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Corporate Governance

Based on OUR PHILOSOPHY (TIS INTEC Group Philosophy) and Group Vision, we have formulated basic corporate governance policies aimed at improving the Group’s corporate value over the medium and long terms. We are working constantly to enhance corporate governance.

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Basic Policy

TIS will constantly strive to achieve the highest level of corporate governance and will work to maintain and further enhance its approaches to corporate governance.
Management believes that the key to good corporate governance is to ensure transparency and fairness in decision-making processes, make full and effective use of management resources, and raise the integrity of management practices through swift and accurate assessment of situations, from the viewpoint of promoting sustainable corporate growth and boosting medium- and long-term corporate value. Accordingly, management at the Company is committed to upholding good corporate governance in line with the following basic principles.

  1. To respect the rights of shareholders and to ensure equality.
  2. To consider the interests of stakeholders, including shareholders, and work with stakeholders in an appropriate manner to achieve stated goals.
  3. To disclose corporate information appropriately and ensure transparency.
  4. To engage in constructive dialogue with shareholders based on a medium- to long-term investment perspective.

Compliance with the Corporate Governance Code

TIS complies with all principles of the Corporate Governance Code.
The status of the Company’s responses to each principle of the Corporate Governance Code is described in the Corporate Governance Report.

Corporate Governance Structure

Form of Organization Company with audit & supervisory board
Chairman of the Board Chairman
Number of Directors 9, including 3 external directors
Director's Term of Office 1 year
Number of Audit & Supervisory Board Member 5, including 3 external audit & supervisory board members
Term of Office for Audit & Supervisory Board Members 4 years
Number of Independent Directors 6, including 3 external directors and 3 external audit & supervisory board members

Reason for Selection of Current Corporate Governance Organization

TIS is a Company with an Audit & Supervisory Board, a model chosen for its double-check function through which the Board of Directors oversees the execution of business activities and the Audit & Supervisory Board audits activities to ensure operations are legal and appropriate. In addition, the Company aims to strengthen the supervisory function of the Board of Directors by appointing outside directors with industry- and corporate management-related experience and insight and drawing on advice and recommendations from an independent standpoint to ensure the validity and appropriateness of decision-making by the Board of Directors.

Organizational Chart

Directors and Board of Directors As stipulated in its Articles of Incorporation, the Company's Board of Directors will comprise at least three and no more than 15 directors, and to strengthen the supervisory functions of the Board of Directors, a policy has been established that one-third or more of the directors must be independent external directors. At present, three independent external directors have been appointed.
For swift and dynamic decision-making by the Board of Directors, the Board of Directors convenes in principle once monthly and also meets on an ad hoc basis whenever necessary.
TIS holds an information meeting once a year to present management direction as well as meetings ahead of Board of Directors' meetings—in principle, twice a month—to give external directors and outside members of the Audit & Supervisory Board sufficient background information to participate in discussions. In addition, the Company organizes study sessions with experts—in-house and external—and arranges visits to local Group facilities and offices. TIS also creates opportunities when external directors can exchange opinions with the president and sets up meetings that involve only external directors and outside members of the Audit & Supervisory Board. This facilitates smooth but vigorous discussion by the Board of Directors.
Nomination Committee The Nomination Committee was established as advisory bodies to the Board of Directors to ensure objectivity and transparency in decision-making processes pursuant to appointment of directors and to strengthen the corporate governance structure.
The independent outside director chairs the committee, with the majority of members, including the committee chair, being independent outside directors.
Compensation Committee The Compensation Committee was established as advisory bodies to the Board of Directors to ensure objectivity and transparency in decision-making processes pursuant to compensation of directors and to strengthen the corporate governance structure.
The independent outside director chairs the committee, with the majority of members, including the committee chair, being independent outside directors.
Group Internal Control Committee The Group Internal Control Committee is charged with promoting various measures to maintain and improve the internal controls of the Company and its subsidiaries, to evaluate the operational status of the internal control systems and to recommend any corrective action to be taken to the Board of Directors, if necessary.
The committee, chaired by the TIS President, comprises standing directors, standing Audit & Supervisory Board members, persons responsible for the internal control management, and any person whose attendance is authorized by the committee.
Corporate Sustainability Committee To implement sustainability management, we will identify trends, discuss sustainability-related issues, and indicate the direction and targets of our response. In accordance with these directions and targets, corporate and business department plan and promote measures, and their planning or progress are deliberated by the Management Committee and overseen by the Board of Directors as appropriate. The committee, chaired by the TIS President, Directors, Audit & Supervisory Board Members, Division Manager of corporate planning division, Department Manager of corporate planning Dept, and any person whose attendance is authorized by the committee.
Management Committee The Company has established the Management Committee to deliberate and report on important matters affecting business execution at the Company and the Group as a whole.
Investment Committee The Investment Committee was established to verify/advise on plans for investment projects, monitor ongoing projects and assess whether to continue them with the aim of minimizing related risks and earning higher returns on investments.
CVC Investment Committee The Company makes corporate venture capital (CVC) investments and enhances alignment with venture capital companies in the form of open innovation in order to (1) create new business, (2) expand existing businesses, and (3) promote business collaboration with customers. For such investments, the CVC Investment Committee decides whether or not to execute an investment and monitors the executed investment.
Corporate-wide Proposal Review Process For large-scale projects to be addressed by the Group as a whole, the Corporate-wide Proposal Review Process was implemented to review drafts prior to actual proposals to customers, in order to detect and reduce risks as early as possible.
System Development Meeting System Development Meetings are held to identify potential risk factors in large-scale projects to be undertaken by the Group as a whole, to develop measures to prepare for risks, to resolve issues before they materialize, and to terminate any project with losses.
Audit & Supervisory Board Members and Audit & Supervisory Board The Audit & Supervisory Board comprises five auditors (of which three are external auditors). Each auditor will perform audits of directors' business execution in accordance with the audit & supervisory policies established by the Audit & Supervisory Board. In addition, the Company works closely with its financial auditors, exchanging information and sharing opinions on a regular basis in addition to receiving the annual financial audit plan and reporting on results of financial audits from Ernst & Young ShinNihon LLC, with which the Company has entered and auditing contract. Furthermore, the Audit & Supervisory Board receives the audit reports of the auditing department and exchanges opinions on a regular basis.

