledge acquisition.

(Principle 5-1: Policy related to constructive dialogue with shareholders)

  1. Basic policy regarding general dialogue with shareholders:
    In order to contribute to the sustainable growth of the Company and the enhancement of corporate value over the medium to long-term, the Company promotes constructive dialogue with shareholders to a reasonable extent. The Director in charge of IR oversees the general dialogue with shareholders and works to enhance dialogue by assigning IR personnel to the IR Division and working with related departments such as general affairs, accounting, and legal affairs in the Administration Division.
    The Company comprehensively considers the wishes and interests of shareholders and investors, and holds individual meetings and telephone conference calls as necessary. Moreover, the Company takes other measures to enhance dialogue. For example, the Company holds financial results briefings every six months, at which management team explains the Company's financial situation and management policy to shareholders and investors.
  2. Dialogue methods other than individual meetings:
    In addition to holding biannual financial results briefings for institutional investors, the Company uses a website to disclose summary of financial results, financial results briefing materials, monthly sales status, and other information.
  3. Feedback measures:
    Information on IR activities, related feedback, and the status of changes in shareholders is reported as necessary to management team and the Board of Directors, and is shared with Directors and Auditors.
  4. Measures for management of insider information:
    The period from the day after the end of each quarterly account settlement until the disclosure of the financial report is stipulated as a silent period. During this period, the Company refrains from commenting on financial results. Furthermore, the Company constantly pays attention to the management of insider information when engaging in dialogue with shareholders, investors, and analysts.
    Our basic policy regarding overall dialogue with shareholders is listed in the Disclosure Policy on our homepage.

Current Corporate Governance System Chart

Current Corporate Governance System Chart

Outside Directors

The Company has appointed three outside directors, Mr. Noboru Kotani, Mr. Jiro Kokuryo and Ms. Chiaki Hayashi. Mr. Kotani has been appointed as an Outside Director with the expectation that he will provide oversight of and recommendations on the Company's overall management and exercise voting rights at meetings of the Board of Directors based on his experience and insight from serving as an officer of multiple listed companies. Mr. Kokuryo has been appointed as an Outside Director with the expectation that he will provide oversight of and recommendations on the Company's overall management and exercise voting rights at meetings of the Board of Directors based on his professional experience at a major telecommunications company as well as deep insight and wide-ranging experience in management and IT as a scholar. Ms. Hayashi has been nominated as a candidate for Outside Director with the expectation that she will provide appropriate advice on the Company's business and sustainability measures based on her experience in managing a variety of projects and working on revitalization of a local economy.

Independent Officers

The Company has designated three outside directors (Mr. Noboru Kotani, Mr. Jiro Kokuryo and Ms. Chiaki Hayashi) and two outside auditors (Mr. Tsuguya Ota and Mr. Tetsuya Oi) as independent officers.

Policy related to constructive dialogue with shareholders

In order to contribute to the sustainable growth of the Company and the enhancement of corporate value over the medium to long-term, the Company promotes constructive dialogue with shareholders to a reasonable extent. The Director in charge of IR oversees the general dialogue with shareholders and works to enhance dialogue by assigning IR personnel to the IR Division and working with related departments such as general affairs, accounting, and legal affairs in the Administration Division.

(Status of officer attendance at meetings of the Board of Directors)

Meetings of the Board of Directors are generally held once a month, and extraordinary meetings of the Board of Directors are held as needed. The Board of Directors makes decisions from a board perspective and supervises the execution of business. In addition to matters stipulated in laws and regulations, the Articles of Incorporation and the Board of Directors Regulations, a wide range of matters are reported, discusses, and resolved. Auditors also attend meetings of the Board of Directors in order to supervise the execution of business by directors.

Status of attendance (number of meetings attended / number of meetings held; (attendance rate)) at meetings of the Board of Directors in FY2021 (September 1, 2020 to August 31, 2021)

President Hitoshi Tanaka 15 out of 15 (100%)
Director Yutaka Nakamura 15 out of 15 (100%)
Outside Director Noboru Kotani 15 out of 15 (100%)
Outside Director Jiro Kokuryo 15 out of 15 (100%)
Outside Auditor Masatoshi Arimura 12 out of 12 (100%)
Outside Auditor Tsuguya Ota 15 out of 15 (100%)
Outside Auditor Tetsuya Oi 14 out of 15 (93%)

Concept and Overview on Officers remuneration

As a basic policy, compensation for the Company's Directors shall be set at an appropriate level in light of each Director's responsibilities and level of contribution in order to ensure transparency and objectivity. Specifically, only basic compensation shall be paid, as a fixed compensation that comprehensively takes into account of the scope of responsibilities, business results, level of contribution, and other factors, within the scope of the maximum amount of compensation determined by resolution of the General Meeting of Shareholders.

