Corporate Governance
Basic Views on Corporate Governance
Daiwa Securities Group Inc. will respect the rights and interests of the shareholders, consider the position of all stakeholders and strive for sustainable growth and improvement of medium to long term corporate value through realization of our corporate principles "Building trust," "Placing importance on personnel," "Contributing to society," and "Maintaining healthy earnings results."
For that purpose, the Company practices group management based on a holding company structure, establishes a highly transparent and objective governance environment that conforms to international standards, realizes highly efficient oversight of group companies and builds a unified group management system that elicits synergies among Group companies.
The Company has adopted Three Committees system (a company with nominating committee, etc.) as an institutional design in order to supervise management through the following (1) and (2).
- (1)Making swift and decisive decisions by having the Board of Directors assign wide-ranging authority to Corporate Executive Officers and clarifying the division of the duties among Corporate Executive Officers
- (2)Improving transparency and fairness of the management by establishing three committees : the Nominating Committee, Audit Committee, and Compensation Committee with highly independent Outside Directors as a majority of the members
Furthermore, the Company proactively addresses corporate social responsibility activities in order to obtain trust from all of the stakeholders. There are indeed various aspects to corporate social responsibility, such as providing superior products, services, and sincere responses to customers; returning profits appropriately and disclosing information to shareholders appropriately; taking measures for labor environment and evaluation of the employees; establishing legal compliance and corporate ethics; environmental management; as well as social contribution.
The Company believes that these approaches, together with a strengthened corporate governance system which emphasizes transparency, mobility and efficiency will lead to the sustainable improvement of the corporate value.
Corporate Governance Guidelines
The Company’s Corporate Governance Guidelines define the basic framework and policies of the Daiwa Securities Group’s corporate governance.
| Daiwa Securities Group Inc. Corporate Governance Guidelines | |
|---|---|
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Corporate Governance System
The corporate governance system of the Company consists of the Board of Directors and the Three Committees (Nominating Committee, Audit Committee, and Compensation Committee) as a supervising body, Outside Director’s Committee as a subcommittee of the Board of Directors, Executive Management Committee and its subcommittees (Group Risk Management Committee, Group Compliance Committee, Disclosure Committee, Group IT Strategy Committee, and Overseas Management Committee) as an executive body, and Group Internal Audit Committee, which is in direct control of the CEO as an internal audit body.
Major Initiatives in Corporate Governance
| June 1998 | Elected outside auditors |
|---|---|
| April 1999 | Became the first listed Japanese company to adopt a holding company structure |
| Established the Advisory Board | |
| Established the Group Management Committee | |
| June 2000 | Established the Compensation Committee |
| June 2002 | Elected outside directors |
| Shortened directors’ terms of office from two years to one year | |
| July 2003 | Established the Internal Control Committee |
| June 2004 | Shifted to a Committee system (currently, a Company with Three Committees system) |
| October 2015 | Complied with the Corporate Governance Code |
| Established the Outside Director's Committee | |
| April 2017 | Appointed outside directors as chairs of all three committees |
| June 2020 | The majority of directors Shall be non-executive directors |
| April 2021 | Established Corporate Governance Guidelines |
| June 2021 | Added one more outside director, electing seven of 14 directors as outside directors |
| December 2021 | The Company selected for inclusion in the new Prime Market segment on the Tokyo Stock Exchange (transferred on April 4, 2022) |
Board of Directors
Role and responsibility
The Board of Directors determine core management matters such as basic management policy, matters related to appointment and dismissal of Corporate Executive Officers (Shikkoyaku), division of duties, command system, etc., internal control systems and risk management systems.
In order to make management decisions promptly and to enhance efficient group management, the Board of Directors delegates decision-making powers to the Corporate Executive Officers (Shikkoyaku) as much as possible.
In addition, by supervising the execution of duties of the Directors and the Corporate Executive Officers (Shikkoyaku), the Company aims to ensure the fairness and transparency of the Group management and to achieve sustainable growth and maximization of corporate value over the medium to long term based on the corporate philosophy.
