The Company is a company with a Board of Corporate Auditors.
Under this system, the Board of Directors is responsible for oversight of business execution and corporate auditors are responsible for oversight of the whole Company, thereby ensuring the double-checking of management. We have taken the following measures to enhance corporate governance:

1) Introduction of officer system: Separation of business execution and oversight, clarification of management responsibilities

2) Ratio of outside directors above 30%: Enhancement of the oversight function

3) Establishment of committees primarily comprising outside directors: To ensure transparent, objective and sound management

4) Appointment of independent outside directors and outside corporate auditors: To protect general shareholders’ interests

5) Establishment of Executive Committee and Officers’ Committee: To ensure appropriate and swift decision-making

The Company has eight directors, of whom three are outside directors, and of the three types of boards of directors presented by the sectional committee of the Financial System Council, the Board of Directors is classified as “a board of directors centering on outside directors.” Meanwhile, the Company has a Corporate Governance Committee consisting of all outside directors and the representative director. The Company therefore has a hybrid corporate governance system, which is based on the system of a company with a board of corporate auditors and has the function of a company with a committee system.
The Company has three independent outside directors and three independent outside corporate auditors to protect the interests of general shareholders.

 

 

• Configuration			Company with a Board of Corporate Auditors
  Management and Business Execution Framework	Board of Directors	Chairman	Representative director
  		Member	Directors: eight (three outside directors, all of whom are independent directors, and five directors who are also executive officers) Corporate auditors: four (three outside corporate auditors, all of whom are independent corporate auditors)
  		Roles	Make decisions and report on the matters set out by laws and regulations or the Articles of Incorporation, and deal with important matters relating to the Company’s business activities
  		No. of meetings held in FY2011	16 times (including 5 ad hoc meetings) ▸Attendance records of directors and corporate auditors in FY2011
  	Executive Committee	Chairman	President & CEO
  		Member	Senior Executive Officers (Observers: outside directors and corporate auditors)
  		Roles	- Prior deliberation of items to be decided by the Board of Directors - Formulate policies and plans for the entire company
  		No. of meetings held in FY2011	8 times
  	Officers’ Committee	Chairman	President & CEO
  		Member	All Officers (Observers: outside directors and corporate auditors)
  		Roles	- Management, analysis and countermeasures relating to progress of business strategies - Thorough implementation of policies, plans and strategies throughout the entire company
  		No. of meetings held in FY2011	11 times
  Advisory Organ to the Board of Directors	Corporate Governance Committee	Chairman	Outside director (chosen from the outside directors)
  		Member	Outside directors and representative director (Observers: outside corporate auditors)
  		Roles	- Discuss candidates for directors, corporate auditors and executive officers - Discuss remuneration system for directors and officers - Discuss other matters related to corporate governance
  		No. of meetings held in FY2011	11 times
  	Risk Management Committee	Chairman	Representative director
  		Member	Officers with directorships and officer responsible for internal control (Observers: outside directors and corporate auditors)
  		Roles	Promote smooth and appropriate risk management
  		No. of meetings held in FY2011	3 times
  Auditing by Corporate Auditors and Internal Auditing System	Auditing by Corporate Auditors	Corporate auditors	Four (three outside corporate auditors, all of whom are independent corporate auditors)
  		Auditors’ staff	One staff member (full-time)
  		No. of meetings held in FY2010	17 times (including 7 ad hoc meetings) ▸Attendance records of corporate auditors in FY2011
  	Internal Auditing	Internal Auditing Organ	12 (direct report to the CEO)
  		Roles	- Evaluate the internal control system - Audit business operations of the Company and its subsidiaries - Report audit results to the corporate auditors, CEO, and officers, and instruct departments responsible to correct inadequacies
  	Cooperation	-	At the beginning of each fiscal year, the corporate auditors consult with the outside accounting auditor about an audit plan for the fiscal year. The corporate auditors receive a progress report each month on audits of financial statements and reviews, and exchange information and opinions. They check the audit plan developed by the Internal Auditing Organ at the beginning of the fiscal year. The corporate auditors receive a report on audit results from the Internal Auditing Organ once a quarter and express opinions on it. They also exchange information.

 

The independent directors or the independent corporate auditors of the Company shall be the outside directors or outside corporate auditors who satisfy the following requirements for independency.
At the time when any event has occurred to the person which results in infringement of the following requirements for independency, the person shall loose the independency.

1. The Company’s outside directors or outside corporate auditors shall not have had any interest in the Company and its affiliates (hereinafter collectively referred to as AUTOBACS SEVEN Group) or specified corporations or entities in the past five years in any of the following manners:

(1) Receiving remuneration (excluding the remuneration for the duty of a director or a corporate auditor from the Company) or other assets from AUTOBACS SEVEN Group in the amount exceeding ten (10) million yen per fiscal term

(2) Serving any of the following corporations or entities (including holding companies) as a director, executive officer or in any other executive or managerial post:

1) AUTOBACS SEVEN Group’s customer or business partner whose amount of operation or trade with, or the amount paid or received by or to, AUTOBACS SEVEN Group accounts for 2% or more of the consolidated sales of either party.

2) Corporation or entity which has an interest of essential nature with AUTOBACS SEVEN Group (main bank, accounting auditors, law firm, consultancy, etc.), regardless of the amount of trade

3) Any major shareholder of the Company (owning 10% or more of the shares issued)

4) Any corporation among whose major shareholders (owning 10% or more of the shares issued) is AUTOBACS SEVEN Group

5) Any corporation which shares any number of mutually appointed directors with AUTOBACS SEVEN Group (in the framework of cross-holding of shares involving mutual appointment of directors)

2. The Company’s outside directors or outside corporate auditors neither be a spouse of, nor have any relation of the second degree of kinship or closer to any of AUTOBACS SEVEN Group’s directors, corporate auditors or officers.

3. The Company’s outside directors or outside corporate auditors shall not share means of livelihood with any person corresponding to the description of Paragraph 1 above.

4. The Company’s outside directors or outside corporate auditors shall not be in any situation that may hinder them from performing their duties as the Company’s independent directors or independent corporate auditors.

(Established February 24, 2010)