Sharp 2015 Annual Report Download - page 19

Ongoing Development of the Internal Control System
Corporate Governance
meets regularly with the representative directors, the
directors, the executive officers, the accounting audi-
tors, the head of the Internal Audit Unit and others to
exchange opinions and work to ensure that business is
executed legally, appropriately and efficiently.
In May 2006, the Board of Directors passed a resolu-
tion to adopt a basic policy related to the develop-
ment of systems necessary to ensure the properness of
business (Basic Policy for Internal Control), which was
partially amended in April 2015. This amended policy
forms the basis for Sharp’s ongoing development and
implementation of its internal control system. The In-
ternal Control Committee, which is an advisory body to
the Board of Directors, deliberates on basic policies re-
garding internal controls and internal audits, as well as
the development and implementation status of various
measures related to the internal control system, then
make a decision about what to report on or discuss
with the Board of Directors. The department promot-
ing internal controls on a company-wide basis oversees
the internal controls of the business execution depart-
ments. Meanwhile the Internal Audit Unit makes con-
crete 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 introduced the Sharp Group Charter of Corpo-
rate Behavior, a set of principles to guide corporate be-
havior, and the Sharp Code of Conduct, which clarifies
the conduct expected of all directors, corporate audi-
tors, 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 developing a company-wide
compliance promotion system. Meanwhile, Sharp is
implementing thorough measures to prevent compli-
ance 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 Busi-
ness Risk Management Guideline to achieve preven-
tion of and swift responses to risk.
Sharp believes that determining whether to accept
large-scale share purchases aimed at a takeover
should be ultimately entrusted to the shareholders.
However, 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 purchasing activity that could
potentially cause significant harm to corporate value
and common interests of shareholders—including in
the medium and long terms—the Company has ad-
opted the prior warning type of defense measures
called the Plan Regarding Large-Scale Purchases of
Sharp Corporation Shares (Takeover Defense Plan*)
(“the Plan”).
The Plan provides rules for enabling shareholders to
reach a proper decision, by requiring large-scale pur-
chasers of the Company’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 complies with
these rules, the large-scale purchase is deemed to
be harmful to corporate value and common interests
of shareholders, the Board of Directors of Sharp will
make a decision concerning the implementation of
countermeasures after fully taking into consideration
the advice and recommendations of the Special Com-
mittee consisting of three or more persons who re-
main independent of Sharp’s management. In case the
Special Committee has placed a reserve that confir-
mation of the shareholders’ intent with respect to a
consideration of taking countermeasures shall be ob-
tained, or in case the Board of Directors of Sharp con-
siders it is necessary to take countermeasures, Sharp
shall convene the Shareholders’ Intent Confirmation
Meeting to seek whether countermeasures shall be
taken or not.
The effective term of the Plan is until the conclusion
of the 123rd Ordinary General Meeting of Sharehold-
ers, which will be held by June 2017.
* For more details of the Plan, please visit the website below:
http://sharp-world.com/corporate/ir/topics/pdf/150514-1.pdf
Plan Regarding Large-Scale Purchases of
Sharp Corporation Shares (Takeover Defense Plan)
17
Corporate Governance
Segment Outline
Medium-Term Management Plan
for Fiscal 2015 through 2017
Financial Section
Investor Information
Directors, Audit & Supervisory Board
Members and Executive Officers
Risk Factors
Contents
Corporate Social
Responsibility (CSR)
Message to our Shareholders
Fiscal 2014 Review by
Product Group
Financial Highlights
SHARP Annual Report 2015