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 March 31,
2025) 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.
Corporate Governance System
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.
Pursuant to the resolution of the Annual Shareholders’ Meeting held on June 26, 2025, the Company has transitioned from a company with an Audit & Supervisory Board to a company with an Audit and Supervisory Committee with the aim of strengthening the supervisory function of the Board of Directors by placing as members of the Board of Directors, Audit and Supervisory Committee Members who are in charge of, among other things, auditing the execution of duties by Directors, and further enhancing corporate governance, as well as further increasing its corporate value by enabling more speedy decision making under the appropriate supervision by the Board of Directors and enriching strategic discussions for the mid to long term at the meetings of the Board of Directors.
The Board of Directors consists of ten members (including one female Director),
including five Independent Outside Directors. The Board of Directors holds a meeting once a month, in
principle, and
resolves and reports on material business matters. The Company has adopted an executive officer system to
separate
management supervision from business execution.
The Audit and Supervisory Committee consists of four members (including one female Director), including three Independent Outside Directors (the chairperson: Full-time Audit and Supervisory Committee Member). The Audit and Supervisory Committee 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 Audit and Supervisory Committee receives reports of auditing plans and auditing results from the department in charge of internal auditing, and as necessary, requests investigation or gives specific instructions to the department in charge of internal auditing. The Company has assigned one Audit and Supervisory Special Officer and one full-time staff member, who are independent from the directions and orders of officers and employees who execute operations, to assist the duties of the Audit and Supervisory Committee.
The Company has the Nomination and Compensation Committee 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 the nomination of the candidates for the Directors, and decisions on the remuneration of the Directors (excluding Directors who are Audit and Supervisory Committee Members), and meetings of the Committee are held as necessary. The Committee consists of seven members, the majority (five members) of which being Independent Outside Directors, and the chairperson being appointed from the Independent Outside Directors.
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, 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.
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 Representative Director, 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. In addition, the Internal Auditing department evaluates the status of development and operation of the internal control over financial reports in accordance with the Financial Instruments and Exchange Act.
The Internal Auditing department directly reports to the Board of Directors regarding the results of the internal audit for the preceding fiscal year and the audit plans for the current fiscal year once a year in accordance with the Regulations of the Board of Directors, in addition to reporting the results of its work to the Representative Director, President and CEO.
Framework of the Corporate Governance System
Skill Sets for Directors and Skills Matrix
The Knowledge, Experience and Skills to be Held by the Board of Directors (Skill Sets for Directors) which was determined by the Board of Directors, and the Skills Matrix of the current Directors are available on Skill Sets for Directors and Skills Matrix.
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.