GovernanceCorporate Governance

Governance system

Guided by the above basic approach, we have advanced corporate governance reforms by increasing the number of outside directors, establishing a Nomination, Remuneration, and Other Governance Committee, and transitioning to a holding company structure. These initiatives have enabled us to enhance the Board of Directors’ supervisory functions while streamlining business execution. We have also worked to increase corporate value by building an agile execution framework that supports sustainable growth, complemented by effective oversight through thorough deliberations at board meetings.

To further strengthen our ability to respond to the rapidly changing external environment and achieve continued growth, we have decided to transition from a “company with audit & supervisory board” to a “company with audit & supervisory committee,” subject to approval at the 4th Annual General Meeting of Shareholders held on June 25, 2025. We also believe that having directors who are well-versed in both the medical and pharmaceutical industries—our group’s core business—and internal company matters, and who demonstrate strong ethics and provide oversight across all areas of the company, is the most effective way to ensure both efficiency and compliance in management. We have therefore adopted the audit & supervisory committee system, in which management is supervised by both outside directors and the audit and supervisory committee, as the most suitable structure for our company’s size and management style.

We expect our outside directors to provide valuable advice, sound judgment, and effective audit and supervisory functions from an independent perspective, drawing on their specialized knowledge and experience in fields such as corporate management, healthcare, global business, medical and pharmaceutical science, finance / accounting / tax practice, legal affairs / risk management, and sustainability / ESG.

Executive Team

Audit & Supervisory function

The Company has established the “Regulations of the Audit & Supervisory Committee,” “Code of Audit & Supervisory Committee Auditing and Supervising Standards,” and the “Regulations of Internal Audit,” and will strengthen its auditing and supervisory functions in cooperation with the Audit & Supervisory Committee, the Group Internal Inspection Office, and the accounting auditor.

The full-time Audit & Supervisory Committee member attends meetings of the Group Strategy Council, and other important meetings, inspects important approval documents, examines the state of operations and assets at the head office and major business locations. By reporting to the Audit & Supervisory Committee, the full-time Audit & Supervisory Committee member shares information and collaborates with the outside directors who also serve as Audit & Supervisory Committee. In addition, the full-time Audit & Supervisory Committee member maintains regular communication with the Representative Director through scheduled dialogues, and exchanges information with the directors and others at subsidiaries and receives reports on their business activities. The full-time Audit & Supervisory Committee member and the General Manager of the Group Internal Inspection Office exchange information as necessary regarding the establishment and operation of internal controls, operational audits, theme-based audits, and other matters, in accordance with the “Cabinet Office Ordinance on Systems to Ensure the Adequacy of Financial Calculation Documents and Other Information.” Internal audit reports prepared by the Group Internal Inspection Office are also provided to the full-time Audit & Supervisory Committee member, who then reports their contents to the Audit & Supervisory Committee.

The Audit & Supervisory Committee mainly conducts operational audits (audits of the “Maintenance and operation of a system to ensure appropriate business operations”), while the accounting auditor mainly conducts accounting audits, to improve audit efficiency. Both parties shall exchange relevant information and views to ensure that the audit is conducted thoroughly and without oversight. The Audit & Supervisory Committee also periodically receives explanations of the basic audit plan and audit summary reports to gain an understanding of the accounting auditor’s audit activities. In addition, the Audit Division (the Audit & Supervisory Committee, the Group Internal Inspection Office, and the accounting auditor) conducts audits of business sites to ensure the effectiveness of audits and to ensure that audits are conducted thoroughly throughout the Company.

Each department within the Audit Division gathers information and engages in dialogue with departments responsible for promoting internal control, assesses the development and implementation status of internal control systems, and, when necessary, reports to the Internal Control Committee to enhance internal control through opinions and recommendations.

Nomination, Remuneration and Other Governance Committee

The Company’s Nomination, Remuneration and Other Governance Committee performs the functions of both the Nomination Committee and the Remuneration Committee, and its members are composed of directors selected by resolution of the Board of Directors. The chairperson of the committee is elected by its members in accordance with internal regulations. Conversely, the lead independent outside director is elected by the outside directors. Members with a special interest in matters under deliberation are not permitted to participate in the resolution process.

Resolutions require both the presence of a majority of eligible members and the approval of a majority of those present.

The committee primarily deliberates on matters such as the appointment and dismissal of senior management, the selection and removal of the CEO, CEO succession planning, and the remuneration of senior management and executive officers. These discussions are conducted with consideration for diversity and a range of skills, including gender diversity. The outcomes of these deliberations are submitted to the Board of Directors. Regarding the appointment and dismissal of directors who are members of the Audit & Supervisory Committee, the committee deliberates in accordance with the “Code of Audit & Supervisory Committee Auditing and Supervising Standards” ensuring independence from management and maintaining impartiality. These matters are submitted to the Board of Directors as proposals for the General Meeting of Shareholders, following prior explanation to and approval by the Audit & Supervisory Committee.

Furthermore, Regulation of the Board of Directors stipulate that the Board of Directors shall fully respect the advice and recommendations received from the Committee.

Group Strategy Council

The Group Strategy Council deliberates on important matters to be submitted to the Board of Directors, discusses and decides the execution policy of matters resolved at the Board of Directors meetings, and analyzes business results and discusses the countermeasures.

Group Governance Council

The Group Governance Council, which is made up of four committees, meets to build, maintain, and improve the governance system of the entire Group. The council works to improve the sustainable growth and raise the corporate value of the overall Group in the medium and long term.

Other committees

History of measures to strengthen governance

* Items before transitioning to holding company in 2021 are for Sawai Pharmaceutical