Anti-takeover Measures

At this time, the Company does not plan to introduce specific anti-takeover measures.

Policy for Cross-Shareholdings

The Company’s basic policy is not to own listed shares as cross-shareholdings.
At this time, the Company owns three issues of unlisted shares as cross-shareholdings.

Basic Policy for internal Control

  1. System for ensuring that Directors and employees perform their duties in compliance with applicable laws and the Articles of Incorporation
    1. The Company's concept of compliance is based on the JINS Group Code of Ethical Conduct, which has been established to ensure that all officers and employees working at the Company are proactively refining and improving their organizations, as well as proactively resolving issues from the perspectives of ethics and compliance with laws. This will enable the Company to build trust and obtain high evaluation from the market.
    2. The Company has established a Compliance Committee as an organization to guarantee the management philosophy and the Code of Ethical Conduct. Furthermore, the Company develops compliance systems by educating officers and employees so that each individual can act in accordance with the concept of compliance. The status of compliance activities is reported from the Compliance Committee to the Board of Directors and a department in charge of auditing regularly audits the status of compliance implementation at each department.
    3. The Company has established a contact point for receiving reports from workers, etc., as well as a Compliance Hotline for responding to consultation on matters such as confirming possible violations of laws and regulations, within the Compliance Committee and external specialized institutions. Through these measures, the Company works to discover and correct inappropriate behavior at an early stage. The Company has stipulated that the contents of all whistleblowing reports are kept confidential and whistleblowers are not subjected to any unfair treatment.
    4. Based on internal rules, a department in charge of auditing periodically conducts internal audits on the overall status of operations; specifically, the status of compliance with laws and regulations, the Articles of Incorporation, and internal rules, as well as the appropriateness of procedures for executing duties and of business contents. The department in charge of auditing then reports the results of said audits to the Board of Directors, the Board of Auditors and CEO.
    5. All executives and employees of the Company must comply with the Guidelines for Code of Ethics. In the Guidelines for Code of Ethics, the Company declares its resolute response to anti-social forces which threaten social order, its disassociation with illegal acts and anti-social acts, and its prohibition of all benefits for anti-social forces. The Company works to eliminate all relationships with anti-social forces.
  2. System for storing and managing information related to the execution of duties by Directors
    In accordance with the Document Management Regulations, the Company records, stores, and manages information related to the execution of duties by Directors in documents or electromagnetic media (hereinafter, "Documents, etc."). The Document Management Regulations define the scope of documents to be stored, the storage period, the storage location, and other elements of the system for storing and managing Documents, etc. Directors and Auditors shall be able to view these Documents, etc., at any time.
  3. Regulations and other systems for managing the risk of loss
    1. The Company shall stipulate basic policies and systems regarding business risk management in the "Risk Management Regulations," and shall develop and construct a risk management system in accordance with the Regulations.
    2. The Company recognizes credit risks, administrative risks, system risks, compliance risks, information-related risks, and other types of risks as business risks, and shall develop and review internal rules and manuals to deal with individual risks.
    3. Regarding information-related risks, the Company has established the IT Governance Division specialized in information security to take measures such as information security education for its officers and employees, countermeasures against unauthorized access and hacking, and protection of personal information, as natural responsibilities of a company supporting today's advanced information society. Furthermore, the Company has established the Information Security Committee to detect and solve internal risks at an early stage as well as share external cases of information-related risks.
    4. As the other risk management system, the Company has set up the Risk Management Committee for receiving reports from risk management committees established within overseas group companies and various departments. In addition, a department in charge of auditing conducts an audit of the management status of risks reported to the Risk Management Committee and thereby risk management which is integrated with internal controls is implemented. The Company has established a system to respond promptly and to minimize loss and damage in the event that a serious situation occurs in business activities.
    5. In addition to the above, in order to ensure business continuity in the case of the following risks, the Company shall establish Management Risk Countermeasure Guidelines and develop a risk management system.
      1. Risk of serious losses due to disasters and accidents such as earthquakes, floods, and fires
      2. Risk of serious interference with production and sales activities due to improper execution of business by officers and employees
      3. Risk of serious damage due to incorrect functioning of core IT systems
      4. Other risks deemed as critical by the Board of Directors
  4. System to ensure that Directors execute their duties efficiently
    The Company will formulate a medium-term business plan and a single-year business plan in order to define a company-wide future vision in response to changes in the business environment. In order to achieve these plans, the Company shall clarify the authority and duties of Directors, and shall improve the efficiency of execution of duties.
