SALA Corporation (hereinafter, “we,” “us,” or “our”) understands that the largest demand our shareholders have from us as a pure holding company is to carry out management with greater objectivity and accountability, and in a highly transparent manner, as we continually expand the Group’s corporate value.
With regard to business administration at the Group, we aim to promote the delegation of authority and responsibility to Group companies while also enhancing business administration functions and internal auditing functions. We will enhance our consolidated management capabilities by focusing on business portfolio management to boost corporate value, medium- to long-term management strategy proposals, and performance monitoring of Group companies in terms of our business administration functions. Additionally, we will strengthen business auditing (including proposals for improvements) and compliance auditing to monitor compliance with laws and regulations in terms of our internal auditing functions.

At the 18th Annual General Meeting of Shareholders held on February 21, 2020, a resolution was passed to change our articles of incorporation to shift to a company with an Audit and Supervisory Committee. As a result, as of the same date, we transitioned from a company with an Audit & Supervisory Board to a company with an Audit and Supervisory Committee. Following this transition, we will work to bolster the supervisory function over the Board of Directors, accelerate decision-making by boosting efficiency in management, and enhance deliberations at the Board of Directors, thereby further augmenting our corporate governance.


A. Board of Directors
Our Board of Directors comprises seven Directors (excluding Directors who are Audit and Supervisory Committee Members) and three Directors who are Audit and Supervisory Committee Members for a total of 10 members. Of these, four are Outside Directors, meaning that over a third of the Board of Directors consists of Outside Directors. The Board of Directors is in charge of management strategy for the whole of the SALA Group, deliberations on medium- to long-term management policies and other topics, making decisions on important matters, and monitoring the status of execution at each department within the Group, among other functions.


B. Audit and Supervisory Committee
The Audit and Supervisory Committee consists of three Directors who are Audit and Supervisory Committee Members, two of whom are Outside Directors. The Audit and Supervisory Committee carries out auditing using an internal control system as an organization that is independent from the Board of Directors, and is responsible for the supervisory function of the status of execution of duties by the Directors.


C. Management Conference
The Board of Directors delegates some decisions on the execution of important matters to the Management Conference consisting of Directors (excluding Outside Directors). The Management Conference holds meetings at least once a month to deliberate matters delegated to it by the Board of Directors, as well as management policy, management strategy, and other matters. It also strives to boost the efficiency of Group management, accelerate decision-making, and share information.


D. Nomination and Remuneration Committee
We have established the Nomination and Remuneration Committee as a voluntary advisory body to the Board of Directors to enhance the transparency and objectivity of decisions related to the nomination and remuneration of Directors. The Nomination and Remuneration Committee consists of six Directors, four of whom are independent Outside Directors. In response to requests from the Board of Directors, the Nomination and Remuneration Committee deliberates on establishing or changing policies and procedures regarding the selection and dismissal of executives, the nomination of candidate Directors, and policies and criteria regarding the remuneration of Directors. The Committee then issues reports with the results of these deliberations to the Board of Directors.


E. Audit Department

We have established the Audit Department as our internal audit division. The Audit Department collaborates with the Audit and Supervisory Committee to carry out internal auditing on Group companies.

 A. Status of efforts to build an internal control system and risk management structure
With respect to internal control, multiple departments are collaborating with the Financial Auditor, the Audit and Supervisory Committee, and the Audit Department to build an internal control system to maintain healthy business activities with four objectives: effectiveness and efficiency in operations, credibility in financial reporting, compliance with laws and regulations, and the safety of assets. With respect to risk management, we have established the Risk Management Committee, which governs risk management for the entire Group. In addition, the various risks that may arise through all business activities are evaluated and analyzed at each related department and organization, and countermeasures for these risks are discussed at these departments and organizations as well.

As part of our internal control system and risk management structure, we aim to build a stance for compliance. Accordingly, we have established the Compliance Committee, our Charter of Corporate Behavior, and our Code of Conduct, in addition to opening a Compliance Hotline. With respect to our evaluation system covering internal control regarding financial reports, we have established the Working Group for Internal Control Regarding Financial Reports for the SALA Group, and are carrying out Group-wide actions.

B. Overview of agreements that limit liability

To allow Outside Directors to suitably fulfill the roles expected of them, we have established a clause in our articles of incorporation based on the stipulations of Article 427, Paragraph 1 of the Companies Act to allow us to enter into an agreement that limits the liability for damages prescribed in Article 423, Paragraph 1 of the Companies Act. Based on these stipulations, we have entered into an agreement that limits liability with four Outside Directors.

The monetary limit with respect to liability for damages based on this agreement is the “Minimum Liability Amount” as defined in Article 425, Paragraph 1 of the Companies Act.

C. Number of Directors
We have prescribed in our articles of incorporation that there are to be no more than 15 Directors (excluding Directors who are Audit and Supervisory Committee Members) and no more than five Directors who are Audit and Supervisory Committee Members.

D. Requirements regarding resolutions on the election of Directors

With respect to resolutions on the election of Directors, we have prescribed in our articles of incorporation that such resolutions are carried out at meetings where shareholders holding more than one-third of the voting rights of shareholders who are capable of exercising such rights are present, whereby the resolutions are approved by a majority of the voting rights present. We have also prescribed that such resolutions are not to be conducted by cumulative voting.

E. Shareholder meeting resolutions that can be conducted at the Board of Directors

(a) Exemption of Directors’ liability

Based on the stipulations of Article 426, Paragraph 1 of the Companies Act, we have prescribed in our articles of incorporation that the Board of Directors may hold a resolution to exempt Directors (including persons who were formerly Directors) from liability to the extent permitted by law in relation to actions described in Article 423, Paragraph 1 of the Companies Act. The objective of this is to build an environment in which Directors can suitably demonstrate their abilities and fulfill the roles expected of them as they perform their duties.

(B) Decision-making organization regarding dividends of surplus, etc.

We have prescribed in our articles of incorporation that the Board of Directors can pass resolutions regarding dividends of surplus and the matters listed in each item of Article 459, Paragraph 1 of the Companies Act without the need for a resolution at a shareholder meeting, excluding cases with special provisions in laws and regulations. The objective of this is to achieve dynamic capital and dividend policies that respond to changes in the business environment by giving the Board of Directors jurisdiction over dividends of surplus, etc.

F. Requirements regarding special resolutions at shareholder meetings

With respect to special resolutions as described in Article 309, Paragraph 2 of the Companies Act, we have prescribed in our articles of incorporation that such resolutions be carried out at meetings where shareholders holding more than one-third of the voting rights of shareholders who are capable of exercising such rights are present, whereby the resolutions are approved by at least two-thirds of the voting rights present. The objective of this is to ensure that shareholder meetings run smoothly by alleviating the restrictions on the number of people participating in special resolutions at shareholder meetings.