Corporate Governance

Approach to Corporate Governance

MAX aims to further grow our business and increase our corporate value by continuing to receive support from our customers. To achieve this goal, we recognize the importance of taking the initiative to enhance our corporate governance based on trusting relationships with our stakeholders.

Basic Policy on Corporate Governance
  1. 1Conduct proper and appropriate information disclosure
  2. 2Strengthen our management supervision function
  3. 3Ensure stable corporate management
  4. 4Accelerate decision making
  5. 5Respect people

Corporate Governance System

Institutional design

As the institutional structure of our company, MAX has adopted a structure with an Audit and Supervisory Committee and has introduced an executive officer system. As the main institutions of the current corporate governance system, in addition to the statutory Board of Directors and Audit and Supervisory Committee, we are working to enhance corporate governance by establishing advisory boards for nomination and remuneration, management meetings, and Corporate Governance Committee.

Overview of corporate governance system
Main items Details
Organizational form Company with an Audit and Supervisory Committee
Number/tenure of Directors (excluding Directors who are Audit and Supervisory Committee Members) 6 persons/1 year
Number/tenure of Directors who are Audit and Supervisory Committee Members 4 persons/2 years
Number of Outside Directors 4 persons
Voluntary committees Nomination Advisory Committee, Remuneration Advisory Committee
Number of Outside Directors who are designated by independent officers 4 persons
Audit corporation KPMG AZSA LLC
Initiatives for strengthening corporate governance
2015 Determined the basic policy on the establishment of internal control systems
2016 Transitioned to a company with an Audit and Supervisory Committee
2018 Formulated the basic policy on corporate governance
2020 Revised Rules of the Board of Directors (newly established "Matters for discussion")
Established the Nomination Advisory Committee and the Remuneration Advisory Committee
2021 Resolved on the basic policy on remuneration for Directors
2023 Introduced restricted share-based remuneration plan
Appointed a female outside director
Corporate governance chart (as of September 30, 2023)

Board of Directors

The Company's Board of Directors consists of six directors (excluding directors who are members of the Audit Committee, one independent Outside Director), and four directors who are members of the Audit Committee (including three independent Outside Directors). The board is chaired by the President and Representative Director.
It meets once a month and as necessary, and met 17 times in fiscal 2022.
The Board of Directors is positioned as a body that makes decisions on matters stipulated in laws, regulations, and the Articles of Incorporation, as well as important matters concerning management stipulated in the Company’s Rules of the Board of Directors, such as management policies, business plans, investment plans, and establishment of and investment in subsidiaries, and supervises the execution of operations, to promote the Company’s sustainable growth and enhancement of medium- to long-term corporate value in an effort to improve profitability and capital efficiency based on fiduciary responsibilities and accountability to shareholders.

Attendance at Board of Directors (FY2022)
Name Status of activities
Director Mitsuteru Kurosawa 17/17
Masahito Yamamoto 17/17
Tatsushi Ogawa 17/17
Yoshihiro Kaku 17/17
Director, full-time Audit and Supervisory Committee Member Tomohiko Nakamura 13/13
Outside Director (Audit and Supervisory Committee Member) Minoru Hirata 17/17
Asaka Kanda 17/17
Shoji Kiuchi 17/17

Audit and Supervisory Committee

The Company’s Audit and Supervisory Committee consists of one full-time Audit and Supervisory Committee Member and three part-time Audit and Supervisory Committee Members who are Independent Outside Directors. The reason for selecting a full-time Audit and Supervisory Committee Member is to strengthen the audit/supervisory function of the Audit and Supervisory Committee in gathering information from Directors (excluding Directors who are Audit and Supervisory Committee Members) and sharing information at important internal meetings as well as ensuring thorough coordination with the internal audit department and the Audit and Supervisory Committee. The committee is chaired by a full-time Audit and Supervisory Committee Member.
It meets once a month and as necessary, and met 17 times in fiscal 2022.
As an organization that plays a role in the company’s supervisory function and as a statutory independent institution entrusted by the shareholders, the committee performs the duties stipulated in the laws, regulations, and the Company’s Rules of the Audit and Supervisory Committee, including auditing the execution of duties of Directors, preparing audit reports; deciding the details of proposals regarding the appointment, dismissal, and non-reappointment of the accounting auditor; and deciding the opinions of the Audit and Supervisory Committee regarding the appointment/dismissal or resignation of and remuneration for Directors (excluding Directors who are Audit and Supervisory Committee Members).