Executive Officer System

The Company has adopted an executive officer system to accelerate management decision-making and supervisory functions of the Board of Directors. Directors delegate business execution to Executive Officers, and these Executive Officers provide specific direction, orders, and supervision to each business unit head.

Viewpoint regarding Composition of Board of Directors

The Board of Directors shall be composed of no more than 15 directors, at least one-third of whom shall be independent external directors. The Board of Directors recognizes its fiduciary responsibility toward shareholders, supervises management strategy, management plans and other important decision-making and business execution of the Company, as prescribed by laws and regulations, the Articles of Incorporation and Company regulations, and bears a responsibility to ensure sustainable growth and enhance medium- to long-term corporate value. In the case of directors that constitute the Board of Directors, after engaging in discussion at meetings of the Board of Directors, the Company shall nominate persons who have extensive experience, strong insights and a high level of specialization that is appropriate for these obligations based on the election criteria prescribed by the Company.

Summary of Results of Analysis and Evaluation of Effectiveness of Board of Directors

TIS strives for the best corporate governance and works continuously to make improvements in that area. Since fiscal 2016, ended March 31, 2016, the Company has evaluated the effectiveness of the Board of Directors each fiscal year with the aim of identifying issues and areas for improvement and linking them to initiatives to improve the Board’s effectiveness. For the fiscal 2023 evaluation, all directors and Audit & Supervisory Board members were given a questionnaire to be submitted anonymously. The questionnaire asked them to conduct a comprehensive self-evaluation and self-analysis of the composition and operation of the Board of Directors. Individual interviews were also conducted, and the Board of Directors held discussions based on the results of those interviews. The method and results of the evaluation are described below.

1. Method of evaluation

TIS distributed a questionnaire regarding the effectiveness of the Board of Directors to all directors and Audit & Supervisory Board members and obtained responses. In addition, personnel of its administrative office conducted interviews with all directors and Audit & Supervisory Board members. The Board of Directors then used these results to analyze and evaluate the Board’s effectiveness.
Note that TIS conducted this effectiveness evaluation based on advice and verification by an external attorney.

2. Actions to address issues identified in the previous fiscal year

In fiscal 2023, TIS took the following actions to address issues identified in the effectiveness evaluation conducted in the previous year.

  1. (1) Further improving the function of the Board of Directors
    At multiple meetings, the Board of Directors discussed the state of the Company’s governance with a view to medium- and long-term growth. The main topics discussed included the role and function of the Board of Directors, institutional design, delegation of authority to the executive side, desired skills of Board members, number and composition of Board members, and succession planning for outside directors. As a result, the Board of Directors has become more oriented toward monitoring with a focus on medium- and long-term discussions. The Board also revised the criteria for submission of proposals to the Board of Directors and delegated authority to the executive side starting in the current fiscal year.
  2. (2) Discussions on improving medium- to long-term corporate value
    The Board of Directors identified themes of high importance for improving medium- to long-term corporate value and drafted an annual schedule for addressing those themes. The Board also established a system to ensure that each theme is addressed in a timely and appropriate manner, with particular emphasis on improving the functions of the Board as described above.

3. Results of analysis and evaluation of effectiveness of the Board of Directors

The Company’s Board of Directors concluded that a certain degree of effectiveness had been ensured to appropriately supervise the approval of important management matters and business execution, such as the execution status of business activities and investments at the Company and Group companies, through deliberation based on Company regulations. In addition, the Board of Directors concluded that the level of effectiveness continues to trend upward, reflecting improvement measures based on the results of the effectiveness evaluation conducted in the previous fiscal year.
At the same time, management acknowledged the need to improve the quality of discussions in line with the Company’s growth and to further focus on medium- to long-term management themes in order to promote more advanced management of the Company.

4. Responses based on analysis and evaluation

In light of the analysis and evaluation previously mentioned, TIS will focus particular efforts on the following.

  1. (1) Improving the quality of discussions
    To further enhance and facilitate discussions at Board of Directors’ meetings, TIS will continue improving the method of operation, the format of materials used, and the composition of the meeting body.
  2. (2) Focus on medium- to long-term discussions
    The Board of Directors will prepare an annual agenda covering management and strategic themes to be discussed regarding the formulation of medium- to long-term strategies and their implementation. Through more active discussion and confirmation of progress, the Board will also engage in activities aimed at enhancing corporate value.

Policy and Procedures for Election, dismissal, and Nomination of Directors, etc.

