Governance
Status of Corporate Governance
In terms of strengthening corporate governance, Mitsui & Co. worked to improve diversity among members of the Board of Directors. At the same time, an even greater number of discussions were held at Board of Directors' meetings regarding Mitsui & Co.'s future direction and business strategies. In these ways, Mitsui & Co. has been moving forward with efforts to enhance the effectiveness of the Board of Directors.
Basic View on Corporate Governance
In structuring the corporate governance framework, the Company places emphasis on "improved transparency and accountability" and "the clarification of the division of roles between the oversight activities and the executive activities of management." For "improved transparency and accountability," the Company ensures sound supervision and monitoring of management with the viewpoints of External Directors and External Audit & Supervisory Board Members. The Company has also established an internal control system for disclosure so that all executives and employees fulfill their accountability to stakeholders under the principle of fair disclosure. For "the clarification of the division of roles between the oversight activities and the executive activities of management," the Company delegates execution of business to Managing Officers substantially while the Board of Directors retains a supervisory role over Managing Officers' business activities. Chief Operating Officers of the 16 Headquarter Business Units and the 2 Overseas Regional Business Units serve concurrently as Managing Officers and engage in business operations for the consolidated Group in a responsive and flexible manner.
While increasing the effectiveness of supervisory functions by having Audit & Supervisory Board Members, the Company implements corporate governance by maintaining an Audit & Supervisory Board system because it believes that having internal Directors who are familiar with its business practices and operations is essential to the business of a general trading company. By adopting a Committee System in which External Directors and External Audit & Supervisory Board Members participate, the Company achieves highly effective corporate governance to secure "improved transparency and accountability" and "the clarification of the division of roles between the oversight activities and the executive activities of management."
Mitsui & Co. has presented to the Tokyo Stock Exchange and other stock exchanges a corporate governance report that describes the status of Mitsui & Co.'s corporate governance.
Filed on June 21, 2023
Board of Directors
The Board of Directors is the highest authority for execution of business and supervision, and in order to secure this function, the Company has limited the number of Directors to the maximum to enable substantial discussions and gives priority to the appointment of new External Directors in the case of increasing the number of board members in order to enhance the division of roles between management oversight and execution. In addition, the Company has established the Governance Committee, the Nomination Committee, and the Remuneration Committee to serve as advisory bodies to the Board of Directors. These committees comprise mainly external members.
At Board of Directors' meetings, matters that are deliberated or reported on abide by the Company's internal regulations. In addition to matters concerning fundamental policies related to management, important business execution and matters authorized by resolutions of the General Meeting of Shareholders, the Company passes resolutions on matters determined by law and company statute. We also receive reports regarding matters determined by law and the status of important business operations.
Regular meetings of the Board of Directors are held once every month in principle and extraordinary meetings are held from time to time at any time if deemed necessary.
Audit & Supervisory Board
The Audit & Supervisory Board Members supervise the Directors' execution of duties as an independent institution with the mandate of the shareholders. For this purpose, Audit & Supervisory Board Members carry out multifaceted, effective audit activities such as attending important internal meetings, verifying reports and investigating our business, and take necessary measures in a timely manner.
Audit & Supervisory Board meetings are held periodically and precede meetings of the Board of Directors. Moreover, additional meetings are held on an as-needed basis. The Audit & Supervisory Board Members attend meetings of the Board of Directors to monitor how the proceedings of the meetings are managed and the content of the decisions made. These members also actively express their opinions.
Auditing by the Audit & Supervisory Board Members covers a variety of areas, among which are execution of duties by Directors, decision-making processes at the meetings of the Board of Directors and others, status of construction and operation of the internal control system, independence of the Independent Auditors, system of financial reporting, accounting policies and processing of financial information, tax policies and tax processing.
Evaluation Results of the Effectiveness of the Board of Directors
Each year, the Board of Directors analyzes and evaluates its effectiveness, taking into consideration relevant matters, including self-evaluations of each Director, and discloses a summary of the results.
At the Board of Directors meeting held on April 6, 2023, we analyzed and evaluated the effectiveness of the Board of Directors meeting for the year ended March 31, 2023. We would like to inform you of the results.
- Summary: Summary of Effectiveness Assessment for FYE 3/2023 (PDF 88KB)
- Details: FYE 3/2023 Effectiveness Assessment (PDF 528KB)
The Board of Directors continues to work to maintain and improve the effectiveness of the Board of Directors, and aims to ensure thorough supervision of management by the Board of Directors and to achieve sustainable increases in corporate value.
