Corporate Governance Guidelines
Chapter 1 General Provisions
Article 1 (Purpose)
These Guidelines provide for the good corporate governance of Eisai Co., Ltd. ("the Company"), in order to increase its corporate value and to enhance the long-term interests of its shareholders, and thereby to enable shareholders to possess the Company's shares over the long term with a peace of mind through the realization of the following "Corporate Philosophy" set forth by the Company in its Articles of Incorporation.
- 1.The Company's Corporate Philosophy is to give first thought to patients and their families, and to increase the benefits that health care provides to them. Under this Philosophy, the Company endeavors to become a human health care (hhc) company.
- 2.The Company's mission is the enhancement of patient satisfaction. The Company believes that revenues and earnings will be generated by fulfilling this mission. The Company places importance on this sequence of placing the mission before the ensuing results.
- 3.The Company strives to fulfill its social responsibilities by positioning compliance (i.e., the observance of legal and ethical standards) as the basis of all business activities.
- 4.The Company's principal stakeholders are patients, customers, shareholders and employees. The Company endeavors to develop and maintain a good relationship with stakeholders and to enhance the value of their stake through:
- (1)Satisfying unmet medical needs, ensuring a stable supply of high-quality products, and providing useful information on subjects including drug safety and efficacy;
- (2)Timely disclosure of corporate management information, enhancement of corporate value, and a positive return to shareholders; and
- (3)Ensuring stable employment, offering challenging and fulfilling duties, and providing full opportunities for the development of employees' capabilities.
Article 2 (Basic Framework of Corporate Governance)
- 1.The Company is always aiming for good corporate governance, and strives continually to achieve it.
- 2.The Company respects the rights of all our shareholders, and as the essence of corporate governance is to ensure fair and transparent management and to enhance corporate vitality, the Company aims to achieve good corporate governance on the following basis:
- (1)Shareholder Relations:
The Company shall:
- (i)Respect the rights of all shareholders;
- (ii)Ensure the equality of all shareholders;
- (iii)Develop positive and smooth relations with the Company's stakeholders including all shareholders; and
- (iv)Ensure transparency by properly disclosing Company information.
- (2)Corporate Governance System
- (i)The Company has adopted a Company with a Nomination Committee, etc. System.
- (ii)The Board of Directors ("the Board") shall delegate to the Corporate Officers broad powers of decision-making for business execution, to the extent permitted by the laws and regulations, and it shall exercise the function of management oversight.
- (iii)The majority of the Board shall be independent and neutral Outside Directors.
- (iv)The Representative Corporate Officer and CEO shall be the only Director who is concurrently a Corporate Officer.
- (v)To clarify the management oversight function, the positions of the Chair of the Board and the Representative Corporate Officer and CEO shall be separated and performed by different people.
- (vi)The Nomination Committee and the Compensation Committee shall be entirely composed of Outside Directors, and the majority of the Audit Committee shall consist of Outside Directors.
- (vii)Each of the Chairs of the Nomination Committee, the Audit Committee and the Compensation Committee shall be appointed from the Outside Directors.
- (viii)The internal control system and its operation shall be implemented to ensure the credibility of financial reports is enhanced.
Article 3 (Establishment of These Guidelines)
These Guidelines are subject to the Companies Act and the related laws and regulations, as well as the Articles of Incorporation, and apply in priority to the other rules of the Company.
Chapter 2 Shareholder Relations
Article 4 (Respect for Voting Rights)
- 1.As the exercise of voting rights in the General Meeting of Shareholders is the right of all shareholders, the Company will endeavor to enable all shareholders to exercise their voting rights appropriately.
- 2.In order to enable shareholders to exercise their voting rights appropriately, the Company shall include sufficient information in the Notice of Convocation of the General Meeting of Shareholders and reference documents, etc., send them to shareholders at an early stage, and ensure that there is enough time to consider the contents.
- 3.The Company will arrange the circumstances under which not only the shareholders who attend the General Meeting of Shareholders but all shareholders are able to exercise their voting rights appropriately.
