Corporate Governance | Consumer Electronics and Living EDION

Corporate governance status

① Overview of corporate governance system

I. Overview of corporate governance system
In addition to the Board of Directors meeting held once a month in principle, the Company has set up a meeting body such as a management meeting that is not obliged to be established by law, and conducts flexible and sufficient deliberation according to the importance and urgency of the project. In addition, we have established the Nomination and Compensation Committee and the Management Discussion Meeting as advisory bodies to the Board of Directors.
The "Nomination and Compensation Committee" is composed of three or more directors, the majority of whom are Independent Director directors, and is chaired by an independent Independent Director. I will consider.
The "Management Discussion Meeting" is composed of representative directors and outside officers, and exchanges opinions on important management issues.
In addition, the Board of Corporate Auditors conducts rigorous audits of decision-making at the Board of Directors and the execution of duties by directors, and shares information with the internal audit department through liaison meetings and other means.
By adopting the above system, we are striving to strengthen the governance of the entire group, sustainably grow the company, and improve corporate value over the medium to long term.
B. Why adopt corporate governance?
The "service-based retail business" that our corporate group advocates is a community-based retail business that is established based on the security and trust of stakeholders such as shareholders, customers, business partners, and local communities. In order to continue to develop in a competitive and rapidly changing business environment, to be accepted by the local community as a "service retailer", and to gain widespread support, first of all, governance within our corporate group is important management. We recognize that this is an issue. Appropriate delegation of authority enables swift and accurate decision-making, and important matters are discussed by the Board of Directors.
We have also built a top management system that performs strong business execution, and we are constantly striving to improve internal communication so that on-site information and the opinions and requests of stakeholders are promptly conveyed to directors. Secondly, we recognize that building good relationships between our corporate group and our stakeholders is an important management issue. For this reason, we will ensure the rationality and satisfaction of our management policies and the transparency of our decision-making process from the perspective of each stakeholder.
Fully accountable to holders. Furthermore, as a premise for gaining the trust of our customers, it is indispensable to take organizational measures to ensure thorough compliance (observance of laws and regulations) by officers and employees. Our corporate group considers all of these to be issues of corporate governance.
At our company, the director serves as the general manager, so that management issues can be quickly and accurately grasped, management functions are strengthened, and management intentions are quickly and thoroughly communicated to each sales branch. In addition, in accordance with the affiliated company management regulations, while taking into account the uniqueness and characteristics of each subsidiary, we will ensure compliance with the basic rules of the EDION Group. We are trying to unify our intentions.
C. Status of improvement of internal control system and risk management system
The following figure is a schematic diagram of the status of the development of major organizations, internal control systems and risk management systems in the Group.
D. Overview of the contents of the limited liability contract and directors and officers liability insurance (D&O insurance) and the reasons therefor

