Sharp 2006 Annual Report Download - page 20

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Through a corporate governance system that intimately
unites management and manufacturing divisions, Sharp
seeks to accelerate decision-making and enhance supervi-
sory functions.
Corporate Governance
Basic concept concerning corporate governance
Sharp has always been a manufacturing and technology
oriented company. In an effort to further strengthen manu-
facturing competency, Sharp is committed to improving the
speed and quality of managerial decisions. As a manufactur-
ing company, our business activities are limited to the devel-
opment, productions and sales of products and devices,
while at the same time there is a strong interrelation between
these activities. Accordingly, Sharp believes it is important for
all business group directors with operational responsibility to
make their management decisions after consulting with one
another. It serves to clarify their reciprocal managerial
responsibilities, and it also facilitates nimble, responsive busi-
ness execution, and mutual supervisory functions. For these
reasons, Sharp seeks to further strengthen the current
Director/Corporate Auditor System, which allows manage-
ment and manufacturing divisions to work very closely,
enabling the business to expand further. Sharp enhances its
corporate governance through this system.
Status of corporate governance system
The Board of Directors meetings of Sharp Corporation
are held on a monthly basis to make decisions on matters
stipulated by law and management-related matters of impor-
tance, thereby exercising its ongoing oversight responsibility
over its business affairs. To improve management
agility and flexibility, and to clarify the responsibilities of
company management during each accounting period,
the term of office for members of the Board of Directors
is set at one year.
In addition to the Board of Directors, the company has
the Executive Management Committee, where matters
of importance related to corporate management and busi-
ness operation are discussed and reported twice a
month. Through this committee, executive decisions
are made promptly.
The Board of Corporate Auditors formulates audit poli-
cies, and conducts hearings on the company's activities and
performance from accounting auditors and corporate direc-
tors. The Board also exchanges information and opinions on
such matters as auditing (on-site auditing) results and the
progress of deliberations of important meetings, which
increases the validity of audits. Currently, at Sharp
Corporation, three of the four corporate auditors are outside
corporate auditors.
In July 2006, Sharp Corporation inaugurated the
Advisory Board comprised of eminent persons who play
active roles in various sectors of society. The Board will
assist management decisions through exchanging ideas and
making proposals from diverse perspectives.
Strengthening internal controls
In April 2006, Sharp integrated the three auditing divi-
sions of Sharp Corporation, its domestic group companies
and its overseas group companies and established the
Internal Audit Division with the objective of strengthening
internal control systems. By checking the validity of business
execution as well as the appropriateness and efficiency of
management, they make concrete proposals on how to
improve business operations and establish relevant internal
controls. Furthermore, in May 2006, Sharp created the
Internal Control Committee as an advisory body to the Board
of Directors. Deliberating on the basic policies and the state
of operations regarding internal controls and internal audits,
the committee reports on and discusses important matters
with the Board of Directors. The CSR Promotion Department
is responsible for creating and developing internal control
systems for Sharp.
To enhance compliance throughout the group, in May
2005, Sharp introduced the Sharp Group Charter of
Corporate Behavior, a set of principles to guide corporate