The methods and results of the evaluation of effectiveness of the Board of Directors for the year ended March 31, 2023, and prior years, are summarized as follows:
Please note that the summary of the methods and results of the evaluation of effectiveness of the Board of Directors is also described in the Corporate Governance Report.
Evaluation of effectiveness (Excerpt from the Corporate Governance Report)
- Evaluation of effectiveness for FYE 3/2023 (PDF 528KB)
- Evaluation of effectiveness for FYE 3/2022 (PDF 510KB)
- Evaluation of effectiveness for FYE 3/2021 (PDF 148KB)
- Evaluation of effectiveness for FYE 3/2020 (PDF 959KB)
- Evaluation of effectiveness for FYE 3/2019 (PDF 237KB)
- Evaluation of effectiveness for FYE 3/2018 (PDF 219KB)
- Evaluation of effectiveness for FYE 3/2017 (PDF 161KB)
- Evaluation of effectiveness for FYE 3/2016 (PDF 119KB)
Summary of Effectiveness Evaluation of the Board of Directors
The effectiveness of the Board of Directors is evaluated every year in order to check actions on issues identified in the previous fiscal year and identify issues to be tackled in the next fiscal year. The process emphasizes the maintenance of a PDCA cycle for the improvement of effectiveness of the Board of Directors.
Based on the results of the effectiveness survey for the fiscal year ended March 2021, the Board of Directors and its Secretariat took action on the following matters in the fiscal year ended March 2022.
| Issues identified from the effectiveness evaluation results for FYE 3/2021 | Actions | Evaluations in the FYE 3/2022 survey |
|---|---|---|
| Ongoing consideration of the optimal overall number of directors, the ratio of external to internal members, the number of internal directors, and organizational design |
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The majority of board members (and the majority of external board members) gave positive evaluations. There were comments that the Board is functioning well with its present composition but should continue to consider to reflect changes in the external environment and other factors. |
Effectiveness evaluation for FYE 3/2022
After discussion of the results from the survey at an External Members Meeting in February 2022 and a Governance Committee meeting and a Corporate Management Committee meeting in March 2022, the effectiveness evaluation was resolved by the Board of Directors in April.
Self-evaluation
- Implemented in January 2022 by 14 directors and 5 Audit & Supervisory Board members
- 5-level evaluations, comparisons with the previous fiscal year, and comments for each question
- The evaluation of the effectiveness of the Board of Directors in FYE 3/2022 was carried out through self-evaluation.
Evaluation results
- Concerning the issue "ongoing consideration of the optimal overall number of directors, the ratio of external to internal members, the number of internal directors, and organizational design" which was raised in FYE March 2021, the Governance Committee discussed Mitsui & Co.'s business execution framework and institutional design at meetings in September and December 2021.
- Composition of the Board of Directors: The diverse expertise and experience of each director is well intertwined. The diversity of external members is fully utilized.
- Deliberations by the Board of Directors: Items of agenda such as overall business strategy, business portfolio has been enhanced. In addition to sustainability, themes related to internal control such as cybersecurity have been expanded and deepened.
- Operations of the Board of Directors: Each and every topic is discussed carefully. The use of written resolutions has resulted in improvements in the number of agenda items and securing more time.
- Advisory committees, support for directors and Audit & Supervisory Board members: Matters are discussed appropriately by the advisory committees as well. The Board Secretariat provides appropriate support for directors and Audit & Supervisory Board members.
- The fact that macroscopic themes were discussed at the free discussion sessions was positive. Themes necessary for future management strategy are taken up.
- It is very clear that Mitsui & Co. emphasizes governance.
- The overall conclusion based on the above results is that the Board of Directors achieved an appropriate level of effectiveness in FYE 3/2022.
Steps toward further improvement of effectiveness
- Continuing consideration of high-level analysis of substantive effectiveness relating to the number of directors and the role and ratio of internal directors, based on the existing business executive structure and governance systems
- We will analyze the pros and cons in relation to the number of directors and the roles and ratio of internal directors and discuss these matters periodically at Governance Committee meetings and in other forums.
- Continue with initiatives to improve the operation of the Board of Directors
- We will continue to improve agenda selection and operation to enable the Board of Directors to focus more on deliberations about important matters.