Nomination Advisory Committee

The Company established the Nomination Advisory Committee,the majority of whose members are Independent Outside Directors, as an advisory body to the Board of Directors to enhance transparency and objectivity of the nomination of Directors. The committee met five times in fiscal 2022. The Board of Directors respects and takes into account the committee’s recommendation when deciding the nomination of Directors.
The Nomination Advisory Committee deliberates on the validity and appropriateness of the overall process for appointing Directors, and makes reports or statements to the Board of Directors. The members of the committee are appointed from Directors by a resolution of the Board of Directors, with the majority of committee members consisting of Independent Outside Directors. The chairperson of the committee is selected by the committee. Tatsushi Ogawa, Minoru Hirata, and Shoji Kiuchi were appointed as committee members, and Minoru Hirata was selected as the chairperson.

Remuneration Advisory Committee

The Company established the Remuneration Advisory Committee, the majority of whose members are Independent Outside Directors, as an advisory body to the Board of Directors to enhance transparency and objectivity regarding remuneration, etc., for Directors (excluding Directors who are Audit and Supervisory Committee Members) and Executive officers. The committee met three times in fiscal 2022. The Board of Directors respects and takes into account the committee’s recommendation when resolving on remuneration, etc., for Directors (excluding Directors who are Audit and Supervisory Committee Members).
The Remuneration Advisory Committee deliberates on the validity and appropriateness of the overall process for determining remuneration, and then makes reports or statements to the Board of Directors. Committee members are appointed from Directors by a resolution of the Board of Directors, with the majority of committee members consisting of Independent Outside Directors. The chairperson of the committee is selected by the committee. Tatsushi Ogawa, Asaka Kanda, and Shoji Kiuchi were appointed as committee members, and Shoji Kiuchi was selected as the chairperson.

Management Meeting

The Company holds the Management Meeting hosted by the President, once a month as a body executing operations, thereby reviewing in advance the matters to be referred to the Board of Directors for discussion and supporting the President's decision making.
The Management Meeting consists of five Directors (excluding Directors who are Audit and Supervisory Committee Members,Outside Director) and relevant staff nominated by the President. It is working to improve the quality of decision making to enable flexible response to changes in the business environment and decisions to be made based on on-site information. In addition, the Business Review Meeting has been established to confirm the plans and results of each quarter, and the Business Strategy Meeting has been established to advance companywide, cross-functional initiatives. Both meetings, which are subordinate bodies of the Management Meeting, are hosted by the President. Matters discussed at the Business Review Meeting are reported to the Board of Directors meeting to be held in the month following the date of the Business Review Meeting.

Corporate Governance Committee

The Company convenes the Corporate Governance Committee, which is headed by the President and held quarterly, as an organization that promotes corporate ethics, legal compliance, risk management, and other compliance issues at the Company.
The Corporate Governance Committee is composed of Directors, Executive Officers, and division representatives, and is attended by the four Audit and Supervisory Committee Members.
The Corporate Governance Committee is working to improve and make progress in risk management companywide, based on the main themes of internal audit reports, case studies of other companies, risk management status by division, review of rules, and information security audits.

Sustainability Committee

In September 2022, we established the Sustainability Committee (chaired by the President) as a decision-making body for sustainability strategies under the supervision of the Board of Directors, and the Sustainability Promotion Committee (chaired by the Director in charge of sustainability) as a subordinate body of the Sustainability Committee to promote various activities related to sustainability. The Sustainability Promotion Committee (chaired by the director in charge of sustainability) was established as a subordinate organization of the Sustainability Committee to promote various activities related to sustainability. The committee reports the status of deliberations and other matters to the Board of Directors and reflects them in the mid-term business plan and business plan to integrate sustainability-related activities and business strategies for sustainable enhancement of corporate value.