The Board of Directors convenes at least once every three months; in FY2021, it convened 10 times.
Composition
The Board of Directors, in which a Board Chairman served as a chairman, consists of all Directors, of which between three and 20. In order for the Board of Directors to exercise the supervisory function over the management more appropriately, two or more and one-third or more of the members of the Board of Directors shall be independent Outside Directors with a high degree of expertise and a sense of ethics.
As a general rule, the majority of Directors do not concurrently serve as Corporate Executive Officers (Shikkoyaku). Regarding the personnel composition of the Board of Directors, the Company endeavors to ensure a balance of knowledge, experience and abilities, and diversity including gender, internationality, etc. The Company aims to increase the ratio of female Directors to 30% or more by 2030.
Following the June 2022 Shareholders Meeting, the Board of Directors consists of 14 members, seven of whom are Outside Directors and four of whom are female (two Internal Directors and two Outside Directors). Of its seven Internal Directors, five concurrently serve as Corporate Executive Officers (Shikkoyaku).
The members of the Board of Directors and their status of attendance in FY2021
In FY2021, all Internal and Outside Directors attended 100% of Board of Directors' meetings.
| Takashi Hibino (Chairman of the Board) | 10/10 |
|---|---|
| Seiji Nakata | 10/10 |
| Toshihiro Matsui | 10/10 |
| Keiko Tashiro | 10/10 |
| Akihiko Ogino | 10/10 |
| Sachiko Hanaoka | 10/10 |
| Hiromasa Kawashima | 10/10 |
| Michiaki Ogasawara (Outside Director) | 10/10 |
| Hirotaka Takeuchi (Outside Director) | 10/10 |
| Ikuo Nishikawa (Outside Director) | 10/10 |
| Eriko Kawai (Outside Director) | 10/10 |
| Katsuyuki Nishikawa (Outside Director) | 10/10 |
| Toshio Iwamoto (Outside Director) | 10/10 |
| Yumiko Murakami (Outside Director) | 8/8 |
*Attendance rates for the nine meetings held following their appointment as directors in June 2021
Supporting system
In order to provide support for the Board of Directors Secretariat and for Outside Directors, a Corporate Secretariat was established in April 2020.
The Skill Matrices of Outside Directors
Evaluating the Effectiveness of the Board of Directors
The Group has conducted effectiveness evaluations of the Board of Directors each fiscal year since FY2014 for the purpose of identifying any issues hindering the greater effectiveness of the Board of Directors and for making improvements.
All of the Directors were asked to answer a survey about the roles, duties, structure, management methods and the status of discussions of the Board of Directors. They were then interviewed by specialized agencies, and the Company analyzed and evaluated the results of those interviews.
The results of the evaluation were reported to the Board of Directors and discussed by the directors in order to implement PDCA cycle. The Company endeavors to maintain and enhance the effectiveness of the Board of Directors using such PDCA cycle.
Addressing the Opinions of the FY2020 Evaluations
1. Strengthening of the Medium-term Management Plan monitoring
Concerning the monitoring of the Medium-term Management Plan by the Board of Directors, efforts were made to secure more time for discussion and to improve those discussions. With regard to the monitoring of Group companies, discussions were held based on reports from the presidents of each company.
2. Strengthening of risk monitoring
As far as Top Risks are concerned, in light of growing social interest in SDGs/ESG issues, including climate change, geopolitical risks, fears of rising inflation and interest rates, DX(digital transformation), and cyber security as well as changes in the business environment, the scope and definition of major risks were reviewed and decided by the Board of Directors (reflected in the risk appetite statements). Discussions on monitoring important investment projects and cyber security were also held at Board of Directors' meetings.
3. Continuation of discussions on SDGs and ESG
The decision was made at a Board of Directors' meeting to formulate/revise the Environmental and Social Policy Framework and to set targets for reducing greenhouse gas (GHG) emissions (the formulation of the Daiwa Securities Group Net Zero Carbon Declaration).
