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CSR - Corporate Social Responsibility
Committed to People, Committed to the Future.

Corporate Governance

Toshiba Group has established internal control systems and continually works to enhance managerial efficiency and transparency to effectively execute its stakeholder strategy in order to appropriately meet the demands of stakeholders while responding to changing circumstances.

Medium- to Long-term Vision

Toshiba Group endeavors to realize sustainable growth and medium- to long-term gains in corporate value, thereby benefitting all of the Group's stakeholders.

FY 2017 Achievement

  • Cancellation of designation as securities on alert.
  • Restored financial statements to normality.
  • Recover from negative shareholders' equity and strengthen the financial constitution.

Future Challenges and Approaches

  • We will formulate and execute the Toshiba Next Plan as a five-year transformation plan in order to restore the trust of all stakeholders including investors and shareholders as well as strengthen our earnings foundation and realize stable growth to maximize corporate value.
  • We will formulate the Essence of Toshiba and spread awareness of the new Toshiba brand.

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Toshiba's Corporate Governance Policy

Toshiba's central aim in corporate governance is to achieve sustainable growth and to enhance Toshiba Group's corporate value over the medium- to long-term thereby contributing to the profit of all stakeholders, including shareholders, investors, employees, customers, suppliers, creditors and local communities.

The Board of Directors has adopted "Corporate Governance Guidelines" that form the framework of governance of the Company.

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Toshiba's Governance Structure

Toshiba emphasizes the supervisory function of the Board of Directors over business execution, and to the extent possible delegates decisions on the execution of business to responsible executives. For this reason, Toshiba has adopted the company with a nomination committee, etc., system. The main missions of the Board of Directors are to determine the company strategy in such areas as basic management policy, and to monitor and supervise Executive Officers and Directors in the execution of their duties.

The ability of the Board of Directors to carry out monitoring and supervisory functions in an appropriate manner is ensured by a board with a majority of outside directors (seven outside directors of 12 in total, as of June 2018), with an outside director also serving as the Chairman of the Board. In addition, the Board of Directors has established Nomination, Auditing, and Compensation Committees, all comprised only of outside directors, which further enhances management transparency.

Corporate Governance Structure

Corporate Governance Structure

Chairman of the Board of Directors Yoshimitsu Kobayashi

Committee Composition
Nomination Committee Kouichi Ikeda (Chairman), Yoshimitsu Kobayashi, Ryoji Sato, Junji Ota, and Mami Taniguchi
Audit Committee Ryoji Sato (Chairman), Teruko Noda, Yuki Furuta, and Junji Ota
Compensation Committee Yuki Furuta (Chairman), Teruko Noda, Kouichi Ikeda, Yoshimitsu Kobayashi, and Mami Taniguchi

(As of June 2018)

Two of the 12 directors are female.

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Outside Directors

Outside Directors shall be selected from managers, accounting specialists, legal specialists and other individuals with outstanding knowledge and experience and who meet all the requirements set out by Toshiba, in addition to the independence related-provisions prescribed by the Tokyo Stock Exchange.

As a means to share information and awareness of issues with the independent outside directors, so as to further deepen their understanding of Toshiba's business, and as a forum for discussing major management issues facing the Group, and for providing prior explanation of matters to be discussed by the Board of Directors, Toshiba established a Board of Directors Council (Executive Session) with a membership consisting solely of the independent outside directors.

Reasons for selection of Outside Directors and Significant concurrent positions
Name Reasons for selection Significant concurrent positions
(As of June 2018)
Teruko Noda Ms. Teruko NODA is appropriately supervising the management of the Company based on her rich experience and insight as a certified public accountant. -
Kouichi Ikeda Mr. Kouichi IKEDA is appropriately supervising the management of the Company based on his rich experience and insight as a management executive. Advisor to the Board, Asahi Group Holdings, Ltd.
Outside Director, Sumitomo Chemical Company, Ltd.
Yuki Furuta Mr. Yuki FURUTA is appropriately supervising the management of the Company based on his rich experience as a legal professional and insight concerning to corporate law and corporate governance. -
Yoshimitsu Kobayashi Mr. Yoshimitsu KOBAYASHI is appropriately supervising the management of the Company based on his rich experience as a management executive. Director, Chairman, Mitsubishi Chemical Holdings Corporation
Director, Chairman, The KAITEKI Institute, Inc.
Chairman, Japan Association of Corporate Executives
Chairman, Council on Competitiveness-Nippon
Ryoji Sato Mr. Ryoji SATO is appropriately supervising the management of the Company based on his rich experience and insight as a certified public accountant and CEO of an auditing firm. Outside Company Auditor, NIPPON LIFE INSURANCE COMPANY
Junji Ota Mr. Junji OTA is expected to appropriately supervise the management of the Company based on his rich experience and insight as a top management member of a large company and an executive of Japan Audit & Supervisory Board Members Association. Outside Director, Heiwa Real Estate Co., Ltd.
Mami Taniguchi Ms. Mami TANIGUCHI is expected to appropriately supervise the management of the Company based on her rich experience and insight as a professional of business administration studies. Professor, Faculty of Commerce( School of Commerce and Graduate School of Commerce), Waseda University

