SPARX Group

SPARX Group Co., Ltd. has a guideline for corporate governance to conduct our business properly and efficiently as stated below:

1. System to ensure that the business execution by directors complies with laws and regulations and the Articles of Incorporation

  • To reinforce and enhance the function to monitor the legality and adequacy of decision making and business execution, the Board of Directors shall invite independent outside directors to serve as the members of the Board of Directors. In addition, the legality and adequacy of business execution shall be monitored through the audit, etc. to be conducted by the Audit and Supervisory Committee where outside directors constitute the majority of its members.;
  • A notification on independent officers shall, in principle, be filed with regard to those outside directors who satisfy the requirement of independent officers stipulated in the rules on the listing of securities adopted by the stock exchange;
  • Executive directors shall comply with laws and regulations, the Articles of Incorporation and internal rules and act in accordance with SPARX VISION STATEMENT, the compliance manual and SPARX Group Code of Ethics which have been established to achieve the management philosophy of SPARX Group, that is, "to become the most trusted and respected investment company in the world." In addition, executive directors shall be required to attend a compliance training session at least once a year to foster better understanding of laws and regulations;
  • In order to comply with laws and regulations in Japan and overseas, the Legal and Compliance Department, having been established as an organization under the direct control of the Board of Directors, shall report on the status of compliance with laws and regulations, at a meeting of the Board of Directors on a regular basis after deliberation at the committee hosted by such Department;
  • With regard to unlawful acts or violations by the directors under the internal reporting system, the head of the Legal and Compliance Department, the General Counsel and the secretariat of Audit and Supervisory Committee shall receive reports from and/or be consulted by officers and employees.

2. System to store and manage the information on the execution of duties of directors

  • Based on the Information Security Rules, measures such as specifying storage methods according to the levels of confidentiality are established to protect information assets. Additionally, to address the emerging threat of cyber-attacks in recent years, a defense system has been established separately in accordance with our Cyber Securities Rules. 
  • Based on the internal document rules, the documents set out in the following items (including electromagnetic records, and the same shall apply hereinafter) shall be stored and managed together with related materials:
    • ① Minutes of the General Meeting of Shareholders;
    • ② Minutes of the Board of Directors;
    • ③ Minutes of the Audit and Supervisory Committee ;
    • ④ Other documents set out in the internal document rules and/or the accounting rules
  • In the case where a director requests browsing of any document, the department in charge shall make the requested document or information available at any time for browsing or copying.

3. Rules and other systems for managing the risk of loss

  • In view of the importance of establishing the risk management system, executive directors shall prepare various rules for risk management so as to facilitate the risk management system;
  • The department in charge of risk management shall endeavor to grasp and manage risks. In addition, such department shall report the results thereof to the Board of Directors as may be necessary;
  • The Board of Directors shall discuss the countermeasures for individual risks as may be necessary and implement appropriate measures;
  • In response to damages caused by natural disasters such as earthquakes and floods, as well as incidents related to fire, power outage, poor system management during operation or in case of malfunctions, and security incidents such as cyber-attacks, a business continuity plan shall be established in advance, with efforts made for proactive measures. This includes minimizing the impact in the event of damage and preparing for prompt recovery.

4. System to ensure the efficient execution of duties of directors

  • Important management matters concerning the management policy, business strategies, etc. shall be discussed and decided upon based on the rules of the Board of Directors. In addition, with regard to the scope of the authority and responsibilities of executive directors, the system where executive directors can efficiently execute their duties shall be ensured by establishing the organization rules and the rules on the division of operations;
  • To enable flexible responses to be made in the business expansion, the term of office of directors (excluding those who are the Audit and Supervisory Committee members) shall be one year. Directors shall not only mutually monitor whether the duty of the diligence of a good manager is fully performed in making decisions but also ensure the efficiency and soundness in executing business;
  • The Board of Directors shall hold a meeting at least once a month, decide on the managerial execution policy, matters stipulated by law and other important management matters, and monitor the business execution status. Monthly business performance shall be reported and reviewed at the regular meeting of the Board of Directors;
  • The Board of Directors shall set up various types of committees as consultative organs that conduct research, deliberation, planning, reporting, etc., in terms of specialized matters.