- We will continue to enhance the provision of information to external members.
Remuneration of Executives
Structure of Remuneration
Remuneration of Directors and Audit & Supervisory Board Members
The Company has established a policy for determining the remuneration of individual Directors by resolution of the Board of Directors, following deliberation by and reporting from the Remuneration Committee. In each fiscal year, the Remuneration Committee discusses the remuneration structure for Directors and Audit & Supervisory Board Members, and examines the appropriateness of the proportions of fixed remuneration, result-linked bonuses, and stock-based remuneration based on trends at other companies and then reports this as well as the appropriateness of clawback provisions to the Board of Directors, among other measures, in order to emphasize transparency in the determination of Directors' and Audit & Supervisory Board Members' remuneration.
Remuneration for Directors of the Company is comprised of fixed remuneration (basic remuneration), result-linked bonuses (short-term incentive) and restricted stock-based remuneration as stock-based renumeration (long-term incentive). From the perspective of respecting the independence of External Directors and Audit & Supervisory Board Members, who are independent from business execution, they are not eligible for result-linked bonuses or stock-based renumeration. In addition, the Company will not pay retirement compensation to Directors and Audit & Supervisory Board Members.
With the approval of the 103rd Ordinary General Meeting of Shareholders on June 22, 2022, the Company revised the remuneration for Directors for the fiscal year ending March 2023 and thereafter. An overview of the revised structure is shown below. The Company also established the Share Ownership Guidelines in FY March 2023.
The composition of remuneration for Directors (excluding External Directors) from FY March 2023 is 2:1 for monetary remuneration:stock-based renumeration and 1:1:1 for basic remuneration:short-term incentive:long-term incentive.
Overview of Remuneration of Directors and Audit & Supervisory Board Members
* Capped a total amount of ¥240 million / year
Composition of remuneration for Directors (excluding External Directors)
Overview of Policy for Determining Remuneration of Individual Directors
| Position | Type | Compensation | Cap | Overview | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Directors (excluding External Directors) |
Performance-linked restricted stock-based remuneration | Stock-based | ¥300 million |
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| Tenure-linked restricted stock | Stock-based | ¥500 million |
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| Result-linked bonus | Monetary | ¥1.5 billion |
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| Directors | Basic remuneration | Monetary | ¥1 billion |
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| Audit & Supervisory Board Members | Basic remuneration | Monetary | ¥240 million |
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- * For details, please refer to 4. Corporate Governance (4) Remuneration of Directors and Audit & Supervisory Board Members under 4. Corporate Information in our Annual Securities Report for the fiscal year ended March 2022.
Share Ownership Guidelines
| Position | Type | Goal regarding ownership of the Company's shares |
|---|---|---|
| Internal Directors | President and Chief Executive Officer | Ownership of the Company's stock equivalent to three times basic remuneration (annual amount) |
| Other Directors | Ownership of the Company's stock equivalent to basic remuneration (annual amount) |
Remuneration of directors and Audit & Supervisory Board Members in the fiscal year ended March 31, 2022
Please scroll horizontally to look at table below.
| Category of Position | Number of Recipients(*1) | (¥ million) | |||
|---|---|---|---|---|---|
| Basic Remuneration | Bonus | Stock Compensation | Total Remuneration | ||
| Directors (Excluding External Directors) | 11 | 725 | 700 | 325 | 1,750 |
| Audit & Supervisory Board Members (Excluding External Audit & Supervisory Board Members) | 2 | 132 | - | - | 132 |
| External Directors | 5 | 104 | - | - | 104 |
| External Audit & Supervisory Board Members | 3 | 60 | - | - | 60 |
| Total | 21 | 1,021 | 700 | 325 | 2,046 |
- *1 The above includes Directors who retired from office in the fiscal year to March 2022.
- *2 In addition to the above amounts, a total of ¥438 million was paid to 95 retired Directors, and ¥41 million to 12 retired Audit & Supervisory Board Members, as pensions (representing payments determined prior to the abolition of those systems).
External Directors / External Audit & Supervisory Board Members
Selection Criteria
External Directors
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- The prospective person's extensive business experience and knowledge are required to deliberate and knowledge of his or her particular area of business should be used.
- The Company puts great value on ensuring independence of External Directors from Mitsui in the pursuit of their management oversight functions.