4. Other
Discussions on human capital were held at Board of Directors' meetings. At meetings of the Outside Directors' Meeting, opinions were exchanged with outside directors on the basis of the CEO's summaries since his appointment.
Overview of the results of the Effectiveness of the Board of Directors in FY2021
Regarding the evaluations of the effectiveness of the Board of Directors in FY2021, the Company evaluated the following items with reference to the advice of specialized agencies and confirmed that the effectiveness is ensured.
Each directors awarded high marks to the monitoring of the Medium-term Management Plan, reports from the presidents of major subsidiaries, and discussions on Top Risks. The themes mentioned as those that should continue to be addressed going forward included SDGs/ ESG, DX, cyber security, human capital, geopolitical risk, and economic security.
The Company will continuously endeavor to enhance the effectiveness of the Board of Directors to earn trust of various stakeholders and improve corporate value sustainably.
| Major discussion topics covered by for the FY2021 Board of Directors | |
|---|---|
| Major resolution items | Current Medium-term Management Plan review Management policy Risk appetite statements (second-half and following first half-year) Selection for inclusion in the new market segment (Prime Market) Environmental and Social Policy Framework Greenhouse gas (GHG) emissions reduction target (Net Zero Carbon Declaration) Financial results, dividends/acquisition of treasury stok, executive appointments, etc. |
| Major reporting items | Annual plan monitoring Reports from major Group companies Risk monitoring Important new businesses, investments, and business alliances, and group restructuring Response to LIBOR reforms Response to revised Corporate Governance Code Engagement status with shareholders and investors, etc. Reports from the Nominating Committee, Audit Committee, and Compensation Committee Discussions on cyber security and human capital |
Nominating Committee
Role and responsibility
The Nominating Committee examines the composition of the Board of Directors and the basic idea of candidates for Director in consideration of corporate governance, and selection of candidates for Director, the succession plan of the CEO, etc. In order to nominate Directors from multiple points of view, the specialized expertise of Outside Directors is taken into consideration.
The meetings of the Nominating Committee are held once or more a year. In FY2021, there were six meetings in total.
Composition
Nominating Committee is chaired by an Outside Director, and consists of a total of seven members, of whom five are Outside Directors and two are Internal Directors.
Nominating Committee members
Chairperson Michiaki Ogasawara (Outside Director)
Members Takashi Hibino, Seiji Nakata, Hirotaka Takeuchi (Outside Director), Eriko Kawai (Outside Director), Katsuyuki Nishikawa (Outside Director), and Toshio Iwamoto (Outside Director)
Audit Committee
Role and responsibility
The Audit Committee is in charge of auditing the execution of duties by the Directors and Corporate Executive Officers (Shikkoyaku), auditing business reports and financial statements, etc., preparing audit reports, and determining the content of proposals to be submitted at shareholders meetings regarding the election or dismissal and non-reappointment of the Accounting Auditor.
Audit Committee members attend meetings of the Board of Directors, and Audit Committee members selected by Audit Committee attend the Executive Management Committee as well as other important meetings and have report hearings from Directors and employees to share the information with other Audit Committee members, in order for the Company to create an environment for the effective audit by the Audit Committee.
In principle, meetings of Audit Committee are held once a month. In FY2021, there were 16 meetings in total
Composition
The Audit Committee is chaired by an Outside Director, and consists of seven Directors who do not serve as Corporate Executive Officers (Shikkoyaku), of whom five are Outside Directors and two are full-time Internal Directors.
Audit Committee members
Chairperson Ikuo Nishikawa (Outside Director)
Members Sachiko Hanaoka, Hiromasa Kawashima, Michiaki Ogasawara (Outside Director), Eriko Kawai (Outside Director), Katsuyuki Nishikawa (Outside Director), and Yumiko Murakami (Outside Director)
Supporting system
The Audit & Supervisory Board Member’s Office, which is not engaged in executive operations, provides support for the Audit Committee.
