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Corporate Governance System

Chart of corporate governance system

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Board of Directors

SoftBank Group Corp. (“SBG”)'s Board of Directors consists of 13 Board Directors, including four External Board Directors. The Chairman and CEO serves as the chairman of the Board. The Board's purpose is to make important decisions on execution of duties and oversee Board Directors' execution of duties. SBG ensures adequate independence of the four External Board Directors, who bring a wealth of knowledge and experience to the Board related to business management and other matters. Each of the External Board Directors participates actively in the discussions at the Board meetings and SBG makes management judgments and decisions based on these discussions.

 

Agenda items for discussion at the Board of Directors meetings are set forth in the Board of Directors Regulations. The Board discusses the following:

  • (ⅰ) Statutory matters

  • (ⅱ) Critical matters related to business management, such as (a) fundamental management policy, business plans, and (b) matters such as investments and loans and borrowings, etc. exceeding a certain amount

  • (ⅲ) Certain matters related to subsidiaries (excluding listed subsidiaries and their subsidiaries), such as investments and loans and borrowings, etc. exceeding a certain amount

  • (ⅳ) Other matters

 

Furthermore, Special Directors are put in place in accordance with Paragraph 1, Article 373 of the Companies Act, and matters related to “disposal and acceptance of important assets” and “borrowing in a significant amount” are resolved by the Board of Special Directors meeting for the purpose of prompt decision-making.

 

Authority to decide matters other than these agenda items discussed by the Board of Directors is delegated to committees, Board Directors, and department managers to enable speed and flexibility in corporate activities.

 

To elect Board Directors, the Board of Directors selects candidates in accordance with SBG's Articles of Incorporation and the Board of Directors Regulations, and these candidates are proposed at the General Meeting of Shareholders.

 

SBG and each of its non-executive Board Directors Yun Ma, Yasir O. Al-Rumayyan, Masami Iijima Yutaka Matsuo, Lip-Bu Tan and Yuko Kawamoto have concluded a contract to limit liability for damage stipulated in Paragraph 1, Article 423 of the Companies Act in accordance with Paragraph 1, Article 427 of the Companies Act. The amount of limit of liability for damage is stipulated in the relevant contract as ¥10 million or the minimum amount of limit of liability that the relevant laws and regulations stipulate, whichever is higher.

SBG stipulates the maximum number of Board Directors at 15 in its Articles of Incorporation.The Board of Directors elects Board Director candidates who are considered most suitable for the position, regardless of their nationality, ethnicity, gender, or age. There are 13 Board Directors serving, all of whom have a wealth of knowledge and experience regarding business management and a global perspective. Four of the 13 Board Directors are independent External Board Directors, six are non-Japanese, and one is a woman, thereby ensuring constructive and lively discussion at the Board of Directors meetings from diverse perspectives.

Advisory Body to the Board of Directors (Nominating and Remuneration Committee)

The Nominating and Remuneration Committee deliberates on standards for election and dismissal of and the, proposals of candidates for Board Directors,, individual remuneration standards, and other matters includingpolicies concerning evaluation and remuneration for Board Directors, and reports the results of the deliberation to the Board of Directors.

 

The Nominating and Remuneration Committee members are elected by the Board of Directors from among Board Directors, and a majority of the Committee members are independent External Board Directors.

 

The Committee currently comprises three Board Directors (Masami Iijima (Chairman/Independent External Board Director), Yutaka Matsuo (Independent External Board Director), and Masayoshi Son (Chairman & CEO).

Investment Committee

The Investment Committee has the purpose of making decisions on matters for which it has been delegated authority by the Board of Directors, in order to carry out corporate activities flexibly. The Committee is comprised of six Board Directors elected by the Board (Masayoshi Son, Ronald D. Fisher, Marcelo Claure, Katsunori Sago, Rajeev Misra and Yoshimitsu Goto).