Pursuant to the provisions of Article 426, Paragraph 1 of the Companies Act, the Company exempts directors and auditors from the liability for damages stipulated in Article 423, Paragraph 1 of the Companies Act by a resolution of the Board of Directors to the extent permitted by law. The Articles of Incorporation stipulate that it is possible. In addition, in accordance with the provisions of Article 427, Paragraph 1 of the Companies Act, the Company concludes agreements with directors (excluding executive directors, etc.) and auditors to limit liability for damages stipulated in Article 423, Paragraph 1 of the Companies Act. The Articles of Incorporation stipulate that it is possible to
Pursuant to the provisions of Article 427, Paragraph 1 of the Companies Act, the Company entered into an agreement with six Independent Director, one auditor, and two outside auditors to limit their liability for damages under Article 423, Paragraph 1 of the Companies Act. and the maximum amount of liability for damages shall be the minimum liability amount stipulated by laws and regulations.
In addition, the Company has entered into a corporate officer liability insurance contract with the directors and corporate auditors of the Company and its subsidiaries as insured persons. The outline of the content of the contract covers compensation for damages, litigation costs, etc., incurred by the insured due to claims for damages arising from the insured's actions as a corporate officer. . All insurance premiums are paid by the company.
These are so that directors and auditors can fully perform their expected roles in the execution of their duties.
E. Number of directors
The Articles of Incorporation stipulate that the Company has no more than 16 Directors.
What. Requirements for resolution of appointment of directors
Regarding the resolution for the election of directors, we state that shareholders who have one-third or more of the voting rights of the shareholders who can exercise their voting rights shall attend, and that the majority of the voting rights shall be adopted and that cumulative voting shall not be used. It is stipulated in the articles of incorporation.
G. Acquisition of own shares
Regarding the acquisition of own shares, the Articles of Incorporation stipulate in Articles 165, Paragraph 2 of the Companies Act that the Company's own shares may be acquired through market transactions, etc. by resolution of the Board of Directors. This is intended to enable flexible execution of capital policies.
blood. Interim dividend
Pursuant to the provisions of Article 454, Paragraph 5 of the Companies Act, the Company may pay an interim dividend to shareholders or registered share pledgees recorded in the final shareholder list on September 30 every year by a resolution of the Board of Directors. The articles of incorporation stipulate that to that effect. The purpose of this is to provide stable and agile return of profits to shareholders.
Li. Special resolution requirements for general meetings of shareholders
At the Company, shareholders who hold one-third or more of the voting rights of shareholders who can exercise their voting rights attend the special resolution of the general meeting of shareholders stipulated in Article 309, Paragraph 2 of the Companies Act, and the voting rights 3 It is stipulated in the Articles of Incorporation that a majority, which is more than two-minutes, will be used. The purpose of this is to facilitate the operation of the general meeting of shareholders by relaxing the quorum of special resolutions at the general meeting of shareholders.

