Corporate Governance

Corporate Governance

Fiscal 2020 Objectives Fiscal 2020 Achievements Self-Evaluation
  • Change to the new system of Chairman & CEO and President & COO, with the Chairman leading overseas business expansion and the President leading business expansion in Japan
  • Step up the comprehensive strength of the company as “One Sharp” by having the chairman and president be responsible for building company-wide strategy and having five senior executive managing officers be responsible for business field and region, thus building distinct systems for business strategy and regional strategy
  • Amidst a harsh business environment created by the prolonged impact of the Covid-19 pandemic, as well as a semiconductor shortage and other associated issues, successful business expansion under “One Sharp” was carried out, achieving an increase in both sales and profits over the previous year
  • Inappropriate accounting by subsidiaries was identified, and Group governance-related issues remain
Priority Objectives for Fiscal 2021
  • Pursue structural development aimed at further improving the functioning of the Board of Directors
  • Strengthen Group governance
  • Ensure comprehensive, ongoing implementation of auditing measures to prevent the reoccurrence of inappropriate accounting-related issues
  • Self-evaluation: ★★★ Achieved more than targeted / ★★ Achieved as targeted / ★ Achieved to some extent

Basic Policy

Sharp’s basic policy on corporate governance is to maximize corporate value through timely and appropriate management while ensuring transparency, objectivity, and soundness supported by the concept, “Our future prosperity is directly linked to the prosperity of our customers, dealers and shareholders...” as stated in the company’s Business Philosophy.

Based on this policy, Sharp is strengthening the supervisory function over the Board of Directors and enhancing the flexibility of decision-making by appointing outside director and operating an Audit and Supervisory Committee.

Sharp has also introduced an executive officer system that clearly separates supervisory and decision-making functions from business execution functions, thereby creating a structure that steadily facilitates nimble and efficient business execution. Further, Sharp is implementing deep-rooted enhancements to individual fields of business and operations by establishing a divisionalized management system in which each business unit assumes responsibility for their earnings, to be regulated by the Chairman’s Office and the Corporate Strategic Planning and Control Group at the head office.

In addition, Sharp has formulated the Sharp Group Charter of Corporate Behavior as action guidelines for all directors, executives, and employees to raise their awareness of compliance, and it is working for its permeation across the entire Sharp Group.

Corporate Governance System

< Supervisory and Decision-Making Functions >

Sharp Corporation Board of Directors meetings are held on a monthly basis in principle to make decisions on matters stipulated by law and on management-related matters of importance, and to supervise the state of business execution. The Board of Directors comprises internal directors who are experts in the fields of business of the Sharp Group and outside directors appointed from talent with high specialism and abundant experience in fields such as social and economic trends and management.

Sharp has established a voluntary Nominating Committee and Compensation Committee as advisory committees to the Board of Directors. The Nominating Committee recommends candidates for directorships to the Board of Directors and the Compensation Committee determines the value of remuneration and bonus packages for directors undertaking a role on the Board of Directors. Additionally, matters pertaining to dealings between the parent company group and the Sharp Group that are within the purview of the Executive Management Meeting shall, before any decision is made, be subject to study and approval by a special committee with regard to the necessity, reasonableness, and appropriateness of the dealings in question.

Further, as a strategy to enhance corporate governance, more than half of all committee members are outside directors, and each committee chairperson is an outside director. Similarly, Sharp has established an Internal Control Committee to serve as an advisory committee to the Board of Directors. The Internal Control Committee discusses basic policy, consolidation and operation of internal control and internal audits, reports to the Board of Directors, and makes decisions on arising matters.

Composition of Supervisory and Decision-Making Organs

  All Members
(Persons)
Internal Directors
(Persons)
Outside Directors
(Persons)
Non-directors
(Persons)
Chairperson /
Committee Chair
Board of Directors 7 3 4 0 Chairperson:
Chairman & CEO
Nominating Committee 5 2 3 0 Committee chair:
Independent outside director
Compensation Committee 5 2 3 0 Committee chair:
Independent outside director
Special Committee 3 0 3 0 Committee chair:
Independent outside director
Internal Control Committee 7 2 3 2 Committee chair:
Chairman & CEO

Directors (except Audit and Supervisory Committee members) /Directors who are Audit and Supervisory Committee members

  All Members
(Persons)
Internal Directors
(Persons)
Outside Directors
(Persons)
Independent Directors
(Persons)
Term
Directors (except Audit and Supervisory Committee members) 4 3 1 1 1 year
Directors who are Audit and Supervisory Committee members 3 0 3 2 2 years

< Business Execution Functions >

The Board of Directors’ rules stipulate matters on which the Board must decide upon. These matters include Sharp’s basic management policy, management plans, other important matters of management, and matters prescribed by laws, regulations, and articles of incorporation. As for decisions on other matters of management and business operations, these are stipulated in in-house rules such as the Internal Authorization Rules, and the most relevant rules are used to make decisions.

For matters that are key to company-wide management and business operations, these are deliberated on at an Executive Management Meeting that comprises Sharp executives. The meeting convenes in a timely manner, which allows rapid management decision-making.

< Auditing Functions >

The Audit and Supervisory Committee is composed of three directors, all of whom are outside directors with a high level of expertise. Two of them have specialisms to an appropriate extent in finance or accounting. Further, two members are independent directors and one is a full-time member of the Audit and Supervisory Committee. On the Sharp website can be found the “Standards for Independence of Outside Directors,” which stipulates standards for judging the independence of outside directors.

The Audit and Supervisory Committee exchanges opinions periodically with the executive directors, accounting auditors, and the head of the internal audit division, and seeks to attain legality, propriety, and efficiency in business execution. Sharp has also established an Audit and Supervisory Committee Office composed of employees with specialisms in specific fields such as accounting and law, which supports the Audit and Supervisory Committee.

Sharp undergoes audits by its accounting auditor, PricewaterhouseCoopers Arata LLC, in order to ensure the reliability of financial documents and other finance-related information. Through audits, Sharp receives proposals on how to make operational improvements. To preserve the independence of the internal audit division from the business execution divisions, an Internal Audit Division has been established directly under the jurisdiction of the President.

It audits the propriety of business execution and the fairness and efficiency of management. It also makes defined proposals on operational and business improvements as a means of increasing management efficiency and supporting the internal control system.

Management of Related Party Transactions and Others*

Sharp has established the Regulations on Related Party Transactions. Sharp manages these transactions so that they will not adversely affect the company’s finances or business performance.

Sharp has also created a list of related parties. When entering into business with the counterparty, Sharp determines whether or not the transaction should be considered a related party transaction. Such transactions undergo all of the internal procedures that are followed for conventional transactions. In addition, Sharp assesses the necessity, reasonability, and appropriateness of the transaction terms and conditions. This allows Sharp to exercise prudence when deciding on business deals. Once a year Sharp verifies the content of transactions specified by outside directors, and the results are reported to the Board of Directors

  • Related party transactions and management-involved transactions:
    Related party transactions are transactions with a company or person having a certain level of connection with Sharp, including Sharp’s officers, subsidiaries, and major shareholders.
    Management-involved transactions are transactions that Sharp’s management personnel have introduced or planned.

Corporate Governance System of Sharp Corporation (as of June 29, 2021)