Companies should seek to increase their corporate value over the medium to long term based on capital invested by the shareholders through fair corporate activities. Companies are expected to contribute to society as public institutions through corporate activities, considering their responsibility to their stakeholders, including customers, shareholders, employees, clients, communities, and supervisory authorities.
In this social structure, management is expected to engage in good corporate activities. Management needs to ensure the sustainable development of the company, increase transparent accountability, and fulfill its social responsibilities.
Based on the above consideration, the Company, which provides a range of goods and services to a large number of customers through a franchise system, aims to improve its corporate governance to achieve the following:

- Clarify management responsibilities and promote rapid decision-making by improvement of the organizational structure;

- Win the support and trust of all stakeholders by increasing management transparency through enhanced functions to monitor management and appropriate timely disclosure;

- Continue to work for maintenance and enhancement of the AUTOBACS brand; and

- Fulfill its corporate social responsibility.

Paying full attention to shifts in social value and changes in the business environment, the Company will make the necessary and desirable changes to enhance this corporate governance policy.

To manage it adequately, the Company has internal directors who are conversant with the franchise system in the auto industry and outside directors who have diversified backgrounds. To use corporate auditors’ function to check management, the Company has adopted the board of corporate auditors system.
The Company has adopted an executive officer system to separate the function of executing operations and the function of overseeing management. The Company also has committees that consist mainly of outside directors as advisory organs to the Board of Directors, to ensure an objective and transparent corporate governance system.

1) The Board of Directors shall make the best decisions to increase corporate value through fair corporate activities in the medium to long terms.

2) The Board of Directors shall make decisions about matters prescribed by laws and regulations, or the Articles of Incorporation, and important matters relating to business activities.

3) The Board of Directors shall oversee the directors’ performance of their duties.

1) The number of directors shall be around ten. The Company shall endeavor to have outside directors that account for more than 30% of the total number of directors.

2) Outside directors shall meet the requirements set out in the Companies Act. Of outside directors, the Company shall select independent directors who meet the requirements of independence of the stock exchanges and the Company and shall report the selection to the stock exchanges.

The term of office of the director shall be one year.

1) The auditors shall attend meetings of the Board of Directors as well as other important meetings. They shall receive reports about important matters relating to audits and shall oversee and inspect the directors and executive officers’ performance of their duties.

2) The Board of Auditors shall perform the following duties:

- Preparing auditing reports

- Appointing and dismissing standing auditors

- Making decisions about audit policy, methods for inspecting the operations and property of the Company, and other matters relating to the auditors’ performance of their duties

- Adopting resolutions on the consent prescribed in the Companies Act

1) The Board of Auditors shall consist of all auditors and shall choose a chairperson of the board through its resolution.

2) The number of auditors shall be determined so that they can secure the effectiveness of their business audits and accounting audits. The number of outside auditors shall be half or more of the number of auditors.

3) Outside auditors shall meet the requirements set out in the Companies Act. Of outside auditors, the Company shall select independent corporate auditors who meet the requirements of the stock exchanges and the Company and shall report the selection to the stock exchanges.

The term of office of the auditor shall be four years.

1) Roles: To enhance corporate governance and to increase the objectivity of the decision-making of the Board of Directors and the transparency of the decision-making process, the Corporate Governance Committee shall fulfill the following functions and shall make recommendations:

- Function to give advice on appointments: appointments of directors, auditors, and executive officers

- Function to give advice on remuneration: policy on remuneration system for directors and officers

- Function to enhance corporate governance: overall governance

2) Composition: The committee shall consist of outside directors and the representative director.

3) Chairman: The chairman shall be chosen from among outside directors by the members of the committee.

1) Roles: The Risk Management Committee shall develop risk management policies for each fiscal year and shall promote proper risk management.

2) Composition: The committee shall consist of executive officers, who are also directors, and an executive officer responsible for internal control.

3) Chairman: The chairman shall be the chief executive officer.

To achieve objective and transparent corporate governance, the Company has established specific policies for matters of special importance and is endeavoring to develop systems under those policies.

(1) To achieve its goals in corporate governance, the Company has established the compliance principles described below and has made them the preamble to the Code of Conduct and Guidelines for Action of the AUTOBACS SEVEN Group.

