1.Basic Views and Guidelines on Corporate Governance

Basic Views on Corporate Governance

Based on the "Furukawa Electric Group Corporate Philosophy", we enhance our management performance responding appropriately to changes in the business and market environment by prompt business decision making as well as with transparency and fairness. At the same time, we ensure sound management by developing and establishing an effective internal control system. With these, we will expand and develop our business on a sustainable basis and increase our corporate value. Furthermore, we seek to strengthen and enhance our corporate governance, in accordance with the followings:

Guidelines on Corporate Governance

Based on "Basic Views on Corporate Governance", we adopted "Guidelines on Corporate Governance" as a policy for enhancing our corporate governance.

2. Overview of Corporate Governance System

We adopt the "Audit and Supervisory Board" type of governance organization under the Japanese Companies Act taking account of the importance of maintaining the independence of the statutory audit function. And we have a "Nominating/Compensation Committee", majority members of which are outside directors to complement oversight function of the board.

Corporate Governance Organization Chart

(Note) As of June 27, 2016.

Oversight and Supervising

Board of Directors

Given its fiduciary responsibility and accountability to shareholders, the board is responsible for promoting sustainable corporate growth and the increase of corporate value over the mid- to long-term and enhancing earnings capability and capital efficiency. The board oversights and determines the matters listed below:

At present, the board consists of 12 directors with 5 outside directors including 3 independent directors in order to enhance transparency in decision-making and strengthen its oversight functions over the management taking outside directors' advice and opinion.

Outside directors have rich management experiences in financial institutions, trading companies or manufacturing companies, and expertise in the field of legal or industrial governmental policy etc., in addition to the knowledge of our business area. The board respects their views and opinions based on their variety of experiences in making its decision.

Nominating/Compensation Committee

We established the Nominating/Compensation Committee, replacing the former Compensation Committee in May 2015.

The committee's aim is to enhance our corporate governance securing the objectivity and transparency as to nominating and compensation for directors etc. The committee consists of 5 or more members, majority of which shall be outside directors, appointed from directors by board resolution.

At present, the committee consists of 6 members (4 outside directors).

Audit & Supervisory Board

Audit & Supervisory Board and each its member auditor collect information about management under statutory investigation authority and report and express their views to the board meetings and the management from an independent and objective standpoint as a fiduciary to shareholders.
Auditors ensure coordination with internal audit department through regular meetings, and report the policy, plan and result of auditing to the board regularly.
Full-time auditors attend the meetings such as Management Committee which decides major business matters, and they report information obtained from these audit activities to the non-Full-time and outside auditors.
We strengthen our audit function by appointing an assistant staff to the auditors who is dependent of management.

At present, the Audit & Supervisory Board consists of 6 members (3 members are outside and independent).

Business Operation

President is responsible for management of our whole business operation as a chief executive under the board’s oversight.
Our business consists of 14 business divisions, and General Managers of each division are responsible for leading each business operation including subsidiaries and affiliated companies management.
We also appoint General Managers of Communications Solutions Division, Energy Infrastructure Division and Electronics Component Material Division in order to supervise closely related business divisions. Furthermore, we appoint Advisors of Functional Components Business in order to assist President’s supervising function over each business operations and to plan integrated business strategy for each business sector.
In addition, we appoint General Manager of Global Marketing Sales Division that are responsible for our group’s sales and marketing entirely, and General Managers of Corporate Divisions that are responsible for planning group strategy and assisting operation.
These officers are members of the Management Committee, which is the highest decision-making body of business operation.
Management Committee, held 3 times a month basically, deliberates and determines major operational matters. Further, their business affairs and operation are quarterly reported to the Committee to foster common understanding of company business among them and integrated business operation as a whole.
These business affairs and operation are also quarterly reported to the board.

3. Reinforcing Internal Control

Furukawa Electric establishes, develops and operates its internal control for the purpose of efficient execution of responsibilities, compliance, risk management, information management and group company management.

For further details, please refer to "Systems for ensuring compliance of directors' execution of duties with laws, regulations and the Articles of Incorporation and soundness of other operations" (PDF 154MB).