IR InformationCorporate Governance Roundtable Discussion

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Corporate Governance Roundtable Discussion Corporate Governance Roundtable Discussion

Tokyo Century recognizes corporate governance as a key management concern and has appointed prominent experts from various fields as external directors and external corporate auditors to provide objective guidance and advice.
For this report, we asked three of our external directors to share their views on Tokyo Century’s current governance and future management issues.

How do you evaluate the current state of corporate governance at Tokyo Century?

Shimizu: Frankly speaking, I think Tokyo Century’s corporate governance is functioning effectively. Due in part to its history of having grown by pursuing financing as its primary business, its risk-related management and systems are quite robust. If anything, I sometimes feel the company could be more flexible with respect to governance, given the need to respond with agility to changes in the international situation.

Higaki: In the year since my appointment as external director in June 2017, my former impression of Tokyo Century has completely changed. Under President Asada’s firm leadership, I feel that the company is shifting its emphasis from the leasing business to viable business. At Tokyo Century, governance is ensured by clarifying the investment strategies and risks and considering the advice we offer as external directors before decisions are made.

Yoshida: I was appointed at the same time as Mr. Higaki. Even from my standpoint as an external director, I can feel the powerful determination and drive to create new businesses.
At the same time, risks are being assessed based on hard data instead of experience and intuition. Tokyo Century’s management system is clearly anchored in quantitative data, enabling level-headed decision making even as it pursues an aggressive management style.

Yoshinori Shimizu Director (External Director)
Yoshinori Shimizu
Director (External Director)
As external directors, how do you ensure effective checks and balances over the Board of Directors?
Shimizu: Board of Directors meetings encourage free, vigorous and constructive discussion, so I make a conscious effort to offer critical opinions from the standpoint of an outsider. Although the board addresses many large-scale investment proposals, we can engage in meaningful discussion thanks to the explanatory information and reference materials we receive beforehand.

Higaki: In the past, Tokyo Century’s business was based on leasing and financing, but now there is an intentional drive to focus on services and business operations toward creating entirely new business models.
Amid this business transformation, I believe the experience and risk sensitivity I have gained at a manufacturing company will enable me to offer sound judgement from a perspective that is distinct from conventional financing.

Yoshida: The job of external directors is to clearly express their views from an outside perspective in order to ensure diversity in the discussions. The Board of Directors meets in an atmosphere of free and active exchange, and I strive to participate by actively offering my opinions.

Masao Yoshida Director (External Director)
Masao Yoshida
Director (External Director)
Business expansion requires strengthening risk management and governance. What issues lie ahead?

Shimizu: There are two sides to risk, positive and negative. Managing risk is equivalent to managing revenue, and being too stringent with risk management can lead to lower revenue. Excessive fear of risk can mean missing out on opportunities to raise revenue. Having few bad debts is a good aspect of Tokyo Century, but conversely, the company should conduct a review from the standpoint of whether it’s potentially missing any business opportunities.

As for issues, I think the company needs to adopt a global perspective. In the future, the Board of Directors should discuss its agenda from a global viewpoint and through measures such as conducting meetings in English and appointing non-Japanese directors.

Higaki: Reports and resolutions comprise the main agenda of a board meeting, but when it comes to future vision and strategy, I think there should be opportunities for prior discussion, which we may need to address. That’s because learning the details of a project at an early stage can lead to deeper discussion on the risks involved.

Yoshida: I agree. While there’s no need to discuss every minor project, I think we need an open discussion on policies at an early stage with respect to major issues, such as prior to launching a new business.

Since there’s already an environment conducive to an active exchange of views, I believe the opportunity for open discussion will further enhance and enliven deliberations of the Board of Directors. It’s important to develop a shared understanding of the company’s approach at an early stage.

Shimizu: Just as the spread of smartphones brought about major changes around the world, innovations we aren’t able to imagine right now may emerge in the decade ahead. I would welcome an opportunity to discuss the future direction of the company that incorporates our outlook on expected changes.

Yoshida: Various proposals on viable business are presented to the board, and not all of them succeed. It’s better to assume that we may be unable to operate the business as planned and consider proposals based on a pessimistic scenario, even if the probability is low.

I try to keep detailed minutes of board discussions. Maintaining a consistent documentation effort will lead to advanced risk management and sustainable growth in the years ahead.

Yukito Higaki Director (External Director)
Yukito Higaki
Director (External Director)
What are your views on Tokyo Century’s ESG initiatives?

Shimizu: I think management is well aware of ESG. Achieving mutual growth with excellent partners is crucial to Tokyo Century’s business, and the ESG perspective is essential to sustainability. So, I feel it’s already being nurtured as part of the corporate culture.

Higaki: Tokyo Century established the Sustainability Committee in April to strengthen its ESG efforts. It’s important to see solving social issues as a business opportunity, and I hope that active discussion by the Sustainability Committee will lead to the sustainable growth of Tokyo Century. I would like to support this forward-looking initiative by offering my opinions as an external director.

As external directors, how do you envision Tokyo Century’s future?

Shimizu: President Asada often says that maintaining face-to-face relationships with customers is important to Tokyo Century. I believe that business expansion was made possible by these relationships of mutual understanding, including with people outside the company, as well as by longstanding transactions based on trust and strong partner relationships.

I hope Tokyo Century will continue to aggressively open up new domains based on the strength of a corporate culture that values communication networks. It can then develop the most advanced business models for transforming the structure of the financial and services industry in ten years.

Yoshida: To continue operating a business, you need human resources with multifaceted capabilities and experience. Management resources consist of the quantity and quality of human resources. Currently, the speed of business expansion at Tokyo Century seems to exceed the pace of human resource development.

Since growth is prominent in a global business, the company must focus its efforts on cultivating global human resources, not only through mid-career recruiting, but also through job rotation to achieve further growth.

I believe the addition of varied global human resources to its existing strengths, such as the ability to gather information and extensive networks, would make Tokyo Century an exciting company indeed. I expect human resource strategy will be the cornerstone of the next medium-term management plan.

Higaki: Many large-scale projects are under way. As an external director, I would like to see them through like a parent following the growth of a child to succeed.

The company’s growth to date should be credited to President Asada’s choice of exceptional personnel. I can only imagine the difficulties he must have faced in appointing personnel immediately following the merger between Tokyo Leasing and Century Leasing System. The company’s market capitalization has grown elevenfold since the merger under a free and vigorous culture and an effective system of governance.

In the years ahead, I look forward to the company’s development of human networks and global human resources.

Yoshinori Shimizu

Director (External Director)

Professor Emeritus at Hitotsubashi University. Advisor to Century Tokyo Leasing Corporation (currently Tokyo Century Corporation) since 2010. External Director since 2011. Draws on his knowledge and insight as an expert in economics and finance to offer advice on general management issues.

Masao Yoshida

Director (External Director)

External Director since 2017. Applies his many years of experience in corporate management at Furukawa Electric Co., Ltd. and deep insight to offer sound, objective advice on general management issues.

Yukito Higaki

Director (External Director)

External Director since 2017. Has been involved with corporate management for many years as President of Imabari Shipbuilding Co., Ltd. and draws on a wealth of experience and insight to offer sound, objective advice on general management issues.