YCP Group recognizes that effective corporate governance is essential for improving long-term corporate value, and thereby regards strengthening and enhancement of corporate governance to be a key management issue. We believe that an environment in which corporate governance functions effectively will enable us to build good relationships with shareholders and other stakeholders, i.e. business partners, employees, etc., and to achieve long-term growth by providing quality services. As such, we disclose information in a timely and appropriate manner to ensure the soundness, transparency and objectivity of the YCP Group’s corporate activities as well as actively work towards creating a system that strengthens the YCP Group’s management supervision function.
To enhance management oversight functions of the Group Board of Directors, we have adopted the governance system of a company with an audit committee in accordance with the Companies Act of Japan. The Group Board of Directors consists of one (1) Director who is not a member of the Group Audit Committee and three (3) Directors who are members of the Group Audit Committee. The Group Board of Directors meet once a month for regular Group Board Meetings or as and when necessary for Special Group Board Meetings to enable prompt and appropriate management and executive decision making.
The Group Audit Committee is composed of three (3) Non-Executive Directors and is responsible for monitoring the legality and appropriateness of the Directors' business execution.
In addition to the Group Board Meeting, a Director who are a full-time member of the Group Audit Committee, also attends other meetings within the Group where he/she actively speaks from an independent standpoint based on his/her expertise and experience, and inspect important internal documents in daily audits to audit the lawfulness of the business operations. We believe that this system realizes fair and transparent management as well as ensures objectivity and neutrality of the management oversight function.
The image below outlines the corporate governance system of YCP Group.
The Group Board of Directors is composed of one (1) Executive Director who is the CEO of YCP Group, and three (3) Non-Executive Directors who are members of the Group Audit Committee. Of the Directors serving on the Group Audit Committee, two (2) Directors meet the requirement for independent directors stipulated in the Companies Act of Japan.
The Group Board of Directors is chaired by the Group CEO. The Group Board of Directors meets monthly for regular meetings and as and when necessary for special meetings. Directors share information and communicate with each other to make decisions on important business operations and matters delegated by resolutions of shareholders meetings as well as to supervise the Group’s business operations and performance of duties of each Director.
The Group Audit Committee consists of three (3) Directors, and is chaired by a Non-Executive Director. The Committee meets monthly for regular meetings and as and when necessary. The Committee works with the Group Internal Auditor and external financial auditor, conducts audit and communicates with each other to make decision on important audit-related matters including financial reporting, risk management and internal control matters.
The Group Management Committee is composed of one (1) Director (i.e. the Group CEO), who is not a member of the Group Audit Committee, and eight (8) Officers. The Committee meets regularly on a monthly basis and as and when necessary to discuss matters to be reported to or resolved by the Group Board of Directors in advance and to make management decisions on important matters related to business execution. The Group Management Committee meeting is chaired by the Group CEO.
To promote compliance, we have established the Compliance Committee chaired by the Group CEO. The Group COO is also appointed as the officer in charge of compliance, whereas the HR / Legal / General Affairs Group is appointed as the manager in charge of compliance. The Compliance Committee designs YCP Group’s compliance policy and system for the Group Board of Directors to approve, develop compliance manuals and conduct trainings to improve awareness and deepen knowledge on compliance.
We have three (3) Non-Executive Directors, each of whom is a member of the Group Audit Committee. Out of the three (3) Non-Executive Directors, two (2) Directors meet the requirements for independent directors stipulated in the Companies Act of Japan, which is equivalent to an Independent Non-Executive Director in Hong Kong. Each of the two (2) Independent Non-Executive Directors owns 10,000 shares of the Company. Apart from equity holding, none of the Independent Non-Executive Director have any personal, capital or business relationships with the Group.
An Independent Non-Executive Director plays an important role in corporate governance where he/she participate in the decision-making process, to confirm and advise on important corporate decisions; and to conduct effective oversight and supervision of the management team from a broader and independent perspective based on their background, knowledge, experience, etc. that are different from those within the Group. All of the Independent Non-Executive Directors of the Company are members of the Group Audit Committee, who perform necessary audits. Regarding the independence of Independent Non-Executive Director, it is a requirement that there are no personal relationships and/or business relationships between the Directors and the Group. On capital relationships, there should be no conflict of interests between Directors and the Company, not only with its major shareholders, but also the general shareholders. The two (2) current Independent Non-Executive Director meet the above requirements, and that independence is ensured.
The Group Audit Committee consists of three (3) Directors who are members of the Group Audit Committee. In order to conduct audits in alignment with the Internal Control System, the Group Audit Committee has established a system to confirm whether the Internal Control System is properly implemented and operated in accordance with the audit plan of the Group Audit Committee formulated every fiscal year, and to receive the audit reports on the audit results conducted by the Group Internal Auditor.
Internal audit of the Group is conducted under the supervision of the Group Internal Auditor who is an employee of the Company, with the operational support of an external professional firm. The purpose of internal audit is to verify and evaluate the effectiveness of the internal controls that we have developed and are operating in order to achieve the Group’s management objectives and ensure stable business operations, to identify areas requiring improvement and to provide advice for improvements. The Group Internal Auditor conducts internal audit with the approval of the Group CEO based on the internal audit plan formulated every fiscal year, reports the audit results of the respective audit components to the Group CEO, provides guidance for improvements on audit findings, and confirms the status of improvements.
Ernst & Young (Hong Kong) has been appointed as the financial auditor. There are no special interests between the Group and Ernst & Young as well as the executive members of Ernst & Young.
The Group Audit Committee, the Group Internal Auditor, and the Financial Auditors hold regular meetings from the perspective of Three-Way Audit to share information and exchange opinions. Information may also be exchanged as and when necessary, and audits and supervision are performed in cooperation with each other.