In nominating candidates for directors, audit & supervisory board members and executive officers, the Board of Directors will nominate persons with abundant experience, a high level of insight and advanced specialization based on the following election criteria that make them suitable as directors or audit & supervisory board members in order to realize effective corporate governance and contribute to the sustainable growth of the Company as well as the enhancement of its medium- to long-term corporate value while also considering aspects of diversity such as gender, internationality, career and age.
If a situation arises where a management executive should be dismissed, the Board of Directors shall determine a dismissal proposal. However, the dismissal of a director shall be conducted in accordance with the Companies Act and other relevant provisions.

Reason for Election of Directors and Audit & Supervisory Board Members

  • Directors
Toru Kuwano After assuming the office of President and Representative Director of the Group company, Mr. Kuwano was appointed as a Director of the Company in June 2013 and President and Representative Director in June 2016. Since April 2021, he has assumed the office of Chairman and Director of the Company. He has a wealth of experience and knowledge about the Company's and its Group's business, as well as in business administration.
Since April 2021, he has also assumed the position of Chairman and Director as a non-executive Director, in order to realize fair management supervision. He has promoted a stronger and more effective corporate governance structure and worked toward the sustainable growth and increase in the medium- to long-term corporate value of the Company. He was appointed as a Director since he is highly expected to continue to fulfill the duties of significant decision-making for the Company’s Group as well as the administration and oversight of business management.
Yasushi Okamoto Mr. Okamoto served as Senior Managing Executive Officer and Division Manager of the planning and development department of industrial systems from July 2016, and as Director from June 2018, after having been engaged in corporate business in the corporate planning department of the Company for many years. He was appointed to the office of President and Representative Director in April 2021.
Based on these experiences, he is a person who can exert leadership to further promote the sustainable growth and increase in corporate value of the Group through the steady implementation of the current Medium-Term Management Plan (2021-2023). He was appointed as a Director since he is highly expected to fulfill the duties of significant decision-making for the Group and oversight of business management.
Josaku Yanai Mr. Yanai was mainly engaged in the corporate section in the corporate planning department of the Company and its Group company for many years. He assumed the office of Executive Officer and Division Manager of corporate planning division of the Company in April 2011. He became a Director of the Company in June 2016 and a Representative Director in April 2021. He has a wealth of experience and knowledge about the business of the Company and its Group, as well as in business administration. Based on these experiences, he was appointed as a Director since he is highly expected to further promote the sustainable growth and increase in corporate value of the Group through the steady implementation of the current Medium-Term Management Plan (2021-2023) and fulfill the duties of significant decision-making for the Group and the administration and oversight of business management.
Shinichi Horiguchi Mr. Horiguchi has been engaged in finance / credit card business for many years, has been promoting corporate business operations at the Human Resources Department and Corporate Planning Department since April 2009, and has served as General Manager of the Financial Systems Planning and Development Department for financial systems as Managing Executive Officer of the Company since April 2017. Based on these experiences, he was appointed as a Director since he is highly expected to promote the current Medium-Term Management Plan (2021-2023), and fulfill the duties of significant decision-making for the Group and the oversight of business management.
Takayuki Kitaoka Mr. Kitaoka was engaged in business related to IT infrastructure of INTEC Inc., the Company's major subsidiary, and served in management administration of the Group companies at the Company for three years from April 2012. Furthermore, he has assumed the office of President and Representative Director of INTEC Inc. since April 2018 and the office of Director of the Company since June 2018. He was appointed as a Director since he is highly expected to continue to promote the duties of INTEC Inc. assigned by the current Medium-Term Management Plan (2021-2023) and to fulfill the duties of significant decision-making for the Group and the administration and oversight of business management, based on the above experiences and from the viewpoint of Group management.
Shuzo Hikida Mr. Hikida is engaged in business activity to create strategic informatization directly connected to business strategy of top-class companies in the industry at INTEC Inc., one of our major group companies, to establish the revenue base of the network & outsourcing business operation and create new services. Also, he was appointed as director and executive vice president of the said company in April 2023. He was appointed as a Director since he is highly expected to promote the current Medium-Term Management Plan (2021-2023) at the said company to play a sufficient role in supervision of decision-making on significant matters and the oversight of execution of business management for the Group based on his experiences.
Koichi Sano Mr. Sano worked mainly in the finance and accounting departments, and served as Executive Vice President and Representative Director of Mitsui Chemicals, Inc., and has a wide range of experience and a wealth of expertise in corporate management.
Since assuming the office of External Director in June 2016, he has given advice and suggestions from an independent perspective to ensure that the decisions to be made by the Company’s Board of Directors will be reasonable and appropriate by utilizing these experiences and expertise in the Company’s business.
Since June 2022, he has acted as Chairperson of the Nomination and Remuneration Committees which are voluntary advisory bodies to the Board of Directors, and fulfils an important role in the deliberation and advice to the Board of Directors on the nomination and remuneration of directors etc. in response to the consultation of the Board of Directors. He is highly expected to be a person who will continue to contribute to the increase in corporate value and enhancement of corporate governance of the Company. Therefore, he was appointed as an External Director.
Fumio Tsuchiya Mr. Tsuchiya previously worked in an important position in overseas offices and the Corporate Planning Department of Japan Airlines Co., Ltd. (“JAL”). After having assumed the office of Director of JAL in June 2004, he served as Managing Director and was thereafter appointed as President & CEO of JALCard, Inc. in June 2007, which is a group company of JAL. He has a wide range of experience and a wealth of expertise in corporate management.
Since assuming the office of External Director of the Company in June 2017, he has given advice and suggestions from an independent perspective by utilizing these experiences and expertise in the Company's business to ensure that the decisions to be made by the Company's Board of Directors will be reasonable and appropriate. He was appointed as an External Director as he is highly expected to be a person who will continue to contribute to the increase in corporate value and enhancement of the corporate governance of the Company.
Naoko Mizukoshi Ms. Mizukoshi is a qualified lawyer and has a wealth of professional knowledge of, and experiences in, intellectual property, ICT and international transactions.
Since assuming the office of External Director of the Company in June 2018, she has given advice and suggestions from an independent perspective by utilizing these experiences and expertise in the Company’s business to ensure that the decisions to be made by the Company’s Board of Directors will be reasonable and appropriate. She is highly expected to be a person who will continue to contribute to the increase in corporate value and enhancement of the corporate governance of the Company.
She has not participated in corporate management but has expertise in corporate legal works. Therefore, she was appointed as an External Director since she could discharge duly the duties of External Director.
  • Skills Matrix for Board of Directors
Name Company
Management
Industry
Knowledge
International
Experience
Finance/
Accounting
Legal/
Intellectual
Property
Toru Kuwano

