We have adopted an organizational framework with Audit & Supervisory Board Members (or the Audit & Supervisory Board), focusing on the enhancement of functions of the Board of Directors and the Audit & Supervisory Board, as part of endeavors to bolster corporate governance. In addition, in order to ensure independence and objectivity with regard to the appointment and remuneration of the senior management and Members of the Board of Directors, we have established the Executive Appointment Meeting and the Executive Compensation Meeting, where Outside Directors account for a majority and one of them serves as chairperson.
Regarding business execution, we have adopted the Corporate Officer System to improve management efficiency and expedite the decision-making process. Furthermore, important matters regarding business execution are deliberated and determined at Management Meetings and other meetings chaired by the responsible Members of the Board of Directors or Corporate Officers, depending on the importance and content of the management issues. Overall, we strive for optimal business operations in consideration of mutual supervisory functions.

Corporate Governance Structure

Board of Directors

We work to ensure an appropriate numbers and composition of the Board of Directors, with focus on expediting and accurate decision-making process while enhancing management transparency and supervisory functions.
We nominate candidates for Member of the Board of Directors by taking into consideration the balance of their knowledge, experience, and capability, as well as diversity, so that the Board of Directors as a whole can make technical and comprehensive management decisions. In addition, we nominate candidates for Independent Outside Director from those who have high level of expertise in corporate management on the premise that they satisfy the standards for Independent Directors set out by Tokyo Stock Exchange, with a basic policy of at least one third of Members of the Board of Directors being Outside Directors (currently, three of the seven Members of the Board of Directors are Outside Directors, including one female Member of the Board of Directors). The term of office for Members of the Board of Directors is set at one year to maintain clarity of the responsibilities of management and to ensure we can respond quickly to changes in the business environment.
The meeting of the Board of Directors is held once every month in principle, with the attendance of Members of the Board of Directors and Audit & Supervisory Board Members, to decide on important management issues and to supervise the status of the execution of duties by Directors. In order for Members of the Board of Directors and Audit & Supervisory Board Members to appropriately fulfill their roles and responsibilities, the attendance rate at the meeting of the Board of Directors is, in principle, set at 75% or more. Taking into account the time required to be devoted on duties as our Member of the Board of Directors or Audit & Supervisory Board Member, we set a limit on the number of companies its Members of the Board of Directors and Audit & Supervisory Board Members are allowed to concurrently serve as officers or in other capacity (appointment as officers of listed companies, etc.) at up to, in principle, four companies not including us.

• Positions, Assignments or Important Concurrent holding of Positions are as of April 1, 2023.
• Isao Ono left the board as of the end of the 75th Ordinary General Shareholders Meeting held on June 22, 2023.

Audit & Supervisory Board

From the perspective of strengthening audit functions, the Audit & Supervisory Board is composed of two independent Outside Audit & Supervisory Board Members　(including one female Audit & Supervisory Board Member) along with two Full-time Audit & Supervisory Board Members who have expert knowledge on our business operations and who are highly skilled in collecting auditing information. These Outside and Full-time Audit & Supervisory Board Members work together to achieve high auditing efficiency. The Meeting of the Audit & Supervisory Board is held regularly. Audit & Supervisory Board Members strive to enhance the management supervision function by enhancing the efficiency through cooperation with the Internal Audit Department (Business Audit Department) and audit effectiveness through cooperation with the Accounting Auditor.

• Positions, Assignments or Important Concurrent holding of Positions are as of April 1, 2023.

Skill Matrix of Members of the Board of Directors and Audit & Supervisory Board Members

• Skill certification standard: Internal Members of the Board of Directors: Experience in the pharmaceutical industry and in managerial positions; Outside Directors and Audit & Supervisory Board Members: Fields in which they are expected to give supervision, auditing, and advice

Executive Appointment Meeting

The Executive Appointment Meeting consists of five members, including three Outside Directors, the President & CEO, and 1 internal director in charge of human resources, and is chaired by an Outside Director. All members attend the Executive Appointment Meeting to ensure the transparency and objectivity of appointment of candidates for Members of Board of Directors, Audit & Supervisory Board Members, and senior management, and to discuss the policies for the succession planning to the chief executive officer (President, CEO) and senior management, and those of our corporate governance. Executive appointments to be submitted to the Board of Directors are discussed at Executive Appointment Meeting, and submitted and approved at the Board of Directors.

Executive Compensation Meeting

The Executive Compensation Meeting consists of four members, including three Outside Directors and the President, Representative Director, and Chief Executive Officer ("Representative Director") and is chaired by an Outside Director. All members attend the Meetings to ensure transparency and objectivity of the amount of remuneration for each Member of the Board of Directors and the calculation methods thereof and deliberations are held on the appropriateness and future form of the executive remuneration system. In addition, when examining remuneration related to performance evaluations, such as bonuses for the Representative Director, etc., the Representative Director is required to leave the meeting and is not to be directly involved in the examination. Remuneration of Members of the Board of Directors is proposed to and determined by the Board of Directors after being examined at the Executive Compensation Meeting.

We implement all the principles of the Corporate Governance Code stipulated by the Tokyo Stock Exchange. We continue to improve the efficiency, soundness and transparency, etc. of the management, and to develop our system to be more suitable for our business operations, through an annual evaluation of the effectiveness of the Board of Directors.

Please refer to the “Corporate Governance Report” below for details on our corporate governance situation.

We have established an internal system in accordance with the basic views on Internal Control System set forth by the Board of Directors. The Internal Audit Department (Business Audit Department) performs audits to ensure compliance, make efforts to identify internal control issues early, and maintain and improve the appropriateness of organizational management. In addition, the status of development and operation of the Internal Control System is regularly reported to the Board of Directors to ensure continual improvement of organizational operations.
We are also fully aware of the need to take a firm attitude against anti-social forces and organizations that threaten the order and safety of society.

Operational Management Structure

We effort to maintain and improve the efficiency and accuracy of decision-making and business execution by conducting multifaceted reviews of important business executive matters, including those to be reported to the Board of Directors, at the Management Meetings and other meetings, which are comprised of the President & CEO, Members of the Board of Directors, and Cooperate Officers responsible for each department, as well as the manager of relevant departments. We have also introduced a Corporate Officer System, under which we strive to improve management efficiency and expedite the decision-making process through delegation of authority and other measures.
The Management Meeting is subject to audit by way of attendance by the Audit & Supervisory Board Members, review of the minutes, and other means.