Audit Committee’s Activities
The Daiwa Securities Group Inc. Audit Committee carries out auditing activities for duties executed by Directors and Corporate Executive Officers (Shikkoyaku) as part of the Group's corporate governance. In particular, it focuses on verifying the structure and operational status of internal control systems.
In FY2021, the Audit Committee focused on three key issues when conducting audits.
To verify the Group's efforts toward "pursuing customers' best interests," the Committee conducted hearings with employee unions and various divisions, including the Compliance Department and Internal Audit Department.
As for the issue of "the progress and management of Hybrid Strategy," the Audit Committee checked the situation of the Group's major investees and also visited their major facilities.
Regarding "the internal controls of Group companies in Japan and overseas," for companies in Japan, the Committee received reports on issues and prospects from executives and employees of major subsidiaries. For overseas companies, it received updates on each office through online meetings with executives stationed abroad who oversee the Americas, Europe & Middle East, and Asia & Oceania businesses. In this way, the Committee confirmed the internal control status of Group companies.
Compensation Committee
Role and responsibility
The Compensation Committee discusses issues related to Director remuneration policy and decisions upon individual remuneration, as well as the incentive plan of the Company group, to ensure the enhancement of consolidated earnings, etc. The specialized expertise of the Outside Directors is taken into consideration so that the Compensation Committee can plan, operate, and verify rational Remuneration system.
The meetings of the Compensation Committee held once or more a year. In FY2021 there were four meetings in total.
Composition
The Compensation Committee is chaired by an Outside Director, and consists of four Outside Directors including a chairman and two Internal Directors.
Compensation Committee members
Chairperson Hirotaka Takeuchi (Outside Director)
Members Takashi Hibino, Seiji Nakata, Ikuo Nishikawa (Outside Director), Toshio Iwamoto (Outside Director), and Yumiko Murakami (Outside Director)
Outside Directors' Committee
The primary purpose of the Outside Directors' Committee is sharing information among the Outside Directors and aims to exchange their opinions on the issues including the contests of the proposal of the Board of Directors. As needed, lectures by external instructors are conducted. The meetings of the Committee are held once or more a year. In FY2021, there were four meetings, and the issues discussed include the role to be played by Outside Directors at the time of receiving M&A and other proposals, the impact of AI on society, opinions on the planned agenda at the Board of Directors meetings in FY2021, human resources strategies, annual review, and the method of proceeding with the evaluation of the effectiveness of the Board of Directors.
The Executive Management Committee
Role and responsibility
The Executive Management Committee deliberates and determines important business matters and the Company group's business strategy and the basic policy on the structural problems between the group companies.
In order to make the management decisions promptly, the Board of Directors delegated decision-making powers to the Executive Management Committee as much as possible. Furthermore, to have more expert deliberation, the Company established subcommittees each of which consists of certain Corporate Executive Officers (Shikkoyaku), etc.
Executive Management Committee is held once or more than once every three months. In FY2021, there were eighteen meetings in total.
Composition
The Executive Management Committee consists of all of 12 the Corporate Executive Officers.
Subcommittees
Group Risk Management Committee
Role and responsibility
Group Risk Management Committee deals with the group risk management system and the status of the risk of the Company group etc., deliberates and decides upon policy and concrete measures on risk management.
The meetings of the Group Risk Management Committee are held once or more than once every three months. In FY2021 there were nine meetings in total.
Composition
The CEO is the chairman of the committee, and the Committee consists of nine Corporate Executive Officers (Shikkoyaku) and two Executive Officers (Shikkoyakuin).
Group Compliance Committee
Role and responsibility
Group Compliance Committee deliberates and decides general policies and specific measures on the compliance with the laws and regulations, establishment of corporate ethics, internal control, etc. of the Company group.
The meetings of the Group Compliance Committee are held once or more than once every three months. In FY2021 there were five meetings in total.
Composition
The CEO is the chairman of the Committee, and the Committee consists of twelve Corporate Executive Officers (Shikkoyaku).
