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We, at Komatsu Ltd., believe our corporate value is the total sum of trust given to us by society and all stakeholders. To become a company which enjoys more trust from shareholders and all other stakeholders, we are working to strengthen corporate governance, improve management efficiency, advocate corporate ethics and ensure sound management on a group-wide basis. To further improve the transparency of management for our shareholders and investors, we disclose information in a fair and timely manner and actively engage in investor relations’ activities by holding meetings with shareholders and investors.
Establishment and Improvement of Corporate Governance
In 1999 Komatsu Ltd. introduced the Executive Officer System and has been working to separate management decision making and supervisory functions from executive functions to the extent permitted by laws and regulations. At the same time, we also limit the Board of Directors to a small number of members and appoint Outside Directors and Outside Audit & Supervisory Board Members. To improve the effectiveness of discussions at meetings of the Board of Directors, we have worked to reform their operational aspect, primarily by putting in place a system to ensure thorough discussions of important management matters and prompt decision making. We have also established the International Advisory Board (IAB) as a means to supplement executive functions.
Corporate Governance of Komatsu
Board of Directors
Komatsu Ltd. holds Board of Directors’ meetings periodically at least once every month. The Board of Directors deliberates and makes resolutions on important matters, determines management policies of Komatsu, and rigorously controls and supervises the execution of duties by all members of the executive management team including Representative Directors. Of the 8 Directors on the Board, three are Outside Directors to ensure transparent and objective management.
Audit & Supervisory Board
The Audit & Supervisory Board consists of five (5) Audit & Supervisory Board Members, including three (3) or more Outside Audit &Supervisory Board Members. The Board meets periodically at least once every month in principle and determines audit policies and the division of duties among Audit & Supervisory Board Members. Based on audit policies, each Audit & Supervisory Board Member audits the execution of duties by Directors and hears reports from members of the executive management team on their execution of duties, thereby performing appropriate audits. To assist the Audit & Supervisory Board Members in their duties, the Company has established the Office of Corporate Auditors’ Staff, allocates necessary staff, and budgets expenses, which are regarded as necessary to perform their duties based on audit plans, thereby performing appropriate management and execution.
- Independence Standards for Outside Directors and Outside Auditors
The Board of Directors of Komatsu Ltd. has determined the independence standards for Outside Directors and Outside Auditors.
We have established the Compliance Committee as the group to oversee compliance, and it regularly reports its reviews and activities to the Board of Directors. We shall also establish a system to ensure Directors and employees thorough compliance to business rules as well as laws and regulations through a variety of measures, including the provision of Komatsu Code of Worldwide Business Conduct, appointment of the Executive Officer in charge of compliance, and establishment of the Compliance Department. Through all of these, we work to supervise, educate and train Directors, Audit & Supervisory Board Members and employees. In addition, we shall establish the internal reporting system where those who are discretely reporting questionable actions in light of laws and regulations and business rules will not be penalized.