Article 5 (General Meeting of Shareholders)
- 1.The General Meeting of Shareholders is the supreme decision-making body, which consists of shareholders with voting rights, and must appropriately reflect their views.
- 2.The Company shall determine the date and venue so that as many shareholders will be able to attend the General Meeting of Shareholders and it will reflect the views of all shareholders.
- 3.In order to develop a relationship of trust with shareholders, Directors and Corporate Officers shall provide sufficient explanations and a question and answer session at the General Meeting of Shareholders.
Article 6 (Returns to Shareholders)
- 1.As the shareholders have the right to receive distributions of profits, the Company will decide on and announce its basic guidelines for capital policy, including shareholder returns.
- 2.Decisions on surplus dividends will be the subject of resolutions at Board Meetings in accordance with the Articles of Incorporation, and such decisions are to be implemented efficiently.
Article 7 (Protection of Shareholders' Rights)
- 1.In order to protect shareholders' rights, the Company will appropriately disclose to the shareholders relevant information whenever there are changes to the Company's shareholder composition or actions which might lead to such changes in the future, such as the allocation of new shares to particular third parties.
- 2.The Company shall also give sufficient consideration to the rights of minority shareholders, including rights related to derivative actions, etc.
Article 8 (Ensuring Shareholder Equality)
- 1.The Company will treat each shareholder equally based on each shareholder's equity stake.
- 2.The Company will not provide any special benefits, including profits from assets, to any particular shareholder.
Article 9 (Prevention of Conflicts with Shareholder Interests)
- 1.In order to protect shareholders' interests, the Company will endeavor to prevent any of the Company related persons, such as Directors, Corporate Officers and employees from abusing their position or conducting any transaction in conflict with the interests of the Company and the shareholders.
- 2.Directors and Corporate Officers shall not conduct any transactions that conflict or compete with the interests of the Company without the approval of the Board subject to the Companies Act.
- 3.The Company will appropriately disclose the material facts relating to any transactions described in the preceding clause.
- 4.In order to prevent insider transactions by Company-related persons, the Company will adopt rules relating to the treatment of material facts that have not yet been publicly announced and will strictly apply such rules.
Article 10 (Favorable and Smooth Relations with Stakeholders)
- 1.The Company will endeavor to maintain favorable and smooth relations with various stakeholders by respecting patients, customers, shareholders and employees, with a view to enhancing long-term corporate value.
- 2.The Directors and Corporate Officers will provide leadership to building the corporate culture to respect the stakeholders' rights based on the Corporate Philosophy of the Company.
Article 11 (Disclosure and Transparency)
- 1.The Company will actively, and in a timely and appropriate manner, disclose to shareholders important information related to management, regardless of whether the content is positive or negative.
- 2.The Company will determine its policy for disclosing important information related to management, etc. and create structures to implement it.
- 3.The Company shall disclose information in a way that is easy to understand and through a variety of methods that enable shareholders to access it easily.
- 4.The Company will develop a relationship of trust and enhance communications with shareholders, e.g., by establishing an inquiries contact point for them.
Chapter 3 Corporate Governance System
Article 12 (Structure of the Board and Committees)
- 1.The Company has chosen to be a Company with a Nomination Committee, etc. System. The function of management oversight shall be carried out by the Board, and the function of business execution shall be carried out by the Corporate Officers. Through this, the Company will clearly separate the functions of management oversight and business execution, increase the vitality of its management and ensure the fairness and transparency of its management.
- 2.The Board will be composed of diverse Directors with differing backgrounds of specialized knowledge, experience, etc. and an appropriate number of Directors shall be maintained so that the Board can exercise its functions most effectively and efficiently.
- 3.The majority of the Board shall be composed of independent and neutral Outside Directors.
- 5.To thoroughly separate the functions of management oversight and business execution, the positions of the Chair of the Board and the Representative Corporate Officer and CEO shall be separated and performed by different people.
- 6.The Company will establish the Nomination, Audit and Compensation Committees in accordance with the Companies Act. In addition, the Board will establish, as needed, Committees of the Board other than the Nomination, Audit and Compensation Committees.