- With a view to overseeing business operations in a way that reflects the perspectives of our diverse stakeholders, Mitsui shall take into consideration the fields from which candidates originate, along with their gender.
Reasons for Appointing Each External Director / Major Activities in the Fiscal Year Ended March 31, 2022
| Name | Izumi Kobayashi |
|---|---|
| Independent Director(*1) | 〇 |
| Reasons for Appointment | Ms. Kobayashi has deep insight in organizational management and risk management for generating innovation, which she has accumulated through her experience working as the representative of private sector financial institutions and a multilateral development bank. She speaks out actively from diverse perspectives at the Board of Directors' meetings, making a significant contribution to deepening the discussion. In the year ended March 31, 2022, Ms. Kobayashi served as the Chair of the Nomination Committee, and exercised strong leadership in enhancing the transparency and effectiveness, including the CEO succession plan. In addition, as a member of the Remuneration Committee, she contributed to the discussions related to the redesign of executive remuneration and evaluation system. In view of these points, the Company appointed her as an External Director so that she may continue to advise and supervise its management. |
| Attendance at Meetings in FY2022 (Number of Meetings Attended / Total Number of Meetings) |
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| Significant Concurrent Positions(*2) |
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| Name | Jenifer Rogers |
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| Independent Director(*1) | 〇 |
| Reasons for Appointment | Ms. Rogers has a global perspective and deep insight in risk management cultivated through her experience working for international financial institutions and her experience in legal work as in-house counsel. She makes many useful comments concerning risk control at the Board of Directors' meetings, making a significant contribution to enhancing the supervisory function of the Board of Directors. In the year ended March 31, 2022, she served as a member of the Governance Committee, actively provided her opinions with the aim of creating of a highly transparent governance system. In view of these points, the Company appointed her as an External Director so that she may continue to advise and supervise its management. |
| Attendance at Meetings in FY2022 (Number of Meetings Attended / Total Number of Meetings) |
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| Significant Concurrent Positions (*2) |
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| Name | Samuel Walsh |
|---|---|
| Independent Director(*1) | 〇 |
| Reasons for Appointment | Mr. Walsh has global expertise and excellent management skills cultivated through his long years working in upper management within the automobile industry and as chief executive officer of an international natural resources company. At the Board of Directors' meetings, he makes many proposals and suggestions from a broad-minded standpoint based on his abundant business management experience, and makes significant contributions to active discussions at the meetings of the Board of Directors, and to improving the effectiveness of said meetings. In the year ended March 31, 2022, Mr. Walsh served as a member of the Governance Committee and actively provided his opinions with the aim of creating a highly transparent governance system. He has diverse perspectives based on global corporate management experience and expertise and knowledge related to capital policy and business investment. The Company appointed him as an External Director so that he may continue to advise and supervise its management. |
| Attendance at Meetings in FY2022 (Number of Meetings Attended / Total Number of Meetings) |
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| Significant Concurrent Positions (*2) |
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| Name | Takeshi Uchiyamada |
|---|---|
| Independent Director(*1) | 〇 |
| Reasons for Appointment | Mr. Uchiyamada has long been involved in research on environmental and safety technologies at Toyota Motor Corporation that could realize a mobility society responding to the needs of the times, as well as in the development of products demanded by consumers, and has been exercising his excellent managerial skills as an executive officer of Toyota Motor Corporation. At the Board of Directors' meetings, he makes many proposals and suggestions from a broad-minded standpoint based on his management experience at a global company and his in-depth knowledge of society in general, and makes significant contributions to active discussions as the meetings of the Board of Directors, and to improving the effectiveness of said meetings. In the year ended March 31, 2022, he served as a member of the Nomination Committee, and contributed to the discussions with the aim of enhancing the transparency and effectiveness of the procedures for the appointment of executives, including the CEO succession plan. In view of these points the Company appointed him as an External Director so that he may continue to advise and supervise its management. |
| Attendance at Meetings in FY2022 (Number of Meetings Attended / Total Number of Meetings) |
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| Significant Concurrent Positions (*2) |
JTEKT CORPORATION is an equity accounted associated companies of Toyota Motor Corporation. |
| Name | Masako Egawa |
|---|---|
| Independent Director(*1) | 〇 |