 

The agenda items for discussion by the Investment Committee are set forth in the Regulations of the Investment Committee. The committee makes decisions on the following matters:

  • (ⅰ) Matters such as investments and loans and borrowings under a certain amount

  • (ⅱ) Certain matters related to subsidiaries (excluding listed subsidiaries and their subsidiaries), such as (a) investments and loans and borrowings etc. under a certain amount, (b) issue and gratis issue of new stock or stock acquisition rights etc. (except matters such as the issue of new stocks that will not alter the shareholding ratio), (c) issue of corporate bonds, (d) overseas business expansion, and (e) entry into new business fields

  • (ⅲ) Other matters

 

The committee makes decisions through the Electronic Investment Committee System, and such decisions are only approved by unanimous agreement from all members. If one or more members is against a proposal, it is brought to the Board of Directors. All final decisions results of the committee are reported to the Board of Directors.

Brand Committee

The Brand Committee is a committee that has been delegated authority by the Board of Directors to make decisions on and properly manage matters related to the SoftBank brand. The Committee comprises five members including the chairman (Board Director, Senior Vice President Yoshimitsu Goto), who has been selected by the Board of Directors, and four members (Senior Vice President Kazuko Kimiwada, the head of the Corporate Legal Department Natsuko Oga, the head of the Corporate Communications Office Takeaki Nukii, and the head of the General Administration Department Tatsuya Iida), who have been appointed by the chairman.

 

The agenda items for discussion at the Brand Committee are set forth in the Regulations of the Brand Committee. The Committee discusses the following:

  • (ⅰ) Certain matters related to the licensing of the SoftBank brand

  • (ⅱ) Matters related to a consideration for use of the SoftBank brand

  • (ⅲ) Cancellation of licensing of the SoftBank brand

  • (ⅳ) Basic policy and important matters related to the management of the SoftBank brand

  • (ⅴ) Certain matters other than the above related to the SoftBank brand

 

The Brand Committee makes decisions through an electromagnetic means in principle, and such decisions are only approved by unanimous agreement from all members. All decisions made by the Committee are reported to the Board of Directors.

Audit & Supervisory Board Members and the Audit & Supervisory Board

The Audit & Supervisory Board Members attend the Board of Directors meetings, allowing them to monitor and verify the decision-making of the Board and fulfillment of the Board's obligation to supervise the execution of duties by each Board Director. Moreover, the Audit & Supervisory Board Members receive regular reports from Board Directors, employees, Audit & Supervisory Board Members, and other personnel of major subsidiaries and conduct hearings, as necessary, to audit the execution of duties by the Board Directors of SBG.

 

The Audit & Supervisory Board has been established to receive reports on, deliberate and resolve important matters related to audits. The Audit & Supervisory Board consists of four Audit & Supervisory Board Members, three of whom are External Audit & Supervisory Board Members (two full-time members and two part-time members), and is chaired by a full-time, internal Audit & Supervisory Board Member. SBG ensures adequate independence of the three External Audit & Supervisory Board Members, who possess a wealth of knowledge and experience in their professional roles as a lawyer, certified public accountants, or certified tax accountants.

 

The Audit & Supervisory Board meets once a month, in principle. The Audit & Supervisory Board meets once a month, in principle.At these meetings, in addition to formulating the audit policy and plan, details of various internal and external meetings attended only by full-time members are reported to part-time members. The Audit & Supervisory Board also explains details of the audit plan for each fiscal year, interim audit status, and audit results to the Board of Directors.

 

Furthermore, as described in “2. Audit by the Independent Auditor, (1) Status of audit by the Independent Auditor, iv. Policy for selection of audit corporation and evaluation of audit corporation by the Audit & Supervisory Board,” the Audit & Supervisory Board determines whether or not the reappointment of the Independent Auditor is appropriate, each term.

