Mitsubishi 2007 Annual Report Download - page 34

MITSUBISHI MOTORS CORPORATION Annual Report 2007
32
Fundamental Approach to Corporate
Governance
MMC is taking three key measures to strengthen
corporate governance: ensure legal and regulatory
compliance, improve transparency through frequent
disclosure of information to stakeholders, and clarify
management responsibilities.
1. Corporate Governance Framework
(1) Governance Institutions
The Board of Directors and Board of Statutory Audi-
tors audit and oversee business execution. MMC has
also sought to improve and strengthen the corpo-
rate governance framework beyond statutory require-
ments through moves such as the introduction of an
executive officer system and appointment of advi-
sory committees.
The Board of Directors has 13 members, two of
whom are outside directors. The Board is respon-
sible for making decisions concerning important
management issues and overseeing business execu-
tion. The adoption of the executive officer system in
June 2000 clarified the separation of the roles and
responsibilities of directors and executive officers.
Managing directors meetings, which are attended by
18 members (including directors, executive officers
and statutory auditors), are held every two weeks to
expedite decision-making within the company.
The Board of Statutory Auditors has five mem-
bers, three of whom are outside auditors. Statutory
auditors attend meetings of the Board of Directors,
the managing directors meetings and other key
forums. They audit the operations of MMC and its
subsidiaries based on business reports received from
directors, reviews of key internal business docu-
ments, and interviews with the internal auditing
groups and independent auditors.
Separate from the auditing functions of the statu-
tory auditors, to strengthen the company’s “self
cleansing” activities MMC has also established two
departments within the CSR Promotion Office, the
Quality Audit Department and the Internal Audit
Department. Independent from other business func-
tions, these groups conduct internal audits from an
objective perspective.
The Quality Audit Department, which had four
employees at the end of June 2007, monitors all
processes that are carried out within the Quality
Affairs Office. It does so to ensure compliance with
laws and regulations worldwide related to the devel-
opment and production of automobiles, including
Japanese road safety and transportation laws. The
department reports its findings to senior manage-
ment and also reports to the Business Ethics
Committee twice per year.
The Internal Audit Department, which had 14
employees at the end of June 2007, conducts
regular company-wide audits to check the appro-
priateness of business processes, including those
of subsidiaries and affiliates in Japan and overseas.
These audits aim to verify the execution status of
all internal control systems, including compliance
and risk management. The results of internal audits
are reported to senior management of MMC and of
its subsidiaries and affiliates, along with proposals
for improvement.
In fiscal year 2006, MMC completed the estab-
lishment of a global internal audit system with in-
ternal auditing functions within all major overseas
subsidiaries. MMC continues to work to strengthen
internal audit systems and governance structures for
the overall company while taking into account spe-
cific characteristics of overseas markets and regional
differences in regulatory approach.
Advisory committees that report to the Board of
Directors supplement the internal governance
structures. In June 2004, MMC set up the Business
Corporate Governance
Audit and report
Audit and report
Accounting
audit
Report
Report
Quality audit
Internal audit
Internal audit
Guidance
and
advice
Report and advise
MMC’s Corporate Governance Framework
(As of June 30, 2007)
Report and advise
Shareholders’ Meetings
Board of Statutory
Auditors
(5 members, of which
3 are outside auditors)
Business Revitalization
Monitoring Committee
Chairman
President
Managing Directors’
Meetings
(18 members) Executive Vice President
(Revitalization Promotion Officer)
Business Ethics
Committee
Quality Affairs Office
Each department
Subsidiaries and
affiliates
(in Japan and overseas)
CSR Promotion Office
Board of Directors
(13 members, of which
2 are outside directors)
Accounting Auditors