Governance

Materiarity Strengthening of corporate governance

Corporate governance

The Qol Group recognizes that the Group must continually enhance its corporate value through its corporate activities based on its Corporate Philosophy, Slogan, Qol Group Vision, and Qol Group Charter of Corporate Behavior to respond to the expectations of all stakeholders including its shareholders, patients, and employees. To this end, ongoing corporate governance enhancements are an important management issue as the basis for ensuring management soundness, transparency and efficiency. The Group is strengthening its management oversight function by appointing outside directors who meet the requirements for independent officers. Furthermore, the Group’s policy about dialogues with shareholders and investors is to proactively have dialogues with them. This policy represents its commitment to meeting the expectations of stakeholders including shareholders and investors. In line with such commitment, the Group makes efforts such as establishing appropriate conditions for the exercise of the shareholders' rights in addition to appropriately disclosing the following information in a timely manner: information on the business conditions such as the progress of management plans; quantitative financial information; and non-financial information on corporate governance and activities aimed toward sustainability.

Corporate governance structure

Board of Directors

The Board of Directors consists of nine directors (six men and three women) excluding those who are Audit & Supervisory Committee members and three directors (two men and one woman) who are Audit & Supervisory Committee members. The Board holds meetings in principle once per month to make decisions on important management matters as well as to manage and supervise the status of business execution. The term of office for directors (excluding those who are Audit & Supervisory Committee members) is one year to clarify management responsibilities each fiscal year.

The Chairman of the Board of Directors is Takashi Nakamura, President and Representative Director and includes Masaru Nakamura, Chairman and Director; Kiyonobu Fukumitsu, Representative and Executive Director; Takayoshi Ishii, Representative and Executive Director; Yukari Onchi, Director; Shinobu Karasawa, Director; Yutaka Togashi, Director; Toshiko Kuboki, Outside Director; Yukiharu Yamamoto, Outside Director; Mitsuru Bushimata, Full-time Outside Audit & Supervisory Committee Member; Chie Hashimoto, Full-time Outside Audit & Supervisory Committee Member; and Motoyuki Miyazaki, Outside Audit & Supervisory Committee Member.

Audit & Supervisory Committee

The Audit & Supervisory Committee consists of three members, two of whom are outside directors (Audit &Supervisory Committee members) and one of whom is a director (Audit & Supervisory Committee member),The Committee audits the legality and validity of the execution of duties by directors (excluding those who are Audit & Supervisory Committee members) in accordance with the Audit & Supervisory Committee Rules and Audit & Supervisory Committee Directors Auditing Standards. Moreover, to avoid a situation where the number of outside directors who are Audit & Supervisory Committee members and directors who are Audit & Supervisory Committee members falls short of legal requirements, the Company appointed one substitute outside director (Audit & Supervisory Committee member) and one substitute director (Audit & Supervisory Committee member).

The Audit & Supervisory Committee is chaired by Mitsuru Bushimata, Full-time Outside Audit & Supervisory Committee Member, and includes Chie Hashimoto, Full-time Outside Audit & Supervisory Committee Member; and Motoyuki Miyazaki, Outside Audit & Supervisory Committee Member.

Nomination and Compensation Committee

• The Company has established the Nomination and Compensation Committee as a committee to deliberate on the nomination and compensation of Directors.
• The Nomination and Compensation Committee is composed of 3 or more Directors, with a majority of Independent Outside Directors. Its members and chair are selected by resolution of the Board of Directors.
• The Nomination and Compensation Committee deliberates on the following matters and makes recommendations to the Board of Directors from a fair, transparent and objective perspective as an advisory body to the Board of Directors.
  1. Matters concerning the appointment and dismissal of Directors (matters to be determined by resolution of the General Meeting of Shareholders)
  2. Matters concerning the appointment and dismissal of Representative Directors and Directors with titles
  3. Matters concerning Directors’ Compensation, etc.
  4. Succession plans for the President and Representative Director
  5. Other important management matters deemed necessary by the Board of Directors

Internal Audit Department

Internal audits of the Company are conducted by the Internal Audit Department under the direct control of the president. The Internal Audit Department head conducts an audit to secure legitimate, appropriate and efficient operations and makes suggestions for improvement to relevant departments as necessary. In principle, the results of the audit are reported once a month at the internal audit meeting attended by directors and business execution departments. The results of the audits are reported to the auditors twice a year at the Audit & Supervisory Board. In addition, the Internal Audit Department cooperates with auditors and accounting auditors as necessary to improve the efficiency of auditing work.

