Social and Environmental Initiatives 2009

Corporate Governance

The Mitsui Fudosan Group believes that ensuring sound, transparent and efficient management is of great significance for earning the trust of all stakeholders.
From that perspective, we have been striving to build an optimal corporate governance framework.
As a part of such efforts, we have also been addressing the strengthening of internal control.

Corporate Governance Organization

Corporate Governance Organization

Management Soundness and Efficiency

Mitsui Fudosan has introduced its Corporate Officer System with the aim of creating a business execution framework that best suits its operating environment and activities. By promoting the separation and reinforcement of the management and executive functions, the system enhances management soundness and efficiency. In addition, seeking to further reinforce the management of the Mitsui Fudosan Group, we have also introduced our Group Corporate Officer system, under which executives at Group companies have been given a status and mission similar to those of the corporate officers of Mitsui Fudosan.

Transparency of Management and an Expanded Perspective

Outside directors are welcomed and selected under the objective of reinforcing the supervisory function of the directors as well as the transparency of management. Outside directors deliver their opinions concerning the rationality and validity of the company's decision-making as necessary.
We have also established the Advisory Committee, consisting of experts from business and academia, to receive comprehensive and insightful advice from an impartial standpoint, thus offering more diverse perspectives to management. In fiscal 2008, the Committee convened twice, and instructive advice was received from the respective Committee members.

Company Decision-making

Important matters related to business execution are deliberated and reported at the weekly meeting of the Executive Management Committee, consisting of executive managing directors and executive corporate officers. To keep abreast of important decision-making processes and the status of business execution, full-time corporate auditors also attend the meetings of the Executive Management Committee and provide opinions as necessary. In addition to this, the Executive Management Committee also supervises and manages internal control and risk management items.
Further, three special committees have been established as advisory panels and operational coordination panels for the Executive Management Committee: the Strategy Planning Special Committee, the Risk Management Special Committee and the Environmental Special Committee. The Strategy Planning Special Committee formulates and deliberates group strategy and the management plan and engages in risk management of Mitsui Fudosan and the Mitsui Fudosan Group in collaboration with the Risk Management Special Committee. In fiscal 2008, the Environmental Special Committee, which is responsible for reviewing overall CSR efforts including environmental and societal contributions, discussed how the Mitsui Fudosan Group can enhance its environmental activities and how it should execute societal contributions based on the Group's thinking on CSR.

Board of Directors and Board of Corporate Auditors

The Board of Directors, which consists of eleven members (including three directors from outside the Company), makes decisions on material issues of Mitsui Fudosan and monitors the business execution status of directors. Board meetings are attended by corporate auditors, who provide opinions as necessary.
Mitsui Fudosan introduced the Corporate Auditor System. The Board of Corporate Auditors has five members, including three from outside the Company. The Board formulates auditing policies and determines the responsibilities of each Board member. It also receives reports and discusses material items on audits conducted according to such policies and responsibilities.
The corporate auditors cooperate with and receive periodic reports from the Audit Department, which is responsible for internal audits of the Company, and the Company's Certified Public Accountant. Beginning in fiscal 2006, the newly-established Corporate Auditors Department has been assisting the corporate auditors' duties.

Number of Directors and Auditors (as of September 2009)

Directors 11, including 3 outside directors
Corporate Auditors 5, including 3 outside auditors

Internal Auditing System

The Audit Department tests the effectiveness of risk management and internal control from the perspective of the entire Mitsui Fudosan Group. In order to conduct such evaluations or improve these, it carries out audits of departments, audits based on specific themes and other activities.
From the perspective of “risk approach,” it establishes material issues for each fiscal year. At the same time, it works to enhance “improvement proposals” and the “monitoring of the progress of improvements” beyond simply indicating areas that are at risk. Specifically, it formulates a medium-term plan based on risk analyses or risk evaluations. Based on this plan, it then formulates an annual plan. It selects target departments, audit themes and audit details based on risk evaluations, while giving due consideration to requests from management, the Risk Management Special Committee, departments in charge of compliance, etc. Furthermore, as for audit results, it indicates areas that need improvement based on the degree of risk.
The Department reports results of internal audits to the Vice President who is responsible in this area and gives feedback to relevant departments. Furthermore, it gives a report to the Senior Corporate Auditor or standing corporate auditor and strives to share information and cooperate by doing so, and also gives a report to the Executive Management Committee and Board of Directors every six months.
For areas that need improvement from an internal audit or risk management perspective, it receives responses from all departments concerning improvement policies. It then follows up on the progress of improvements. Follow-ups are considered particularly important and it strives to enhance the effectiveness of the “PDCA (Plan-Do-Check-Act) cycle.” As for areas that need improvement that may affect the entire Group and that are discovered when carrying out audits, the Department at the same time gives indications and proposals to the relevant departments.
For material themes, it carries out an audit based on a specific theme, which is an audit of a wide range of targets under a single theme. Therefore, when carrying out audits based on a specific theme, it may sometimes target Group companies.
There are many Group companies involved in front line businesses when interacting with customers and these are of particular significance. Therefore, the Department pours effort into giving support or cooperation to enhance the internal auditing function and giving support to departments when carrying out audits.

