Corporate Governance
Basic Approach to Corporate Governance
The Board of Directors of Sumitomo Pharma Co., Ltd. (the "Company") passed a resolution on the following Basic Policy on Corporate Governance, and has been continually implementing the basic policy.
Factors That Could Significantly Influence Corporate Governance
Sumitomo Chemical Co., Ltd. is the parent company holding 51.78% (as of September 30,
2024) of the voting rights of the Company.
However, the Company secures a certain level of independence from the parent company, and engages in business
activities based on its own management judgments without any restrictions from the parent company (such as
prior approval by the parent company). The Company retains some personnel seconded from the parent company
based on the Company's own judgment, and believes this has no influence on the Company's management or
business operations.
Based on the above, the Company understands that the interests of its retail shareholders are not impaired by
its parent company.
Management Structure
The Company has established the Basic Policy on Corporate Governance and commits
itself to continuously pursuing the establishment of a corporate governance system which is highly effective,
aiming for the fuller realization of its Mission.
The Company has elected the organizational structure of
a "Company with an Audit & Supervisory Board" and has appointed Independent Outside Directors to audit the
execution of duties by the Directors, independent of the Board of Directors. In addition, the Company has
adopted an executive officer system to separate management supervision from business execution.
The Board
of Directors consists of eight members (including one female Director), including four Independent Outside
Directors. The Board of Directors
holds a meeting once a month, in principle, and resolves and reports on material business matters .
The
Audit & Supervisory Board consists of five members (including one female Director), including three
Outside Audit & Supervisory Board
Members. The Audit & Supervisory Board holds a meeting once a month, in principle, discusses and resolves
material matters relating to auditing, and also examines in advance matters to be submitted to the Board of
Directors for discussion.
The Company has the Nomination and Compensation Committee, which holds a
meeting as necessary, as a consultative body to the Board of Directors for enhancing the objectivity and
independence of the functions of the Board of Directors on matters such as nomination of the candidates for
Directors and Audit & Supervisory Board Members, and decisions on compensation of Directors. The
Nomination and Compensation Committee
consists of six members, the majority (four members) of which being Independent Outside Directors, and the
chairperson
being appointed from the Independent Outside Directors, placing importance on the independence of the
Nomination and Compensation Committee.
The Company has the Supervisory Committee for
Conflict of Interests in Transactions between Group Companies, which holds a meeting as necessary, as a
consultative body to the Board of Directors in order to ensure that the Company's significant transactions,
etc. with its parent company or any subsidiary of the parent company (excluding the Company and its
subsidiaries) are fair and reasonable and help protect the interest of minority shareholders of the Company.
The Committee consists of all the Independent Outside Directors, and the chairperson be appointed from among
the members by mutual vote of the members.
The Global Management Committee holds meetings twice a month,
in principle, as a consultative body to the President and CEO for the decision making for important business
matters, based on the basic policy determined by the Board of Directors.
In addition, the Executive
Committee holds a meeting once a month, in principle, for the purpose of appropriately sharing among the
Directors and Audit & Supervisory Board Members, including the Outside Directors and the Outside Audit
& Supervisory Board Members, as well as Executive Officers and other related persons, the status of the
execution of business and material matters relating to the execution of business.
Skill Sets for Directors and Audit & Supervisory Board Members and Skills Matrix
The Knowledge, Experience and Skills to be Held by the Board of Directors and the Audit & Supervisory Board as a Whole (Skill Sets for Directors and Audit & Supervisory Board Members) which was determined by the Board of Directors, and the Skills Matrix of the current Directors and Audit & Supervisory Board Members are available on Skill Sets for Directors and Audit & Supervisory Board Members and Skills Matrix.
Audit System
The Audit & Supervisory Board consists of five members, including three Outside
Audit & Supervisory Board Members. In accordance with the audit policies, audit plans, allocation of
duties among members and other relevant matters determined by the Audit & Supervisory Board, the members
audit the implementation status of the internal control system, while attending meetings of the Board of
Directors and the Executive Committee and other various briefing sessions (as for the Full-time Audit &
Supervisory Board Members, by attending the meetings of the Global Management Committee and other important
meetings) and monitoring legality and appropriateness of management decisions
by the Directors, by holding meetings with the Representative Directors on a regular basis, receiving reports
from the Directors and employees on the status of the execution of their duties, requesting additional
explanations as necessary, conducting field audits at principal offices, reviewing important approval documents and taking other necessary actions. In
addition, each member strives to establish an appropriate environment in order to enhance the effectiveness of
audit practices by having opportunities on a regular basis for collaboration with the Accounting Auditor and
the Internal Auditing Department, and for collaboration in a three-party auditing structure. The
implementation status of the internal control system of subsidiaries of the Company is audited by holding meetings with the representative
directors and other relevant persons of the subsidiaries located in Japan and abroad, holding meetings with
audit & supervisory board members of the subsidiaries as necessary and seeking to obtain relevant
information.
Accounting audits are conducted by KPMG AZSA LLC, under the audit
agreement.
The Company has established the Internal Auditing Department, which reports directly to the
President and CEO of the Company. The Internal Auditing Department conducts internal audits for not only the
Company but also its subsidiaries to check the basic elements necessary for achieving the objectives of
internal control, from a fair and independent standpoint.
Development of an Internal Control System
The Board of Directors of the Company passed a resolution on the basic policies for the development of a system to ensure appropriate business operation. The status of implementation efforts pursuant to the basic policies for each year is reported based on the Companies Act at the Board of Directors meeting held in the last month of the fiscal year and the basic policies are revised as necessary to improve the system.