 

The Audit & Supervisory Board Office is established to support the duties of all the Audit & Supervisory Board Members and the office comprises three dedicated personnel who act under the directions of the Audit & Supervisory Board Members to gather information, investigate financial statements, requests for approval, treasury stock and matters related to the General Meeting of Shareholders, among other matters, and give other assistance.

 

SBG and each of its Audit & Supervisory Board Members have concluded a contract to limit liability for damage stipulated in Paragraph 1, Article 423 of the Companies Act in accordance with Paragraph 1, Article 427 of the Companies Act. The amount of limit of liability for damage is stipulated in the relevant contract as ¥10 million or the minimum amount of limit of liability that the relevant laws and regulations stipulate, whichever is higher.

Internal audits

The Internal Audit Department, which comprises eight staff members, conducts internal audits of the Company's internal departments and subsidiaries to check that duties are carried out legally and correctly based on laws and regulations, the Articles of Incorporation, and internal regulations. The results of these internal audits are reported to the CEO, and briefings are also given to the Audit & Supervisory Board Members.

Support system for External Board Directors and/or External Audit & Supervisory Board Members

SBG seeks to ensure that all officers including the External Board Directors and External Audit & Supervisory Board Members can participate fully in the Board of Directors meetings having fully grasped the specific details of the agenda for discussion. The secretariat to the Board of Directors therefore provides them with materials for the Board of Directors meeting beforehand, including supplemental briefings and other information as required.

 

The Audit & Supervisory Board Office has been established to support the duties of all the Audit & Supervisory Board Members, including the External Audit & Supervisory Board Members. The office comprises dedicated personnel who act under the directions of the Audit & Supervisory Board Members to gather information, investigate matters, and give other assistance.

Cooperation between the Audit & Supervisory Board Members, Independent Auditor, and the Internal Audit Department

Cooperation between the Audit & Supervisory Board Members and the Independent Auditor

The Audit & Supervisory Board Members receive regular briefings from the Independent Auditor (Deloitte Touche Tohmatsu LLC) on the audit plan, main items to be audited, the audit results and other matters. The Audit & Supervisory Board Members and the Independent Auditor also cooperate as necessary by exchanging information and opinions, among other measures.

Cooperation between the Audit & Supervisory Board Members and the Internal Audit Department

The Audit & Supervisory Board Members receive briefings from the Internal Audit Department, which is responsible for SBG's internal audits. The briefings include the audit plan and the results of internal audits performed on each department of SBG and its major subsidiaries. The Audit & Supervisory Board Members and the Internal Audit Department also cooperate as necessary by exchanging information and opinions, among other measures.

Cooperation between the Independent Auditor and the Internal Audit Department

The Independent Auditor receives briefings from the Internal Audit Department on the audit plan and, when necessary, on the results of internal audits and other matters. The Internal Audit Department receives regular briefings from the Independent Auditor regarding audit results and other matters. Moreover, both parties cooperate with each other as necessary by exchanging information and opinions, among other measures.

Reasons for adoption of current corporate governance system

SBG adopts the company with Audit & Supervisory Board system. As explained in “Governance system,” its corporate governance system is built around the Board of Directors, the Audit & Supervisory Board Members, and the Audit & Supervisory Board.

 

The Board Directors carry out lively discussions at each Board of Directors meetings. Moreover, since four of the 13 Board Directors are External Board Directors, management benefits from diverse perspectives, and the function for mutual monitoring between Board Directors are enhanced.

 

The Audit & Supervisory Board Members conduct strict audits of Board Directors' execution of duties from their specialist perspectives as a certified public accountant, a lawyer, or other professional. Moreover, since three of the four Audit & Supervisory Board Members, a majority, are External Audit & Supervisory Board Members, SBG's audit function is enhanced by ensuring more independent perspectives.

 

The current system is thus selected because SBG judges that it can ensure effective corporate governance.

