- Rinnai views reinforcement and enhancement of corporate governance as important management priorities from the perspectives of strengthening competitiveness and continually improving corporate value of the Group.
- Rinnai takes care to preserve equality of shareholders by ensuring that their rights are essentially protected and that those rights can be exercised smoothly.
- Rinnai views appropriate cooperation with all stakeholders as essential to improving corporate value and, through its business activities, strives for its own growth together with social and economic prosperity.
- Rinnai emphasizes highly transparent management through the swift and appropriate disclosure of wide-ranging information while stepping up efforts to ensure that disclosure of company information is based on legal regulations.
- Rinnai's Board of Directors recognizes its fiduciary responsibilities to shareholders and strives to continually improve corporate value though transparent, fair, swift, and resolute decision-making.
- Rinnai encourages mutual communication through dialog with shareholders and other stakeholders in order to build relationships of trust with those stakeholders.
Basic Principles of the Internal Control System
Seeking to reinforce our management system and fulfill our social responsibilities, we established an internal control system with the following aims:
- To enhance the stability and efficiency of business operations
- To ensure the reliability of financial reports
- To comply with laws and regulations affecting business operations and internal regulations
- Safeguarding of Assets
Rinnai is in the process of establishing an internal control system as a means of ensuring proper risk management, compliance, and internal auditing.
Audit & Supervisory System
There are four Audit & Supervisory Board Member, two of whom are outside Audit & Supervisory Board Member. Audit & Supervisory Board Member attend Board of Directors meetings and other important meetings, where they monitor directors' execution of their duties, the development of the internal control system, and the overall performance of duties.
In addition, an external account auditor audits the Company's accounts and verifies from a third-party perspective the legality of the internal control system as it relates to financial accounts.
Corporate Governance Code
Japan's Corporate Governance Code went into force in June 2015. Since then, committed to implementing all of the Code's principles, Rinnai has promoted efforts to deal with principles not adequately addressed to date, as well as principles that have been partially addressed but require reassessment. Rinnai will continue in-house efforts to address two remaining principles: "Balance of cash and stock as remuneration for directors" and "Involvement of outside directors in nomination and remuneration matters." Rinnai will step up efforts to improve corporate value by implementing all of the Code's principles while further strengthening corporate governance.
Board of Directors
The Board of Directors consists of seven members, among whom two outside directors included and meet once a month in principle. The Board makes decisions on major management issues and also oversees business execution by Board members. Some of directors, from the Chairman down, serve concurrently as executive officers, whose role is to convey on the decisions of the Board to the head executives of the relevant divisions. The board checks on business operations and discuss issued at general business meetings and at other business meetings held on a quarterly basis. Moreover, the term of Directors should be fixed as one year in order to clarify their management responsibilities and to increase the opportunity of shareholders' confidence to them.
We have introduced an executive officer system in order to create a flexible management structure capable of responding swiftly to changes in the business environment. Some of directors, from the president down, serve concurrently as executive officers, whose role is to convey the details of decisions made by the Board of Directors to the managers of the divisions responsible so that they can be implemented. Quarterly company-wide management meetings and individual management meetings are also held to confirm how business is progressing and to share information on the challenges faced.
The limits of compensation for Directors and Auditors are determined in accordance with the resolution of the general meeting of shareholders. Moreover, the Rinnai's internal regulations stipulate fundamental matters related to Directors' compensations including the method of determination, revision and reduction. Based on these, the amounts of compensation for Directors are resolved at the Board of Directors and the amounts of compensation for Auditors are determined through the deliberations by Auditors. Directors are paid a fixed amount commensurate with assigned duties. Please note that Rinnai terminated the retirement benefit system for directors, following approval of a proposal put forward at the General Meeting of Shareholders on June 27, 2008.
Rinnai's internal regulations set out the system and procedures for the timely disclosure of important internal company information, including information concerning subsidiaries. The Information Disclosure Committee deliberates the timely disclosure of information and, when deemed necessary, makes that information public.