Disclosure Committee
Role and responsibility
Disclosure Committee is in charge of decision making regarding disclosure of the Company group's information on management, effectiveness and appropriateness of internal control report, the scope of consolidated financial reporting, etc.
In principle, the meeting of the Committee are held before the quarterly earnings announcement, disclosure of a securities report or a quarterly report. Committee meetings are also held from time to time when certain important matters to be disclosed occur. In FY2021, there were fourteen meetings in total.
Composition
In principle, the chairman of the Committee is CFO, and the Committee consists of seven Corporate Executive Officers (Shikkoyaku), who are in charge of the sections which have close relations to the above decision making and who have jurisdiction over such section and one other member, a total of eight members.
Group IT Strategy Committee
Role and responsibility
Group IT Strategy Committee deliberates and decides to integrate management strategy and IT strategy, enhance speed of the decision-making related to IT investment and improve IT investment efficiency.
In principle, the meetings of the Group IT Strategy Committee are held once every six months in principle. In FY2020 there were two meetings in total.
Composition
The CEO is the chairman of the Committee, and the Committee consists of six Corporate Executive Officers (Shikkoyaku) and three Executive Officer (Shikkoyakuin), a total of nine members.
Overseas Management Committee
Role and responsibility
The Company established the Overseas Management Committee as a deliberative and decision-making body for the management administration of overseas subsidiaries, etc. and other related matters.
The meetings of the Committee are held once or more than once every three months. In FY2021 there were five meetings in total.
Composition
The CEO is the chair of the Committee, The Committee consists of eleven Corporate Executive Officers (Shikkoyaku), ten Executive Officers (Shikkoyakuin) and three Senior Managing Director (Sanyo), a total of twenty four members.
Group Internal Audit Committee
Role and responsibility
Group Internal Audit Committee deliberates and determines various matters of the business of the Company group related to the development of the internal audit system and verification of internal controls to secure suitability and effectiveness of the Group's business operations, internal audit system and internal control.
The meetings of the Group Internal Audit Committee are held once or more than once every three months. In FY2021 there were five meetings in total.
Composition
The CEO is the chair of the Committee, and the Committee consists of eleven Corporate Executive Officers (Shikkoyaku) and two Executive Officers (Shikkoyakuin).
Preventing Conflict-of-Interest Transactions between Group Companies
Conflict-of-interest transactions can occur between Daiwa Securities Group Inc. and Group companies in situations such as intra-Group transactions. Daiwa Securities Group applies rules regarding conflicts of interest stipulated by Japan’s Companies Act to the Executive Management Committee as well as the Board of Directors. Conflicts of interest between Daiwa Securities Group Inc. and Group companies are appropriately prevented through a rule prohibiting an executive officer from voting when he or she concurrently serves as an officer of an interested Group company and thus has a special interest in a matter to be decided.
Executive Compensation that is Closely Linked to Performance
At Daiwa Securities Group, Inc., as stipulated by the Companies Act, the Compensation Committee has determined "Policies on Determination of Remuneration of Directors and Corporate Executive Officers".
Policies on Determination of Remuneration of Directors and Corporate Executive Officers
Compensation for Directors and Corporate Executive Officers is based on the following fundamental policies.
- To create effective incentives, which contribute to the increase of shareholders’ value through sound business development and also lead to the improvement of business performance in the short-term and in the medium/long-term.
- To maintain a remuneration level which is competitive enough to recruit and retain people not only in Japan but also in the world as a global securities company group.
- To ensure the execution and supervision functions operate effectively as a company with a nominating committee, etc.
Remuneration of Directors and Corporate Executive Officers consists of base remuneration,Performance-linked remuneration and Stock-linked remuneration, and determined at the Compensation Committee which are specifically as below.
- Base remuneration
- A fixed amount calculated based on his/her position, duties and role, and paid monthly and in cash.
- Performance-linked remuneration
- Determined depending on the level of individual contribution, mainly on the basis of consolidated ROE and consolidated ordinary income, which are set as Performance KPIs of the Medium-Term Management Plan, while also comprehensively taking into account achievement status of the managerial goals set in the Medium-Term Management Plan and the other relevant factors and provided at a certain time every year.