5. System to ensure that the execution of duties of employees complies with laws and regulations and the Articles of Incorporation

  • Employees shall comply with laws and regulations, the Articles of Incorporation and internal rules and act in accordance with SPARX VISION STATEMENT, the compliance manual and SPARX Group Code of Ethics which have been established to achieve the management philosophy of SPARX Group, that is, "to become the most trusted and respected investment company in the world." In addition, the management philosophy shall be passed through and spread through various types of meetings, etc.;
  • Internal rules shall be reviewed and revised as may be necessary when laws or regulations are revised, abolished or otherwise and shall be made universally known to all the employees. In addition, all the employees are required to attend a compliance training session at the time of joining the company and subsequently at least once a year to foster better understanding of laws, regulations and internal rules;
  • In order to comply with laws and regulations in Japan and overseas and internal rules, the committee hosted by the Legal and Compliance Department shall be set up to check the compliance system and research and examination shall also be conducted in terms of law-related issues and the countermeasures thereof shall be determined by the Board of Directors;
  • Various compliance related problems arising within the company shall be reported by each department to the Legal and Compliance Department and the Internal Audit Department through the Incident Report and, after deliberation at the committee, shall be reported to the Board of Directors and the Audit and Supervisory Committee. In addition, when necessary to examine whether any disciplinary sanction should be imposed or not, deliberation shall be conducted separately at the committee and internal disciplinary sanction shall be imposed pursuant to the working regulations, etc.;
  • With regard to unlawful acts and violations by employees, under the internal reporting system, the head of the Legal and Compliance Department, the General Counsel, and the secretariat of Audit and Supervisory Committee shall receive reports from and/or be consulted by officers and employees;
  • The Internal Audit Department, having been established as an organization under the direct control of the Board of Directors, shall conduct an audit as to whether the execution of duties of employees is appropriately and efficiently fulfilled in accordance with laws and regulations, the Articles of Incorporation, internal rules, corporate ethics, etc and report the results to the Board of Directors and the Audit and Supervisory Committee;
  • In order to make the internal control work effectively for financial reporting, the Board of Directors shall monitor each of the activities, such as the documentation of the control activities in terms of company level control, IT control and business process control, the evaluation of internal control, the judgment of effectiveness and the remedy of deficiencies.

6. System to ensure the appropriateness of business operations in the Corporate Group consisting of SPARX Group Co., Ltd., and its subsidiaries

  • With regard to the management of each of the Group's subsidiaries, the department in charge of subsidiary management shall conduct monitoring in accordance with the subsidiary management rules, grasp the management conditions of major subsidiaries and report the results to the Board of Directors as may be necessary;
  • The Board of Directors shall receive a business report directly from the representative of any major subsidiary as may be necessary;
  • To comply with laws and regulations, the major subsidiaries shall be directed to adopt such internal rules customized to each subsidiary that contain prescribed matters based on SPARX Group Code of Ethics Protocol according to the scale, type of business, etc. In addition, compliance with laws and regulations and risk management in terms of business execution shall be implemented from a global perspective.

7. Matters ensuring the independence from the directors of an employee who should assist the Audit and Supervisory Committee with assigned duties and the effectiveness of an instruction given to the relevant employee

  • The Internal Audit Department shall assist the Audit and Supervisory Committee with assigned duties;
  • Matters concerning personnel affairs as a whole, including transfer and evaluation, of the employees belonging to the Internal Audit Department, shall be subject to the prior consent of the Audit and Supervisory Committee, ensuring independence from the directors (excluding those who are the Audit and Supervisory Committee members).
  • The employees of the Internal Audit Department who have received the instructions from the Audit and Supervisory Committee necessary for the conduct of their audit shall not be directed or ordered by the directors (excluding those who are the Audit and Supervisory Committee members) with regard to such instructions.