Name and members of the body
(as of September 30, 2023)
Name Position Main bodies established
Board of Directors Audit and Supervisory Committee Nomination Advisory Committee Remuneration Advisory Committee Management Meeting Corporate Governance Committee Sustainability Committee
Tatsushi
Ogawa
President Chair
person
- Host Host Chairperson
Yoshihiro
Kaku
Senior Managing Director, Senior Executive Officer - - -
Masahito
Yamamoto
Managing Director, Senior Executive Officer - - -
Hideyuki
Ishii
Director, Executive Officer - - -
Koji
Kato
Director, Executive Officer - - -
Kako
Kurasawa
Outside Director - - - -
Tomohiko
Nakamura
Director, full-time Audit and Supervisory Committee Member Chairperson - - - -
Minoru
Hirata
Outside Director (Audit and Supervisory Committee Member) Chairperson - - -
Asaka
Kanda
Outside Director (Audit and Supervisory Committee Member) - - -
Shoji
Kiuchi
Outside Director (Audit and Supervisory Committee Member) Chairperson - -
Daisuke
Yasue
Executive Officer - - - - - -
Takashi
Iwamoto
Executive Officer - - - - -
Shintaro
Yoshida
Executive Officer - - - - - -
Akio
Kitaya
Executive Officer - - - -
Katsunori
Manabe
Executive Officer - - - - -
Hitoshi
Igarashi
Executive Officer - - - - -
Hideo
Kashihara
Executive Officer - - - - - -
Mitsugu
Takezaki
Executive Officer - - - - - -
Reasons for election of Outside Director and status of activities
Name Reasons for election Status of activities
Minoru Hirata The Company has elected Minoru Hirata because it has determined that he is qualified to serve as Outside Director who is an Audit and Supervisory Committee Member based on the belief that he will utilize the knowledge and wealth of experience he has cultivated as a certified public accountant for the Company’s management. Attendance at meetings of the Board of Directors
17/17
Asaka Kanda The Company has elected Asaka Kanda because it has determined that he is qualified to serve as Outside Director who is an Audit and Supervisory Committee Member of the Company, considering that he has professional insight as an attorney-at-law and experience involved in corporate management as Outside Corporate Auditor and Outside Director (Audit and Supervisory Committee Member) at other companies. Attendance at meetings of the Board of Directors
17/17
Shoji Kiuchi The Company has elected Shoji Kiuchi because it has determined that he is qualified to serve as Outside Director who is an Audit and Supervisory Committee Member of the Company, considering that he has professional insight as an attorney-at-law and careers serving as a domestic affairs conciliation commissioner, member of a committee on administrative complaints, and others, as well as a wealth of experience and broad insight gained from serving in such positions. Attendance at meetings of the Board of Directors
17/17
Kako Kurasawa The Company has elected Kako Kurasawa because it has determined that she is qualified to serve as Outside Director of the Company, considering that she has been involved in sustainability-related business in her previous and current positions, and in addition to her expertise in sustainability, she has experience working overseas in the manufacturing industry. -
Number of Outside Director 4 members

In order to objectively determine the independence of Outside Directors and outside corporate auditors, the Company has established the following "Criteria for Independence of Outside Directors and Outside Corporate Auditors" in reference to the criteria for determining the independence of independent directors and outside corporate auditors established by Tokyo Stock Exchange, Inc.

Standards for Independence of Outside Directors

The Company shall deem an Outside Director or a candidate for Outside Director of the Company to be independent of the Company when all of the following requirements are satisfied