② Status of internal audits and audits by corporate auditors

I. Status of Audit by Auditors
The Audit & Supervisory Board Members shall comply with the Audit & Supervisory Board Audit Standards established by the Audit & Supervisory Board, follow the audit policy, division of duties, etc., communicate with the Directors, the internal audit department and other employees, etc., collect information and perform audits. In addition to receiving reports from directors and employees on the status of execution of duties, requesting explanations as necessary, inspecting important settlement documents, etc. We have investigated the status of In addition, with respect to subsidiaries, in addition to attending the board of directors meetings of subsidiaries, we will strive to communicate and exchange information with directors and corporate auditors, etc., of subsidiaries, receive business reports from subsidiaries as necessary, and visit major subsidiaries. , investigated. Mr. Fujio Yamada, a full-time Audit & Supervisory Board Member, has worked in the Company's finance and accounting department and has many years of practical experience. Outside Audit & Supervisory Board Member Takashi Okinaka is qualified as a tax accountant and has considerable knowledge of finance and accounting. In order to assist the duties of the Audit & Supervisory Board Members, the Audit & Supervisory Board establishes an Audit & Supervisory Board Office and assigns one full-time staff member to instruct the staff to collect information, operate meetings as a secretariat, and communicate with the Audit & Supervisory Board Members. We are making adjustments.
B. Internal Audit Status
The Internal Auditing Department reports directly to the president of the Company and audits the appropriateness of the business execution status of the head office, sales offices and affiliated companies as internal control departments, and cooperates with Audit & Supervisory Board Members in audit activities. I will.
In addition, the Internal Audit Office discusses the internal control with the accounting auditor as necessary and adjusts opinions to verify the validity of the evaluation.
C. Accounting Audit Status
The Company has commissioned EY Ernst & Young ShinNihon LLC to perform an accounting audit based on the Companies Act and an accounting audit based on the Financial Instruments and Exchange Act. There is no special interest between the employees and the Company. In addition to statutory audits, the Audit & Supervisory Board and the Internal Audit Office regularly exchange audit reports and exchange opinions.
- Name of audit firm
  EY Ernst & Young ShinNihon LLC
- Certified accountant who executed the business
  Hiroyuki Koichi
  Naotaka Sasayama
- Composition of assistants involved in audit work
  There are 14 certified public accountants and 18 others who assist in our accounting audit work.
- Audit corporation selection policy and reasons
  The Company appropriately selects candidates for external accounting auditors and establishes the following criteria for appropriately evaluating external accounting auditors.
  (1) About quality control system
  -The quality control system of the external accounting auditor has a system that can receive reports on the quality system from the external accounting auditor every year and take appropriate measures to ensure proper audits.
  -There are no serious indications that affect the quality control system in external reviews (certified accountants / audit review committee inspections, quality control reviews of the Japanese Institute of Certified Public Accountants), etc.
  (2) About the audit plan
  ・ Formulate an audit plan that is in line with the environment of the industry and company
  -Reflecting requests from Audit & Supervisory Board Members when formulating an audit plan
  Whether or not the external accounting auditor has the independence and expertise required is confirmed based on the following three points.
  (1) The external accounting auditor and the audit team maintain the independence required by the Certified Public Accountants Act, etc.
  (2) The audit team includes members who have the knowledge and experience to carry out audits in accordance with the audit plan.
  (3) If you have a complex and important area of expertise, use a specialist other than accounting and auditing.
  The Board of Corporate Auditors regarding the dismissal or non-reappointment of the Accounting Auditor to be submitted to the General Meeting of Shareholders when the Accounting Auditor finds it difficult to carry out the audit properly or otherwise determines that it is necessary. We will decide the content of the agenda.
  In addition, the Board of Corporate Auditors will dismiss the Accounting Auditor with the consent of all Audit & Supervisory Board Members if the Accounting Auditor is found to fall under any of the reasons stipulated in each item of Article 340, Paragraph 1 of the Corporate Law. In this case, the Audit & Supervisory Board Members selected by the Board of Corporate Auditors will report the fact that the Accounting Auditor has been dismissed and the reason for the dismissal at the first general meeting of shareholders convened after the dismissal.
- Audit & Supervisory Board Members' Evaluation of Audit Corporation
  The Corporate Auditors and the Board of Corporate Auditors monitor and verify that the Accounting Auditor maintains an independent position and conducts appropriate audits, and receives reports from the Accounting Auditor on the status of execution of their duties, Asked for explanations as needed.
  In addition, the Accounting Auditor changed the `` System to ensure that duties are performed properly '' (items listed in each item of Article 131 of the Corporate Accounting Regulations) to the `` Quality Control Standards for Auditing '' (October 2005 On the 28th, it was notified that the maintenance was being carried out in accordance with the Business Accounting Council, etc., and requested explanation as necessary.
  Based on the above, we comprehensively evaluated the auditing status, quality control system, independence, and expertise of the independent auditor, and determined that there was no problem with the suitability of EY Ernst & Young ShinNihon LLC.

③ Independent Director and Auditor

The Company has six Independent Director and two outside corporate auditors.
More than half of the total number of auditors (three) are outside auditors, and the number of auditors stipulated in the Articles of Incorporation (up to five) is satisfied.