8. System for a director, an auditor and an employee of the Corporate Group consisting of SPARX Group Co., Ltd., and its subsidiaries to make a report to the Audit and Supervisory Committee of SPARX Group Co., Ltd.

In SPARX Group Co., Ltd., and its domestic subsidiaries (hereafter, the "Group" ),

  • When directors (excluding those who are the Audit and Supervisory Committee members), auditors and employees of the Group have detected a fact that may severely damage the company, they shall immediately report it to the Audit and Supervisory Committee
  • When directors (excluding those who are the Audit and Supervisory Committee members), auditors and employees of the Group are asked for the status of business and asset of the company by the Audit and Supervisory Committee and the Internal Audit Department, they shall immediately report it to them.
  • The Internal Audit Department shall periodically report the results of the internal audit at the Group and its activities etc. to the Audit and Supervisory

9. System to ensure that an officer or employee who made a report to the Audit and Supervisory Committee will not be treated unfavorably for the reason of having made the said report

It shall be prohibited that SPARX Group's director or employee who made a report, (whether directly or indirectly) to the Audit and Supervisory Committee is treated unfavorably for the reason of having made the said report; this prohibition shall be made universally known to SPARX Group's officers and employees.

10. Matters concerning the processing policy for advance payment of expenses or debts arising out of the execution of duties of the Audit and Supervisory Committee (limited to those duties assigned to the Audit and Supervisory Committee)

  • When a member of the Audit and Supervisory Committee claims advance payment of expenses from the company in accordance with the provisions of the Companies Act, after deliberation in the department in charge, the relevant expenses or debts shall be promptly processed, except in the case where it has been proven that the expenses or debts relating to the relevant claim are not necessary for the execution of duties of the Audit and Supervisory Committee;
  • To pay the expenses arising out of the execution of duties of a member of the Audit and Supervisory Committee, a certain amount of budget shall be set every year.

11. In addition, System to ensure that an audit by the Audit and Supervisory Committee be effectively conducted

  • The Audit and Supervisory Committee shall hold a meeting with the representative director on a regular basis and exchange opinions about the status of environmental improvement of an audit, etc. by the Audit and Supervisory Committee, important tasks relating to audit and, in addition, challenges to be tackled by the company;
  • The Audit and Supervisory Committee shall conduct its audit in cooperation with the Internal Audit Department taking into consideration the results of internal audit conducted by the Internal Audit Department. The Audit and Supervisory Committee also receive a report on the results of an accounting audit from the Accounting Auditor on a regular basis. In addition, to conduct an efficient and effective audit, both the Internal Audit Department and the Accounting Auditor shall endeavor to share information by holding a coordination meeting or otherwise;
  • Members selected by the Audit and Supervisory Committee shall browse the minutes of important meetings at any time and ask for an explanation as necessary;
  • The Audit and Supervisory Committee shall endeavor to share information and exchange opinions in terms of audit work for each company.

12. Basic Policy for Exclusion of Antisocial Forces

SPARX Group established the basic policy against Antisocial Forces (ASF) which threatens social order and sound business activities that SPARX Group will not have any relations with ASF, will not give economic benefits to them, will not make backstage deals with them and will not accept undue or illegal demands from them. In order to realize the policy, SPARX Group will carry out thorough compliance education to its officers and employees by divisions in charge and will associate with police, lawyers or other external professionals.

13. System to ensure the reliability of financial reporting

To ensure the reliability of financial reporting, SPARX Group, having formulated the Basic Principles on the Management's Evaluation of the Internal Control over Financial Reporting, based on the annual fundamental policy determined by the Board of Directors, currently enhances, operates and evaluates the internal control system for effective and efficient financial reporting.

(Resolution of Board of Directors Meetings on May 1, 2023)