Governance

Corporate governance policy

Our vision is "to create new food experiences and make people's lives happier" and to contribute to society by creating value in the area of "food," which is closely related to people's daily lives. To achieve this, in addition to continuous and progressive business operations, our basic approach to corporate governance is to reinforce relationships with stakeholders in a broad sense, and to build a management governance function that ensures execution and transparency. We will also continue to enhance the effectiveness of corporate governance on an ongoing basis in response to changes in the external environment and to new regulations.

Governance structure

Board of Directors

The Board of Directors makes important managerial decisions and supervises the execution of business operations in accordance with laws and regulations, the Articles of Incorporation, and the Company's rules and regulations, with the aim of enhancing the Company's sustainable corporate value. In addition, based on the decisions made by the Board of Directors, the Company delegates a portion of the authority for business execution to executive officers in order to expedite decision-making related to business execution. The Company's Board of Directors consists of six directors (including four outside directors, three of whom are also audit committee members) and holds a regular meeting once a month. All important matters are brought before the Board of Directors, and the status of business performance and new measures, as well as medium-term management issues, are also discussed. When issues requiring prompt decision-making arise, a meeting of the Board of Directors is held as necessary to fully discuss and make management decisions.

Audit Committee

The Audit Committee shall constantly monitor management execution, audit compliance with laws and regulations, the development and operation of internal control systems for financial reporting, and the legality of the directors' execution of their duties. Composed of three highly independent outside directors, the Audit Committee meets once a month to discuss necessary matters and share information. The Audit Committee Chairman is elected by members of the Audit Committee from among themselves, and the Chairman and other members of the Audit Committee exchange information with internal auditors and accounting auditors on a regular and ad-hoc basis to ensure close cooperation on compliance and risk management. In addition, one director who is a member of the Audit Committee works part time. But in principle he reports to the office five days a week, devoting a considerable amount of time to his duties each day.

Executive Officers' Meeting

In addition to the Board of Directors meetings, the Executive Committee, consisting of two full-time directors and six executive officers, meets once a week in principle to discuss important matters related to the execution of the company's business operations and individual management issues. The meeting is a forum for sharing information, discussing important matters related to business execution, and making decisions on business execution matters delegated by the President and Representative Director.

Internal Audit

Although the Company has not established an Internal Audit Office as a specialized department, internal audits are conducted by internal audit staff appointed by the Representative Director with his/her approval. The internal audit of the Company is conducted by three individuals. The internal audit staff conducts internal audits of departments other than the one to which they belong to avoid self-audits. In addition, persons in charge of internal audits, Audit Committee members, and the accounting auditor exchange information as necessary to ensure that audits are conducted effectively and efficiently.

Accounting Auditor

The Company has entered into an audit contract with Ernst & Young ShinNihon LLC to conduct accounting audits from an independent standpoint.

Appointment of Directors and Executive Officers

Board of Directors

The Company's Board of Directors is composed of directors with diverse areas of expertise, gender, and backgrounds, so that issues can be raised and discussed from different perspectives and contribute to the medium- to long-term growth of the Company. Therefore, as mentioned above, the Board of Directors as a whole is designed to ensure diversity in terms of age, areas of expertise, skills, backgrounds, etc. when formulating proposals for the election of directors.

Audit Committee Members

Audit committee members must be familiar with the Company's business or management structure, or have a high degree of insight and extensive experience in specialized fields such as law, finance and accounting, and internal controls, and must satisfy the requirements of independent and outside directors. One has expertise in finance and accounting, another has expertise in legal affairs, and the third individual has expertise in constructive dialogue with the capital markets through investor relations.

Independent Outside Directors

The Company has appointed three independent outside directors. The Independent Outside Directors meet the criteria for independence from the Company as well as that as stipulated by the Tokyo Stock Exchange. In addition to the requirements for independent directors stipulated by Tokyo Stock Exchange, Inc., the Company designates as independent directors those who do not pose a risk of conflict of interest with shareholders, taking into consideration their independence from the Company, their relationship with the Company and the directors, and their track record and insight in their fields of expertise necessary for the exercise of management oversight functions.