I. Independent Director and personal, capital or business relationships and other interests between the Company and the outside corporate auditors
There is no special interest to be noted between the Company and Independent Director or Outside Audit & Supervisory Board Members.
B. Independent Director and outside auditors are officers or employees of other companies, etc., or if they were officers or employees, personal relationships, capital relationships, or business relationships between such other companies, etc. and our company Other interests
Independent Director Mr. Shozo Ishibashi has concurrently served as Representative Director of General Incorporated Foundation Ishibashi Tanzan Memorial Foundation, Independent Director Minkabu the Infonoid Co., Ltd., and Director of Kurimoto Gakuen Educational Corporation. Co., Ltd., Lehman Brothers Securities Co., Ltd., Tokyo Medical and Dental University, and Rissho University.
Mr. Sefumi Takagi, an Independent Director, established Takagi Law Office and has worked for Breakmore Law Office, Adachi Henderson Miyatake Fujita Law Office, Tokyo Aoyama Aoki Koma Law Office, and White & Case Law Office. Although they were enrolled in each office, there is no special interest between our company and the corporation concerned.
Ms. Shoko Mayuna, Independent Director, previously worked at Okasan Securities Co., Ltd., Deutsche Asset Management Co., Ltd., UBS Asset Management Co., Ltd., and Lazard Japan Asset Management Co., Ltd. There is no special interest between and the company.
Independent Director Yoshihiko Fukushima concurrently holds a professorship at Waseda University's Faculty of Political Science and Economics, and has previously worked at Citigroup Securities Japan Limited, Royal Stockholm University in Sweden, and Nagoya University of Commerce. There are no special interests between them.
Independent Director Tadatsugu Mori concurrently serves as Independent Director HITO-Communications Holdings Co., Ltd. and Advisor of Kansai Supermarket Co., Ltd. In the past, he has worked for Hankyu Department Store Co., Ltd., H2O Retailing Co., Ltd., and Ume no Hana Co., Ltd. I was present at the meeting, but there is no special interest between the Company and the relevant company.
Independent Director Yoshikiyo Sakai concurrently holds Executive Adviser to NTT Finance Corporation, and has worked at NTT DoCoMo, Inc., Nippon Telegraph and Telephone East Corporation, and Nippon Telegraph and Telephone Corporation in the past. There are no special interests between them.
Outside Audit & Supervisory Board Member Yuki Fukuda opened Fukuda Certified Public Accountant and Tax Accountant Office, served concurrently as Audit & Supervisory Board Member of Seiko Co., Ltd., and previously worked at Ernst & Young ShinNihon LLC. There is no special interest between
Outside corporate auditor Takashi Okinaka runs Takashi Okinaka Tax Accountant Office, but there is no special interest between the Company and the company.
C. Functions and Roles of Independent Director and Outside Audit & Supervisory Board Members in Corporate Governance of the Company
Independent Director Director Shozo Ishibashi has a wealth of experience and knowledge in corporate management and finance. We carry out activities based on our own experience and knowledge.
Mr. Sefumi Takagi, Independent Director, has experience and specialized knowledge in corporate legal affairs as a lawyer. We carry out activities based on our own experience and knowledge.
Ms. Shoko Mayuna, Independent Director, makes remarks based on her own experience and knowledge at Board of Directors meetings, etc., based on her extensive experience in the financial and securities sectors.
Mr. Yoshihiko Fukushima, Independent Director, makes statements based on his own experience and knowledge at Board of Directors meetings, etc., based on his knowledge as an academic in the fields of economics and management.
Independent Director Tadatsugu Mori has appropriately performed his duties as an Independent Director of a retail company.
Independent Director Mr. Yoshikiyo Sakai has provided proposals and Independent Director from an independent and objective standpoint based on his wealth of experience and knowledge as an executive director in charge of the finance and accounting department of a company that operates a telecommunications network business. We expect you to perform your duties properly.
Outside Corporate Auditor Yuki Fukuda is a certified public accountant and certified tax accountant, and has considerable knowledge of finance and accounting.
Outside Audit & Supervisory Board Member Takashi Okinaka is a qualified tax accountant and has considerable knowledge of finance and accounting.
D. Our view on the appointment status of Independent Director and outside auditors
As standards for appointing Independent Director and outside corporate auditors, the Company satisfies the provisions of the Companies Act and the "Guidelines for Listing Management, etc." We are here.
The six Independent Director and two outside corporate auditors all meet the requirements for independent officers stipulated by the stock exchanges, as well as the company's own standards, and their independence is maintained.
＜ Independence criteria ＞
Persons who do not meet any of the criteria set out below
- Current or past executives of the Company or its subsidiaries
- A business executor who currently belongs to a major shareholder or an organization that is a major shareholder with a voting right ratio of 10% or more in the company's latest shareholder list.
- Business executors who currently belong to a business partner or its consolidated subsidiary whose total transaction amount with the Company exceeds 2% of the Consolidated net sales of the Company or the business partner even once in the last three business years.
- Consultants, accounting professionals, legal professionals, accounting auditors or advisors who have earned an average of 10 million yen or more per year in addition to executive compensation from the Company during the most recent three business years. (If the organization is a corporation, union, etc., the executive who currently belongs to the organization)
- Directors and other executives of organizations that have received donations from the Company in the most recent three fiscal years that exceed 10 million yen or 2% of Net sales or gross revenue, whichever is higher
- If you belonged to an organization or business partner b to e in the past, who has not retired from the organization or business partner for less than one year
- Spouses or relatives within second degree of the Company or a to e executives
E. Mutual cooperation between supervision or audit by Independent Director or outside corporate auditors and internal audits, corporate auditors' audits and accounting audits, and relationships with internal control departments
Independent Director and outside corporate auditors attend the board of directors meeting held once a month in principle and conduct sufficient deliberation. In addition to holding individual meetings with other management teams and departments as necessary, we also visit our stores and distribution bases and exchange opinions.
Each corporate auditor, including outside corporate auditors, regularly exchanges information with accounting auditors, receives reports on audit plans, audit implementation status, problems pointed out in audits, etc., and shares information and exchanges opinions on audits. We are doing.
In addition, we regularly exchange information with the Internal Audit Office to obtain information on the internal audit plan, system, internal audit implementation status, problems pointed out in the audit, etc., and to the staff of the Internal Audit Office as necessary. We give instructions regarding the assistance of audits by auditors.