- A certain limit is set on Performance-linked remuneration to be paid in cash based on business performance. If Performance-linked remuneration exceeds the limit, the exceeded amount will be paid in restricted stock instead of cash.
- It does not apply to Directors who do not serve as Corporate Executive Officers.
- Stock-linked remuneration
- To increase the link between remuneration and shareholders’ value, the Company grants, as Stock-linked remuneration, restricted stock, etc., the value of which corresponds to a certain percentage of base remuneration as non-monetary remuneration at a certain time every year.
- It does not apply to Outside Directors.
⟨ Performance-linked remuneration ⟩
The Company refers to KPIs, which are set as the Group numerical goals in the Medium-Term Management Plan "Passion for the Best" 2023 to calculate Performance-linked remuneration.
The Performance Evaluations used for calculating Performance-linked remuneration reflects the Financial Performance Evaluation, which is based on Performance KPIs (calculated based on the financial information), and Quality Evaluation that comprehensively evaluates KPIs other than Performance KPIs. The Financial Performance Evaluation and the Quality Evaluation are determined by the Compensation Committee.
Performance-linked remuneration is calculated by multiplying the reference amount determined for each position and the Performance Evaluation and reflecting the degree of individual contribution. The same calculation formula is applied to all positions for Performance Evaluation.
The indicators pertaining to Performance-linked remuneration are as shown below.
⟨ Image of Executive Remuneration Structure ⟩
If Performance-linked remuneration exceeds a certain limit, the portion exceeding the limit is paid in restricted stock, while maintaining the slope. This structure provides the executives with more incentives to improve performance in the long term and seek sustainable growth.
⟨ Restricted Stock Remuneration System ⟩
The Company has introduced a Restricted Stock Remuneration System to further increase incentives to improve performance in the medium to long term and advance the sharing of value between shareholders and the Directors, the Corporate Executive Officers (Shikkoyaku), Executive Officers (Shikkoyakuin), and other executives of the Company and its subsidiaries.
Under a Restricted Stock Remuneration System, the Company has introduced the malus provisions. If eligible officers commit a serious criminal offense, a breach of duty of care, or any other misconduct that damages the Group's reliability during the restriction period, the Company will automatically acquire subject stocks without compensation.
| Stock Remuneration I (remuneration linked to stock price) |
Restricted stock with a value equivalent to a certain percentage of base remuneration is provided. To ensure that the remuneration functions effectively as an incentive to improve performance in the long term, the restriction is to be lifted after the recipient retires from any executive position at the Company and its subsidiaries and affiliated companies. |
|---|---|
| Stock Remuneration II (remuneration linked to performance) |
A certain limit is set for Performance-linked remuneration that is paid in cash based on business performance. If the amount of remuneration exceeds the limit, the part exceeding the limit is to be provided in restricted stock rather than in cash. The restriction period is set at three years. When Performance-linked remuneration exceeds the certain limit, this system effectively serves as a deferment of payment for remuneration. |
⟨ Total Amount of Consolidated Remuneration, etc. by Executive for FY2021 ⟩
| Name | Total amount of consolidated remuneration, etc. | Executive category | Company category | Amount of consolidated remuneration, etc. by type | |||
|---|---|---|---|---|---|---|---|
| Base remuneration | Non-monetary remuneration (restricted stock) | Performance-linked remuneration | Retirement benefits | ||||
| Takashi Hibino | 223 | Executive Officer | Daiwa Securities Group Inc. | 69 | 23 | 83 | - |
| Daiwa Securities Co. Ltd. | 46 | - | - | - | |||
| Seiji Nakata | 260 | Executive Officer | Daiwa Securities Group Inc. | 69 | 23 | 121 | - |
| Daiwa Securities Co. Ltd. | 46 | - | - | - | |||
| Toshihiro Matsui | 179 | Executive Officer | Daiwa Securities Group Inc. | 61 | 17 | 75 | - |
