Corporate Governance

Fundamental approach to corporate governance

In order to clarify our stance on our management that we will contribute to society through sound banking operations by adapting to the changes in the management environment of the financial industry, we have established a corporate philosophy in an aim to gain the trust of the regional society, customers, employees, and shareholders, and in an effort to realize sustainable growth and enhancement of corporate value over the mid- to long-term.

To realize the above-mentioned aim, we have adopted a system of a company with a board of corporate auditors that enables transparent, fair, swift and resolute decision-making as our system of corporate governance. While making effective use of the auditing functions of the Board of Corporate Auditors, we have appointed multiple, highly independent outside directors so that monitoring functions of the Board of Directors are duly executed. In addition, we have established the Basic Policy on the Internal Control System pursuant to the Companies Act, and developed a system to ensure the appropriateness of business execution of the corporate group comprised of the Hyakugo Bank and its subsidiaries. We have also established various committees (e.g. the Corporate Governance Committee), and are also working to enhance investor relations (IR) activities.

Furthermore, within the context of the changing business environment, we will continue to review the system as required to strengthen and enhance corporate governance.

Corporate governance system

The Board of Directors, composed of nine directors (including three outside directors), meets in principle once a month. It deliberates and makes decisions on matters stipulated by laws and regulations or the Articles of Incorporation of the Bank, as well as fundamental management policies and other important matters. The Board also receives reports on status of business execution and oversees directors’ execution of their duties. The Bank has adopted the Executive Officer System to vitalize the Board of Directors, speed up decision making, and enhance the operation execution functions. In addition, Hyakugo Bank established a Corporate Governance Committee, composed of six directors (including three outside directors), as an advisory body for considering key issues in the Bank’s management including issues related to candidates for directors and corporate auditors and issues related to compensation of directors.

The Management Committee consisting of standing directors has been established under the Board of Directors, and meets in principle once a week. It deliberates on important matters concerning business execution and makes decisions on the execution, based on the basic policies set by the Board of Directors.

The Internal Audit Board consisting of Representative Directors and General Manager of the Internal Audit Division has been established under the Board of Directors, and meets in principle once a month. It monitors the appropriateness of business execution and effectiveness of internal audits, and works to strengthen and improve management. The Internal Audit Division, which reports directly to the Internal Audit Board, conducts internal audits in accordance with the basic audit plan for each fiscal year, and recommends improvements as necessary.

The Board of Corporate Auditors, composed of five corporate auditors (including three outside corporate auditors), meets in principle once a month. It resolves and consults on matters prescribed in laws and regulations and others. In addition, it receives reports on the results of internal audits by each of the corporate auditors and audits the directors’ overall execution of their duties. The Corporate Auditor’s Office is established and one dedicated staff is assigned to the office to support the corporate auditors and the Board of Corporate Auditors.

Furthermore, Hyakugo Bank has established the following committees to strengthen and enhance management.

Name of committee	Objectives
Compliance Committee	Establishment of legal compliance measures
Customer Protection Management Committee	Study of improvement and response measures to improve customer protection and convenience
Finance Facilitation Committee	Appropriate facilitation of funds for small and medium-sized businesses
ALM Risk Management Committee	Deliberation of portfolio management from the perspectives of soundness and profitability of management
Operational Risk Management Committee	Deliberation of measures to minimize operational risks to the end of ensuring the soundness and appropriateness of management
IT Strategy Committee	Optimization of information system policies and investments
Performance and Compensation Committee	Improvement of credibility, fairness and transparency of personnel evaluations
BPR Strategy Committee	Maintenance of sound operations and further enhancement of productivity