Square Enix 2009 Annual Report Download - page 14

Corporate Governance
Basic Stance on Corporate Governance, etc.
Basic Stance on Corporate Governance
The Company has adopted the corporate auditor system for its
corporate governance. To strengthen monitoring functions and
ensure the maintenance of sound management, at least half of
the corporate auditors are drawn from outside the Company.
Furthermore, in accordance with the objective standards provided
under the Company’s internal decision-making authority rules, the
Board of Directors, which sets management policy, is clearly
separated from the decision-making bodies responsible for the
execution of operations. This system aims to enhance the
efficiency and balance of management decision-making and
operational execution.
Status of Implementation of Corporate Governance
Policies
(1) Management control structure and other corporate
governance systems relating to management decision-
making, execution of operations and audit functions
The Board of Directors comprises five directors, including one
outside director. The Company has four corporate auditors, three,
including one standing corporate auditor, are drawn from outside
the company. The directors are appointed for a term of one year,
the same as for companies adopting the committee system.
The Auditing Division reports directly to the president as an
autonomous internal unit currently comprising one member. The
Auditing Division performs regular monitoring and evaluation of
internal control systems, including those of Group companies,
taking into account the relative importance and risk inherent in
each part of the organization, and provides reports and
recommendations to the president. The Auditing Division’s
functions are carried out while sharing information with the Board
of Auditors and the independent audit firm.
To ensure a rigorous compliance system, the Company
clearly specifies the importance of compliance in its management
guidelines and The Group Code of Conduct. The Company has
established the Internal Control Committee and an internal
compliance reporting (whistleblower) system, through which
Companywide compliance measures are integrated laterally
across organizational reporting lines. With regard to the
management and operation of the Company’s information
systems, which form the foundation of efficient operational
functions, the Company has established the Information System
Management Committee to oversee information systems on a
companywide basis.
In principle, the Board of Directors convenes monthly, and
each of the directors, including one outside director, engages in
vigorous discussion and exchange of opinions aimed at
enhancing their mutual oversight functions.
In principle, the Board of Auditors convenes monthly, and
conducts accounting and operational audits based on the audit
plan. The corporate auditors attend meetings of the Board of
Directors to audit the execution of duties of the directors.
With regard to the use of independent outside professionals,
the Company consults with several outside legal counsels as
necessary on significant transactions and legal matters. The
Company retains Ernst & Young ShinNihon as its statutory audit
firm under the Companies Act and the Financial Instruments and
Exchange Law to perform independent third-party accounting
audits. The Company fully cooperates with the statutory audit firm
to ensure smooth performance of their duties.
The following certified public accountants (CPAs) conducted
audits of the Company during fiscal year ended March 31, 2009.
• CPAs performing audits:
Partners: Koichiro Watanabe, Kenichi Shibata, Tatsuya Yokouchi
• Personnel providing audit assistance:
10 CPAs and 12 assistant CPAs
• Remuneration to directors and corporate auditors:
Remuneration paid to directors totaled ¥374 million, of which
¥11 million was paid to the outside director.
Remuneration paid to corporate auditors totaled ¥34 million, of
which ¥34 million was paid to outside auditors.
(2) Personal, financial business or other relationships constituting
conflicts of interest between the Company and its outside
director or outside corporate auditors
There are no such relationships to be specified.
(3) Basic policy on the establishment of internal control systems
The Board of Directors has passed a resolution establishing the
Company’s Basic Policy on Building an Internal Control System.
The Company is building such systems to ensure auditing and
supervisory functions are strictly maintained and to confirm that
all business activities comply with all relevant laws and regulations
and the Company’s Articles of Incorporation, as well as to
enhance the efficiency of the directors’ exercise of duties.
1. Status of Corporate Governance.
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