Governance Promotion System

Summary of Corporate Governance Structure

Type of Organization Company with corporate auditors
No. of Directors Ten including four independent outside directors
No. of the Audit & Supervisory Board Members Four including two independent outside Audit & Supervisory Board Member
Term of office for the Directors One year
Accounting Auditor Ernst & Young ShinNihon LLC
Notification of independent directors/corporate auditors (Japanese only).

Outline of Corporate Governance

We consider developing and strengthening corporate governance to be a key management issue. By strengthening corporate governance, we are aiming to realize the corporate philosophy, achieve the management plans, enhance the corporate value over the medium- to long-term, and achieve sustainable growth. In addition, to realize higher corporate value for all stakeholders, we consider aiming for efficient, fair, and highly transparent management to be the basic approach underpinning our corporate activities.

Based on this approach, the Board of Directors is working to develop management structures, organizations, and systems that will allow us to engage in appropriate and speedy decision making, strengthen the supervisory functions governing the decisions made, establish compliance systems, improve and reinforce internal control systems, and build healthy relationships with stakeholders.

In addition, the director in charge of the Corporate Management Headquarters oversees the management of the Company and its subsidiaries and affiliates in order to ensure thorough governance throughout the entire Group. In order to facilitate the smooth exchange of information and promote group activities, liaison meetings of subsidiaries and affiliates are held on a regular basis.

The director in charge of each subsidiary and affiliated company is responsible for establishing sustainability promotion system, compliance system, and risk management system in accordance with measures based on management plans and efficient business execution.

Corporate Governance Report

Corporate Governance SystemAs of June 27,2024

Corporate Governance SystemAs of June 27,2024

Business Management System

The Company has the Board of Directors to decide important matters concerning business operations, such as the decision of management plans, and resolution set by the law, regulations, and the articles of incorporation. It also monitors the management activities as well. This improves corporate value by responding dynamically to changes in the business and management environment.
The Company has in place the Corporate Management Council to discuss important matters concerning business operation for the purpose of rapid decision-making management and smooth business operation before the Board of Directors meetings. In addition, the Board of Executive Officers is established to share information about company management in order to achieve smooth business operation and strengthened cooperation.

Furthermore, the Board of Directors set up various committees to discuss the major management challenges of the Company. Specifically, the Board of Directors established the Nomination and Compensation Committee to confer about selection and remuneration of directors, the Risk Management Committee to manage risks in the business operation, the Compliance Committee to maintain the compliance structure and manage the issues, the Personnel Committee to confer about personnel utilization, the IT Committee to maintain IT environment, and the Sustainability Committee to promote sustainability initiatives.

In the business operation structure, Leopalace21 has put in place four headquarters comprise of: the Leasing Business Headquarters which manages the Company's core leasing business; the Corporate Management Headquarters which establishes and monitors the management strategies, increases inter-divisional synergy and supports smooth business operation; the Compliance Promotion Headquarters which aims to strengthen our legal compliance and monitors business risks; and the Construction Defects Response Headquarters which manages construction defects.
We also see the enhancement of audit functions as our critical management task, and will try to reinforce the management monitoring function by setting the Audit & Supervisory Board as a supervising body for directors' business operations, by electing outside directors, and by setting the Auditing Department which is responsible for internal audit functions.
With this structure in place to clarify responsibilities and authorities, we aim to continuously enhance our corporate governance.

Board of Directors

The Board of Directors operates with an emphasis on both ensuring the speed of management and enhancing the supervisory function. We think appropriate nomination of directors is important to improve the corporate value. Therefore, we incorporate in the decision process the deliberation at Nomination and Compensation Committee with membership including outside directors.
The Board of Directors holds regular meetings once a month, while extraordinary meetings can be called at any time as required, so that it can determine critical management matters, monitor business operation, and oversee directors' performance of duties.

Outside Directors

We elected outside directors to reinforce the supervising function and to receive objective advice for decision-making. The outside directors give various advices to improve corporate value by participating in essential meetings such as the Board of Directors meetings. We think decision based on an objective advice is important especially for nominating officer candidates and determining the remuneration of the officers. The Nomination and Compensation Committee is therefore composed of President and CEO, and outside directors.
In addition, the election of the outside directors is based on an independency standard we formulated. Please refer to the relevant part in our Corporate Governance Report.

Audit & Supervisory Board

The Audit & Supervisory Board, composed of four members including two outside members, emphasizes on monitoring the directors' performance of duties.
The Audit & Supervisory Board Members try to enhance the effectiveness of audits by attending important meetings such as the Board of Directors' meetings, conducting operational status investigations and regularly collaborating with the Auditing Department, accounting auditor and outside directors.


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