The officers and employees of the AUTOBACS SEVEN Group aim to deepen trust with all stakeholders in every corporate activity and to grow together. They will comply with the Code of Conduct and Guidelines for Action below.
The officers and department heads will take the lead in setting good examples. They will also keep employees apprised of the Code of Conduct and Guidelines for Action and will instill compliance by developing an effective system.

(2) The Code of Conduct and Guidelines for Action of the AUTOBACS SEVEN Group are posted on the intranet and the website of the Company (the Guidelines for Action are only posted in Japanese) to ensure that officers and employees of the AUTOBACS SEVEN Group companies are kept fully apprised of them.

(1) The Company believes that enhancing accountability through timely disclosure and IR activities will improve management transparency and will help companies fulfill their corporate social responsibility. Based on this belief, the Company has established the accountability principles described below and has included them in the preamble to the Timely Disclosure Policy.

The Company believes that communication with its stakeholders, especially shareholders and investors, through timely disclosure and IR activities is important for the development of the Company and the AUTOBACS SEVEN Group and that enhancing timely disclosure will help maintain or improve the trust of stakeholders and enhance shareholder value. Based on this belief, the Company discloses, in addition to its Code of Conduct, its Timely Disclosure Policy on five factors: judging the importance of information, disclosing important information, disclosing other information, making fair disclosure, and maintaining and improving systems for timely disclosure.

(2) The Timely Disclosure Policy is posted on the intranet and the website of the Company (only in Japanese) to ensure that the officers and employees of the AUTOBACS SEVEN Group companies are kept fully apprised of it.

(1) The Company believes that establishing an integrated risk management system that combines a risk management system for ordinary times and a crisis management system for emergency situations and continuing integrated risk management will help fulfill its corporate social responsibility. The Company has established the principles for integrated risk management stated below and has made them the preamble to the Integrated Risk Management Policy.

The Company provides a range of goods and services to a number of customers through an AUTOBACS franchise system and believes that its management priority is continuing to maintain and enhance the AUTOBACS brand to win further support and trust from all stakeholders.
To that end, the Company is striving to fulfill its corporate social responsibility, not only by responding to day-to-day changes in the business environment but also by determining and assessing a range of risks that could inhibit the Company from properly achieving its goals and by controlling risks appropriately. The Company is also endeavoring to establish a system that could prevent damage from expanding and to minimize damage and losses if significant damage occurs.
The entire AUTOBACS SEVEN Group is continuing to perform integrated risk management to become a corporate group trusted by stakeholders.

(2) The Integrated Risk Management Policy is posted on the intranet and the website of the Company (only in Japanese) to ensure that the officers and employees of the AUTOBACS SEVEN Group companies are kept fully apprised of it.

(1) To establish an adequate remuneration system, the Company has established the Remuneration Policy for Directors and Officers, which sets out the purpose of directors’ and officers’ remuneration, remuneration levels, remuneration mix, the concept of performance-based remuneration, and the process for determining remuneration.

(2) The main points of the Remuneration Policy for Directors and Officers are as follows:

1) The Company shall pay sufficient remuneration to directors and officers to secure competent management that increases the corporate value.

2) The Company’s remuneration for directors and officers shall consist of fixed remuneration and performance-based remuneration, which changes in accordance with the Company’s performance and stock price.

3) The performance-based remuneration shall be paid in accordance with the Company’s results and the evaluation of individuals’ performance of their duties, that shall aim to improve the Company’s results and corporate value in the short term and in the medium to long terms.

4) To ensure the objectivity and transparency of the process of determining remuneration for directors and officers, the Board of Directors shall consult the Governance Committee about the remuneration system and remuneration levels.

▶Remuneration Policy and remuneration for the latest fiscal year

(1) The Company believes that the supervision of subsidiaries is important for the Company’s corporate governance and for that reason has established the Affiliate Control Regulations, which set out principles for controlling subsidiaries.

(2) The main principles for controlling subsidiaries are as follows:

1) Respect the autonomy of the management of subsidiaries, and cooperate and give appropriate advice for improving management

2) Reasonably resolve important management issues and complaints arising between the Company and subsidiaries

3) Communicate important matters of the Company and matters that need to be communicated to all affiliates as needed

(3) Set up a department that supervises the control of subsidiaries.

(4) To check whether subsidiaries are considering and making decisions about their management issues appropriately, the Company proposes auditor candidates to subsidiaries. If appointed, the auditors oversee the management of subsidiaries.

 





 





(Revised on April 1, 2010)