See the following Business Report for details of activities such as attendance rate of outside directors at the Board of Directors in FY2017.

Outside Directors Independence Criteria

The Nomination Committee has determined that, in addition to the standards of independence defined by Japan's stock exchanges, such as the Tokyo Stock Exchange, Inc., persons who fall under any of the following items, are not independent.

  • (1) An outside director who currently or in the past three years has been an executive director, executive officer or employee at a company in which Toshiba currently holds 10% or more of the voting rights.
  • (2) An outside director who currently or in the past three years has been an executive director, executive officer or employee of a company that currently holds 10% or more of Toshiba's voting rights.
  • (3) An outside director who currently or in the past three years has been an executive director, executive officer or employee of a company where the value of transactions with Toshiba in the any of the past three fiscal years has exceeded 2% of the consolidated sales of either that company or Toshiba or of both companies together.
  • (4) An outside director who currently or in the past three years has been an executive director, executive officer or employee at a financial institution that currently loans Toshiba more than 2% of its total assets.
  • (5) An outside director who currently or in the past three years has received compensation from Toshiba of more than 10 million yen, excluding executive remuneration, as a legal, accounting, or tax expert or consultant. Or in the case that the organization to which that said person belongs to as a legal, accounting, or tax expert or consultant has, during any of the past three business years, received compensation from Toshiba exceeding 2% of that organization's annual income.
  • (6) An outside director who currently or in the past three years, has been an officer responsible for executing business or an employee of a corporation that has, or who has him- or herself, received donations from Toshiba exceeding 10 million yen in any of the past three business years. However, this is with the provision that, in the case of a corporation, the donation has been directed to research, education directly related to the donation.
  • (7) An outside director who currently or in the past three years, has been an executive director, executive officer or employee at a company where another person currently in a similar position at that company has served as an Executive Officer of Toshiba.
  • (8) An outside director who currently or in the in the past three years has been a representative or employee at a company that is currently Toshiba's accounting auditor, or has been in any of the past five fiscal years.

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Evaluation of the Effectiveness of the Board of Directors

Once a year, the Board of Directors evaluates the effectiveness of the Board of Directors as a whole, discloses a summary of the results, and reviews the management of the Board of Directors as necessary.

In the analysis and evaluation conducted for the period from June 28, 2017 to the end of March 2018, the advice of external experts was taken into account, and the following matters were confirmed based on a questionnaire that targeted all of the directors and on discussions based on interviews.

Items evaluated as appropriate

1. Management of the Board of Directors Council

Meetings of the Board of Directors Council were held 26 times between June 28, 2017 and the end of March 2018. In addition to providing a forum for free discussions on major themes, such as company-wide issues, the company's mid- to long-term plan, and risk items, they also allowed for provision of prior explanations of items on the agendas of meetings of the Board of Directors, Q&A sessions, and allowed sufficient time for free and open-minded debate.

2. Management of the Board of Directors

Meetings of the Board of Directors were held 27 times between June 28, 2017 and the end of March 2018. Based on the content of items fully discussed at the Board of Directors Council, the meetings saw free, open-minded and constructive discussions and exchanges of opinions.

3. Operation of the Nomination Committee, Audit Committee, and Compensation Committee

Each committee, on the whole, has been evaluated as being appropriate, in terms of number of members and composition, frequency of meetings, and practice of free and open discussions.

Future issues

1. Management of the Board of Directors and the Board of Directors Council

There are occasions where materials are not provided with a sufficient time margin, and where their content is not well organized or analyzed in a way that is easily understood. Following coordination with the divisions, a commitment was made to continue to provide materials as soon as possible and to improve their content.

