Practicing Sound and Transparent Corporate Governance

Basic Philosophy on Corporate Governance

The BASE Group has set forth its mission as “Payment to the People, Power to the People,” aiming to be a company that contributes positively to society. Under this mission, in order to ensure a continuous increase in corporate value, it’s crucial to boost the soundness, efficiency, and transparency of our management, while constructing an organizational structure that can adapt swiftly and flexibly to changes in the business environment. Accordingly, we are diligently working to bolster and enhance our corporate governance.

Corporate Governance Structure

The BASE Group operates as a company with a Board of Corporate Auditors. Our Board of Directors comprises directors well-acquainted with our business, as well as outside directors who bring specialized knowledge and an objective viewpoint. While the Board of Directors decides on the company’s basic management policies and the execution of important operations, corporate auditors independently audit the directors’ performance of their duties from an unbiased stance. We believe that such a structure enhances the soundness, efficiency, and transparency of management, leading to a continuous increase in corporate value. Furthermore, we have adopted an executive officer system in order to bolster corporate governance by separating supervisory and executive functions and by delegating authority for the execution of duties to executive officers in order to facilitate agile decision-making. The governance structure is as follows.

Board of Directors

The BASE Group’s Board of Directors, chaired by CEO Yuta Tsuruoka, determines company management policies, strategies, business plans, acquisitions and disposals of significant assets, and important organizational and personnel matters as well as supervising the execution of directorial duties. The board consists of a total of four directors, two of whom are external. Regular board meetings are held monthly, with additional extraordinary meetings convened as needed for important matters.

Board of Corporate Auditors

The BASE Group’s Board of Corporate Auditors is chaired by full-time corporate auditor Fumio Utagawa. It audits the compliance of directors with laws, regulations, and the Articles of Incorporation, as well as their performance of duties, ensuring that both operational and financial audits are conducted effectively. All members of the board are outside corporate auditors, including one certified public accountant and one attorney. The board is made up of three corporate auditors in total. Regular auditor board meetings are held monthly, with additional extraordinary meetings convened as required.

Moreover, corporate auditors attend meetings of the Board of Directors and other important meetings. They ensure appropriate oversight of management through the review of important documents, questioning of officers and employees, and other audit procedures in accordance with the audit plan. They also collaborate with internal audit staff and accounting auditors to ensure accurate and thorough audits.

Nomination and Remuneration Committee

As part of the BASE Group’s efforts to bolster corporate governance, we have established a Nomination and Remuneration Committee. This committee is tasked with deliberating on executive appointments and the executive remuneration system, and subsequently making recommendations to the Board of Directors. Through this, we aim to enhance the objectivity and rationality of management, striving to maximize corporate value. Based on consultations with the Board of Directors, the Nomination and Remuneration Committee deliberates and submits recommendations on the following matters:

• Appointment and dismissal of directors (subject to shareholder resolution)
• Selection and dismissal of representative directors
• Directors’ remuneration structure and policy, as well as individual remuneration
• Limits on directors’ remuneration (subject to shareholder resolution)
• Appointment and dismissal of senior executive officers
• Senior executive officers’ remuneration structure and policy, as well as individual remuneration
• Other significant managerial matters that the Board of Directors deems necessary

Executive Officer System & Management Meeting

The BASE Group introduced an executive officer system in March 2021 with the objective to enhance corporate governance by separating supervisory and executive functions, and to enable agile decision-making by delegating authority for the execution of duties to executive officers. We have since appointed both senior executive officers and executive officers.

Furthermore, in line with our Management Meeting Regulations, a management meeting composed of senior executive officers is held twice a month. This meeting aims to discuss and coordinate basic policies and plans related to managerial execution, as well as other significant matters. The meeting also reviews and considers important business-related topics that should be presented to the Board of Directors. The full-time corporate auditor attends these management meetings as an observer and can voice opinions. Through auditing procedures such as questioning of officers and employees, proper oversight of management is ensured. Corporate auditors also collaborate with internal audit staff and accounting auditors to guarantee comprehensive and accurate audits.

Evaluation of the Effectiveness of the Board of Directors

The BASE Group conducts an evaluation of the effectiveness of the Board of Directors to verify whether the board is fulfilling its expected roles appropriately. We strive to improve our corporate governance by making enhancements based on the evaluation results. The methods and results of the effectiveness evaluation for fiscal 2022 are as follows:

• Evaluation Method
  In December 2022, a questionnaire consisting of 27 questions with respect to the items below was given to directors, corporate auditors, and senior executive officers to evaluate their efforts in fiscal 2022. The results were discussed in the Board of Directors meeting held in February 2023. To objectively grasp the corporate governance demanded by the market and the Company’s structure, we utilized an external organization for designing, conducting, and compiling the questionnaire.
• Questionnaire Items
  The operation and composition of the Board of Directors, management and business strategies, corporate ethics and risk management, and the evaluation and remuneration of the management team
• Evaluation Results
  The majority opinion was that the Board of Directors’ effectiveness is either appropriate or mostly appropriate. Specifically, the following points were highly rated:
  • The Board of Directors consists of a significant proportion of independent external directors, who provide constructive opinions to the management team when necessary, and can voice objections when required.
  • Appropriate decision-making authority is delegated to the executive side, especially regarding individual business execution decisions.
  • Feedback from shareholders and investors is effectively and appropriately conveyed to the Board of Directors.