Yasushi Okamoto

Josaku Yanai
Shinichi Horiguchi



Takayuki Kitaoka


Shuzo Hikida



Koichi Sano


Fumio Tsuchiya

Naoko Mizukoshi

  • Audit & Supervisory Board Members
Tetsuya Asano Mr. Asano has a wealth of expertise in finance and accounting as well as in corporate management, accumulated through many years of experience of working at financial institutions and managing companies.
He was appointed as an Audit & Supervisory Board Member, as he is expected to discharge audit and supervisory duties regarding the execution of duties of the Company's directors in a fair and appropriate manner.
Makoto Tsujimoto Mr. Tsujimoto has abundant experience and knowledge of systems and center operations, which form the foundation of the service business of the Company. In addition, he has knowledge of corporate management as he has served as representative director of QUALICA Inc., a consolidated subsidiary of the Company, since April 2019. He was appointed as an Audit & Supervisory Board member because it is expected that he can perform accurate and fair monitoring and oversight functions for the Company’s business contents and internal audits as well as the execution of business by the directors of the Company by taking advantage of these experiences.
Yukio Ono Mr. Ono is a licensed certified public accountant. His expertise and knowledge in the field of finance and accounting are beneficial to the Company in strengthening the audit system of the Company. Although he has not participated in corporate management, he was appointed as an External Audit & Supervisory Board Member as he is considered to be able to appropriately perform the duties of External Audit & Supervisory Board Member as a result of the above credentials.
Akiko Yamakawa Ms. Yamakawa is a qualified lawyer. Based on her experience, such as being responsible for litigation at global corporations, she can be expected to provide appropriate monitoring and supervision of the global business execution of the Company. Although she has not participated in corporate management, she was appointed as an External Audit & Supervisory Board Member as she is considered to be able to appropriately perform the duties of External Audit & Supervisory Board Member as a result of the above credentials.
Hiroko Kudo Ms. Kudo is highly knowledgeable in domestic and international finance and administration and holds a doctorate in public policy. She is also active globally as a university professor and researcher. Although Ms. Kudo has not participated in corporate management, she was appointed as an External Audit & Supervisory Board Member. Because management at TIS felt she would be able to suitably execute the duties of a committee member by drawing on the extensive experience and knowledge she has accumulated to date and thereby help TIS improve the value provided in DX services as a way to address social issues through business activities—highlighted in the TIS INTEC Group’s medium-term management plan—and deepen and expand global operations.
  • Skills Matrix for Audit & Supervisory Board Members
Name Company
Management
Industry
Knowledge
International
Experience
Finance/
Accounting
Legal/
Intellectual
Property
Tetsuya Asano


Makoto Tsujimoto

Yukio Ono


Akiko Yamakawa


Hiroko Kudo


Profiles of our corporate officers are available here .

Training Policy for Directors and Auditors

For directors and auditors, including external directors and external auditors, the Company will provide and arrange training opportunities that are appropriate for individual directors and auditors and support the cost of such training. The objective of such training is to provide an opportunity to acquire necessary knowledge regarding the Group's businesses, financial affairs and organization and to understand the duties and responsibilities required of directors and auditors when assuming office, as well as to continuously update these attributes during the term of office.

External Directors and External Auditors

The Company has three external directors and three external auditors. The determination of the independence of external directors and external auditors is prescribed by the requirements of the Companies Act as well as judgement criteria to ensure the independence of external directors and external auditors (referred to as "external officers" hereafter) as described below, with reference to the rules and regulations of the Tokyo Stock Exchange.

For reference: Criteria Concerning Independence of External Officers (revised December 21, 2016)

The determination of the independence of external directors and external auditors is prescribed by the requirements of the Companies Act as well as judgement criteria to ensure the independence of external directors and external auditors (referred to as "external officers" hereafter) as described below, with reference to the rules and regulations of the Tokyo Stock Exchange.

