Sharp 2009 Annual Report Download - page 32

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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
importance, and to supervise the state of business execu-
tion. To improve management agility and flexibility, and to
clarify the responsibilities of the 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 business
operation are discussed and reported twice a month. This
committee facilitates prompt executive decision-making. To
further strengthen our operation and business execution
system we instituted the Executive Officer System from
June 24, 2008. Then, from June 23, 2009 we appointed an
outside director, thereby strengthening decision-making
and supervision of directors’ execution of duties.
The Board of Corporate Auditors formulates audit poli-
cies, listens to reports from accounting auditors, and
receives reports on the execution of duties, in particular from
the Board of Directors. Corporate auditors also exchange
information and opinions on such matters as the progress of
deliberations of important meetings, and auditing (on-site
auditing) results, which increases the validity of audits.
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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 Control), which has been partially amended
at the Board of Directors Meetings in July 2008 and April
2009. This amended policy forms the basis for Sharp’s ongo-
ing development and implementation of its internal control
system. Sharp has set up the Internal Control Committee as
an advisory body to the Board of Directors. The committee
deliberates on basic policies regarding internal controls and
internal audits, and the state of development and implemen-
tation of initiatives related to the internal control system,
then reports on and discusses important matters with the
Board of Directors. The Internal Control Promotion Depart-
ment within the CSR Promotion Group is responsible for
internal control of all business execution departments
company-wide. Meanwhile the Internal Audit Division
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
introduced 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 every employee and director of Sharp. Sharp
has also set up a Compliance Committee and is developing
a company-wide compliance promotion system. Meanwhile,
Sharp is taking thorough measures to prevent compliance
breaches by distributing a Sharp Group Compliance
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 Business
Risk Management Guideline to achieve prevention of and
swift responses to risk.
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When there are attempts to purchase shares of a target
company without the agreement of its board of directors so
as to take control over that company’s policy decisions on
finance and business operations, various inappropriate
actions may result from this objective. These include clearly
harming the corporate value and common interests of the
shareholders, undermining corporate value by harming the
interests of stakeholders such as customers, business
partners and employees, putting undue pressure on
shareholders to sell their shares, not providing sufficient
information about the purchase activity or the buyer, and
not providing enough time for the board of directors of the
target company to provide an alternative plan having con-
sidered the details of the purchase.
Especially, in the case of manufacturing firms such as
Sharp, where in-house development and use of cutting-
edge technologies and manufacturing technologies is
crucial to securing and raising corporate value and the
common interests of shareholders, it may take many
years to commercialize the results of R&D work, during
which time it is essential to build good cooperative rela-
tionships with stakeholders such as customers, business
partners and employees. Therefore, it is essential that
Sharp approaches management from a medium- to long-
term perspective in order to maximize its corporate value.
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