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Corporate Governance Practices At Nomura


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  • 1. Nomura GroupCorporate GovernanceJuly 2010
  • 2. I Committee System II Management Structure III Internal Controls System IV ComplianceNote:1. This document is produced by Nomura Holdings, Inc. (“Nomura”). Copyrights 2010 Nomura Holdings, Inc. All rights reserved. No part of this document shall be reproduced, storedin a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying or otherwise, without the prior written permission of Nomura.2. This document has been prepared by Nomura solely to provide an overview of its corporate governance structure. No representations or warranty, express or implied, are madethat the information and opinions in this document are fair, accurate or complete and no responsibility or liability can be accepted by Nomura for errors or omissions or for any lossesarising from the use of this document. 2
  • 3. I Committee System  Adoption of the Committee System  Purpose of Adopting the Committee SystemII Management StructureIII Internal Controls SystemIV Compliance 3
  • 4. 1. Adoption of the Committee System  Nomura Group companies in Japan adopted the Committee System following amendments to the Articles of Incorporation at the June 2003 Annual Meeting of Shareholders Statutory Auditor System Committee System (Former System) Meeting of Nomination of Director Candidates Meeting of Shareholders Election Election Shareholders Dismissal Election Election/Dismissal of Dismissal Dismissal Committee Members C itt M b Nomination Committee Board of Directors Audit Board of Management Board of Audit Audit Statutory Decision Directors Determination of Committee Auditors Oversight of Compensation Compensation Business Execution Committee Election/ Audit Dismissal Determination of Compensation Representative Oversight of Executive Business Execution Officer(s) Executive Managing Directors 4
  • 5. 2. Purpose of Adopting the Committee System  To Separate Management and Oversight Functions Under the Statutory Auditor System, Directors traditionally performed the dual roles of management oversight and business execution. Under the Committee System, these roles are separated, making the individual roles more functional.  To Transfer Business Execution Powers Under the Committee System, many of the powers to execute business activities are System delegated to Executive Managing Directors. As a result, NHI can make quicker management decisions on a consolidated basis.  To Increase Management Transparency The Nomination Committee, Audit Committee and Compensation Committee all have a majority of Outside Directors. The aim is to strengthen management oversight and further improve transparency. 5
  • 6. I Committee SystemII Management Structure  Management Structure  Board of Directors  Three Committees  Business Execution StructureIII Internal Controls Sy C SystemIV Management ObjectivesV Compliance 6
  • 7. 1. Management Structure Meeting of Shareholders Board of Nomination Committee Directors Audit Committee Compensation Committee President & Executive Management Board Advisory Board CEO Group Integrated Risk  Consultative body for the Management Committee Executive Management Board  Top managers of representative global companies offer management advice Internal Controls Committee 7
  • 8. 2. Board of Directors Nomura Holdings’ Board of Directors (12 Directors) Concurrent  Directors term is Positions as Outside Audit Mission Audit Nomination Compensation 1 year Director Name Executive Managing Director Director Committee Committee Committee  The offices of Director CEO / Executive ManagingChairman Junichi Ujiie   Director and (Chairman) (Chairman) Chairman are separateDirector Kenichi Watanabe   CEO / ExecutiveDirector Takumi Shibata  Managing Directors are notDirector Masanori Itatani  members of the Nomination, NominationDirector Masanori Nishimatsu  Audit, orDirector Haruo Tsuji   Compensation (Corporate Advisor of Sharp Corp) (Chairman) CommitteesDirector Hajime Sawabe    All members of (Chairman of TDK Corp) Audit CommitteeDirector Tsuguoki Fujinuma   are independent (Certified Public Accountant) directors asDirector Hideaki Kubori    stipulated by the (Chairman of Hibiya Park Law Offices) Sarbanes-Oxley  Director Masahiro Sakane (Chairman of Komatsu Ltd.)   Act.Director Colin Marshall   Audit Mission Directors (full-Director Clara Furse  time non- executive directors) support the Audit Regarding the Board of Directors Committee by conducting audit  Board of Directors Meetings are held at least once every 3 months. including inspections  The Chair of the meeting is held by the Chairman of the Board of Directors who is non-executive.  Executive Managing Directors report to the Board of Directors on the status of business execution and matters which have 8 been discussed at the Executive Management Board, etc. at least once every 3 month.