  1. External directors (including candidates) are defined by Article 2, Paragraph 15 of the Companies Act (Requirements of External Directors) and have never served as an executive director, manager or other employee of the TIS INTEC Group (Note 1) even in the past.
  2. External auditors (including candidates) are defined by Article 2, Paragraph 16 of the Companies Act (Requirements of External Company Auditors) and have never served as a director, manager or other employee of the TIS INTEC Group even in the past.
  3. In the current fiscal year and during the past three fiscal years, none of each of the following items shall apply to external officers.
    1. A counterparty which has transactions principally with the Company (Note 2) or a person who executes that counterparty's business
    2. A counterparty which has transactions principally with the TIS INTEC Group (Note 3) or a person who executes that counterparty's business
    3. A consultant, accounting professional or legal professional who has received a large amount of money or other assets (Note 4) other than remuneration of officers from the Company. In addition, when these are received by an organization such as a corporation or partnership, this includes persons who belong to the applicable organization.
    4. A major shareholder of the Company (Note 5). In addition, when the major shareholder is a corporation, this includes a person who executes the business of the corporation.
    5. A person other than those in (Ⅰ), (Ⅱ) and (Ⅲ) above who executes the business of a counterparty of the Company (Note 6)
    6. A person who was formerly a member of a counterparty which is in a situation of cross-assumption of offices of external officers
    7. A counterparty or former member of the counterparty that receives donations from the Company
  4. External officers must not be a relative within the second degree of a person who falls under each of the following items.
    1. A person mentioned in (Ⅰ) to (Ⅲ) of the previous clause
    2. A person who executes the business of a subsidiary of the Company
    3. A non-executive director of a subsidiary of the Company (limited to external auditors)
    4. A person who fell under (Ⅱ) or (Ⅲ) above or a person who executes the business of the Company (including a non-executive director in the case of an external auditor) recently (in the current business year and during the past four business years)
  5. In addition to the above, there exist no circumstances in which duties imposed on an independent external officer are reasonably deemed not to be achieved.
  • Note 1: The "TIS INTEC Group" means the Company and its subsidiaries.
  • Note 2: A "counterparty which has transactions principally with the Company" means a counterparty which provides products or services to the Company and whose payments from the Company constitute at least 2% of the sales of such counterpart in one fiscal year. The main bank (MUFG Bank, Ltd.) and the lead managing underwriters (Nomura Securities Co., Ltd., Mitsubishi UFJ Morgan Stanley Securities Co, Ltd., and SMBC Nikko Securities Inc.) of the Company shall also each be a "counterpart which has transactions principally with the Company," regardless of the transaction amount.
  • Note 3: A "counterparty which has transactions principally with the TIS INTEC Group" means a counterparty with sales exceeding 2% of the total consolidated sales of the TIS INTEC Group.
  • Note 4: "A large amount of money or other assets" means the total value exceeds 10 million yen per fiscal year. This shall apply also to a consultant, accounting professional or legal professional that enters a consulting agreement or similar arrangement and periodically pays an amount of money or other assets, regardless of the amount.
  • Note 5: A "major shareholder" means a person or company, and the like, that directly or indirectly holds 10% or more of total voting rights. However, the Company's leading shareholders (the top 10 approximately) shall be treated as "major shareholders."
  • Note 6: A "counterparty which has transactions with the Company" means the case when transactions with the Company per fiscal year constitute at least 2% of non-consolidated sales of the Company.

Primary Activities of External Directors and External Auditors (Year ended March 31, 2023)

Status Name Primary Activities
Director Koichi Sano Mr. Sano attended all 19 meetings of the Board of Directors, which were held in fiscal 2023, and provided advice and recommendations to ensure validity and appropriateness of decision-making of the Board of Directors based on his abundant experience and insight in corporate management. Also, since June 24, 2022, he has served as chairman of the Nomination Committee and the Remuneration Committee, which are voluntary advisory bodies to the Board of Directors, put together opinions in nomination and remuneration of Directors, etc. in response to the inquires of the Board of Directors and played an important role upon reporting to the Board of Directors.
Director Fumio Tsuchiya Mr. Tsuchiya attended all 19 meetings of the Board of Directors, which were held in fiscal 2023, and provided advice and recommendations to ensure validity and appropriateness of decision-making of the Board of Directors based on his abundant experience and insight in corporate management. Also, he serves as a member of the Nomination Committee and the Remuneration Committee, which are voluntary advisory bodies to the Board of Directors, and plays an important role upon responding to inquiries about nomination and remuneration of Directors, etc. from the Board of Directors and reporting to the Board of Directors.
Director Naoko Mizukoshi Ms. Mizukoshi attended all 19 meetings of the Board of Directors, which were held in fiscal 2023, and provided advice and recommendations to ensure validity and appropriateness of decision-making of the Board of Directors from her professional viewpoint as a lawyer. Also, she serves as a member of the Nomination Committee and the Remuneration Committee, which are voluntary advisory bodies to the Board of Directors, and has served as chairperson of the respective committee until June 23, 2022, playing an important role upon reporting to the Board of Directors in response to the inquires of the Board of Directors about nomination and remuneration of Directors, etc.
Auditor Yukio Ono Mr. Ono attended 18 out of the 19 meetings of the Board of Directors and all 12 meetings of the Audit & Supervisory Board, each of which were held in fiscal 2023, and provided recommendations to ensure appropriateness of decision-making of the Board of Directors from his professional viewpoint as a certified public accountant. Also, he made the necessary remarks as appropriate at meetings of the Audit & Supervisory Board. In addition, he serves as a member of the Nomination Committee and the Remuneration Committee, which are voluntary advisory bodies to the Board of Directors, and plays an important role upon responding to inquiries about nomination and remuneration of directors, etc. from the Board of Directors and reporting to the Board of Directors.
Auditor Akiko Yamakawa Ms. Yamakawa attended all 19 meetings of the Board of Directors and all 12 meetings of the Audit & Supervisory Board, each of which were held in fiscal 2023, and provided recommendations to ensure appropriateness of decision-making of the Board of Directors from her professional viewpoint as a lawyer. Also, she made the necessary remarks as appropriate at meetings of the Audit & Supervisory Board.
Auditor Hiroko Kudo Ms. Kudo attended all 15 meetings of the Board of Directors and all 10 meetings of the Audit & Supervisory Board, each of which were held after she assumed office on June 24, 2022, and provided recommendations to ensure appropriateness of decision-making of the Board of Directors with her high level of knowledge and insight as an academic expert. Also, she made the necessary remarks as appropriate at meetings of the Audit & Supervisory Board.

