Epson 2016 Annual Report Download - page 42

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The Audit & Supervisory Committee and accounting auditors enhance the effectiveness of audits by
periodically discussing issues with one another. Accounting auditors have the right to observe meetings of the
Compliance Committee, which is made up of outside directors and a director who is a member of the Audit &
Supervisory Committee.
(4) Overview of limited liability agreements
The Company concludes agreements with non-executive directors that limit their liability for damages under
Article 423 (1), pursuant to the provisions of Article 427 (1) of the Companies Act. The maximum amount of
liability for damages under these agreements is limited to the amount provided for by laws and regulations. The
liability of the non-executive directors shall be limited only if they have acted in good faith and without gross
negligence in performing their duties.
(5) Outside directors
The role of outside directors
To ensure that outside directors are independent from the Company’s management team, have a broad view, and
are able to objectively supervise the making of important decisions, the Company has set forth the role of
outside directors in the Corporate Governance Policy as below. In principle, outside directors should comprise
at least one-third of the members of the Board of Directors.
(i) Monitoring of the management
- Monitoring of corporate executives through involvement in the officer election process and the
compensation determination process based on an evaluation of the business as a whole
- Monitoring of the business as a whole through the exercise of voting rights on important business
decisions made by the Board of Directors
(ii) Advisory function for improving business efficiency
(iii) Monitoring of conflicts of interest
- Monitoring of conflicts of interest between Epson and its directors and executive officers
- Monitoring of conflicts of interest between Epson and related parties
Principle of independence
The Company’s Board of Directors has established a “Standard of Outside Officers’ Independence” and, in
compliance with this standard, elects director candidates who are unlikely to have conflicts of interest with
general shareholders. All current outside directors satisfy the independence requirements of the standard.
Standard of Outside Officers’ Independence
The Company shall not nominate a person as an Outside Officer candidate who falls under any of the below.
(1) A person which deems the Company as a major business partner1, or in the case of a company, an
executing person2 of a contractor in the past five years.
(2) A person which the Company deems as a major business partner3, or in the case of a company, an
executing person of a customer in the past five years.
(3) A business consultant, certified public accountant or lawyer who has received monies, etc. (meaning a
large sum of money and other properties4) other than Officers’ remuneration from the Company in the past
three years, or in the case where the receiver of the monies, etc. is an entity including corporate entities
and unions, a quasi-executing person who has belonged to the payee’s group in the past three years.
(4) A major shareholder5 of the Company, or in the case of a company, an executing person or Audit &
Supervisory Board Member of the shareholder in the past five years.
(5) An executing person or Audit & Supervisory Board Member in a corporation of which the major
shareholder is the Company.
(6) A person who has belonged to an auditing firm which has conducted a legal accounting audit of the
Company in the past ten years.
(7) A person who has belonged to a leading managing underwriter of the Company in the past ten years.
(8) A payee of a large donation6, or in the case the receiver of the donation is an entry including corporate
entities and unions, a judicial partner, general partner, or quasi-executing person who has belonged to the
payee group at any time.