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COOPERATE GOVERNANCE CODE IN JAPAN (Mission and role of the board of…
COOPERATE GOVERNANCE CODE IN JAPAN
Main Concepts
Obligation
Family
Consensus
Mission and role of the board of directors
The board should be comprised of outside directors and inside director.
appointment and removal of the chief executive officer (CEO)
nominating candidates for director positions
management supervision, including approving important strategic decisions
general oversight of accounting and auditin
The board of directors may also be required to approve certain decisions made by the CEO
Addressing shareholder derivative litigation
-comprise of a majority of independent directors
.
-to determine whether litigation action should be made against directors or executives against whom the company/shareholders may have a claim
Reporting to the shareholders and communicating with investors
-to obtain further information about the company through asking questions.
-The shareholders’ general meeting is seen as an opportunity for shareholders to listen to the reports of the directors and executives
Mission and role of the committees established within the board of directors
-The board establish various committees, including audit, compensation, and nominating committees
-Each committee established should comprise at least three directors, with an outside director appointed as chair of each committee.
Securing fairness and transparency for executive management
-Important areas were covered in this section of the Code: internal control and disclosure.
-The CEO should ensure that there is an effective corporate governance system with adequate internal control
The audit committee should evaluate the CEO’s policies on internal audit and control
-The CEO should prepare an annual report about the internal audit and control
-Disclosure should be made by the CEO of any information that may influence share prices and information should be disclosed to the various stakeholder groups as appropriate.
Leadership responsibility of the CEO
-The CEO’s role is to formulate management strategies, set up an executive management committee
.
-The CEO is supervised by the board of directors and not be a member of the committees
Corporate Governance Code in 2001
six chapters containing14 principles