Note:In addition to the above-mentioned number of meetings of the Board of Directors that were held, we have made one written resolution deemed to have been made by the Board of Directors based on the provisions of Article 370 of the Companies Act and Article 27 of the Articles of Incorporation.

Summary of Content of Liability Agreements

In accordance with Article 427, Paragraph 1 of the Companies Act, each of Audit & Supervisory Board enters into an agreement with the Company that limits legal responsibility for liability compensation as set forth under Article 423, Paragraph 1 of the same law.
The limit of liability compensation, based on these agreements, is an amount provided for in Article 425, Paragraph 1, of the same law.

Overview of the contents of the officers’ liability insurance contract

The Company has concluded an officer liability insurance contract as stipulated in Article 430-3, Paragraph 1 of the Companies Act with an insurance company as follows:

1. Scope of the insured

  1. (1) Directors, audit & supervisory board members and executive officers of the Company and consolidated subsidiaries of the Company
  2. (2) Executive officers and employees who are dispatched to or concurrently serving at overseas subsidiaries and overseas investment companies of the Company

2. Overview of the contents of the insurance contract

In the event of a claim for damages due to an action (including in-action) by the insured as part of their duties as officers of the company, that falls under (1), damages including compensation for damages and legal expenses to be borne by the insured shall be compensated for under the said insurance agreement. However, damages, etc., incurred by officers themselves who have conducted a criminal act such as bribery and/or intentionally conducted an illegal act are not subject to compensation. This way, measures are taken to ensure that the appropriateness of the execution of duties by officers, etc. is not impaired.
The Company bears the full amount of insurance premiums including the rider portion, and there are no substantial premiums borne by the insured.

Overview of the policies for determination of remuneration, etc.

1. Remuneration determination policies

In order to ensure objectivity and transparency of the remuneration determination process and further strengthen the corporate governance framework, the Company has set up an arbitrary remuneration committee consisting mainly of Independent External Directors as an advisory body to the Board of Directors.
officers’ remuneration is determined by the resolution of the Board of Directors after consulting and reporting to the Remuneration Committee with the basic policy of strengthening incentives to improve performance by implementing a remuneration system linked to the company performance indicators.

2. Remuneration structure for officers

The remuneration for Directors of the Company consists of the base remuneration, performance-linked remuneration and performance-linked stock remuneration as shown in the diagram below. If the company performance indicators set are achieved at the maximum level, the remuneration composition rate will be as follows: Base remuneration: Performance-linked remuneration: Performance-linked stock remuneration = 6:3:1.
*The performance-linked stock remuneration system has been implemented since fiscal 2018 for the purpose of increasing awareness of the need to help improve medium- to long-term performance and increase corporate value and sharing interests with shareholders for the Company’s Directors, Executive Officers and executive fellows (excluding External Officers and part-time Directors and whose who do not reside in Japan).

3. Remuneration structure for External Directors and Audit & Supervisory Board Members

The remuneration for External Directors consists of only base remuneration without performance-linked remuneration paid.
Also, remuneration for Audit & Supervisory Board Members is determined through discussions among Audit & Supervisory Board Members. Only base remuneration is paid without linking to performance from the perspective of ensuring a high degree of independence.

4. Others

  1. When the performance-linked stock remuneration system was introduced, the Board of Directors resolved to stipulate activities that are not complying with the stock delivery regulations and a clause that makes it possible to request that a person who has violated returns the amount equivalent to the delivered shares, etc. and a clause that makes it possible to confiscate the awarded points.
  2. We have a rule that Directors (excluding External Directors) shall uniformly acquire shares of the Company through the Officers’ Stock Ownership Association based on the contribution calculated from the position and remuneration amount from the perspective of reflecting medium- to long-term performance and shall hold all of the acquired shares during their tenure of office for the purpose of sharing value with shareholders.

5. Process to determine officers’ remuneration

  1. Based on the medium-term management plan, evaluate the results including the status of achievement of the business plans drawn up at the beginning of the fiscal year at a performance evaluation meeting to be held in late May, every year.
  2. At the performance evaluation meeting mentioned in a. above, the President and Representative Director evaluates officers.
  3. Consult on the evaluation result of b. above and the amount of remuneration based on the evaluation result at the Remuneration Committee to be held in mid-June each year.
  4. The Board of Directors shall resolve the amount of remuneration for officers, which has been mentioned to and discussed with the Remuneration Committee mentioned in c. above.
  5. Pay the annual amount of officers’ remuneration for officers, which has been resolved at the meeting of the Board of Directors as described in d. above, in monthly installments from July.
  6. As for the level of the amount of officers’ remuneration, we ask a third-party organization to conduct a survey on officers’ remuneration to analyze trends of other companies from July each year.
  7. We report the result of the officers’ remuneration survey conducted by the third-party in f. above to the Remuneration Committee in November each year to inquire about a revision of the amount of officers’ remuneration.

Performance-linked stock remuneration is calculated based on the stock delivery regulations, and there is no room for discretion of the Representative Director or the Remuneration Committee.

