Corporate Governance

1. Basic Stance

SUMCO is committed to contributing to the development of industries and to the improvement of people’s quality of life by supplying high-quality silicon wafers used as substrates for semiconductor devices. At the same time, the Company places importance on living up to the expectations of shareholders by increasing corporate value as well as establishing and maintaining sound relations with all stakeholders.
Based on this understanding, the Company is implementing a broad range of measures relating to corporate governance such as strengthening the audit and supervisory functions of the Board of Directors, ensuring the efficient execution of the duties by the directors, and reinforcing internal control in the SUMCO Group. The Company has also taken measures to achieve speedy decision-making and to maintain a high level of transparency and fairness in the execution of business operations. As part of this commitment, the Company is making every effort to increase management transparency through timely and appropriate information disclosure.

SUMCO believes that sound corporate activities must be guided by an awareness of social values and morals as well as compliance with applicable laws and regulations. Toward this end, the Company has adopted and is implementing the SUMCO Charter of Corporate Conduct as a norm of behavior to be observed by the Company and its officers and employees. All SUMCO employees are united in the goal of making SUMCO an excellent company. The SUMCO Vision has been formulated as objectives for realizing this goal.

<SUMCO Vision>

1. World’s Best in Technology
2. Deficit-Resistant Even during Economic Downturns
3. Empower Employee Awareness of Profit
4. Competitiveness in Overseas Markets

For more information on the corporate governance, please refer to "Fundamental Policy on Corporate Governance".

2. Corporate Governance Structure

The ordinary general meeting of shareholders, held on March 29, 2016, approved the amendment to the Articles of Incorporation that enables SUMCO transfer to a Company with Audit and Supervisory Committee. As of that date, therefore, the Company made the transition from a Company with a Board of Corporate Auditors to a Company with Audit and Supervisory Committee. Directors who are Audit and Supervisory Committee Members and have voting rights on the Board of Directors will conduct audits. We expect this enables the Company enhance the effectiveness of audits and supervision as well as enhance the effectiveness of internal controls through the implementation of audits making active use of the Internal Audit Department.

[Corporate Governance Structure]

General Meeting of Shareholders, Board of Directors, Audit and Supervisory Committee, Accounting Auditor

(1) The SUMCO Board of Directors comprises of six Directors (excluding Directors who are Audit and Supervisory Committee Members) and six Directors who are Audit and Supervisory Committee Members (of whom four are Independent Outside Directors). In accordance with laws and regulations, the Articles of Incorporation, and the Rules of the Board of Directors, the Board of Directors makes decisions on management strategy, management plans, and other such important matters relating to business, it receives reports from every Director on the status of the execution of his/her duties, and it exercises supervision on the status of important business execution in affiliated Companies, compliance, internal controls, and risk management. The Board of Directors, with the participation of Independent Outside Directors, also freely exchange their opinions regarding the appropriate evaluation of Company performance and related matters, and reflects such evaluation on the personnel administration of top management members.

It is our basic Company policy that important matters of business execution, including matters relating to the general meeting of shareholders, financial results and so on, management plans and internal controls shall be decided after thorough discussion among the Board of Directors including the Independent Outside Directors. For this reason, the Articles of Incorporation do not stipulate that decisions on the important business execution can be delegated to Directors.

SUMCO has appointed four Independent Outside Directors. One is an attorney; one is a management consultant who has experience of working as a certified public accountant; one is a person with wide experience and knowledge cultivated through experience in the public sector as well as many years of experience in corporate management; and one is an individual with broad experience and knowledge relating to international finance, experience in corporate management, and knowledge of corporate governance. Each Independent Outside Director provides advice based on their own knowledge and engages in supervision of management from the perspective of minority shareholders and other stakeholders. They participate in the appointment and dismissal of executive officers and other important decision-making by the Board of Directors, and supervise business execution by directors and executive officers as well as conflicts of interest between the Company and management members.

The Board of Directors is generally convened once every month and the extraordinary Board of Directors is convened when necessary.

(2) The Company’s Audit and Supervisory Committee is made up of six Directors who are Audit and Supervisory Committee Members (of whom the majority of four are Independent Outside Directors). In order to assure the effectiveness of Audit and Supervisory Committee activities, permanent Audit and Supervisory Committee Members are put in place by the mutual vote among Audit and Supervisory Committee Members.

The Audit and Supervisory Committee exercises its statutory right of investigation and audits the Directors’ execution of their duties from the viewpoints of appropriateness and conformance with laws and regulations and the Articles of Incorporation by inspecting and confirming the status of compliance with laws and regulations, Articles of Incorporation, and so on, and by monitoring and otherwise supervising the development and operational status of the system of internal controls, including the internal controls relating to financial reporting.

The Audit and Supervisory Committee also receives periodic reports from the Internal Audit Department on the status of implementation and the results of internal audits. The system is also implemented in which Directors, Executive Officers, and operation divisions in SUMCO and group companies appropriately report to the Audit and Supervisory Committee regarding matters that seriously affect management, performance, and other aspects of business.

(3) SUMCO has established a Nomination and Compensation Committee composed of two Representative Directors and two Independent Outside Directors to serve as a discretionary advisory body for the Board of Directors. The Nomination and Compensation Committee receives requests from the Board of Directors for advice on the process for selection of candidate Directors of SUMCO (excluding Directors who are Audit and Supervisory Committee Members), their qualifications, the reasons for their designation as candidates, the structure of executive remuneration, and related matters. The committee deliberate on the appropriateness and other aspects of the matter referred and, also taking evaluations of Company performance into account, delivers its advice. The Board of Directors, receiving the advice from the Nomination and Compensation Committee, designates candidate Directors (excluding Directors who are Audit and Supervisory Committee Members) and decides on their remuneration and related matters.

(4) The Management Conference, which consists of executive officers ranked Managing Executive Officer or above, deliberates on important management matters. This Conference generally meets every week.

(5) SUMCO has adopted the executive officer system, thereby separating the decision-making and supervisory functions of the Board of Directors from the function of executing decisions made by the Board. This system enhances the Company’s agility in responding to changes in the business environment and also assures the prompt decision-making.

(6) For each business operating organization, authority is clearly defined, responsible managers are appointed, and appropriate administrative procedures are established in accordance with internal rules and under the supervision by the executive officer in charge.

(7) As for the Internal audits, the Internal Auditing Department (five staff members) conduct audits of management efficiency, compliance status, and other such matters in accordance with internal auditing rules and annual audit plan. The Department submits reports of audit results to the CEO & Chairman of the Board of Directors and the COO & President, and also notifies the audit results to the audited departments.
When necessary, the Department also seeks implementation of corrective measures and performs investigation to confirm the corrective measures implemented.
The Audit and Supervisory Committee and the Internal Auditing Department hold regular meetings, share their audit results, exchange information and views, and collaborate in pursuit of efficient audits.

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