Risk Management Committee

The Risk Management Committee examines, consults and approves the policies and directions of overall management initiatives for risks (classified into external risks, business process risks, and internal risks) stipulated in the Company-wide Risk Management Regulations and the scope of management crises stipulated in the Crisis Management (Risk Management) Regulations. The department in charge of Business Management holds regular meetings as the secretariat of the Compliance Subcommittee of the Risk Management Committee to report on the status of each risk management, devise and discuss company-wide plans and deal with individual issues. Departments related to various risks prepare preventive measures and manuals, and the secretariat of the Risk Management Committee manages the progress. Based on the viewpoint that dispensing errors, which are apparent in the insurance and pharmacy business, the Group’s mainstay business, are the most important risks on the business, the Committee for the Eradication of Dispensing Errors was established in April 2008 to report on the occurrence errors reported and analysis of the reports to the Group’s directors and the heads of major divisions, as well as to examine measures to prevent them.

The Group Strategy Management Committee

The Group Strategy Management Committee consists of Company and Group company directors designated as representative directors that, in principle, meet twice each month to confirm the progress toward targets on both a Group-wide and Group company basis, deliberate important matters and determine policies in an attempt to hasten decision making.

The Group Strategy Management Committee is chaired by Takashi Nakamura, President and Representative Director, and includes Masaru Nakamura, Chairman and Director; Kiyonobu Fukumitsu, Representative and Executive Director; Takayoshi Ishii, Representative and Executive Director; Shinobu Karasawa, Director, Yutaka Togashi, Director; and Sakae Omata, Vice President and Director, Qol Co., Ltd.

Sustainability Committee

In order to respond to issues related to sustainability, including social and environmental issues toward the realization of a sustainable society, the Company has established the Sustainability Committee chaired by the President and Representative Director under the Board of Directors of the Company, as an advisory body to the Board of Directors. Under the corporate philosophy of "We support quality of life for everyone. There for you. Anywhere,anytime." the Committee takes the mission to deliver safe medical care to all over the country and aims to realize a healthy, prosperous and sustainable society. The Sustainability Committee, chaired by the President and Representative Director, is composed mainly of directors and the persons responsible for each department, and works on formulating the Qol Group’s sustainability policies, determining activity targets, and managing progress. The Committee regularly reports on the activities and progress of the Committee to the Board of Directors.

Expertise and experience expected of Directors (Skill Matrix)

Officer remuneration

① Matters related to policies concerning the determination of the amount of remuneration, etc. for officers or the calculation method thereof

1）Method of determining the policy for determining the elements of individual remuneration, etc. for directors

In order to establish a remuneration system that functions sufficiently as an incentive to continuously improve corporate value, the Company consults the Nomination and Compensation Committee on the draft of the policy for determining the content of remuneration, etc. for each director (hereinafter referred to as the “Decision Policy”) and resolves the Decision Policy based on the contents of the report.

2）Summary of the contents of the Policy

1.Basic policy

The remuneration of directors shall be made up in the remuneration system that functions sufficiently as an incentive to continuously improve corporate value, be monetary and within the range of the remuneration limit resolved at the General Meeting of Shareholders, and consist only of monthly basic remuneration.

The concepts and calculation method for remuneration for directors are as follows.

2.Ideas and procedures for remuneration of directors

From the perspective of ensuring the appropriateness of the level of remuneration and the transparency of performance evaluations, the Nomination and Remuneration Committee, which is made up with a majority of outside directors, formulates a draft of the amounts of remuneration for directors based on comprehensive consideration of their positions, responsibilities, years of office, the standards of other companies, the Company’s business performance and the employee salary levels, and reports it to the Board of Directors.

The date of resolution at the General Meeting of Shareholders concerning the remuneration, etc. of the Company’s officers was June 29, 2021, and the resolution stipulates that remuneration of directors (excluding directors who are members of the Audit and Supervisory Committee, etc.) shall be limited to 700 million yen per year (20 million yen or less for outside directors) and the amount of remuneration for directors who are members of the Audit and Supervisory Committee, etc. shall be limited to 40 million yen per year.

Based on the report of the Nomination and Compensation Committee, the Board of Directors resolved to delegate the matter to Chairman of the Board of Directors Masaru Nakamura, President and Representative Director Takashi Nakamura, and Representative Executive Director Kiyonobu Fukumitsu . The content of the authority is the basic amount of remuneration based on the positions and responsibilities of each director, and the reason for delegating this authority is that they are most suitable as they are well versed with the environment surrounding the Company and the management situation, and decisions must be made in accordance with the contents of the report of the Nomination and Compensation Committee.

The remuneration of directors who are Audit and Supervisory Committee members shall be determined through consultation with directors who are Audit and Supervisory Committee members within the range of the maximum amount of remuneration resolved at the General Meeting of Shareholders.