6. Activities of the Advisory Committee with respect to determination of officers’ remuneration

A total of three Remuneration Committee meetings were held in the fiscal year ended March 31, 2023, to inquire about the validity of the remuneration of the Company based on comparative analysis between the officers’ remuneration amount of the Company and the officers’ remuneration of other companies, which had been made by the research company. The Board of Directors put a proposal on officers’ remuneration on the agenda based on the result of the advice given by the relevant organization.
In addition to the consultation, two sessions of exchanging opinions on the theme of the way officers’ remuneration as an incentive for officers ought to be were held to discuss the direction of revising the officers’ remuneration that will contribute to the improvement of corporate value.

7. Method of calculating remuneration

1) Base remuneration

Paid based on the magnitude of the role and the scope of responsibility for each position.

2) Overview of calculation of performance-linked remuneration

We have decided to pay within a range of 0% to 50% of the performance evaluation coefficient specified for each position against the base remuneration amount in conjunction with the degree of achievement against the company performance indicators specified based on the annual management plans for each fiscal year.
The amount of payment is calculated by making organizational performance evaluation and individual performance evaluation each on a scale of five points for each officer for the performance-linked remuneration amount determined according to the company performance evaluation. (Organizational performance evaluation: personal performance evaluation = 3:7)
In the standard model for the allowance, in case that performance evaluation coefficient of the company is 30%, if the organizational performance evaluation/individual performance evaluation is AA, it will be 33%. Similarly, it will be 27% for BB, 20% for CC, 13% for DD, and 7% for EE.

3) Performance-linked stock remuneration

For performance-linked stock remuneration, “stock delivery regulations” were established upon introducing the system. Based on the degree of achievement against the company performance indicators of the management plans as stipulated in the regulations, points are to be awarded within a range of 0% to 15% of the base remuneration amount specified for each position, and shares are to be granted according to the points.
As for the reason for selecting the corporate performance indicators, in order to steadily realize the corporate value improvement expected by shareholders, we have set “consolidated operating income amount,” “EPS” and “gross profit from service-type business” as financial indicators to pursue growth of business, and “job satisfaction,” “customer/service satisfaction” and “business partner satisfaction” as non-financial indicators to pursue improvement of satisfaction of stakeholders with the Company.

Remuneration for Directors and Audit & Supervisory Board Members (Year ended March 31, 2023)


Recipients
(Persons)
Remuneration
(Millions of yen)
Remuneration by type
Basic remuneration Performance-linked remuneration Performance-linked
Stock compensation
Directors
(External Directors)
9
(3)
282
(32)
193
(32)
67
(-)
21
(-)
Audit & Supervisory Board Members
(External Auditors)
6
(4)
70
(28)
70
(28)
-
(-)
-
(-)
Total
(External Directors and External Auditors)
15
(7)
352
(61)
263
(61)
67
(-)
21
(-)

Notes

  1. There is no employee portion of salaries for Directors who concurrently serve as employees for the fiscal year ended March 31, 2023. Also, no bonuses were paid because the Company has not implemented an Officer retirement benefit system.
  2. As of the end of the fiscal year ended March 31, 2023, there are nine (9) Directors (including three (3) External Directors) and five (5) Audit & Supervisory Board Members (including three (3) External Audit & Supervisory Board Members). It is different from the above-mentioned number of Audit & Supervisory Board Members because it includes one (1) External Audit & Supervisory Board Member who retired at the conclusion of the 14th Annual General Meeting of Shareholders, which was held on June 24, 2022.
  3. It has been resolved at the first Annual General Meeting of Shareholders, which was held on June 25, 2009, that the amount of remuneration for Directors and Audit & Supervisory Board Members (base remuneration and performance-linked remuneration) shall be 400 million yen or less per year (of which, 50 million yen or less for External Directors) and 85 million yen or less per year for Audit & Supervisory Board Members. At the conclusion of the relevant General Meeting of Shareholders, there are eight (8) Directors (including two (2) External Directors) and four (4) Audit & Supervisory Board Members (including three (3) External Audit & Supervisory Board Members).
  4. Performance-linked stock remuneration is the amount of expenses recorded during the fiscal year ended March 31, 2023 for four (4) Directors (excluding External Directors and part-time Directors).
    As for the relevant performance-linked stock remuneration, it was resolved at the 10th Annual General Meeting of Shareholders, which was held on June 26, 2018, that the number of shares of the Company to be delivered through the trust shall be limited to 132,100 shares per fiscal year (including 99,000 shares for the Company) by contributing a maximum of 700 million yen (including 520 million yen for the Company) to the relevant trust for each target period (three fiscal years) for Directors (excluding four (4) External Directors and part-time Directors), corporate executive officers and executive fellows and also partial revisions such as adding directors (excluding external directors and part-time directors) and executive officers of INTEC Inc., a subsidiary of the Company, as eligible persons and continuation of the system were resolved at the 13th Annual General Meeting of Shareholders, which was held on June 24, 2021.

Constructive Dialogue with Shareholders

TIS will actively engage in constructive dialogue with shareholders based on the IR Policy in order to contribute to the Company's sustainable growth and the enhancement of its medium- to long-term corporate value. In addition, the Company will strive to develop a system to promote constructive dialogue with shareholders.
In the case of dialogue with shareholders, TIS will pay sufficient attention to the fairness of information disclosure and manage internal information appropriately in accordance with the Rules for Prevention of Insider Trading

Status of Dialogue with Shareholders, Etc.