    In addition, by implementing an executive officer system, the Company shall strive to strengthen the supervisory function of Directors through delegation of authority for executing certain business operations. Furthermore, a management committee, which consists of executive and other officers and is chaired by the CEO, shall be held under the Board of Directors. The management committee shall engage in advance deliberations for enhancing discussions at the Board of Directors. Also, within the extent of authority delegated by the Board of Directors, the management committee shall deliberate and make decisions on the execution of the Company's business and implementation of measures.
  5. System to ensure the appropriateness of business in the corporate group consisting of the Company and affiliates
    1. The Company strives to grow and prosper the overall business of the Group. Accordingly, the Company has defined the "Affiliates Management Regulations" for developing and constructing systems for efficient execution of business at its affiliates.
    2. In accordance with the "Affiliates Management Regulations," the person in charge and the supervisory department manage and provide guidance to the affiliates through prior consultation, reporting, and meetings.
    3. Affiliates with a high degree of importance for the Group's business performance give periodic reports on management results and other important matters, at a management liaison conference which is attended by the Company's full-time Directors, full-time Auditors, executive officers, and management team from the applicable affiliates.
    4. In accordance with the Risk Management Regulations, the Company develops and constructs a risk management system implemented throughout the Group. Furthermore, in the event of disasters and accidents, at the affiliates as stipulated in the Management Risk Response Guidelines, the Company promptly establishes a countermeasure headquarters and takes necessary actions.
    5. The Company applies the "JINS Group Code of Ethical Conduct" and the "Guidelines for Code of Ethics" to all officers and employees of the Company and its affiliates, and has ensured that all applicable individuals are aware of the ethical codes.
    6. The Internal Audit Division periodically audits the status of operations at the affiliates.
  6. Matters relating to employees in the event that an Auditor requests assignment of that employee for assistance in duties
    If an Auditor requests the assignment of an employee for assisting in the operation of the Board of Auditors or in the execution of other duties (hereinafter, "Assistant to Corporate Auditor"), an Assistant to Corporate Auditor is promptly assigned after consulting with the Auditor.
  7. Matters related to the independence of Assistant to Corporate Auditor from Directors and matters related to ensuring the effectiveness of instructions from Auditors
    1. Consent shall be obtained in advance from the Auditor in regards to the transfer or personnel evaluation of an Assistant to Corporate Auditor.
    2. An Assistant to Corporate Auditor who has received an order necessary for auditing work from an Auditor shall possess the authority to view documents, enter the audit site, etc., within the scope necessary to perform the duties of the Assistant to Corporate Auditor.
  8. System for Directors and employees to report to Auditors and other systems related to reporting to Auditors
    1. Directors and other executives shall periodically report the status for execution of their duties to Auditors. In addition to legal matters, Directors shall immediately report to Auditors on the details of decisions that may have a significant impact on finance and business.
    2. An employee shall be able to report directly to Auditors in regards to facts, etc., that may cause significant damage to the Company.
    3. From among matters communicated to the whistleblowing contact point, the person in charge of the Compliance Hotline shall be able to communicate with Auditors in regards to matters related to the duties of Directors.
    4. Auditors attend meetings of the Compliance Committee, which deliberates and reviews the contents of reports to the whistleblowing contact point, reports on the status of response, and measures for preventing reoccurrence.
  9. System for Directors and employees of affiliates to report to Auditors
    1. Similar to the Directors and employees of the Company, the Directors, Auditors and employees of the affiliates promptly report to Auditors of the Company if any facts that have a significant impact on each company occur or are likely to occur.
    2. As necessary, Auditors of the Company shall be able to request reports on the contents of business execution from Directors and employees of the affiliates, and reports on the status of audits from Auditors of the affiliates.
    3. The Company has established a system to ensure that persons who have reported to Auditors as stipulated in 8. and 9. do not incur unfavorable treatment at the Company or the affiliates because of the report.
  10. Matters related to the procedures for prepaying or redeeming expenses arising from execution of duties by Auditors, as well as policies related to the processing of expenses or obligations arising from the performance of such duties
    When an Auditor requests advance payment of expenses for the execution of duties per Article 388 of the Companies Act, the Company shall promptly process the request.
  11. Other systems to ensure that audits by Auditors are conducted effectively
    1. Directors and employees of the Company and Directors, Auditors, and employees of the affiliates shall actively cooperate with audits by Auditors of the Company, report on the status of business operations, and disclose materials related to their duties.
    2. Auditors shall periodically exchange opinions with the CEO in order to exchange information and confirm the status of business execution.
    3. Based on necessary consultation with Accounting Auditors, lawyers, or other external experts, Auditors shall propose important improvements to the Board of Directors.
  12. System to ensure the reliability of financial reports
    In order to ensure the reliability of financial reports and to effectively and appropriately submit internal control reports as stipulated in the Financial Instruments and Exchange Act, the Company shall act under the direction of the CEO to maintain and operate an internal control system for financial reports, and shall work to evaluate and improve said system.