- 7.The Company shall establish an Outside Directors Meeting comprised of Outside Directors only and make the role of Outside Directors function more effectively.
- 8.The Nomination Committee and the Compensation Committee shall be entirely composed of Outside Directors, and the majority of the Audit Committee shall be composed of Outside Directors.
- 9.The Chairs of the Nomination Committee, the Audit Committee and the Compensation Committee shall be Outside Directors.
- 10.Outside Directors who are members of the Audit Committee shall be appointed from those with expertise in finance, accounting, legal affairs, management, etc., and Internal Directors shall be appointed from those with abundant experience within the Company.
- 11.In order to ensure the independence of audits, members of the Audit Committee shall not concurrently be members of the Nomination Committee or the Compensation Committee.
- 12.A Board of Directors Secretariat shall be established to act as the secretariat of the Board, the Nomination Committee and the Compensation Committee. A Management Audit Department shall be established to act as the secretariat of the Audit Committee.
Article 13 (Duties of the Board)
- 1.Through developing good corporate governance, the Board shall fulfill its oversight functions, take the best possible decisions by exercising fair judgment and aim to realize the Corporate Philosophy.
- 2.The Board shall determine the material matters required by law, the Articles of Incorporation and the Rules of the Board, including basic management policies and the appointment of Corporate Officers.
- 3.In order to accelerate the speed and increase the flexibility of business execution and to enhance the vitality of management, the Board shall delegate the decision-making function on business execution, except for items provided for in the preceding clause, to the Corporate Officers.
- 4.The Board shall oversee the execution of duties by the Directors and Corporate Officers on the basis of reports from the Nomination Committee, Audit Committee, the Compensation Committee and the Corporate Officers.
- 5.The Board will strive to realize the Corporate Philosophy, to increase the Company's corporate value and to enhance the long-term interests of the shareholders. It shall have the duty of judging fairly any conduct that may damage these goals and of taking appropriate action.
- 6.In order for the Representative Corporate Officer and CEO to be appointed by the Board, all of the Directors shall share information related to the succession plan for the future Representative Corporate Officer and CEO.
- 7.The Board, together with the Nomination, Audit and Compensation Committees, shall not violate or interfere with their respective authorities when executing their duties and shall maintain mutual understanding.
- 8.The Board and the Corporate Officers shall maintain mutual understanding while fulfilling their respective responsibilities of executing duties.
Article 14 (Chair of the Board)
- 1.The Chair of the Board shall be appointed from the Outside Directors.
- 2.In addition to determining the annual agenda to be deliberated by the Board, the chair of the Board shall specify the date, location, and agenda and convene the Board Meeting.
- 3.The chair of the Board shall provide the Directors with the information necessary to consider the items for deliberation prior to the holding of the Board Meeting.
- 4.The Chair of the Board shall enhance the quality of the discussions among the Directors and manage the Board Meetings effectively and efficiently.
Article 15 (Directors)
- 1.The term of office of Directors shall be one (1) year. Directors shall be elected every year at the General Meeting of Shareholders.
- 2.Directors shall assume the duty of care and the duty of loyalty.
- 3.Directors shall request explanations at Board Meetings, actively express their opinions, conduct thorough discussions, and exercise their voting rights, as well as collect sufficient information to execute their duties.
- 4.Through the timely and appropriate exercise of their right to propose agenda items and to call for Board Meetings to be convened, the Directors shall seek solutions to issues concerning the management of the Company of which they become aware.
- 5.In responding to the trust placed in them by all shareholders, Directors shall spend sufficient time on the execution of their duties and demonstrate the competence expected of them.
Article 16 (Outside Directors)
- 1.Outside Directors shall be personally and financially independent from the Company.
- 2.Outside Directors must not only meet the requirements for Outside Directors stipulated in the Companies Act, but must also satisfy the "Requirements for the Independence and Neutrality of Outside Directors" established by the Nomination Committee, and must continue to satisfy those requirements after their appointment as Outside Directors.
- 3.Outside Directors shall take the initiative to increase the fairness of the decisions and actions of the Board and of each Committee and to achieve good corporate governance.
