Corporate Governance

We are building relationships of trust with our stakeholders

Recognizing the importance of management in companies that have social responsibilities, Socionext sees one of its most important management tasks as being to put in place organizational structures and practices that will ensure the transparency and fairness of decision-making and to build relationships of trust with our shareholders and other stakeholders. We also aim to deliver ongoing growth and enhanced corporate value by putting our corporate governance code into practice and by making continuous improvements.

Corporate Governance Report

Please see the report below for the status of Socionext's corporate governance.

  • Corporate Governance
  • Compliance
  • Tax Policy

Corporate Governance

The diagram below shows how corporate governance is managed at Socionext.

Corporate Governance

Board of Directors

In addition to deciding on important business matters and matters stipulated by law or the company’s articles of incorporation, the Board of Directors also exercises oversight over the operations of the company.
The board strives to maintain effective practices by bringing in independent outside directors with expertise in a range of different fields to strengthen operational oversight and provide appropriate advice. The board has regular monthly meetings as well as extraordinary meetings whenever the need arises.

Audit & Supervisory Committee

For the ongoing enhancement of corporate value, the Audit & Supervisory Committee maintains the integrity of the company and ensures that it acts for the mutual benefit of shareholders by monitoring the legality and appropriateness of actions taken by directors in the conduct of their duties.
A single full-time Audit & Supervisory Committee member is appointed to enhance the effectiveness of auditing and oversight functions, both by attending important meetings and by strengthening collaboration with the auditors and audit office. The committee has regular monthly meetings as well as extraordinary meetings whenever the need arises.

Membership of Appointments and Remuneration Committee

The Appointments and Remuneration Committee is made up of Board Directors appointed by the board. It operates as a voluntary advisory body to the Board of Directors with aims that include improving transparency in the appointment and remuneration of Board Directors.
The committee gives advice on matters such as the appointment and remuneration of Board Directors in response to inquiries from the Board of Directors. Its duties involve formulating selection criteria and policies for Board Directors and Executive Officers and reviewing candidates for such positions. It also formulates policies for Board Director and Executive Officer remuneration and deliberates on the level of remuneration. To adopt an independent position, the committee is chaired by an independent Outside Board Director and two-thirds of its members are also independent Outside Board Directors.

Core Philosophy on Compliance

The Socionext Group recognizes “compliance with legal and societal expectations” and “fair trading practices” as important duties, both of which are included in the CSR policies that represent the group’s guiding principles.

[Compliance with legal and societal expectations]

We will justify the trust placed in us by society through the strict observance of legal requirements and societal expectations.

[Fair trading practices]

We will follow fair trading practices to build relationships of trust with our customers and suppliers.

The Socionext Group has also laid out compliance criteria that are based on these CSR policies. We take care to ensure that all company employees maintain high ethical standards and act in ways that are cognizant of compliance requirements so that we remain a company that is trusted by all of its stakeholders.

Compliance Administration

●Risk and Compliance Committee

The Socionext Group has a Risk and Compliance Committee made up of executives and others and led by the CEO. The committee meets once a quarter to assess, analyze, and formulate actions on issues such as compliance, information security, and disaster risks.

●Internal Reporting System

The Socionext Group has established an internal reporting (whistle-blowing) system for the early detection and response to unauthorized activities that is intended to reinforce fair business practices that are in accord with the law. The system provides for both internal reporting (to the Socionext Risk Compliance Committee Secretariat) and external reporting (to the Socionext Reporting Contact at TMI Associates). The diagram below shows a flowchart of how this works.

In accordance with the law and company policy on this issue, measures are in place to ensure that the persons making and receiving reports are not identified so as to prevent them from being subject to any unfavorable treatment. To date, the company has not received any reports of serious breaches of the law, CSR policies, or company rules.

Compliance Administration

Main Actions on Compliance

●Compliance education and Training

The Socionext Group conducts education and training to raise employee awareness and understanding of compliance.
The main instances of compliance education and training in the March quarter of 2022 were as follows.

Education and training

Basic compliance education for all employees provided by e-learning (100% participation)

e-learning programs for all employees on the following topics (100% participation)
Laws on subcontractor payments and security-related export controls, harassment prevention, information security, and insider trading.