2. Discussion at the Board of Directors and Board of Directors Council, and the support system for directors

We received the opinion that there is insufficient discussion on essentials, such as the composition of the business portfolio. Going forward, in order to facilitate discussion from a mid- to long-term perspective, we have decided to organize matters brought to the Board of Directors Council and on Board of Directors agenda in such a way as to enable sufficient discussion on business strategy and the like.

3. Dialogue with shareholders (investors)

We have decided to establish a mechanism that will enable the opinions of investors to be shared with members of the Board of Directors immediately. We have also decided to continue discussing setting up a mechanism for dialogues with shareholders, such as group meetings of outside directors and institutional investors.

Other individual opinions

  • In-house directors should be selected in a way that ensures balanced representation for each key subsidiary (key Group company) and the staff divisions.
  • It would be best to decide on a format for materials provided to the Board of Directors and the Board of Directors Council that offers a detailed summary of the discussion points and contents at the beginning.

Also, the Board of Directors Council held discussions on the number of times to hold meetings of the Board of Directors Council and Board of Directors in the future.

We will focus on further improving the issues shared in this analysis and evaluation, promote measures to increase the effectiveness of the Board of Directors Council, the Board of Directors, and each committee, and will strive to regain the confidence of our shareholders.

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Election Criteria for Executive Officers and Ensuring the Transparency of Nomination Procedures

The Nomination Committee has authority to propose the appointment and dismissal of Directors, including the Chairman and Chief Executive Officer and the President and Chief Operating Officer, selects candidates for directorships according to the criteria and processes described below, and submits the proposals to the General Meeting of Shareholders for finalization.

Proposals regarding the election, dismissal, and special titles of executive officers(excluding the Chairman and Chief Executive Officer and the President and Chief Operating Officer) will be formulated by the Corporate Personnel Committee (chaired by the Chairman and Chief Executive Officer) in accordance with following criteria and decided by the Board of Directors.

Director Nomination Criteria

(1) Being a respected, dignified, and highly ethical person;
(2) Being responsive to compliance with laws and regulations;
(3) Being in good health to conduct the required duties;
(4) Having the ability to make objective judgments on management issues as well as excellent foresight and vision;
(5) Having no interest in or transaction with the Toshiba's main business fields that might affect management decisions; and
(6) For outside directors, having expertise, insight, and a good track record in field such as law, accounting, or corporate management.

Executive Officer Election Criteria

(1) Being a respected, dignified, and highly ethical person with excellent leadership ability;
(2) Being responsive to compliance with laws and regulations;
(3) Being in good health to conduct the required duties;
(4) Having the ability to make objective judgments on management issues as well as excellent foresight and vision;
(5) Being highly skilled at business execution and having a track record of consistently delivering high performance and results;
(6) Having rich work experience and expert knowledge in the Toshiba's business areas and the ability to contribute to management; and
(7) Having no interest in or transaction with the Toshiba's main business fields that might affect management decisions.

Ensuring the Objectivity and Impartiality of Nomination Procedures

1. The Nomination Committee is responsible for determining a plan (the succession plan) that ensures the objectivity and fairness of the process for selecting a successor to the Chairman and Chief Executive Officer and the President and Chief Operating Officer.
2. The Nomination Committee will have the authority to conduct periodic interviews with all executive officer and representative executive officer candidates, in addition to which it will implement evaluations of the Chairman and Chief Executive Officer and the President and Chief Operating Officer (investigation of confidence) by senior management.

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Merit-based Compensation Amounts for Officers

The Compensation Committee establishes compensation policy regarding compensation of each Director and/or Executive Officer as follows:
Since the main responsibility of Directors is to supervise the execution of the overall Group's business, "Compensation for Directors" is determined at an adequate level to secure highly competent personnel and ensure effective work of the supervisory function.
Since the responsibility of Executive Officers is to increase corporate value in their capacity as executives responsible for companies or divisions within the Group, "Compensation for Executive Officers" is divided into the fixed compensation and the performance-based compensation, and determined at an adequate level to secure highly competent personnel and ensure effective function of their compensation package as an incentive to improve business performance.