Audit by the Independent Auditor

(1) Status of audit by the Independent Auditor

SBG concluded an independent audit agreement with Deloitte Touche Tohmatsu LLC based on the Financial Instruments and Exchange Act. The names of the certified public accountants who executed audit duties in fiscal 2019, the number of assistants for the audit duties, the policy for selection of audit corporation and evaluation of audit corporation by the Audit & Supervisory Board for fiscal year are as follows:

(a) Names of certified public accountants who executed audit duties

Designated Limited Liability Partner and Engagement Partners:
Masayuki Nakagawa, Masayuki Yamada, Ryo Sakai, Yusuke Masuda

(b) Consecutive auditing period

14 years

(c) Composition of assistants who supported audit duties

Certified public accountants: 28, Others: 32

(d) Policy for selection of audit corporation and evaluation of audit corporation by the Audit & Supervisory Board

The Audit & Supervisory Board sets criteria for appropriately selecting an Independent Auditor and appropriately evaluating the Independent Auditor in the Audit & Supervisory Board Members Audit Regulations. In accordance with such criteria, the Audit & Supervisory Board takes into account the system to ensure the proper execution of duties by the Independent Auditor, the independency required by the Independent Auditor, and its expertise including the possession of worldwide network resources, and determines whether the reappointment of the Independent Auditor is appropriate each year. The Audit & Supervisory Board has determined that reappointment was appropriate for this fiscal year. In the event that the Audit & Supervisory Board determines that reappointment is inappropriate, it considers other candidates for Independent Auditor in accordance with such criteria, upon taking into account factors such as audits at other companies.

 

The Audit & Supervisory Board has resolved, as its decision-making policy of dismissal or not reappointing of the Independent Auditor, that the Independent Auditor may be dismissed by the Audit & Supervisory Board with unanimity of Audit & Supervisory Board Members when the Independent Auditor corresponds to any of Paragraph 1, Article 340 of the Companies Act, and that, other than those cases above, the Audit & Supervisory Board shall submit a proposal on dismissal or not reappointing of the Independent Auditor to the Annual General Meeting of Shareholders when it is acknowledged that the execution of appropriate audit is difficult due to the occurrence of an event which impairs the qualification or independency of the Independent Auditor.

(2) Remuneration for audits and other duties

(a) Remuneration for auditing certified public accountants and other assistants

  • Remuneration for audit certification duties

    SBG: 723 million yen
    Consolidated subsidiaries: 1,523 million yen

  • Remuneration for non-audit duties

    SBG: 17 million yen
    Consolidated subsidiaries: 121 million yen

 

The non-audit duties for SBG mainly consist of the preparation of comfort letters when issuing corporate bonds. The non-audit duties for the consolidated subsidiaries of SBG mainly consist of advisory services in connection with the accelerated settlement of accounts of subsidiaries.

(b) Remuneration to the same network as SBG’s auditing certified public accountants and other assistants (Deloitte Touche Tohmatsu Limited) (excluding “Remuneration for auditing certified public accountants and other assistants”)

  • Remuneration for audit certification duties
  • SBG: -
  • Consolidated subsidiaries : ¥4,031 million
  • Remuneration for non-audit duties
  • SBG: ¥51 million
  • Consolidated subsidiaries: ¥790 million

 

The non-audit duties for SBG mainly consist of advisory services for taxation and other matters. The non-audit duties for the consolidated subsidiaries of SBG mainly consist of advisory services in connection with new businesses.

(c) Other material remuneration for audit certification duties

Not applicable.

(d) Reason(s) why the Audit & Supervisory Board gave its consent to the remuneration of the Independent Auditor, etc.

The Audit & Supervisory Board, based on the “Practical Guidelines for Cooperation with Accounting Auditors“ published by the Japan Audit & Supervisory Board Members Association, reviewed and examined the plan details of the audit conducted by the Independent Auditor, the performance status of accounting audit duties, and the basis for calculating remuneration estimates, and from the results, has given consent prescribed in Paragraph 1, Article 399 of the Companies Act for the remuneration paid to the Independent Auditor.