Executive Officers

The Company appoints six Executive Officers. Executive Officers are appointed by the Board of Directors to fulfill the following roles: (1) business and organizational management of the divisions under their control, (2) formulation and achievement of budgets for the divisions under their control, and (3) reporting to the Board of Directors.
Leadership/personal qualities: Strong commitment to the vision, will to achieve the plan, and ability to take action.
Demonstrated abilities/qualities necessary to lead a mission that will have an impact on management.
[Personality/Personality Evaluation] Personality as a management member representing Retty.
Reasons for appointment of director(s) are attached.

Analyzing and evaluating the effectiveness of the Board of Directors

Once a year, the Company's Board of Directors reviews the operation of the Board itself. Specifically, we conduct a questionnaire survey of each director to gather information on the effectiveness of the Board of Directors and areas for improvement in the operation of the Board, and analyze the results for the operation of the Board in the subsequent years.
・Regarding the operation of the Board of Directors (timing of the distribution of materials, appropriateness of deliberation time and content, etc.)
・Decision-making and supervisory functions of the Board of Directors (items to be discussed at the Board of Directors meetings, criteria for discussion, appropriateness of report content, etc.)
・Roles of audit committee members and outside directors (necessity of training and other events to better understand the company's operations and organization, number and structure of directors, etc.)
The most recent survey was conducted in January 2022. The results of the questionnaire were generally highly positive, particularly with regard to the decision-making and supervisory functions of the Board of Directors. However, there were many requests for an earlier distribution of materials, and we have been working to accelerate distribution since the following month. There were no issues with regard to the number of Board of Directors meetings, the scope and volume of agenda items, the content of materials, and the time allotted for the meetings. The results found that each director was making appropriate decisions after discussing budgets, performance forecasts, risks affecting business and management, and other matters.

Related party transactions

In order to ascertain whether there are any related party transactions, the Company prepares a related party list for the Company and all officers. The Corporate Division is in charge of this list and has established a system to confirm whether there are any related party transactions prior to the commencement of transactions. The list is updated at the end of each fiscal year. For newly appointed director candidates, the list is prepared prior to their appointment and the existence of related party transactions is verified.

Process for determining remuneration

Based on the business results of the previous fiscal year and other factors, the Board of Directors considers and decides on these matters from the end of the fiscal year to the first meeting of the Board of Directors following the Ordinary General Meeting of Shareholders. The Company's basic policy is to set the amount of remuneration for Directors (excluding Directors who are members of the Audit and Supervisory Committee; hereinafter the same) at a level appropriate to the duties, responsibilities, and performance of each individual Director within the total amount approved at the General Meeting of Shareholders, which is necessary for Directors to fully perform their functions toward the sustainable improvement of corporate performance and shareholder value. Specifically, the Company pays only base remuneration to executive directors and outside directors, and does not pay performance-linked remuneration or non-monetary remuneration to them, taking into consideration that the shares and stock acquisition rights they hold are considered to be an incentive to increase corporate value. The basic remuneration for the Company's directors is a fixed monthly remuneration, which is determined based on their position, responsibilities, and performance, taking into consideration the standards of other companies, the Company's performance, and employee salaries, while also comprehensively taking into account the Company's performance. The amount of individual remuneration is determined by a resolution of the Board of Directors within the maximum amount of remuneration resolved at the General Meeting of Shareholders, based on the deliberations and reports of the Remuneration Committee.

Internal audits

The Internal Audit team comes under the direct control of the President and consists of three members from the Corporate, Product, and Engineering departments. The team members are assigned to their respective divisions with due consideration to avoid self-auditing. After formulating an annual plan that incorporates the themes for each fiscal year into the regular audit items, audits are conducted on all departments and offices, and the results and items requiring improvement are reported to the general managers of each department and office. Follow-up audits are conducted within the fiscal year to confirm whether the items requiring improvement have been made, and these items are treated as audit items on an ongoing basis until they are improved. Audit committee members, accounting auditors and internal auditors conduct a three-way audit twice a year, and the Audit Committee and internal auditors exchange information on a monthly basis.