i. Compensation for Directors

Directors who do not concurrently hold office as an Executive Officer are paid the basic compensation (fixed amount) calculated according to his/her duties after being classified into "Full-time Director" or "Part-time Director".
Directors who concurrently hold office as an Executive Officer are paid the basic compensation (fixed amount) in addition to Compensation for Executive Officers specified in (ii).

ii. Compensation for Executive Officers

Executive Officers are paid the basic compensation (fixed amount) calculated based on his/her rank, the service compensation calculated according to his/her duties as an Executive Officer, and the stock compensation.
Based on his/her rank 25-40% of the service compensation will fluctuate from zero (no compensation) to 2 times according to the year-end performance of the Company or of the division for which the Executive Officer is responsible.
The stock compensation will be a compensation system linked to the stock price (e.g. allotment of stocks with restriction on transfer) and designed to work effectively as an incentive to drive forward medium to long term business growth.

* Toshiba decided on a policy to introduce a restricted stock compensation system at the Compensation Committee meeting on May 9, 2018. A decision was made at the Board Directors on July 18, 2018 to issue shares as restricted stock compensation.

The compensation system will enable Toshiba to grant its Executive Officers and certain directors at key subsidiaries (key Group companies) compensation receivables for the allocation of restricted stock that they can use as contributed assets to make contribution in kind to the Company, which will allow them to hold the common stock of the Company.
The Company shall conclude a restricted stock grant agreement concerning the allocation of restricted stock through the system with the eligible officers. The eligible officers shall not be allowed to transfer, create an interest on, or otherwise dispose of the restricted stock that has been allocated during a given period.
Going further, Toshiba will closely consider how to best link its compensation system to the transformation and business plans it intends to announce within this year, as the Toshiba Next Plan. Specifically, we consider incentive system will be linked to performance over the course of the business year and to the achievement degrees of medium-term business plans and combining stocks with the system as incentive compensation.

iii. Compensation standards

Compensation standards are determined at suitable levels as a global company, with the aim of securing highly competent management personnel. The compensation standards of other listed companies and payroll and benefits of employees are considered when determining the Company's compensation standards of management.

Amounts of Compensation, etc. of Toshiba's Directors and Executive Officers in FY2017
Officers Position Total Amounts of Compensation, etc.
(Millions of yen)
Fixed Compensation
(Millions of yen)
Performance-based Compensation
(Millions of yen)
Number of persons of Officers
Directors
(excluding Outside Directors)
21 21 - 5
Outside Directors 92 92 - 6
Executive Officer 475 475 - 31

It should be noted that in the consolidated amount of compensation, etc., no individual officer received ¥100 million or more.

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Toshiba's Internal Control Systems Development Status

Toshiba Group constantly refines its system of internal controls, towards ensuring management effectiveness and efficiency and reliable reporting on operations and finances and to secure high level legal compliance and risk management.
We also ensure that domestic Group companies, regardless of the scale of their operations, establish internal control systems based on those of the parent Company, as follows.

(Excerpted from Page 42 of the Business Report for the 179th fiscal period)

Systems to Ensure the Appropriateness of Business Operations of Toshiba Corp. and its Subsidiaries

The Board of Directors resolved systems to ensure the appropriateness of business operations as follows:

1. System to ensure that Executive Officers' compliance with laws and regulations and the Articles of Incorporation.

  • 1) Executive Officers periodically report to the Board of Directors of Toshiba Corp. on their execution of their duties and are required to report on necessary items to the Board of Directors, as necessary.
  • 2) The Executive Officer in charge of the Internal Audit Division or the General Manager of the Internal Audit Division periodically reports to the Board of Directors of Toshiba Corp. on internal audit results.
  • 3) The Audit Committee of Toshiba Corp. periodically interviews Executive Officers, and the General Manager of the Internal Audit Division periodically reports to the Audit Committee on internal audit results.
  • 4) Executive Officers report to the Audit Committee of Toshiba Corp. on any material violation of laws and regulations without delay in accordance with the Rules concerning Reporting to the Audit Committee.
  • 5) Toshiba Corp. has established the Toshiba Group Standards of Conduct clarifying values and codes of conduct to be shared by all officers and employees and ensures, through continuous execution of officer education, etc., that Executive Officers of Toshiba Corp. comply with the Toshiba Group Standards of Conduct.
  • 6) Toshiba Corp. separates supervision from business execution by placing the Internal Audit Division under the direct control of the Audit Committee and establishes a system in which the Internal Audit Division effectively performs audits of accounting, compliance inspections and audits of other matters.