| Daiwa Securities Co. Ltd. | 25 | - | - | - | |||
| Keiko Tashiro | 132 | Executive Officer | Daiwa Securities Group Inc. | 46 | 13 | 51 | - |
| Daiwa Securities Co. Ltd. | 20 | - | - | - | |||
| Kazuo Takahashi | 129 | Executive Officer | Daiwa Securities Group Inc. | 19 | 13 | - | - |
| Daiwa Securities Co. Ltd. | 46 | - | 50 | - | |||
| Mikita Komatsu | 129 | Executive Officer | Daiwa Securities Group Inc. | 19 | 13 | - | - |
| Daiwa Securities Co. Ltd. | 46 | - | 50 | - | |||
| Akihiko Ogino | 108 | Executive Officer | Daiwa Securities Group Inc. | 44 | 10 | 41 | - |
| Daiwa Securities Co. Ltd. | 11 | - | - | - | |||
| Shinsuke Niizuma | 106 | Executive Officer | Daiwa Securities Group Inc. | 10 | 10 | - | - |
| Daiwa Securities Co. Ltd. | 43 | - | 40 | - | |||
| Atsushi Mochizuki | 106 | Executive Officer | Daiwa Securities Group Inc. | 10 | 10 | - | - |
| Daiwa Securities Co. Ltd. | 43 | - | 40 | - | |||
⟨ Procedures to Determine Executive Compensation ⟩
The Articles of Incorporation stipulate that the remuneration, etc., of the Directors and Corporate Executive Officers (Shikkoyaku) is determined by the resolution of Compensation Committee.
In determining the amount of remuneration, it is calculated based on the indicators determined by Compensation Committee, majority of which is held by Outside Director to secure the transparency.
Internal Control System and Internal Audit
The Company group has created management structure centered on the Company with regard to the group’s various main risks, and seeks to ensure compliance with the laws and regulations regarding the effectiveness and efficiency of operations, the reliability of the finance report and the business operations, and the preservation of assets, etc. This is based on the recognition that the maintenance of the internal control system to accomplish the sound and appropriate operation is the responsibility of the manager.
The Internal Audit Department verifies the effectiveness of the system.
Based on the recognition that instalment of a sound and efficient internal audit system enhances the value of the Company group, and having concluded that the internal audit plays an important role in such a system, the Company has positioned a full-time Internal Audit Corporate Executive Officer (Shikkoyaku) in charge, and has Internal Audit Department, which is independent from other sections, examine the internal control system.
By conducting effective audits on a risk basis, the Department strives to enhance the Group’s corporate value.
Examples of aspects of the Group’s business activities to which the Internal Audit Department pays special attention
- The internal control systems at Daiwa Securities and its overseas offices as global financial instruments business operators
- The status of businesses at Group companies, and the status of control over Group companies by the holding company
Authorization of Plans and Reporting of Results
Internal audit plans are subject to approval by and results of the audits are presented to the Group Internal Audit Committee. Furthermore, internal audit plans shall be consented by the Audit Committee or Selected Committee Member who has been given certain authority from the Audit Committee, and the results of the audits are also reported to the Audit Committee.
Reports to the Group Internal Audit Committee are not limited to the audit results conducted at Daiwa Securities Group Inc. and Daiwa Securities Co. Ltd. They also include highly important findings made during audits conducted on companies in Japan and overseas.
Collaboration with Parties Inside and Outside the Group and Improvement of System
The Internal Audit Department collaborates with the internal auditing divisions of Group companies in Japan and overseas through periodic meetings, monitoring, and audits.
The Internal Audit Department maintains communications with the Audit Committee and accounting auditor, making any necessary adjustments to ensure that audits are performed efficiently. The Department also sometimes receives audit requests from the Audit Committee. The degree to which these internal auditing activities satisfy the Institute of Internal Auditors’ “International Standards for the Professional Practice of Internal Auditing,” the global standard for internal auditing, is routinely evaluated by independent outside third parties. The Group thus strives to constantly improve its system.