Relations with stakeholders
(dialogue with shareholders, IR)

We recognize that our shareholders and investors are important stakeholders in our company who can help us improve our corporate value over the medium to long term through two-way communication at individual meetings and at briefings for individual investors. Therefore, we have established the following policies to promote constructive dialogue with our shareholders and investors. (i) Organizational structure to achieve constructive dialogue with shareholders The President & CEO, CFO, and General Manager of the Investor Relations & Corporate Planning Office work in closely to promote investor relations. Management is committed to achieving a more constructive dialogue with shareholders and investors. (ii) Efforts to enhance means of dialogue other than individual meetings The Company regularly holds financial results briefings and posts financial results briefing materials on its website to enhance the provision of information. In addition, as our services are widely used by those in Japan, a certain amount of shares are held by individual investors, and we regularly hold briefings for individual investors to provide opportunities for two-way dialogue through Q&A sessions, etc. with both institutional and individual investors. (iii) Management of Insider Information in Dialogues The Company has established internal rules for the management of insider information, restricts the distribution of information, and provides education to officers and employees. In addition, in order to prevent leaks of financial information and ensure fairness in information disclosure, the Company has established a quiet period during which it refrains from answering questions or commenting on financial results and forecasts. Preparation and publication of disclosure policy: The disclosure policy is published on a dedicated IR page on the Company's website at https://corp.retty.me/en/ir/management/disclosure/. Regular briefings for individual investors: As our services are widely used by users in Japan, individual investors hold a certain amount of our shares, and we recognize them as important stakeholders and partners in improving our corporate value. Accordingly, we hold briefings for individual investors at least once a year to provide an opportunity for the Representative Director to explain the company's corporate profile and management policies. In addition to one-way presentations from the Company, opportunities are also provided for dialogue through Q&A sessions.

Regular briefings and individual meetings for analysts and institutional investors: A briefing for analysts and institutional investors is held once a quarter, at which the Representative Director explains the company's business performance and management policies. In addition, we hold individual meetings with analysts and institutional investors during all periods of the fiscal year, excluding quiet periods, so that we can reflect the opinions of shareholders and investors in the management of our company by not only explaining our business performance but also holding dialogues aimed at improving our medium- to long-term corporate value. Holding regular briefings for overseas investors: Some overseas investors hold our shares, and we hold regular one-on-one meetings with them and translate financial results briefing materials and financial statements into English. Posting of IR materials on our website: We post financial results, timely disclosure information, and other information on a dedicated IR page on our website (https://corp.retty.me/en/ir/). Establishing an IR department: The IR Corporate Planning Office is the department in charge.

Early dispatch of convocation notices of general meetings of shareholders: We strive to send out convocation notices early so that shareholders have sufficient time to consider agenda items. Avoiding the concentration of the general meeting of shareholders: The Company's fiscal year ends in September and the general meeting of shareholders is held in December, which avoids the concentration of the general meeting of shareholders. We also set the date of the annual general meeting of shareholders so that shareholders can fully consider and reliably exercise their voting rights, for example, by holding the annual general meeting so that the meeting is held before the Christmas vacation in December. In addition, in order to communicate with shareholders in as much as possible, we plan and operate the General Meeting of Shareholders as a two-part meeting so that we can explain our business and organization and then communicate with shareholders in a Q&A session. Provision of the Notice of Convocation (Summary) in English: Starting with the Ordinary General Meeting of Shareholders for the fiscal year ending Sept. 30, 2021, we have prepared the Notice of Convocation (Summary) in English and posted it on our website (https://corp.retty.me/en/ir/)

Management of insider information

The Company has established a public disclosure process and will thoroughly manage undisclosed material facts in its "Regulations for Prevention of Insider Trading" to ensure that undisclosed material information is not inadvertently provided to shareholders in dialogue with the Company.