2. System for retention and management of information concerning Executive Officers' execution of their duties.

  • 1) In accordance with the Rules concerning the Document Retention Period, Executive Officers of Toshiba Corp. appropriately retain and manage material documentation, such as information materials for the Management Meetings and decision-making documents, and other documents such as account books and records.
  • 2) Executive Officers of Toshiba Corp. run a system that allows Directors to access significant information, such as information materials for the Management Meetings, decision-making documents, financial statements and records and business reports.

3. Rules and other systems concerning risk of loss management

  • 1) In accordance with the Basic Rules concerning Risk-Compliance Management, the Chief Risk-Compliance Management Officer (hereinafter referred to as the "CRO") of Toshiba Corp. formulates and promotes measures concerning crisis and risk management of Toshiba Group in his/her capacity as the chairman of the Risk-Compliance Committee. In formulating and promoting such measures, the CRO appropriately performs risk of loss management for the entire Toshiba Group by confirming and improving the effectiveness of such measures.
  • 2) Executive Officers of Toshiba Corp. formulate and promote measures necessary for continuously clarifying business risk factors of Toshiba Group and minimizing loss in the event that risk is realized in accordance with Basic Rules of Business Risk Management.

4. System to ensure that Executive Officers efficiently execute their duties

  • 1) The Board of Directors of Toshiba Corp. determines the basic management policy and approves the midium-term business plan and annual budgets of Toshiba Group prepared by the Executive Officers.
  • 2) The Board of Directors of Toshiba Corp. delegates authority and responsibilities to each Executive Officer in an appropriate manner, and Executive Officers clarify the authority and responsibilities of the Executive Officers and employees in accordance with the Rules concerning Responsibilities of Division and the Rules concerning Managerial Duties.
  • 3) Executive Officers of Toshiba Corp. set concrete targets and roles for organizations and employees.
  • 4) Executive Officers of Toshiba Corp. make decisions on business operations based on appropriate procedures in accordance with the Board of Directors Rules, the Corporate Decision Making Rule and other rules.
  • 5) Executive Officers of Toshiba Corp. appropriately evaluate the performance of Toshiba Group by means of the Performance Evaluation Committee.
  • 6) Executive Officers of Toshiba Corp. promote strengthening of information security systems and operate the accounting system, the authorization system and other information processing systems in an appropriate manner.

5. System to ensure that employees' performance of their duties conforms to laws and regulations and the Articles of Incorporation

  • 1) The Chairman and Chief Executive Officer and the President and Chief Operating Officer ensure, through continuous execution of employee education, etc., that employees comply with the Toshiba Group Standards of Conduct clarifying values and codes of conduct to be shared by all officers and employees.
  • 2) The CRO of Toshiba Corp. formulates and promotes measures of Toshiba Group concerning compliance with laws and regulations in his/her capacity as the chairman of the Risk-Compliance Committee in accordance with the Basic Rules concerning Risk-Compliance Management.
  • 3) Toshiba Corp. establishes a whistle-blower system in which the officers and employees of Toshiba Corp. are able to make a report to the business execution side of Toshiba Corp. if they become aware of an illegal act of Toshiba Corp., and the Executive Officer of Toshiba Corp. in charge endeavors to detect problems early and deal with them in an appropriate manner by making use of the whistle-blower system. The Toshiba Group Standards of Conduct clearly stipulate that the officers and employees who have used this system must not be treated disadvantageously on the grounds that they have done so. In addition, Toshiba Corp. establishes a whistle-blower system in which the Audit Committee of Toshiba Corp. directly receives internal reports and endeavors to collect information on problems early.

6. System to ensure the appropriateness of business operations of the corporate group composed of Toshiba Corp. and its subsidiaries

  • 1) The subsidiaries adopt and implement the Toshiba Group Standards of Conduct and establish whistle-blower systems according to the legal systems and circumstances of the countries in which they operate.
  • 2) Toshiba Corp. establishes a system in which its subsidiaries report to Toshiba Corp. in accordance with the Operational Communication Arrangement, etc. in the event that material issues arise in their business operations.
  • 3) Toshiba Corp. formulates appropriate measures for internal control, including that of its subsidiaries, and causes its subsidiaries to promote the measures according to their situations.
  • 4) The subsidiaries establish audit systems such as auditors in accordance with the Toshiba Group Auditors' Audit Policy.
  • 5) Toshiba Corp. executes internal audits on the accounting treatment processes and business processes of its subsidiaries.
  • 6) Toshiba Corp. appropriately and effectively manages the systems and business processes common throughout Toshiba Group and establishes a system in which shared resources are appropriately and effectively allocated.
  • 7) Under the relevant license agreements, Toshiba Corp. in principle obligates its affiliates that are permitted to use "Toshiba" in part of their company names to adopt the Toshiba Group Standards of Conduct.