  1. 1At present or during the 10 years prior to assuming office, an executive director*1 or employee of the Company or its subsidiaries (hereinafter referred to as "MAX Group") 1The candidate must not have been an executive director*1 or an employee of the Company or its subsidiary (hereinafter referred to as "MAX Group") at the present time or within 10 years prior to his/her appointment. In addition, in the case of a person who has been a non-executive director, corporate auditor, or accounting advisor of MAX Group at any time within the 10 years prior to his/her appointment, he/she must not have been an executive director or employee of MAX Group in the 10 years prior to his/her appointment to such position.
  2. 2The person must not have been a director, executive officer, corporate auditor, accounting advisor or employee of a major shareholder*2 of the Company or a parent company, etc. or a subsidiary company, etc. of a major shareholder, or of a company if such a company is a corporation, at present or in the 10 years preceding his/her assumption of office.
  3. 3The applicant must not have been a director, executive officer, corporate auditor, accounting advisor, or employee of a company in which MAX Group is a major shareholder at the present time or in the 10 years prior to assuming office.
  4. 4The applicant must not have been a director, executive officer, auditor, accounting advisor, or employee of a major business partner*3 of the MAX Group or its parent company or other important subsidiary*4, or of a company if such company is a corporation, at the present time or in the three fiscal years prior to his/her appointment.
  5. 5The applicant must not have been a member of an organization (corporation, association, etc.) that received donations or subsidies from the MAX Group in excess of 10 million yen per year on average in the three fiscal years preceding his/her appointment.
  6. 6The person must not be a director, executive officer, auditor, or accounting advisor of a company that accepts directors, executive officers, auditors, or accounting advisors from the MAX Group, its parent company, etc., or its subsidiary, or a director, executive officer, auditor, accounting advisor, or important employee*5 of such a company if it is a corporation.
  7. 7Not be a director, executive officer, corporate auditor, accounting advisor, or employee of a financial institution or other major creditor, its parent company, etc., or a significant subsidiary, or of a company if such company is a corporation, that is indispensable for the financing of the MAX Group and on which it depends to the extent that there is no alternative, at present or in the three years prior to assuming office. or employee of such a company.
  8. 8Not to have been a certified public accountant who is an accounting auditor of MAX Group at present or in the three (3) years prior to assuming office. In addition, he/she must not have been a lawyer, certified public accountant, certified tax accountant, or other consultant who received an average annual remuneration of 10 million yen or more from MAX Group in the three years prior to assuming office, in addition to remuneration as a director or corporate auditor.
  9. 9The applicant must not be a member of any organization (corporation, association, etc.) such as a law firm, auditing firm, tax accounting firm, consulting firm, etc., which has MAX Group as its main business partner at present or in the three years prior to assuming office.
  10. 10The applicant must not have been a member of an auditing firm that is the accounting auditor of the MAX Group at present or in the three years prior to assuming office.
  11. 11The applicant must not be a close relative*6 of a person falling under items 1 through 10. However, in the case of a person falling under item 10, the person must be an employee or partner of an audit corporation that is the accounting auditor of the MAX Group or an employee of an audit corporation that is the accounting auditor of the MAX Group, and must have actually been in charge of the audit work of the MAX Group (excluding auxiliary involvement). (excluding any supplementary involvement).
  1. *1"Executive directors" means the directors listed in each item of Article 363, Paragraph 1 of the Companies Act and other directors who have executed the business of the company.
  2. *2"Major shareholder" means a person who holds 10% or more of the total voting rights of the company.
  3. *3"Major business partners" means companies, etc., which account for a substantial portion of the consolidated net sales of the MAX Group or its business partners in terms of the amount paid or received in transactions with the MAX Group.
  4. *4"Important subsidiary" means a subsidiary that is listed as an important subsidiary in the company's business report for the most recent fiscal year or in other publicly available materials.
  5. *5"Important employee" means an employee at the rank of general manager or above.
  6. *6"Close relative" means a spouse, a relative within the second degree of kinship, or a relative living in the same household.

Composition of the Board of Directors

In order to secure the efficacy of the Board of Directors, MAX's policy is to appoint directors according to their abilities, regardless of their age, gender, or other characteristics. While considering a balance of knowledge, experience, and abilities in the entire Board of Directors, we endeavor to appoint directors capable of sufficiently fulfilling their roles in the execution and supervision of the MAX Group's management.
When appointing the six directors (excluding directors who are members of the Audit and Supervisory Committee), we strive to ensure diversity in knowledge, experience, and abilities. Furthermore, we also periodically visit our overseas subsidiaries and business partners in order to obtain an understanding of the actual situation and cultivate international sensibility.
The four directors who are members of the Audit and Supervisory Committee possess appropriate experience and abilities in auditing, etc., as well as necessary knowledge in finance, accounting, and legal affairs. Two of the directors possess sufficient knowledge of legal affairs as lawyers. One of directors possesses sufficient knowledge of finance and accounting as a certified public accountant.
Moving forward, MAX will work to balance diversity in terms of gender and internationality, while also paying attention to the appropriate size of the Board of Directors.