In fiscal 2023, led by the President and Representative Director, TIS actively promoted constructive dialogue with shareholders in Japan and overseas (mainly in the United States, Europe, and Asia) engaged in active management. While the attributes of active management are diverse, they are centered on growth and value. Most of the people on the shareholder side were analysts and fund managers.
The main dialogue themes and matters of interest to shareholders identified by TIS included the progress of structural transformation aimed at increasing corporate value, the status of efforts to improve business growth and profitability based on this transformation, and future prospects, as well as the need to invest in human resources, the Company’s most important management capital, and the policy for dealing with this. Financial strategies and shareholder returns that take capital efficiency into consideration were also discussed. Details of those dialogs were shared and discussed within the Company through quarterly reports to the Board of Directors and other forms of feedback and utilized to review management strategies and formulate management plans.

IR Events in Fiscal 2023 Frequency Notes
Results briefings for analysts and institutional investors 4 times
Other briefings for analysts and institutional investors 2 times Business briefings: 1 time
Extraordinary briefing on timely disclosure: 1 time
Small meetings for analysts and institutional investors 257 times Of which overseas investors participated: 151 times
Total number of participating investors: 464 companies
Small meetings by President 2 times sell-side analysts: 1 time, buy-side analysts: 1 time.
Overseas roadshows 2 times
IR conferences for individual investors 2 times

* Conducted in person or online, taking each situation and other factors into account.

Cross-shareholdings

1. Policies for cross-holdings of shares

In accordance with the basic corporate governance policies set by the Company, the Company will not, in principle, make any new acquisitions of domestic listed shares, and works to reduce domestic listed shares as much as possible by positioning it as a priority issue. On the other hand, only if it is judged that it will contribute to the sustainable growth of the Group as well as the enhancement of its medium- to long-term corporate value, shares of unlisted companies, including start-up and venture companies may be strategically held. Specifically, in order to proactively promote business deployment focusing on the social issues to be resolved, which the Company has selected to contribute to the realization of a sustainable society, including “financial inclusion,” “concentration in cities/decline in rural areas” and “health issues,” collaboration and co-creation activity with those companies and stable alliance and cooperative relationships may be essential for continuous creation of business opportunities and utilization of technologies. We position share holdings for that case as an investment that meets the growth strategy of the Group, and define them as “strategically held shares.”
Upon verifying the rationality of continuing to hold shares, we classify shares held into the following two categories and set a verification method for each of them.

Capital alliance partners

After making an investment, the Company will continue to hold the shares for a certain period of time determined by the Company as a period to establish the foundation of the strategic alliance.
After a certain period of time has passed, we will verify to check the progress status of the collaborative business and to see whether or not there are ongoing transactions through qualitative evaluation. As a result of the verification, if it is judged that there is little significance in holding them, listed shares will be sold based on the market conditions, etc. and unlisted shares will be sold as soon as a buyer is found in consultation with the issuer.

Others (items not covered by the above)

We will calculate the percentage of the total amount of the business-related revenue and dividends from each issuer and its affiliated companies against the amount of shares of each stock held as cross-shareholdings, which is recorded on the balance sheet to check to see whether or not it exceeds 10%. As a result of the verification, also considering the qualitative evaluation such as future transaction prospects, if it is judged that there is little significance in holding them, listed shares will be sold based on the market conditions, etc. and unlisted shares will be sold as soon as a buyer is found in consultation with the issuer.

Also, while proceeding with reduction in line with the above-mentioned policies and concepts, we aim to lower the percentage of the amount of the cross-shareholding shares recorded on the balance sheet against the consolidated net assets to the 10% level. To achieve this goal, we reduced 17 issues of shares held for cross-holdings including 14 issues sold in full. Due to fluctuations in the market value in the stock market in addition to the above-mentioned reduction, the amount recorded on the balance sheet for the fiscal year ended March 31, 2023 decreased by 26.7 billion yen to 27.6 billion yen. As a result, the above-mentioned percentage in the fiscal year ended March 31, 2023, is 8.9% (down 9.0 percentage points year on year), and the percentage excluding strategically held shares is 4.0%.

2. Criteria for exercising voting rights for cross-shareholdings

We will exercise voting rights for listed shares held properly after comprehensively judging whether or not it will contribute to the sustainable growth of the Group and the investees as well as the enhancement of their medium- to long-term corporate value among others also while considering the proxy advisory policies of proxy advisory firms.

3. Number of issues held by the Company for purposes other than portfolio investment and total amounts recorded on the balance sheet

Category Fiscal 2022, ended March 31, 2022 Fiscal 2023, ended March 31, 2023
Number of issues total 85 issues 74 issues
(of which) Strategic shareholdings 52 issues 50 issues
Cross-shareholdings 33 issues 24 issues
Total balance-sheet amount total 54,359 million yen 27,628 million yen
(of which) Strategic shareholdings 18,946 million yen 15,185 million yen
Cross-shareholdings 35,413 million yen 12,443 million yen

Note: During the fiscal year ended March 31, 2023, for the purpose of strategic collaboration to promote open innovation, etc., we newly acquired shares of three capital alliance partner companies including a venture company (301 million yen).

4. Relationships with strategic shareholders

If strategic shareholders of TIS indicate an intention regarding the sale, etc. of TIS shares, we will respond appropriately without preventing such a sale. Moreover, we will not conduct transactions that lack economic rationality with strategic shareholders.

Takeover Defense Measures

TIS has not introduced takeover defense measures.

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Update : December 11, 2023, 15:21