Items Necessary for Performance of Duties by the Audit Committee of Toshiba Corp.

The Board of Directors resolved items necessary for the Audit Committee's performance of its duties as follows:

  • 1. Directors and employees assigned to assist the Audit Committee in the performance of its duties
    In order to assist the Audit Committee of Toshiba Corp. in the performance of its duties, the Audit Committee Office consisting of around ten staff is established, and the head of the Audit Committee Office is an Executive Officer (including the Executive Officer who acts concurrently as a director).
  • 2. Ensuring independence of employees mentioned in the preceding paragraph from Executive Officers and effectiveness of instructions to such employees
    The Audit Committee has the right to approve the appointment, request the dismissal, and veto the dismissal of the head and employees of the Audit Committee Office of Toshiba Corp., and the head of the Audit Committee Office is under the direction of the Audit Committee. The employees of the Audit Committee Office are under the direction of the Audit Committee and the head of the Audit Committee Office.

3. System for reporting to the Audit Committee

  • 1) Directors, Executive Officers and employees of Toshiba Corp. report to the Audit Committee on each relevant occasion in accordance with the Rules concerning Reporting to the Audit Committee and the Rules concerning Operation of the System of Reporting to the Audit Committee in the event that any material issue arises that may affect operations and financial performance.
  • 2) The subsidiaries of Toshiba Corp. periodically report their situations and other matters to the Audit Committee of Toshiba Corp. through the Toshiba Group Auditors Liaison Organization, etc. In addition, Toshiba Corp. establishes the Toshiba Group Auditor Hotline through which the auditors and employees in charge of audit reporting of the subsidiaries are able to make a report to the Audit Committee if they become aware of an illegal act of such subsidiaries.
  • 3) Toshiba Corp. establishes the Audit Committee Hotline through which the officers and employees of Toshiba Corp. and officers and employees of its domestic subsidiaries are able to make a report to the Audit Committee of Toshiba Corp. in accordance with the Rules concerning Operation of the System of Reporting to the Audit Committee if they become aware of an illegal act of Toshiba Corp. or such subsidiaries.
  • 4) The Chairman and Chief Executive Officer or the President and Chief Operating Officer provides members of the Audit Committee designated by the Audit Committee with opportunities to attend important meetings, including the Management Committee meetings.
  • 4. System to ensure that persons reporting to the Audit Committee are not treated disadvantageously on the grounds that they have made such report
    The Rules concerning Reporting to the Audit Committee and the Rules concerning Operation of the System of Reporting to the Audit Committee clearly stipulate that the officers and employees of Toshiba Group who have made a report to the Audit Committee of Toshiba Corp. must not be treated disadvantageously on the grounds that they have done so.
  • 5. Policy on procedures for advance payment or redemption of expenses arising from performance of duties of the Audit Committee's members and other settlement of expenses or debts arising from performance of such duties
    If a member of the Audit Committee requests Toshiba Corp. to make advance payment of the expenses, etc. set out in Article 404, Paragraph 4 of the Companies Act in relation to the performance of his or her duties, unless it is determined after examination by the relevant departments that the expenses or debts in relation to such request are not necessary for the performance of duties of such member of the Audit Committee, Toshiba Corp. promptly settles such expenses or debts. Toshiba Corp. annually budgets a certain amount for the payment of expenses and other costs arising from the performance of duties of the Audit Committee's members. If the need arises during the fiscal year, Toshiba Corp. increases the budget after examination by the relevant departments at the request of the Audit Committee's members.