Evaluation of effectiveness of the Board of Directors

The Company analyzes and evaluates the effectiveness of the Board of Directors (hereinafter "effectiveness evaluation") to improve the function of the Board of Directors. Since 2018, the effectiveness has been evaluated by self-evaluation based on an anonymous questionnaire using an outside institution, with the evaluation items consisting of the composition and operation method of the Board of Directors, and the support system for Directors, among other things.
The results of the effectiveness evaluation conducted in April 2023 showed the effectiveness of the Board of Directors. With regard to the discussion on sustainability initiatives, etc., which received a relatively low evaluation in the previous fiscal year, the evaluation result improved as a result of repeated discussions on themes such as initiatives for improving sustainability and ensuring diversity of human resources, in conjunction with the publication of the Integrated Report in October 2022. However, the Company continues to recognize this matter as a challenge.
The company will continue to share with the Board of Directors the challenges,and will face in strengthening autonomous corporate governance and gradually implement measures to resolve them.

Executive remuneration

The Company's executive remuneration, etc., comprises three elements: monthly remuneration (fixed remuneration), performance-linked remuneration (executive bonuses), and compensation for restricted stock transfers. With respect to the shares granted, the Company's prescribed restricted transfer agreement is to be concluded, which restricts the subject director from transferring or otherwise disposing of the shares until he/she retires or resigns from the position predetermined by the Company's Board of Directors. The ratio of each remuneration is designed to be generally 50% for fixed remuneration, 35% for executive bonuses, and 15% for stock-based remuneration, although the ratio of executive bonuses may vary depending on the Company's business performance.

Remuneration for Directors who are Audit and Supervisory Committee Members

Remuneration for Directors who are Audit and Supervisory Committee Members is determined by discussion among Directors who are Audit and Supervisory Committee Members based on their roles and responsibilities as executives within the remuneration limits resolved at the Ordinary General Meeting of Shareholders. Regarding executive remuneration, only monthly remuneration is paid.

Method for determining remuneration, etc., for each individual Director

Regarding the remuneration, etc., of directors (excluding directors who are members of the Audit and Supervisory Committee) The Board of Directors shall, after deliberation by the Compensation Advisory Committee, an advisory body to the Board of Directors, which is composed of a majority of independent Outside Directors, and after reporting to the Board of Directors, pass resolutions on monthly compensation for each executive position, proposals for executive bonuses to be submitted to the General Meeting of Shareholders, the amount of individual executive bonuses, and the number of shares of restricted stock to be granted to each individual as compensation for restricted stock, among other items. The resolution of the Board of Directors is subject to the approval of the General Meeting of Shareholders. Resolutions of the Board of Directors shall be made with respect to the report of the Compensation Advisory Committee.

Composition of executive remuneration
Monthly remuneration
(fixed remuneration)
Performance-linked remuneration
(executive bonus)
Restricted Stock Compensation
(non-monetary remuneration)
Recipients Directors (excluding Outside Directors and Directors who are Audit and Supervisory Committee Members), Outside Directors, Directors who are Audit and Supervisory Committee Members Directors (excluding Outside Directors and Directors who are Audit and Supervisory Committee Members) Directors (excluding Outside Directors and Directors who are Audit and Supervisory Committee Members)
Method of provision Monetary Monetary Stock
Evaluation indicator - The total source of bonuses for officers (excluding Directors who are Audit and Supervisory Committee Members) and employees is 28% of the result distribution profit calculated based on the amount of consolidated operating income, and performance-linked remuneration (executive bonus) for each individual linked to monthly remuneration is calculated according to calculations based on internal rules. The amount of remuneration credits to be granted to each eligible director is calculated by multiplying the base remuneration amount by a coefficient established for each executive position based on his/her role and responsibilities as an executive remuneration, and the number of shares corresponding to the calculated amount is determined and granted based on a resolution of the Board of Directors.
Method of provision Monthly monetary payment Monetary payment after the end of the General Meeting of Shareholders Shares corresponding to the amount contributed during the period covered
Total remuneration by officer category, subtotal by type of remuneration, and number of recipients
Category Total remuneration
(millions of yen)
Subtotal by type of remuneration
(millions of yen)
Number of recipients
Monthly remuneration
(fixed remuneration)
Performance-linked remuneration, etc. Non-monetary remuneration, etc.
Directors (excluding Directors who are Audit and Supervisory Committee Members) 182 102 80 - 4
Directors (Directors who are Audit and Supervisory Committee Members)
(Outside Directors)
43
(25)
43
(25)
-
(-)
-
(-)
5
(3)
Total
(Outside Directors)
225
(25)
145
(25)
80
(-)
-
(-)
9
(3)
  1. *1The amounts paid to Directors (who are not Audit and Supervisory Committee Members) do not include compensation, etc., for the employee portion of Directors who serve concurrently as employees.
  2. *2Performance-linked remuneration, etc., consists of an executive bonus resolved at the 92nd Ordinary General Meeting of Shareholders held on June 28, 2023.
  3. *3The actual amount of the result distribution profit for fiscal 2022, which serves as a performance indicator, was ¥14,338 million.