④Remuneration of officers

Total amount of remuneration, etc. for each officer category, total amount by type of remuneration, etc., and number of eligible officers

Officer classification	Such as rewards the amount (One million yen)	Total amount by type of compensation (million yen)				Target Officer's Number of members (people)
Officer classification	Such as rewards the amount (One million yen)	Basic Reward	Performance linked Reward	bonus	Non-monetary Reward	Target Officer's Number of members (people)
Director (Excluding Independent Director)	529	396	―	64	68	5
Auditor (Excluding outside auditors)	13	13	―	―	―	1
Outside officer	61	61	―	―	―	9

(Note) 1. The total amount of remuneration, etc. for directors above does not include employee salaries for directors concurrently serving as employees.
　　2. “Non-monetary remuneration, etc.” for each type of remuneration, etc. for directors (excluding Independent Director) is 68 million yen in restricted stock remuneration. 　　

Remuneration, etc. for those who have a total remuneration of 100 million yen or more

Full name	Officer classification	Company classification	Total amount by type of compensation (million yen)				Such as rewards the amount (One million yen)
Full name	Officer classification	Company classification	Basic reward	Performance linked Reward	bonus	Other	Such as rewards the amount (One million yen)
Masataka Kubo	Director	Submission Company	186	―	42	38	267
Satoshi Kaneko	Director	Submission Company	110	－	6	9	126

(Note) 1. “Non-monetary remuneration, etc.” for each type of remuneration for Masataka Kubo is 38 million yen for transfer-restricted stock remuneration.
2. 2. “Non-monetary remuneration, etc.” for each type of remuneration, etc. for Satoshi Kaneko is a transfer-restricted stock remuneration of 9 million yen.

⑤Shareholding status

B. Number of issues and amount on balance sheet

	Number of brands (brands)	On the balance sheet Total amount (million yen)
Unlisted stock	―	―
Non-listed shares	5	1,625

(Issues whose shares decreased during the current fiscal year)
	Number of brands (brands)	Acquisition price related to the increase in the number of shares Total amount (million yen)
Unlisted stock	―	―
Non-listed shares	1	121

Information on the number of specific investment shares and deemed shares held by each issue, and the amount recorded on the balance sheet