However, some opinions suggested areas for improvement, such as enhancing the input of information on the business environment including industry trends and competitor trends to external directors, the implementation of officer training, and the appropriateness of agenda items discussed in board meetings.

Based on these opinions, officer training on sustainability and compliance was conducted in January and February 2023. We will also advance measures to optimize the provision of information on the business environment to external directors, improve onboarding plans for newly appointed external directors, and optimize the agenda items discussed in board meetings.

Moving forward, we will continue to enhance the effectiveness of the Board of Directors and further improve our corporate governance.

Policy on Executive Remuneration

The remuneration for the directors of the BASE Group is designed as a reward system linked to shareholder interests, ensuring it functions adequately as an incentive for the continual improvement of corporate value. Our basic policy in determining each director’s remuneration is to set it at an appropriate level considering their individual responsibilities. Specifically, the remuneration for executive directors performing operational roles is comprised of a fixed base salary and stock-based compensation. For external directors, who perform supervisory functions, both a base salary and stock-based compensation are provided, considering their roles.

Yuta Tsuruoka, the CEO, has been delegated the authority to decide on the specific details of the amount of individual remuneration based on a resolution of the Board of Directors. The content of this authority is determined in consideration of each director’s base salary, each director’s responsibilities, contributions, execution status, the company’s performance, and the economic situation. The Board of Directors ensures that this authority is appropriately exercised by the CEO by consulting and obtaining recommendations from the Nomination and Remuneration Committee. The CEO, with the authority delegated as described above, must make decisions considering the contents of the said recommendations, within the limit resolved at the General Meeting of Shareholders.

Regarding stock-based compensation, based on the recommendations from the Nomination and Remuneration Committee, the Board of Directors decides on the number of shares to be allocated to each director. The Nomination and Remuneration Committee is composed of three directors appointed by resolution of the Board of Directors, and more than half of them are outside directors.

Adherence to Corporate Ethics and Compliance

At the BASE Group, in addition to complying with laws and regulations, we believe it is essential to adhere to ethics and other societal norms and to act with social conscience. We have implemented the following measures to ensure thorough compliance:

Establishment of a Risk Management and Compliance Committee

In accordance with our Risk Management and Compliance Regulations, we have established a Risk Management and Compliance Committee aimed at preventing risks in each department and minimizing company losses. The committee meets regularly and reports its results to the Board of Directors and the Board of Corporate Auditors as needed.

Establishment of a Whistleblowing System

To detect and rectify legal violations and other compliance-related issues at an early stage, we have established a whistleblowing system, with an internal reporting contact point, corporate auditors, and an outside attorney as the information recipients. This system is designed to facilitate early detection and prevention of problems. If a report is made, we ensure a thorough investigation within the company and take appropriate actions. Moreover, we have a system in place to ensure that whistleblowers do not face any disadvantageous treatment due to their whistleblowing.

Compliance Training

We conduct compliance training for all employees when they join the company and once every year thereafter.

Business Continuity Plan initiative

As a provider of transaction and financing platforms, BASE Group views major disasters as a key risk to our business continuity. With our highest priorities being the safety of employees and their families and minimizing the impact on our operations, we distill the greatest risks in advance and take all steps to prevent or reduce them in order to achieve the speediest possible recovery from disaster.

Response to major natural disasters

In June 2023, BASE Group established the provisions of its Business Continuity Plan (BCP), set up an emergency management network with the Representative Director and CEO as its chief crisis official, adopted a safety confirmation system, and published various manuals (including the disaster prevention and emergency response manual, the plan to restore key operations). These measures enable the Group to respond rapidly to sustain operations, or to restore and normalize them rapidly in the event of an emergency. The division in charge of the BCP also sets out a one-year BCP plan for conducting safety confirmation drills and fire safety drills on a regular basis and checks that all departments can perform their roles in emergencies, and that emergency communications flow smoothly and correctly within the Group. Adjustements are made to the plan as required.

The outcomes are reported to the Risk Management Committee at its quarterly meeting, where a mechanism is in place for discussion of necessary policies and responses and monitoring of their implementation. We will continue to strengthen our risk management by running the PDCA cycle based on the provisions of the BCP.