Response for strengthened internal controls

To strengthen internal controls, MAX holds the biannual Internal Audit Summit with participation by audit-related organizations such as the Internal Audit Office, System Control Department, and Environment and Quality Assurance Department. At the Summit, participants share information on the status of internal audits and risk response at each department. We also have all employees conduct self-checks for the purpose of reflecting on their own activities, identifying risks in the Group, and taking appropriate measures.

Status of Internal Audit

MAX has established an Internal Audit Office consisting of four people, and conducts audits that address company-wide risks and audits that contribute to the effectiveness and efficiency of operations. These audits target the Company and its domestic and overseas subsidiaries. Audits are performed at each site or department once every two years or once every three years according to the Basic Internal Audit Plan approved by the President and reported to the Board of Directors. The results of the internal audits are reported to the Corporate Governance Committee and the Board of Directors, both of which are attended by all directors, on a quarterly basis.

As an effort to ensure the effectiveness of internal audits, the Internal Audit Office and full-time Audit and Supervisory Committee members regularly exchange opinions and coordinate information. In addition, the Internal Audit Office provides prior explanations and exchanges opinions with the Audit and Supervisory Committee mainly on the contents of reports made at the Corporate Governance Committee meetings. In addition, once a quarter, the Internal Audit Office, the Audit and Supervisory Committee, and the accounting auditor hold a meeting to exchange opinions to promote information collaboration. The secondary control divisions are informed through the Corporate Governance Committee and feedback of internal audit results, etc., in order to understand the status of control and strengthen the control system.

Cross-Shareholdings

The Company holds cross-shareholdings in order to maintain and strengthen business transactions. The Company makes decisions on these holdings based on whether or not they are beneficial to the Company in order to enhance its corporate value over the medium to long term. The Board of Directors discusses the appropriateness of these cross-shareholdings every year based on an evaluation of the purpose, benefits, and risks of the holdings, and reviews or reduces the number of shares to be held. With regard to the criteria for exercising voting rights related to cross-shareholdings, we begin with dialogue and carefully decide whether to approve or disapprove proposals that may harm the Company's interests, such as stocks with extremely deteriorating performance that could lead to a deterioration in valuation and returns.

Number of issues and balance sheet amounts
as of March 31, 2023
Number of issues Balance sheet amounts (Millions of yen)
Unlisted stocks 24 250
Stocks excluding unlisted stocks 13 4,705

Dialogue with shareholders

To oversee constructive dialogue with shareholders, MAX has established a department in charge of IR under the officer in charge of IR. Through coordination with divisions such as corporate planning, general affairs, and accounting, the department in charge of IR engages in fair and timely disclosure of situations related to management, finance, etc. At the end of the year and the end of the second quarter, MAX holds a financial results briefing attended by the President and the IR officer. At the end of the first quarter and the end of the third quarter, we hold a financial results briefing by teleconference attended by the IR officer. We also actively respond to requests for dialogue from shareholders and investors.
The department in charge of IR examines the content of opinions and requests from shareholders and investors, and issues reports to management executives as necessary. At the time of dialogue with shareholders and investors, based on our disclosure policy, we take sufficient caution regarding the management of insider information in accordance with our internal rules. We also limit dialogue with shareholders, investors, etc., for a certain period as a "silent period” before the announcement of financial results information.