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Basic Philosophy on Corporate Governance

Vector, Inc. believes that increasing the efficiency and soundness of management and building a fair and highly transparent management system are essential for achieving stable growth and development. In particular, strengthening corporate governance is regarded as a critical management issue for the Company, which handles new information on the products and services of client companies. These efforts are reviewed as required to boost their effectiveness.
Going forward, we will continue aiming to be a highly trusted company through the strengthening of corporate governance.

The Board of Directors implements checks and balances to ensure fair decision-making by having two highly independent external directors and two external auditors take part in meetings and actively share information. The Vector Group has also adopted a corporate auditor system in which each auditor audits the legality of business execution by the directors. In addition, the Group convenes meetings of the Compliance Risk Committee comprised of the heads of subsidiaries and core business units. This committee evaluates and manages risks such as compliance risk, operational risk and financial risk, responds as required, and disseminates risk-related information in an effort to bolster the Group’s corporate governance. To increase the effectiveness of corporate governance, the Company plans to regularly revise and enforce a corporate governance policy in accordance with changes in the social environment and the implementation and revision of laws, rules and regulations.

Status of Management Control System
Organizational structure Company with a Board of Auditors
Directors
Chairman of the Board of Directors President
Number of directors 5
Appointment of external directors 2
Auditors
Establishment of Board of Auditors Yes
Number of auditors 3

Cooperation between auditors and independent accounting auditor

The auditors and independent accounting auditor endeavor to enhance the efficiency and effectiveness of audits through such means as exchanging information and opinions. Specifically, a regular meeting between the auditors and independent accounting auditor is held, at which opinions are exchanged concerning whether any audit-related problems exist and future tasks. The Company also has a system for holding ad hoc meetings as necessary.

Cooperation between auditors and Internal Audit Department

The Company has established an internal audit system based around the Internal Audit Department. The auditors and the Internal Audit Department cooperate through regular meetings and strive to conduct effective audits.

Appointment of external auditors: Yes
Number of external auditors: 2

The Company’s functions for management decision-making, business execution and oversight are as follows.

Board of Directors

The Company’s Board of Directors consists of four full-time directors and two external directors. In addition to regular monthly meetings, the Board of Directors holds extraordinary meetings as necessary to monitor the status of business execution.

Auditors and Board of Auditors

The Company’s auditors consist of one full-time auditor and two external auditors. They attend the Board of Directors meetings and other important meetings, allowing them to monitor the effectiveness of corporate governance.

Independent Accounting Auditor

The Company has concluded an audit agreement with Crowe Toyo & Co. and undergoes accounting audits based on the Companies Act and the Financial Instruments and Exchange Act. Other audits are conducted as and when required.

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Other matters relating to the corporate governance system

The Company has integrated planning and management functions into Vector, Inc., the parent company. The management of subsidiaries is an important point of consideration from a compliance perspective since the Company’s policy is to increase the number of subsidiaries as business expands.
In light of this, the Company’s management policy for subsidiaries is as follows, in principle.

  • Subsidiaries shall either be newly established or spun off in an incorporation-type demerger, and in the absence of any special reasons, the subsidiary shall have total decision-making authority.
  • In addition to integrating planning and management functions into Vector’s Business Management Headquarters, the Company shall adopt an operational management system for subsidiaries so as to identify results immediately.
  • The Internal Audit Department shall periodically conduct internal audits of subsidiaries and affiliates, and provide necessary guidance and support to ensure the soundness of each company.