Sharp 2013 Annual Report Download - page 23

Annual Report 2013 21
Corporate Governance
the company management during each accounting period, the
term of office for members of the Board of Directors is set at one
year.
As an advisory body to the Board of Directors, the Company
has the Internal Control Committee, which deliberates on basic
policies, and the state of development and implementation re-
garding internal controls and internal audits, then reports on and
discusses important matters with the Board of Directors. As advi-
sory bodies to the Board of Directors, Sharp also has the Nominat-
ing Committee and the Compensation Committee.
In addition to the Board of Directors, the Company has the Ex-
ecutive Management Committee, where matters of importance
related to corporate management and business operation are dis-
cussed and reported twice a month in principle. This committee
facilitates prompt executive decision making.
The Board of Corporate Auditors is composed of four corpo-
rate auditors, three of whom are outside independent corporate
auditors. Each corporate auditor meets regularly with the repre-
sentative directors, the directors, the executive officers, the ac-
counting auditors, the head of the Internal Audit Unit and others
to exchange opinions and work to ensure that business is execut-
ed legally, appropriately and efficiently.
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 Con-
trol), which was partially amended in April 2013. This amended
policy forms the basis for Sharp’s ongoing development and im-
plementation of its internal control system. The Internal Control
Committee, which is an advisory body to the Board of Directors,
deliberates on basic policies regarding internal controls and in-
ternal audits, and the state of development and implementation
of initiatives related to the internal control system, then reports
on and discusses important matters with the Board of Directors.
The department promoting internal controls on a company-wide
basis oversees the internal controls of the business execution de-
partments. Meanwhile the Internal Audit Unit makes concrete
proposals on how to improve business operations and reinforces
internal controls by checking the validity of business execution as
well as the appropriateness 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 all directors, au-
ditors, executive officers and employees of Sharp. Sharp ensures
that these guidelines are thoroughly observed by posting them
on the Web and carrying out position-specific training programs.
Based on the basic rules of compliance, Sharp is also develop-
ing a company-wide compliance promotion system. Meanwhile,
Sharp is implementing thorough measures to prevent compliance
breaches by distributing a Sharp Group Compliance Guidebook
to all employees and implementing training based on the guide-
book.
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 technology from a medium- to
long-term perspective. Furthermore, Sharp believes it is essential
to build good cooperative relationships with stakeholders such as
customers, business partners and employees.
The Board of Directors of Sharp believes that determining
whether to accept large-scale share purchases aimed at a takeover
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 shares, to take control over Sharp, and that it is necessary to
take reasonable countermeasures against such purchases.
In order to prevent such purchasing activity, Sharp has adopt-
ed the prior warning type of defense measures called the Plan
Regarding Large-Scale Purchases of Sharp Corporation Shares
(Takeover Defense Plan)* (hereinafter referred to as the “Plan”).
The Plan provides rules for enabling shareholders to reach a
proper decision, by requiring large-scale purchasers of the Com-
pany’s shares who intend to obtain 20% or more of the voting
rights of the Company to provide sufficient information and give
an adequate assessment period. If a large-scale purchaser does
not follow the rules, or although the large-scale purchaser com-
plies with these rules, the large-scale purchase is deemed to be
harmful to corporate value and common interests of sharehold-
ers, the Board of Directors of Sharp will make a decision concern-
ing the implementation of countermeasures after fully taking into
consideration the advice and recommendations of the Special
Committee consisting of three or more persons who remain inde-
pendent of Sharp’s management.
At the 117th Ordinary General Meeting of Shareholders held
on June 23, 2011, shareholders approved the continuation of the
Plan. The effective term of the Plan is until the conclusion of the
120th Ordinary General Meeting of Shareholders, which will be
held by June 30, 2014.
* For more details of the Plan, please visit the website below:
http://www.sharp-world.com/corporate/ir/topics/pdf/130514.pdf