- 4.Outside Directors shall be provided, on a timely basis, with continuous and sufficient information related to the status of the Company's Corporate Philosophy, corporate culture, managerial environment, etc., and at the same time, seek additional information as necessary for fulfilling their role.
Article 17 (Nomination Committee)
- 1.The Nomination Committee shall determine the content of the proposals to be submitted to the General Meetings of Shareholders related to the nomination and dismissal of Directors.
- 2.The Nomination Committee shall determine the "Requirements for the Independence and Neutrality of Outside Directors" in order to appoint independent and neutral Outside Directors.
- 3.The Nomination Committee shall establish the basic policies, rules, procedures, etc., necessary for the execution of its duties.
- 4.The Nomination Committee shall report on the status of execution of its duties to the Board.
Article 18 (Audit Committee)
- 1.The Audit Committee shall audit the execution of the Directors' and Corporate Officers' duties, determine the content of proposals related to the election, dismissal and non-reappointment of Accounting Auditors to be submitted to the General Meetings of Shareholders, and conduct accounting audits and other matters required by laws and regulations.
- 2.The Audit Committee shall endeavor to achieve efficient and higher quality auditing, e.g., by receiving timely and appropriate reports from the officers and employees of the Company and the ENW Entities and the Accounting Auditor of the Company related to the necessary items to audit the Directors' and Corporate Officers' execution of their duties, as well as by sharing necessary information with the Accounting Auditor and internal audit department.
- 3.The Audit Committee shall establish the basic policies, rules, procedures, etc. necessary for the execution of its duties.
- 4.The Management Audit Department executes its duties based on the resolutions of the Audit Committee and the instructions of the members of the Audit Committee, and its independence from the Corporate Officers regarding work instructions and orders, personnel evaluations, etc. shall be secured in order to ensure the objectivity of audits.
- 5.The Audit Committee shall report on the status of execution of its duties to the Board.
Article 19 (Compensation Committee)
- 1.The Compensation Committee shall determine both the policies for deciding the compensation of Directors and Corporate Officers, and their individual compensation.
- 2.When deciding the compensation of the Directors and Corporate Officers, the Compensation Committee shall make active use of external research data in order to ensure the objectivity of its decisions, and it will determine the appropriateness of the decision-making process after deliberating what is most appropriate.
- 3.The Compensation Committee shall establish the basic policies, rules, procedures, etc. necessary for the execution of its duties.
- 4.The Compensation Committee shall report on the status of execution of its duties to the Board.
Article 20 (Outside Directors Meeting)
- 1.The Outside Directors Meeting shall be composed of all of the Outside Directors.
- 2.The Outside Directors Meeting is held to discuss a broad range of matters related to the Company's corporate governance and business, and strive for continued enhancement of corporate governance.
- 3.The matters discussed at the Outside Directors Meeting shall be reported to the Board or notified to the Corporate Officers as necessary.
- 4.The Outside Directors Meeting shall evaluate the effectiveness of the supervision function of the management of the Board every year. If there are that issues related to the operation of the Board, etc., the Outside Directors Meeting may make proposals to the Board for addressing such issues.
Article 21 (Compensation of Directors and Corporate Officers)
- 1.The compensation of Directors and Corporate Officers shall be appropriately decided with fairness and transparency by the Compensation Committee.
- 2.The compensation of Directors shall be commensurate to the proper performance of their management oversight function as Directors.
- 3.The compensation of Corporate Officers is a separate system from the compensation of Directors who perform the duty of supervising the management and should strongly motivate their performance of duties as Corporate Officers and take their performance into consideration.
Article 22 (Representative Corporate Officer and CEO)
- 1.The Representative Corporate Officer and CEO is the Chief Executive Officer and shall hold the powers delegated by the Board in relation to business execution. The Representative Corporate Officer and CEO shall make decisions concerning the best execution of business and shall implement measures with the aim of realizing the Company's Corporate Philosophy, increasing corporate value, and enhancing the long-term interests of the shareholders.