3.Reasons why the Board of Directors has determined that the content of individual remuneration, etc. for the current fiscal year is in line with the Determination Policy

In order to ensure the fairness and transparency of the deliberation process, the Board of Directors has determined that the content of the decisions is in line with the Decision Policy because Chairman of the Board of Directors Masaru Nakamura, President and Representative Director Takashi Nakamura, and Representative Executive Director Kiyonobu Fukumitsu have made decisions within the range of remuneration limits approved at the General Meeting of Shareholders, taking into account the environment surrounding the Company and the management situation.

Executive compensation paid in the fiscal year ended March 31, 2022, was as follows:
Director compensation (9 people) amounted to 92 million yen (of which, 2 million yen was paid to outside directors)
Audit & Supervisory Board member compensation (three people) amounted to 9 million yen (of which, 3 million yen was paid to outside directors)
Director excluding directors who are Audit & Supervisory Committee Member (9 people) compensation amounted to 279 million yen (of which, 7 million yen was paid to outside directors)
Director who are Audit & Supervisory Committee Member compensation amounted to 27 million yen (of which, 9 million yen was paid to outside directors)

② Total amount of consolidated remuneration, etc. for each executive

It is not listed as there is no person whose total amount of consolidated remuneration, etc. exceeds 100 million yen.

Internal control system

The Company aims to steadily carry out its Corporate Philosophy, and it is promoting corporate activities based on high ethical standards that comply with the "Qol Group Charter of Corporate Behavior," "Executive Officer and Employee Code of Ethics," and "Compliance Management Regulations" in accordance with laws, regulations, the Articles of Incorporation and internal regulations. In addition, the Company established and operates an internal control system in order to ensure the effectiveness and efficiency of operations, the reliability of financial reporting, compliance with related laws and regulations, and the protection of assets. The Internal Control Subcommittee is established within the Internal Control Committee as a supervisory body for internal control. This subcommittee conducts the prescribed procedures to monitor and evaluate internal control, and after review by the Internal Control Committee, reports to the president, with final decisions being made by the Board of Directors. For more information on the Company’s internal control system, please refer to the Corporate Governance Report.

Risk management

Basic policy on Group risk management

1. Through practicing risk management, the Qol Group will ensure continuity and stable development of the business.
2. We will strive to eliminate and reduce the factors that hinder the interests of customers, business partners, shareholders and investors, local communities, and other stakeholders, as well as executives and employees, with the highest priority to ensuring the quality and safety of our operations and services in each business.
3. We are aware of our responsibilities as an entity engaged in medical-related business and act based on our social mission to safely and securely supply operations and various services in each business.
4. All executives and employees of the Qol Group comply with various laws and regulations, and rules, etc. in accordance with the spirit of compliance, decide for themselves what is an ethically correct action, and act according to this value judgment.

Compliance

Qol Group Charter of Corporate Behavior

In order to realize our corporate philosophy as a medical professional, we have established the Qol Group Charter of Corporate Behavior as a code of conduct that all Group employees should comply with.

More information on the Qol Group Charter of Corporate Behavior is available on the site below.

Basic concepts of compliance

For Qol Group, compliance means to comply with laws, regulations based on its corporate philosophy, "We support quality of life for everyone. There for you. Anywhere,anytime." and Qol Group Charter of Corporate Behavior, and to conduct corporate activities while maintaining a high sense of ethics as medical professionals and as business persons.

Information security

Reporting system

The purpose of the reporting system is to establish a mechanism for the proper handling of consultations and reporting from employees, etc. regarding organizational or personal violations of laws, to early detect misconducts and correct them, and thereby to contribute to the strengthening of compliance management. The General Affairs and Legal Affairs Department  serves as the point of contact, and the same department also provides consultation on whether or not it falls under a violation of laws and regulations.

Strengthening of compliance

The Qol Group strives to ensure complete compliance as a corporate mission to provide medical care and health maintenance and as a foundation for practicing management for society. We distribute Qol Group Essential Information and Compliance Book to all Qol executives and employees to raise their awareness in ethics and compliance. In addition, compliance training is conducted with external instructors at the Management Policy Meeting (held once a year), manager training (held once a year), and group training for new employees.

Protection of personal information

Qol Holdings Co., Ltd. (Qol HD) has established and practiced corporate ethics that can contribute to society as a corporation that engages in healthcare-related businesses in our group in addition to complying with laws and regulations, and so have the Charter of Corporate Conduct, which states that it is trusted by society.

To put this Charter into practice, we deeply recognize that personal information must be handled with care based on the philosophy of respect for personal character. At the same time, we comply with the Personal Information Protection Management System, handle personal information accurately and properly, and carry out highly transparent corporate activities.

Privacy Policy of Qol Holdings is available on the site below.

Corporate Governance Report

Corporate Governance Report of Qol Holdings is available on the site below.