Sharp 2010 Annual Report Download - page 32

Sharp strives to achieve timely and accurate disclosure of
information to all stakeholders such as shareholders and inves-
tors, and is increasing the transparency of management by
widely publicizing information.
Status of Corporate Governance System
The Board of Directors Meetings of Sharp Corporation are held
on a monthly basis in principle to make decisions on matters
stipulated by law and management-related matters of impor-
tance, and to supervise the state of business execution. To
improve management agility and flexibility, and to clarify the
responsibilities of the company management during each
accounting period, the term of office for members of the
Board of Directors is set at one year. As advisory bodies to the
Board of Directors, the Company has established an Internal
Control Committee, a Nominating Committee and a Compen-
sation Committee.
To strengthen the decision-making functions within the
Board of Directors and the functions for supervising directors’
execution of duties, the Company appointed an outside direc-
tor. The outside director serves as a member of the
Nominating Committee and the Compensation Committee, as
well as the Special Committee that forms part of the takeover
defense plan. The Company also introduced the Executive
Officer System to carry out swift and efficient business execu-
tion, and to maximize the functions of the Board of Directors
by optimizing the number of members.
In addition to the Board of Directors, the Company has an
Executive Management Committee, where matters of impor-
tance related to corporate management and business opera-
tion are discussed and reported twice a month in principle.
This committee facilitates prompt executive decision-making.
The Board of Corporate Auditors is composed of four
corporate auditors, three of whom are outside corporate audi-
tors with a high degree of independence. Each corporate
auditor meets regularly with the representative directors, the
directors, the accounting auditors, the head of the Internal
Audit Division and others to exchange opinions and work to
ensure that business is executed legally and appropriately.
Ongoing Development of the Internal
Control System
In May 2006, the Board of Directors passed a resolution to
adopt a basic policy related to the development of systems
necessary to ensure the properness of business (Basic Policy
for Internal Control), which was partially amended at the Board
of Directors Meeting in August 2009. This amended policy
forms the basis for Sharp’s ongoing development and imple-
mentation of its internal control system. Sharp has set up the
Internal Control Committee as an advisory body to the Board
of Directors. The committee deliberates on basic policies
regarding internal controls and internal audits, and the state of
development and implementation of initiatives related to the
internal control system, then reports on and discusses impor-
tant matters with the Board of Directors. The Internal Control
Promotion Department within the CSR Promotion Group is
responsible for internal control of all business execution
departments company-wide. Meanwhile the Internal Audit
Division makes concrete proposals on how to improve busi-
ness operations and reinforces internal controls by checking
the validity of business execution as well as the appropriate-
ness and efficiency of management.
To enhance compliance throughout the group, Sharp intro-
duced the Sharp Group Charter of Corporate Behavior, a set of
principles to guide corporate behavior, and the Sharp Code of
Conduct, which clarifies the conduct expected of every
employee, director, auditor and executive officer of Sharp. The
Sharp Group Charter of Corporate Behavior and the Sharp
Code of Conduct were revised in April 2010 in line with
changes in the business environment. Sharp ensures that
these guidelines are thoroughly observed by posting them on
the Web and carrying out position-specific training programs.
Sharp has also set up a Compliance Committee and is devel-
oping a company-wide compliance promotion system. Mean-
while, Sharp is implementing thorough measures to prevent
compliance breaches by distributing a Sharp Group Compli-
ance Guidebook to all employees and implementing training
based on the guidebook.
In order to comprehensively and systematically deal with
diverse business risk, Sharp formulated the Business Risk
Management Guideline to achieve prevention of and swift
responses to risk.
Plan Regarding Large-Scale Purchases of Sharp
Corporation Shares (Takeover Defense Plan)
In order to protect and enhance the corporate value and
common interests of shareholders of a manufacturing firm
such as Sharp, a company must develop in-house and make
good use of advanced technology and manufacturing technol-
ogy from a medium- to long-term perspective. Furthermore,
Sharp believes it is essential to build good cooperative rela-
tionships with stakeholders such as customers, business
partners and employees.
The Board of Directors of Sharp believes that determining
whether to accept purchases aimed at a takeover and con-
ducted without obtaining the approval of the Board of Direc-
tors of Sharp should be ultimately entrusted to the
shareholders. However, the Board of Directors of Sharp also
believes that it is not appropriate for any party that conducts
an inappropriate purchase, such as one that clearly harms the
corporate value and common interests of shareholders and/or
puts undue pressure on shareholders to sell their shares, to
take control over Sharp’s policy decisions on finance and
business operations, and that it is necessary to take reason-
able countermeasures if such an inappropriate purchase is
actually conducted.
In order to prevent such purchasing activity, Sharp has
adopted the prior warning type of defense measures called
the Plan Regarding Large-Scale Purchases of Sharp Corpora-
tion Shares (Takeover Defense Plan)* (hereinafter referred to
as the “Plan”).
Corporate Governance
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