- 2.The Representative Corporate Officer and CEO shall provide sufficient explanation to the Board regarding business execution, and shall concurrently be a Director for this purpose.
- 3.The Representative Corporate Officer and CEO shall establish, prepare and operate an internal control system, including a legal compliance system and risk management system, and continually evaluate its effectiveness and strive to improve it.
- 4.The Representative Corporate Officer and CEO shall in a timely and appropriately provide to the Audit Committee sufficient information for the Audit Committee's audits.
Article 23 (Corporate Officers)
- 1.The term of office of Corporate Officers shall be one (1) year. The Representative Corporate Officer and CEO shall propose candidates for Corporate Officers by providing a sufficient explanation, and Corporate Officers shall be appointed by the Board.
- 2.Corporate Officers shall assume the duty of care and the duty of loyalty.
- 3.Corporate Officers shall undertake the important responsibility of managing the business with the aim of realizing the Corporate Philosophy, increasing corporate value and enhancing the long-term interests of shareholders.
- 4.Corporate Officers shall be delegated from the Representative Corporate Officer and CEO the authority to decide on the specific execution of business in the assigned business/area, and establish, prepare and operate an internal control system within the scope of their assigned division of duties, and take responsibility to execute business with the aim of achieving the targets in addition to developing capable human resources who will manage the Company in the future.
- 5.Corporate Officers shall, on the basis of the Companies Act, report to the Board at least once every three months on the overall state of the execution of their business based on their assigned division of duties, and at the same time, they shall also provide as required information on those matters requested by the Board or Director(s).
- 6.An appropriate number of Corporate Officers shall be maintained so that their duties concerning business execution with which they have been entrusted by the Board can be performed most effectively/efficiently.
Article 24 (Internal Control)
- 1.The achievement of thorough internal control of the whole Company group is an important element in obtaining the trust of shareholders. Based on the Companies Act, the Board shall determine the "Rules Concerning Items Necessary for the Execution of Duties by the Audit Committee" and the "Rules for Preparing Necessary Systems for Ensuring the Suitability of the Execution of Duties by Corporate Officers."
- 2.Based on the resolutions of the Board related to internal control, the Corporate Officers shall maintain a system that is necessary for compliance with laws and ethics, the efficacy and efficiency of business and the reliability of financial reports, and shall make such a system work effectively, and shall report the operative situation to the Board.
Article 25 (Accounting Auditors)
- 1.The Accounting Auditors shall ensure the reliability of financial statements, and they bear an important role in realizing better corporate governance.
- 2.The independence of the Accounting Auditors from the Company shall be ensured.
- 3.The Accounting Auditors shall conduct systematic management for the quality control of audits.
- 4.The Audit Committee shall confirm that the Accounting Auditors' independence is assured, and that the quality control of audits is managed systematically, and make effort to collect relevant information regarding an audit corporation other than the Company's Accounting Auditor.
Article 26 (Exceptional Measures)
In case it is necessary to make exceptions to these Guidelines, the Board shall clarify the reason for the exception, and make it clear that the purport of these Guidelines was taken into account and that reasonable measures were taken.
Article 27 (Evaluation of Corporate Governance)
Every year, the Board shall evaluate the state of the Company's corporate governance and enhance the effectiveness of corporate governance in accordance with the self-review of the Board resolutions relating to these Guidelines and an internal control and the evaluation by the Outside Directors Meeting on the effectiveness of the Board of Directors.
Article 28 (Revisions)
These Guidelines may be revised only by resolution of the Board.
The revision history of these Guidelines is as follows:
- March 23, 2001: Established (Corporate Governance Regulations)
- September 21, 2001: Revision made
- April 25, 2002: Revision made
- June 27, 2002: Revision made
- June 24, 2003: Revision made
- May 11, 2004: Revision made
- October 29, 2004: Revision made (Corporate Governance Guidelines)
- July 29, 2005: Revision made
- April 26, 2007: Revision made
- February 27, 2012: Revision made
- June 20, 2014: Revision made
- June 19, 2015: Revision made
- March 31, 2016: Revision made
- June 21, 2017: Revision made
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