| Reasons for Appointment | Ms. Egawa has deep insight in finance and corporate management gained through her experience of management as a director of the University of Tokyo, her many years of experience working at global financial institutions, and her research on management and corporate governance at Japanese companies. Her broad range of public contributions includes the activities at the Japan-United States Educational Commission and councils of the Ministry of Finance. In the year ended March 31, 2022, she served as a member of the Governance Committee, actively provided her opinions with the aim of creating a highly transparent governance system. In addition, as a member of the Remuneration Committee, she contributed to the discussions related to the redesign of a remuneration system and evaluation system. Although Ms. Egawa has no direct experience participating in corporate management, considering the above, the Company appointed her as an External Director so that she may advise and supervise its management. |
| Attendance at Meetings in FY2022 (Number of Meetings Attended / Total Number of Meetings) |
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| Significant Concurrent Positions (*2) |
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- *1 An External Director who is unlikely to have conflicts of interest with general shareholders, as stipulated by the stock exchange
- *2 As of June 22, 2022
External Audit & Supervisory Board Members
The External Audit & Supervisory Board Members shall be selected with the objective of further heightening the neutrality and independence of the auditing system, and, in particular, it is expected that the External Audit & Supervisory Board Members will give an objective voice to their auditing opinions from the standpoint of neutrality, building on such factors as independence. When selecting candidates for External Audit & Supervisory Board Members, the Audit & Supervisory Board shall confirm that no issues with independence arise by taking into consideration such factors as relations with the Company, management and important staff members.
Reasons for Appointing Each External Audit & Supervisory Board Member / Major Activities in the Fiscal Year Ended March 31, 2022
| Name | Hiroshi Ozu |
|---|---|
| Independent Audit & Supervisory Board Member(*1) | 〇 |
| Reasons for Appointment | Mr. Ozu is appointed as an External Audit & Supervisory Board Member in expectation of the expression of his objective audit opinions from an independent and neutral standpoint, with advanced insight into governance and risk management cultivated through the many years of experience and perspective in legal affairs he has gained, as a prosecutor and an attorney at law. |
| Attendance at Meetings in FY2022 (Number of Meetings Attended / Total Number of Meetings) |
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| Significant Concurrent Positions(*2) |
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| Name | Kimitaka Mori |
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| Independent Audit & Supervisory Board Member(*1) | 〇 |
| Reasons for Appointment | Mr. Mori is appointed as an External Audit & Supervisory Board Member in expectations of the expression of his objective audit opinions from an independent and neutral standpoint, with advanced insight into corporate accounting, accounting audit activities and risk management cultivated through his many years of experience as a certified public accountant. |
| Attendance at Meetings in FY2022 (Number of Meetings Attended / Total Number of Meetings) |
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| Significant Concurrent Positions (*2) |
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| Name | Yuko Tamai |
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| Independent Audit & Supervisory Board Member(*3) | — |
| Reasons for Appointment | Ms. Tamai is appointed as an External Audit & Supervisory Board Member in expectations of the expression of her objective audit opinions from an independent and neutral standpoint, with advanced insight into various types of corporate transactions, corporate governance and risk management cultivated through her many years of experience in legal affairs as a lawyer as well as extensive experiences as an external board member of other companies and a Commissioner (part-time) of Certified Public Accountants and Auditing Oversight Board. |
| Attendance at Meetings in FY2022 (Number of Meetings Attended / Total Number of Meetings) |
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| Significant Concurrent Positions (*2) |
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- *1 An External Audit & Supervisory Board Member who is unlikely to have conflicts of interest with general shareholders, as stipulated by the stock exchange
- *2 As of June 22, 2022
- *3 She satisfies both the standards established by the Company below and the conditions for the independence of External Audit & Supervisory Board Members established by the stock exchange. She will continue to satisfy such independence requirements throughout her term of office as an Audit & Supervisory Board Member. As Nagashima Ohno & Tsunematsu's policy does not recognize lawyers belonging to their office being registered as Independent Directors or Audit & Supervisory Board Members when they become External Directors or External Audit & Supervisory Board Members of any company, the Company does not plan to register her as an Independent Audit & Supervisory Board Member.
Criteria of Independence for External Officers (Directors/Audit & Supervisory Board Members)
External Directors or External Audit & Supervisory Board Members of the Company who do not fall under any of the following items are to be judged to have independence.
