Corporate Governance

YCP Group recognizes that effective corporate governance is essential for improving long-term corporate value, and thereby regards the 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 (out of which two (2) are Independent Non-Executive Directors (Statutory Audit and Supervisory Committee Members)). The Group Board of Directors meet once a month for regular Group Board Meetings or as and when necessary for Extraordinary Group Board Meetings to enable prompt and appropriate management and executive decision making.

The Group Audit Committee is composed of three (3) Directors (including two (2) Independent Non-Executive Directors (Statutory Audit and Supervisory Committee Members)) and is responsible for monitoring the legality and appropriateness of the Directors' business execution.

In addition to the Group Board Meeting, a Non-Executive Director who is a full-time Statutory Audit and Supervisory Committee 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.

• Group Board of Directors

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 Non-Executive Directors serving on the Group Audit Committee, two (2) Independent Non-Executive 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.

• Group Audit Committee

The Group Audit Committee consists of three (3) Non-Executive Directors, and is chaired by a Non-Executive Director (full-time Statutory Audit and Supervisory Committee Member). 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.

• Group Management Committee

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.

• Compliance Committee

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 Legal and Compliance Group is appointed to manage and support for all compliance related matters of the Group. 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.

• Status of Independent Non-Executive Directors
• (1) Overview

The two (2) Independent Non-Executive Directors meet the requirements of an independent director under Singapore’s Corporate Governance Code, such as holding less than 10% of the Company’s shares or having no relationship with the Group Management that would prevent them from making independent management decisions and acting in the best interests of the Group.

• (2) Functions and Roles of Independent Non-Executive Directors in Corporate Governance

An Independent Non-Executive Director plays an important role in corporate governance where he/she participates 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 Directors, 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) Independent Non-Executive Directors meet the above requirements, and hence independence is ensured.

Teng Theng Dar has been appointed as an Independent Non-Executive Director due to his over 40 years of extensive experience and deep insight into entrepreneurship and corporate management in Asia, Australia, and in the Middle East Region, including a Founding Chairman of Asia Entrepreneurs Exchange and Chief Executive Office of Singapore Business Federation. There are no personal, capital or business relationships with the Group.

Satoko Kametaka, a lawyer registered in Japan and State of New York, USA, has been appointed as an Independent Non-Executive Director as she has specialist skills and experience in M&A, private equity, finance and other legal matters for global companies. There are no personal, capital or business relationships with the Group.

• Audit Status
• (1) Status of Group Audit Committee’s Audit

The Group Audit Committee consists of three (3) Non-Executive Directors who are members of the Group Audit Committee (out of which two (2) are Independent Non-Executive Directors). 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.

• (2) Internal Audit Status

Internal audit of the Group is conducted under the supervision of the two (2) Group Internal Auditors who are employees 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 Director of 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.

• (3) Financial Audit Status

Ernst & Young LLP has been appointed as the financial auditor. There are no special interests between the Group and Ernst & Young LLP as well as the executive members of Ernst & Young LLP.

• (4) Mutual Collaboration among Group Audit Committee, Group Internal Auditor and Financial Auditor

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.