Brand	This business year	Previous business year	Holding purpose, Quantitative Holding effect and The number of shares Reasons for increase	Of our stock Possession
Specified investment stock
	Number of shares (shares)	Number of shares (shares)
	Balance sheet Recorded amount (million yen)	Balance sheet Recorded amount (million yen)
㈱Hiroshima Bank	1,146,000	1,146,000	Stable Maintain financial transactions	Yes
㈱Hiroshima Bank	717	742	Stable Maintain financial transactions	Yes
㈱Mitsubishi UFJ Financial Group	504,420	504,420	Stable Maintain financial transactions	Yes
㈱Mitsubishi UFJ Financial Group	427	383	Stable Maintain financial transactions	Yes
㈱Sanae	77,200	77,200	Business transactions (franchised contracts) Medium to long term Relationship maintenance	Nothing
㈱Sanae	314	319		Nothing
Aichi Financial Group Co., Ltd.	70,284	35,800	Stable Maintain financial transactions	Yes
Aichi Financial Group Co., Ltd.	151	100	Stable Maintain financial transactions	Yes
㈱Yamaguchi Financial Group	17,760	17,760	Stable Maintain financial transactions	Yes
㈱Yamaguchi Financial Group	14	12	Stable Maintain financial transactions	Yes

(Note) If the issue is a holding company, the presence or absence of shares of the Company is stated in consideration of the shares held by its major subsidiaries (the number of shares actually owned).

Investment shares whose holding purpose is pure investment

Classification	This business year		Previous business year
Classification	Number of brands (brands)	On the balance sheet Total amount (million yen)	Number of brands (brands)	On the balance sheet Total amount (million yen)
Unlisted stock	21	2,191	20	1,441
Non-listed shares	4	47	5	126

Classification	This business year
Classification	Dividend income Total amount (million yen)	Of gain or loss on sale Total amount (million yen)	Of valuation loss Total amount (million yen)
Unlisted stock	35	―	(note)-
Non-listed shares	2	8	25

(Note) For unlisted stocks, there is no market price, and it is considered extremely difficult to determine the market value.

Details of audit fees

Remuneration for auditing certified public accountants

a.Remuneration for auditing certified public accountants, etc.

Classification	Previous consolidated fiscal year		Current consolidated fiscal year
Classification	For audit certification work Remuneration (million yen)	For non-audit work Remuneration (million yen)	For audit certification work Remuneration (million yen)	For non-audit work Remuneration (million yen)
Submitting company	95	5	95	9
Consolidated subsidiary	―	―	―	―
Total	95	5	95	9

(Note) The content of remuneration based on non-audit services paid by the submitting company in the previous consolidated fiscal year is advisory services related to compliance with the new revenue recognition standards. In addition, the content of remuneration based on non-audit services paid by the submitting company in the current consolidated fiscal year is advisory services related to disclosure of climate-related financial information.

b. Compensation for organizations belonging to the same network (Ernst & Young member firms) as audit certified accountants (excluding a.)

Classification	Previous consolidated fiscal year		Current consolidated fiscal year
Classification	For audit certification work Remuneration (million yen)	For non-audit work Remuneration (million yen)	For audit certification work Remuneration (million yen)	For non-audit work Remuneration (million yen)
Submitting company	―	3	―	―
Consolidated subsidiary	―	―	―	―
Total	―	3	―	―

(Note) The content of remuneration based on non-audit work paid by the submitting company in the current consolidated fiscal year is advisory work related to the sophistication of internal audit.

c. Remuneration for other important audit certification services

Not applicable.

d. Policy for determining audit fees

It is determined after considering the size, characteristics, number of audit days, etc.

e. Reasons for the Board of Corporate Auditors to agree to the remuneration of the Accounting Auditor

The Board of Auditors conducts necessary reviews and deliberations as to whether the audit plan of the accounting auditor, the status of the duties of accounting audits, and the basis for calculating remuneration estimates are appropriate, and after deliberation, the amount of remuneration, etc. of the accounting auditor Has deemed appropriate and has consented to Article 399, Paragraph 1 of the Companies Act.