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- Person who is currently or was in the past 10 years an executive director, executive officer, managing officer, manager, employee, administrative officer, etc. (hereinafter referred to as "executing person") of the Company or its consolidated subsidiaries
- Person or the executing person of a corporation holding either directly or indirectly 10% or more of the total number of the voting rights of the Company
- Person whose major business partner is the Company or its consolidated subsidiaries*1 or the executing person of the same
- Major business partner of the Company or its consolidated subsidiary*2 or the executing person of the same
- Person who is in charge of auditing operations of the Company or the Company's consolidated subsidiary, as partners etc. of the auditing firm of the Independent Auditor of the Company or the Company's consolidated subsidiary
- Person providing professional services such as consultant, lawyer and certified public accountant who received from the Company monetary payment or other property benefits ¥10 million or more in total other than officer remuneration in the most recent business year (if the one who received the relevant property is an organization such as corporation and association, it shall be referred to the person who belongs to an organization which received from Mitsui property benefits more than higher of either ¥10 million or 2% of the consolidated gross sales of such organization)
- Person or the executing person of a corporation who received the annual total of ¥10 million or more of donations or aid funds from the Company or its consolidated subsidiary in the most recent fiscal year
- Person who has fallen under any of 2. to 7. above in the past three years
- Spouse or relative within the second degree of kinship (hereinafter referred to as "close relatives") of the person who is currently or has been recently the important executing person of the Company or its consolidated subsidiary (including director who is not the executing person in the case of External Audit & Supervisory Board Member)
- Close relatives of the person who currently falls or has fallen recently under any of 2. to 7. above (excluding the one who is not important)
- *1. If the relevant business partner received from the Company or the Company's consolidated subsidiary the payment equivalent to 2% or more of its annual consolidated transaction volume in the most recent business year or the relevant business partner obtained from the Company or the Company's consolidated subsidiary the money loans equivalent to 2% or more of its consolidated total assets in the most recent business year, the relevant business partner is deemed to be the person whose major business partner is the Company or the Company's consolidated subsidiary.
- *2. If the Company or its consolidated subsidiary received from the relevant business partner the payment equivalent to 2% or more of Mitsui's annual consolidated transaction volume in the most recent fiscal year or the relevant business partner provided the Company or its consolidated subsidiary with the money loans equivalent to 2% or more of Mitsui's consolidated total assets, the relevant business partner is deemed to be the major business partner of the Company or its consolidated subsidiary.
Support Systems
For External Directors, before regular and extraordinary meetings of the Board of Directors, materials on the proposals are provided and advance explanations are given. For External Audit & Supervisory Board Members, company information which contributes their auditing, including summaries of regular meetings between Full-time Audit & Supervisory Board Members and staff in the Audit & Supervisory Board Member Division, are timely provided by the Full-time Audit & Supervisory Board Members and the staff. Advance distribution of materials and advance explanations are conducted regarding regular and extraordinary meetings of the Audit & Supervisory Board and the Board of Directors.
For External Members, the Company provides personal computers and tablets ("Officer PCs") and distributes materials for meetings of the Board of Directors in a timely manner, thereby ensuring the time to review agendas. In the FYE 22/3, since it has been difficult and inappropriate that all Directors and Audit & Supervisory Board Members gather physically due to the spread of COVID-19, the Company holds the meetings of the Board of Directors and the meetings of the Audit & Supervisory Board Members as fully or partially remote meetings using web conference system, depending on the situation around COVID-19. The Company has set up the usage environment of such web conference system on the Officer PCs and provides supports to use them in order to ensure the environment that allows the External Directors and External Audit & Supervisory Board Members to discuss effectively in remote meetings. The Company has set up Board of Director's database for use in storing information such as minutes and other materials from past meetings of the Board of Directors, and maintain a platform that enables access to such database from the Officer PCs.
External Members Meetings
External Members Meetings are periodically held for the purpose of exchanging information and opinions regarding important matters in management among External Members, or among External Members, Internal Directors, Full-time Audit & Supervisory Board Members, and/or Managing Officers. The External Members Meetings were held 13 times in the FYE 22/3, where External Directors, External Audit & Supervisory Board Members, Internal Directors, Full-time Audit & Supervisory Board Members, Independent Auditors, and Managing Officers exchanged information and opinions regarding matters such as Market Reaction of the Financial Results for the FYE 21/3, Business Overviews of the several Business Units, Activities of the Portfolio Management Committee, and Mitsui Engagement Survey in FYE 21/3 (the results of the engagement survey targeted the employees of the Company and Mitsui & Co. group), etc.
