Corporate Governance

Basic Policy of Corporate Governance

Following is the basic policy of vector Group.

"By promoting "excellent products" from companies to people, and from people to society, vector Group will contribute to corporate, media, and society."

Therefore, keeping in mind the interests of various stakeholders engaged in supporting corporate activities for contributing to the society as a company, we understand that it is extremely important to have robust Corporate Governance to win social trust.

Two highly independent external auditors participate in the Board Meeting, and make active recommendations to ensure that we make right decisions. Moreover, vector Group has also formed Board of Auditors, where each auditor audits the legitimacy of activities undertaken by Directors.

In addition, vector Group has also formed Compliance Risk Committee composed of heads of subsidiary company and important business units. This committee evaluates, manages, and disseminates information about various risks such as compliance risk, operational risk, and financial risk, and strives to strength the governance of vector group.

In future as well, to increase the viability of corporate governance according to changes in social environment, implementation or and revision to laws, rules and regulations, we plan to revise and enforce our corporate governance policy.

Corporate Governance Structure

Organization Structure: Company has appointed auditors

Directors

Chairman of Board of Directors: President and CEO
Number of Directors: 4
Appointment of external directors: Not appointed

Corporate Auditors

Provision of Board of Auditors: Yes
Number of auditors: 3

Collaboration between corporate auditors and accounting auditors

Corporate auditors and accounting auditors aim to increase the efficiency and effectiveness of audit by exchanging information and opinion.

In concrete terms, periodic meetings are held between corporate auditors and accounting auditors for exchanging opinion in order to identify and audit related issues and future challenges. Moreover, apart from regular meetings, there is a mechanism in place where they can meet whenever required.

Collaboration between Corporate Auditors and Internal Audit Department

The company has put in place internal audit structure centering on Internal Audit Department. Corporate auditors and internal audit department collaborates through periodic meetings, and strive to conduct audits in effective manner.

Appointment of external auditors: Appointed
Number of external auditors: 2

Various functions regarding business decision making, business operations, and surveillance of the company are as follows.

Board of Directors

Board of Directors of the company includes four directors (of which, one person is a part time director), and three auditors. In addition to periodic board meeting once a month, board meeting is also convened as and when required for monitoring the status of business operations.

Auditors and Board of Auditor

The company has three auditors including one full time auditor and two part time auditors (of which, two are external auditors). In addition to Board Meeting, auditors participate in other important meetings, and strive to increase the implementation effectiveness of corporate governance.

Accounting Auditor

The company has entered into auditing agreement with BDO Toyo & Co. Moreover, the company also undergoes audits based on the Company Law and Financial Instruments and Exchange Act. Other audits are also conducted as and when required.

コーポレート・ガバナンス体制の状況図

Other notes concerning corporate governance structure

The company has integrated planning and management functions in the parent company, i.e. vector Inc. As the policy of the company is to increase the number of subsidiary companies in line with business expansion, we believe that managing subsidiary companies is a very important point of contention from compliance point of view. Because of this, the basic management policy for our subsidiary companies is as follows.

Establishment of a subsidiary company will be in principle a new establishment or new spin off, and unless special reasons exist, decision making authority is completely given to the subsidiary company.

In addition to centralizing the planning and management function with Business Planning Division and Management Division of vector, for operation management of a subsidiary, the system of vector is adopted to build a structure that offers the status of business numbers in a real time manner.

Formulate "Affiliate Companies Management Manual" containing rules and regulations for managing subsidiary companies, and in addition to appropriate management of subsidiary company, put in place necessary structure for appropriate management of each subsidiary company.

Internal Audit Department periodically conducts internal audit of subsidiary companies and affiliate companies, and provide necessary guidance and support for sound management foundation of each company.