  • 9. 3. Three Committees Nomination  3 Directors (including 2 outside directors) Board of  Determine proposal details regarding election and dismissal of Directors Committee directors for submission to Meeting of Shareholders.  3 Directors (all outside directors)  Audit the execution of duties of Directors and Executive Audit Committee Managing Directors and elect/dismiss an independent accountant  3 Directors (including 2 outside directors) Compensation  Determines particular compensation policies and individual Committee compensation for each Director and Executive Managing Director  Nomination Committee – Majority comprised of outside directors. The CEO and Executive Managing Directors do not serve concurrently as chairman of the Nomination Committee, and Representative Executive Officers including the CEO do not serve as committee members.  Audit Committee – Comprised of outside directors under the Commercial Code. An outside director serves as chairman of the Audit Committee. Audit Committee members do not serve as members of other committees. All members are independent directors as stipulated by the Sarbanes-Oxley Act.  Tsuguoki Fujinuma was formerly President of the International Federation of Accountants. He currently serves as Trustee of the International Accounting Standards Committee Foundation and specializes in international accounting principles, including US GAAP. He satisfies the requirements of ‘Financial Expert’ under the Sarbanes-Oxley Act.  Main powers under the Sarbanes-Oxley Act: (1) pre-approval audit or non-audit services provided by the independent accountant for SEC reporting services, as required by the US auditor independence rules; (2) retain legal counsel, consultants or other outside advisors without prior approval by the Board of Directors or Executive Board.  Compensation Committee – Majority comprised of outside directors. The CEO and Executive Managing Directors do not serve concurrently as chairman of the Compensation Committee, and Representative Executive Officers including the CEO do not serve as committee members. 9
  • 10. 4. Business Execution Structure  Deliberates and decides upon important management issues for President & CEO Executive Management Nomura Group, such as management strategies, business plans, Board budgets and the allocation of management resources. Group Integrated Risk  Deliberates and decides upon important risk management issues for Management Committee Nomura Group  Deliberates and decides upon matters concerning the maintenance Internal Controls and assessment of internal controls and procedures and promotion of Committee proper corporate behavior  Important business matters delegated by the Board of Directors to Executive Managing Directors are deliberated and decided by the Executive Management Board and other principal committees.  The Internal Controls Committee is composed of Executive Managing Directors, including the CEO, who chairs the Committee, as well as an Audit Committee member and an Audit Mission Director. 10
  • 11. I Committee SystemII Management StructureIII Internal Controls System  Internal Controls System (1)  Internal Controls System (2)  Disclosure CommitteeIV Compliance 11
  • 12. 1. Internal Controls System (1) The Audit Committee is composed of non-executive directors and has central responsibility for management audit functions. In order to facilitate audit functions, the following measures have been undertaken: 1. Two full-time non-executive directors (Audit Mission Directors) who are familiar with the business and organization of Nomura Group, are appointed as Directors of the Company and Nomura Securities. In accordance with the instructions by the Audit Committee, Audit Mission Directors conduct operational supervision to support the Audit Committee, including daily inspections and investigations such as attending important committee meetings. 2. An Audit C Committee member and an Audit Mission Director participate as members of the Internal f Controls Committee, a higher body of the Internal Audit Division. Moreover, internal audit results are reported to the Audit Committee and Audit Mission Directors as well as to executive management. 3. The Company has established Office of Audit Committee to assist the Audit Committee. Office of Audit Committee provides assistance to Audit Committee members and Audit Mission Directors and operational support to the Audit Committee. 12
  • 13. 2. Internal Controls System (2) Internal Controls Audit Mission Audit Committee Committee Directors 4 Executive Managing Directors including CEO + Outside Director (Chairman of Audit Committee) + Director (Audit Mission Director) Office of Audit Audit Report Discussion and approval of internal controls Audit enhancement as well as appropriate business Report Committee Nomura behavior and its assessment Assist Audit Committee Assist Audit Mission Directors by Securities S iti Approval of providing operational support Audit Report Audit Plan Nomura Holdings and its Internal Audit Division Subsidiaries Internal Audit Management Risk Business Management Compliance 13
  • 14. 3. Disclosure Committee(1) Nomura Group’s Statement of Global Corporate Policy Regarding Public Disclosure of Information Establish Disclosure Committee Prohibit selective disclosure of material information Consolidate material information to Disclosure Committee Specify authorized spokesman on behalf of Nomura Group(2) Disclosure Procedures Regulation FD Material Information Disclosure • Matters for referral to Executive Management Board, Committee etc. Disclosure • Unforeseen matters Control(3) Production of Legal Disclosure Documents • 20F  Signature of CEO, CFO (Annual report to be filed with SEC) Implemented in 2003 • Annual securities reports  Confirmation of appropriateness by representative officer(4) MembersThe Senior Corporate Managing Director responsible for group corporate communications, Managing Directors of GroupCorporate Communications Dept., Group Controller’ s Dept., Group Finance Dept., Investor Relations Dept., Group Legal Dept.,Corporate Planning Dept. and Group Risk Management Dept. 14
  • 15. I Committee SystemII Management StructureIII Internal Controls SystemIV C Compliance li 15
  • 16. Compliance  Appointment of Group Compliance Officer  Group Compliance Officer shall govern compliance within Nomura Group and ensure compliance with applicable laws, rules and regulations.  Establishment of Compliance Hotline  Set up whistleblowing system for violations of laws or internal company regulations and other unethical acts.  Nomura Group: Officers and employees of Nomura Group may report directly to an officer of Nomura Holdings or alternatively to an outside director both designated by the board of directors of Nomura Holdings.  Nomura Securities: In addition to supplying information to the Nomura Holdings Compliance Hotline, officers and employees of Nomura Securities may report directly to the Internal Administration Supervisor or alternatively to external lawyers serving as legal advisors to the Compliance Committee.  Compliance Committee  Nomura Securities’ Compliance Committee deliberates material compliance matters on Japan’s securities business, including the company’s internal controls system and compliance rules.  Members: 11 officers including the CEO and the Internal Administration Supervisor, as well as outside lawyers acting as legal advisors. 16