6. Other system to ensure that audits by the Audit Committee are conducted effectively

  • 1) The Chairman and Chief Executive Officer or the President and Chief Operating Officer periodically exchanges information with the Audit Committee.
  • 2) Executive Officers and employees report the execution of their duties to the Audit Committee by means of the periodic interviews conducted by the Audit Committee and circuit interviews.
  • 3) The Audit Committee places the Internal Audit Division under its direct control. The Audit Committee presents audit policies and gives audit instructions to the Internal Audit Division. The General Manager of the Internal Audit Division periodically reports the internal audit results to the Audit Committee.
  • 4) The Audit Committee has accounting auditors provide explanations and reports concerning the accounting audit plan at the beginning of each fiscal year, the situation of accounting audits during each fiscal year, and the results of the accounting audits at the end of each fiscal year.
  • 5) The Executive Officer in charge provides explanations to the Audit Committee concerning the settlement of accounts at the end of each fiscal year as well as each quarterly settlement of accounts prior to the approval by the Board of Directors.
  • 6) The General Manager of the Internal Audit Division is appointed an Executive Officer, or the Executive Officer is appointed to being in charge of the Internal Audit Division. The Audit Committee has the right to approve the appointment, request the dismissal, and veto the dismissal of the General Manager of the Internal Audit Division and the Executive Officer in charge of the Internal Audit Division. The General Manager of the Internal Audit Division and the Executive Officer in charge of the Internal Audit Division are under the direction of the Audit Committee.
  • 7) The members of the Audit Committee have the right to access all internal reports made to the whistle-blower system on the business execution side.

* Now "Toshiba Group Standards of Conduct" is renamed to "Standards of Conduct for Toshiba Group".

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Takeover Defense Measures

Toshiba is currently not deploying any takeover defense measures. If any party seeks to acquire a large number of shares in the Company, we will i) request the party to provide information necessary and sufficient for shareholders to properly judge whether the proposed acquisition is reasonable or not and ii) publish the opinion of the Toshiba Board of Directors to secure an amount of time and information for shareholders to consider the proposed share acquisition. Thus, the Company will continue striving to secure and improve its enterprise value and shareholders' shared benefit while taking appropriate action within a scope that is allowed under the Financial Instruments and Exchange Act, the Companies Act and other applicable laws and regulations.

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Status of Internal Audits and Audits by the Audit Committee

(Excerpted from Page 76 of the securities report for the 179th fiscal period)

1. The Internal Audit and the Audit Committee organization, personnel and procedures

The Internal Audit Division (personnel: 45 staff) was established as an internal audit department, and is under the direct control of the Audit Committee. By monitoring the operational status of key subsidiaries (key Group companies) on a daily basis, the internal Audit Division is able to strengthen the audit system with respect to their operations. By strengthening cooperation with the Audit Committee, the Accounting Auditor, we seek to strengthen the various audit functions, such as accounting audits, internal control audits and audits on legality.
In addition, an Audit Committee Office with a staff of approximately 10 has been established to support the Audit Committee in carrying out its responsibilities. The office is headed by an Executive Officer, and a system has been put in place that gives it the right to carry out investigations and hear information for itself, on the basis of instructions received from the Audit Committee.
The Audit Committee works in close cooperation with the internal Audit Division to confirm the development of internal systems.
The Internal Audit Division periodically carries out on-site inspections and reports its results to the Audit Committee. However, if it deems it necessary, the Audit Committee has the right to carry out its own on-site inspections. Furthermore, in addition to receiving explanations from independent auditors on their audit plans at the beginning of each fiscal year, the Audit Committee can also request reports on the status of audits during the course of each term, and explanations and reports on end-of-year audits, as necessary.
It should be noted that the Audit Committee has four members. As certified public accountants, the Chairman of the Audit Committee, Mr. Ryoji Sato, and committee member Ms. Teruko Noda, have been involved in the practice of corporate accounting for many years and have considerable knowledge of finance and accounting.

2. Mutual cooperation between the internal audit, the Audit Committee audit and the accounting audit, and the relationship with the Internal Control Division

Mutual cooperation between internal audits, Audit Committee's audits and the accounting audits is detailed in "1. The Internal Audit and the Audit Committee organization, personnel and procedures." In Toshiba, divisions responsible for internal controls ensure the appropriateness of all information disclosure, including financial reporting, and the effectiveness and efficiency of operations, compliance, and risk management, etc. The Legal Affairs Div., Accounting Div., CRO, and Risk Compliance Committee are included among divisions in this category. Along with providing the Audit Committee with timely reporting required by the "Audit Committee reporting and information access rules," the said divisions responsible for internal controls also provide information to the internal Audit Division and Accounting Auditor from time to time, as required.

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