Group classes for new recruits on compliance, information security, and human rights

●Ensuring exclusion of Antisocial forces (organized crime)

The Socionext Group stipulates the exclusion of antisocial forces in its CSR policies and compliance criteria, explicitly declaring its intention to be resolute in its attitudes and response to all forms of antisocial activity and to avoiding such relationships, with this stance being clearly communicated to employees. The company has also formulated rules on dealing with antisocial forces and laid out specific measures for their exclusion.

Key measures

To ensure the exclusion of antisocial forces, provisions to this end are either included in supplier and other contracts or are contained in separate agreements reached with such parties.

Socionext cooperates with the Police and has put measures in place to collect information about antisocial forces. It has appointed a person to be responsible for preventing extortion and has joined an association of companies in Kanagawa for defending against such forces.

External agencies or similar are used to review all parties with which the company has contractual arrangements to determine whether they have connections with antisocial forces or are suspected of doing so, both at the time of entering into the contract and at regular intervals thereafter.

●Action on Preventing Insider trading

Socionext has formulated rules for preventing insider trading, with stipulations that include the appropriate handling of material information and the pre-approval and post-fact reporting of company shares. We also ensure that these rules are clearly communicated to employees. To ensure that insider trading does not occur, the rules have also been accompanied by an e-learning course for all employees to raise their awareness and understanding of the topic.

Global Tax Policy

Socionext Group (hereinafter referred to as We) has established in its CSR Policy that it fully complies with laws, regulations, and social norms and responds to the trust of society. We also clarify its approach to tax-related matters by formulating this global tax policy.

1.Basic policy

We understand the legislative intent of the tax laws enacted by countries in which Socionext and its subsidiaries operate and commit to comply with such laws. Further, we support the OECD’s international tax rules and the action plan on Base Erosion and Profit Shifting (BEPS), through which we pay taxes in a timely and appropriate manner and fulfill social responsibilities.

2.Tax Governance

Under the leadership of the Chief Executive Officer (CEO) of the Company, we have established a framework under which the tax governance of the group is supervised and controlled by the CFO and corporate finance division of the Company, with the cooperation of regional management who have responsibility for tax affairs in the overseas subsidiaries. With this framework, we appropriately respond and adapt to the changing global taxation environment, including the latest tax legislation changes, in the countries and regions where we operate and have business relations.

3.Tax risk management

We take the following actions to minimize tax risks:

Our specialized tax organization works closely with the business operations department to discover tax risks in the early stages.

When a material tax risk is identified, we will investigate the facts and determine how to treat such a risk in the context of legislative intent.

If any uncertainty as to the tax processing remains, we will seek the advice of outside specialists or make advance inquiries to the tax authorities as necessary in an effort to eliminate such uncertainty.

In cross-border intra-group transactions, we analyze the functions and risks of overseas subsidiaries and determine the transaction prices in accordance with the OECD’s guidelines on transfer pricing and our transfer pricing policy.

4.Approach to tax haven

We don’t use tax havens (countries or regions with no tax or extremely low tax rates) with no presence of actual business conditions for the purpose of international tax avoidance.

5.Tax planning

In order to maximize shareholder value, we strive to realize an appropriate tax burden by applying tax incentives using the most favorable method within the scope of our business objectives and legislative intent.

6.Organization and personnel training

As tax-related issues are complex and may have a material impact on cash flows, tax affairs require expertise and wide experience. We take the following actions for the operation of tax-related organizations and the training of personnel:

Since we are required to find solutions for complex tax-related issues and provide instructions for our domestic and overseas subsidiaries, our specialized tax organization will continue to secure and foster experienced personnel with a high level of expertise.

Each subsidiary develops human resources that can smoothly carry out tax operations by collaborating with external experts.

We make efforts to spread the necessary knowledge on tax among all employees.

7.Relationship with Tax Authorities

We aim to maintain a relationship of trust with tax authorities by providing appropriate information and responding sincerely to each country’s tax authorities. If a difference of opinion should arise with each country’s tax authority, we will communicate constructively with the tax authority to seek a resolution to the issue.