SCALA

Corporate Governance

GOVERNANCE

Corporate Governance

Corporate Governance Policy

Basic Stance and Basic Policy on Corporate Governance

Vision (Aim): Contribute to the happiness and prosperity of all mankind

Scala make the world where valuable things come springing up

By providing a wide range of services that promotes communication between people and between companies and people, we discover valuable people, assets, and information. Additionally, by delivering to those who recognize their value in a timely manner and by fully supporting information sharing to the world, we aim to contribute to people’s the happiness and prosperity of all mankind.

Also, by discovering the people who recognize value and by delivering this to them at the right time, values are properly compared and things with higher value remain in the world. By pursuing a world with accelerated processes of creating greater value, we aim to solve various social problems, create technologies that lead to the evolution of humankind and create a society full of value.

Scala make our business model a global standard

In addition, the Scala Group’s subscription-based business model has been adopted by businesses all over the world. By being recognized as spreading truly useful value to the world, we aim to make the Scala business model a global standard.

Scala will be a company that makes everyone’s dreams come true

Consequently, we provide unlimited possibilities to people (including employees) who have a strong will to realize their dreams; they continue to challenge business that are new/ interested in us/ skilled ,without worrying about failure, and achieve a higher chance of success; they aim to fulfill all dreams by indirectly contributing to the maintenance and development of society not only for employees, but also family members, friends, peers, shareholders, customers, and local communities that share the same will.

Mission (Role to Play): Become an ideal company for the world

Pursuing ultimate social good

As a role to be fulfilled, the mission is to “become an ideal company for the world.” Due to the richness of science and technology and discovering new and old social problems, we contribute not only to direct social contributions in the IT business domain, but also indirectly to people’s happiness. We aim to contribute to solving not only Japanese issues, but also global issues as well as to the prosperity of mankind.

Uncovering unnoticed true values

In such a role, we discover the true value that is easily hidden by using Scala Group’s unique mechanism, breaking down hurdles, so to speak, by activating the “Value Incubation Cycle”, we will accelerate the speed of world development, and “uncover unnoticed true values”.

Facilitating communications

From achieving individual happiness, to achieving the happiness of society as a whole, we will bring together the capabilities of the entire Scala group, maximize the value created, and support it to spread widely throughout the world. The Scala Group’s business model itself is the greatest value of the Group, and we aim to become a value incubation that leads to the happiness of Scala employees and all those related to the Group.

Incubating values / Making SCALA a global company

This business model is unprecedented, subscription-based and has evolved from the “hospitality” spirit that is unique to Japan. Additionally, this model solicits value and encourages friends and comrades to talk about their dreams and passions. And by acting boldly and coordinating systematically to expand to the world, we will become the world’s Scala Group, aiming to become the world’s top business with this new business model using IT.

Value (Values and Action Guidelines): Provide unlimited possibilities for those who continue to challenge anything

Being adherence to dreams

We provide unlimited possibilities for those who continue to challenge anything. We motivate our employees to be able to grow and realize their own happiness by linking what they can do to their dreams and ambition because they are in our Group. Also, we execute specific steps by calculating backwards from the goal and adhering to achieving the goal. We always compare reality with big goals and plans, clarify the gap, and repeat the PDCA cycle for the issues to be addressed. The Scala Group values the importance of staying on goal to realize big dreams, while surpassing the current situation, past successful experiences, existing concepts, and vested interests.

Being fair and square

In addition, we do the correct job with high ethical standards. We focus on creating an environment in which we can accomplish big things this cannot be accomplished alone because if we are taking the correct actions, we will have people who understand and collaborate with us.

Never giving up
We believe that realizing what others cannot do easily is the root of the Scala Group’s growth, and we believe that an abundant environment in which we can thoroughly pursue the possibilities of “I can!” will lead to personal growth. This sentiment is the “Scala Value” and we emphasize “never giving up.”

Boosting each other

We believe that because we all have a strong desire to achieve great goals, we are able to respect, work together, and improve. This will lead to the growth of the Scala Group and everyone who is gathered there, and in collaboration with companies that share the same objectives, we aim to challenge the world with an organized subscription-based business model to achieve top success.

Ensuring the Rights and Equal Treatment of Shareholders

(1) General Meeting of Shareholders

  1. Scala distributes shareholders meeting information well in advance of each meeting in order to give shareholders sufficient time to reach decisions about proposals and properly submit their votes. Notices of the annual general meeting of shareholders are posted about four weeks before each meeting on the timely disclosure network (TDnet) of the Tokyo Stock Exchange and on the Scala website. In addition, the notice is sent by postal mail to shareholders about three weeks before each meeting.
  2. To enable all shareholders to submit their votes with ease, Scala allows shareholders to vote by using the Internet.
  3. If the number of votes opposing a proposal reaches a certain level, the secretariat for the general meeting of shareholders examines the reasons for this opposition and submits a report to the Board of Directors via the director responsible for management of this matter. This director holds discussions with shareholders and takes other actions as needed.