Internal Control

With the aim of winning the trust of all stakeholders, the Mitsui Fudosan Group has been working to improve the soundness, transparency and efficiency of management. While promoting the development and operation of the system related to internal control in accordance with the stipulations of the new Corporate Law, we formulated the “Basic Policy for Establishing a System to Ensure Appropriate Business Practices of Joint Stock Corporations (Internal Control System)” in October 2006 concerning the ensured adequacy of businesses including execution of business according to laws and regulations and the Company's Articles of Incorporation. The Policy is currently in effect.

Overview of "Basic Policies for Establishing a System to Ensure Appropriate Execution of Operations of a Business Corporation"

1. System to ensure that execution of business by directors conforms to laws and regulations and the Company's Articles of Incorporation

The Company is working to prevent violations of laws and regulations and its Articles of Incorporation in various ways, such as through the formulation of Compliance Rules and other internal rules, and by establishing the Risk Management Special Committee. The Company also set up an Internal Consultation System to foster compliance among employees.

2. System related to storage and management of information concerning the execution of business by directors and employees

All information is appropriately stored and managed according to internal rules, including Archives and Documents Rules and Information Management Rules.

3. Regulations and other frameworks related to prevention of losses

Based on Risk Management Regulations and other internal rules, the Executive Management Committee supervises and controls risk management items concerning the entire company or the Mitsui Fudosan Group. It heads two committees charged with uncovering and comprehending risk issues and devising solutions for them - the Risk Management Special Committee, which is responsible for management of administrative risk, and the Strategy Planning Special Committee, which handles business risk. In addition, the Crisis Management Subcommittee, which reports to the Risk Management Special Committee, was established to grasp the magnitude of accidents and other crises, and to formulate responses and policies as necessary.

4. System to ensure appropriate business practices by the Mitsui Fudosan Group (consisting of the parent company, subsidiaries, and affiliated companies)

The Mitsui Fudosan Group Compliance Policies have been formulated as behavioral guidelines for executives and employees of the Group. For operational control of Group companies by the parent company Mitsui Fudosan, a set of Subsidiaries and Affiliates Administration Rules has been devised, enabling important risk issues to be managed via approvals and monitoring of Mitsui Fudosan. In addition, Internal Consulting Systems have been set up in each Group company to provide advice related to compliance.

Internal Control Report System Based on the Financial Instruments and Exchange Law (response to J-SOX)

With regard to the Internal Control Report System (J-SOX), which requires listed companies to establish and evaluate internal control related to financial reports, prepare written reports, and have an auditor audit the report, the Mitsui Fudosan Group set up a project team in April 2006 and has since proceeded with preparations to handle the system, receiving input from specialists from outside the Company.
Fiscal 2008 is the first year this system has been applied, and as for the headquarters and Group companies subject to evaluation, we have completed preparations, including development of the internal regulations and other rules, improvement of business flow and familiarization and educational activities, and have begun evaluation of its development or operation. As a result, we believe that the internal control related to consolidated financial reports of the Company as of March 31, 2009 is effective and have submitted results of the evaluation as an Internal Control Report in June 2009. Furthermore, the content received an internal control audit from KPMG AZSA & Co. and was deemed appropriate. Going forward, we plan to continue performing evaluations of the system's development or operation and improving it, so as to seek enhancements to internal control.

Special Feature 1 Bringing Enrichment and Comfort to Urban Areas Mitsui Fudosan's History of “Creating New Values”

Special Feature 2 Proceeding to Create While Retaining and Reviving - Nihonbashi Revitalization Plan -

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