Coordination between supervision by the External Directors or auditing by External Audit & Supervisory Board Members, the auditing by the Internal Auditing Division, Audit & Supervisory Board Members and the Independent Auditors, and relationship with divisions involved in internal control
External Members, through the Board of Directors, the Audit & Supervisory Board and the External Members Meetings respectively, mutually coordinate with internal audits, auditing by Audit & Supervisory Board Members and accounting audits, as well as supervise and audit the internal control system. Specifically, they periodically receive reports on the following at meetings of the Board of Directors and the Audit & Supervisory Board, respectively: results of the internal audits and internal audit plans, results of auditing by the Audit & Supervisory Board and audit implementation plans, summary of management letters by Independent Auditors, assessment results with regard to the internal control system in accordance with the Financial Instruments and Exchange Act of Japan, the operational status of compliance programs, and other matters regarding the structure and management of internal controls. At the External Members Meetings, External Directors, Audit & Supervisory Board Members and Independent Auditors mutually exchange information and opinions and regarding the policy of audits, and Audit & Supervisory Board Members hosted the free discussion meeting with External Directors.
Full-time Audit & Supervisory Board Members, at their discretion, hold a meeting to exchange opinions beforehand among the External Directors and Audit & Supervisory Board Members on certain important matters to be discussed at meetings of the Board of Directors, in order to provide External Board Members with sufficient information for effective discussion at meetings of the Board of Directors.
Policy on Training for Directors and Audit & Supervisory Board Members
Upon assumption, opportunities are given to Directors and Audit & Supervisory Board Members for gaining full understanding of the business, financial affairs, organization, etc., of Mitsui, the Companies Act of Japan and related laws and regulations, corporate governance and internal control to ensure that they may fulfill their duties including the respective roles expected of Directors or Audit & Supervisory Board Members, which are mandated by the shareholders (fiduciary responsibility) and each legal responsibility. Furthermore, opportunities are given for keeping them up to date as necessary.
Policy Related to Acquisition and Holding of Listed Shares
The Company defines the criteria of classification of stocks for investment held for pure investment purposes and stocks for investment held for purposes other than pure investment purposes as follows.
(Stocks for investment held for pure investment purposes)
Investment held for the purposes of realizing gains solely arising from changes in the value of shares or dividends thereon
(Stocks for investment held for purposes other than pure investment purposes)
Stocks for investment held for purposes other than for pure investment purpose
With respect to the exercise of voting rights of stocks for investment, the content of each proposal shall be considered based on the management policies and business plans etc., of the investee, and deliberation shall be conducted on a case-by-case basis.
At the Company, the Portfolio Management Committee, which is an advisory body to the Corporate Management Committee, establishes company-wide portfolio strategy as well as investment and loan policies, periodically monitors the company-wide portfolio, and verifies the rationale for holding of all assets including stocks for investment through asset portfolio review that is conducted each year. When acquiring stocks for investment, the Company shall conduct a prior stringent assessment of creating business opportunities, or building, maintaining, or strengthening business and collaborative relationships, in addition to profitability and capital efficiency. At the same time, for listed stocks, the Company shall verify the economic rationale based on the status of dividends, business-related profits, and other related profits, in comparison to total cost such as acquisition cost, fair value and its cost of capital, and conduct verification of qualitative aspects based on the status of and outlook for the creation of business opportunities, as well as business and collaborative relationship with each investee. If, as a result of these verifications, the rational of holding these assets has significantly declined, our policy is to sell and reduce such assets. Further the Board of Directors confirms that the qualitative rationale is verified for holding all individual stocks, and identifies stocks that will be considered for sell in the future due to dilution of the rationale, considering both qualitative and quantitative aspects.
Independent Auditors
The Company appoints certified public accountants belonging to Deloitte Touche Tohmatsu LLC as Independent Auditors to carry out auditing under the Companies Act of Japan and the Financial Instruments and Exchange Act of Japan as well as auditing of consolidated financial statements in English. To secure prompt financial closing and reliability, the auditing work of the Company and its consolidated subsidiaries is in principle entrusted solely to Deloitte Touche Tohmatsu, which belongs to the same network as Deloitte Touche Tohmatsu LLC.