Business Risks

The following are examples of business risks that could have a significant impact on the investment decisions of investors. Please note that the forward-looking statements are based on determinations made by the Group as of the end of August 2020, and that the following examples do not cover all risks related to investments in the stock of the Company.

  1. Statutory regulations
    1. Regulations related to the provisions of Article 17 of the Medical Practitioners' Act
    2. Regulations related to the Act on Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices
    3. The Act on the Protection of Personal Information (the Personal Information Protection Act)
    4. The Product Liability Act (the PL Act)
  2. Risks related to the industry environment
    1. Maturing of the market for eyeglasses for vision correction in Japan
    2. Spread and advent of alternative products and services
    3. Natural disasters
    4. Epidemics
    5. Information security
  3. Changes in the financial environment
    1. Fluctuations in interest rate trends
    2. Changes in the financing environment
    3. Impact of exchange rate fluctuations
  4. Risks related to the Group's business model
    1. Advent of competitors
    2. Significant changes in the society, economy, and political situation in China
    3. Store opening policies
    4. Leasehold, guarantee deposits, etc.
    5. Securing and developing human resources
    6. Intellectual property rights
    7. Overseas expansion
    8. Impairment loss of non-current assets

Implementation of Measures for Shareholders and Other Stakeholders

Initiatives for revitalizing
the General Meeting of
Shareholders and facilitate
the exercise of voting
rights
Since the 27th Annual General Meeting of Shareholders in 2014, we have adopted an electromagnetic method for exercising voting rights.
Since the 27th Annual General Meeting of Shareholders in 2014, we have participated in the Electronic Voting Platform operated by ICJ, Inc.
IR activities Briefing sessions for analysts and institutional investors are held twice a year, once after the announcement of full-year financial results and once after the announcement of second quarter financial results. The briefing materials are immediately posted on the Company's IR website.
https://jinsholdings.com/jp/en/ir/library/explanationdata/
Financial information, timely disclosure information, securities reports, financial results briefing materials, materials from the General Meeting of Shareholders, etc.
https://jinsholdings.com/jp/en/ir/
A dedicated department and individual are placed in charge of IR activities.
Initiatives for respecting
the position of
stakeholders
The Company has established Insider Trading Prevention Regulations designed to collect and analyze company information that should be disclosed in a timely and comprehensive manner, to make appropriate disclosures in compliance with rules for timely disclosure, the Financial Instruments and Exchange Act, and other related laws, and to prevent the leakage of important information and illegal insider transactions.
Since 2013, in order to support and promote entrepreneurship in Gunma Prefecture where the Company was founded, we have sponsored the Gunma Innovation Award, which is presented to commend entrepreneurs in cooperation with local newspapers and local companies that support the purpose of the award.
Furthermore, in order to revitalize the city of Maebashi, we established the Taiyo no Kai (Sun Association) together with companies that have head offices and main bases in Maebashi. Every year, we donate 1% of our net profit (minimum of 1 million yen) to invest in businesses that contribute to the development of Maebashi.
We also collect and recycle eyeglasses that are no longer used.