(2) Ensuring the Equal Treatment of Shareholders

  1. Scala discloses information in a timely and proper manner in order to prevent any differences in the access to information among shareholders.
  2. When institutional and other investors who hold shares in a street name express an interest in exercising their voting rights at the general meeting of shareholders, Scala discusses with the trust bank or other custody institution where the shares are registered to take a suitable action..

(3) Capital Policy

  1. The main performance indicators used for the management of business operations with the goal of increasing corporate value are non-GAAP revenue, operating profit and basic earnings per share for the Scala Group and individual business units.
  2. Scala makes investments for growth and strives to maintain a stable dividend while taking steps to use capital more efficiently and preserve financial soundness.
  3. With maximizing corporate value as the highest priority, Scala sells stock to procure funds and approves M&A deals only after carefully examining the rationality and necessity of these actions.
  4. For actions involving capital that would result in a change in the controlling interest or a significant dilution of existing shares, the Board of Directors thoroughly examines the rationality and necessity in order to prevent any unreasonable or unfair harm to the interests of current shareholders. The proper procedure is used to reach a decision and shareholders receive a full explanation of the action to be taken.

(4) Cross-shareholdings

  1. For the sustainable growth of corporate value, Scala has cross-shareholdings for the purposes of maintaining and expanding business alliances and transactions that can potentially produce synergies with the businesses of the Scala Group.
  2. The Board of Directors periodically examines cross-shareholdings with regard to their risk and return and whether or not these investments are contributing to the medium to long-term growth of corporate value.
  3. For cross-shareholdings, voting decisions concerning proposals at the general meeting of shareholders are based on an examination of whether or not each proposal will contribute to corporate value growth of the cross-shareholding company and Scala.

Relationship with Stakeholders

(1) Related-Party Transactions

  1. Transactions with Scala directors, corporate auditors and close relatives of these individuals require the prior discussions and approval of the Board of Directors, which receives in advance a summary of the transaction, the cost and other information.
  2. An examination is performed every year to determine if there have been related-party transactions and any significant facts are reported to the Board of Directors.

(2) Relationship with Stakeholders

Contributing to the preservation and advancement of society while meeting the demands of a broad range of stakeholders is one element of Scala’s corporate philosophy. Scala is dedicated to conducting business in a manner that reflects the interests of shareholders, employees, customers, business partners and all other stakeholders.

  1. Employees:
    Scala is an organization where people with a diverse array of values and backgrounds can realize their full potential regardless of gender, nationality, disabilities and other personal characteristics.

    (a) The Scala Awards
    Scala gives employees awards every year to recognize outstanding achievements in order to reinforce the commitment of everyone to Scala’s mission and corporate philosophy.

    (b) Internal reporting system
    Scala has an internal reporting system that allows individuals to submit reports directly to an outside director or the full-time corporate auditor. This system is used to report violations of laws and regulations, violations of internal rules and other improper behavior. Reports are confidential in accordance with laws and regulations and internal rules. Furthermore, the system protects individuals who submit reports from any harm.

  2. Customers:
    Transforming customers’ needs into solutions is a mission of Scala. To accomplish this, Scala is dedicated to increasing customer satisfaction with a motto of carefully listening to customers in order to identify their needs and supplying products and services with the best possible quality.
  3. Business partners:
    Scala fulfills its social responsibility by procuring products and services in strict compliance with laws and regulations.
  4. Society:
    Scala’s mission is contributing to social progress by using IT in order to make communications among people even more fulfilling and vibrant. Based on this mission, the goal is to play a role in creating a sustainable society in Japan and worldwide.

Disclosure of Information

Scala has a firm commitment to the disclosure of information while complying with associated laws and regulations and terms and conditions under the rules of the Tokyo Stock Exchange. We believe that the timely and proper provision of information is essential for receiving an accurate assessment of our corporate value from a variety of stakeholders.

Corporate Governance System

(1) Organizational Structure

Scala has the organizational structure of a company with the Board of Corporate Auditors under the Companies Act.

(2) Roles of the Board of Directors

  1. Based on an awareness of their fiduciary responsibility to shareholders, the Board of Directors properly exercises its authority in order to fulfill its obligation to maximize corporate value.
  2. To full this obligation, the Board of Directors oversees overall management, makes decisions about important matters as prescribed by laws and regulations and the Articles of Incorporation, and performs studies concerning medium and long-term management strategies.
  3. The Board of Directors establishes and implements an effective framework for corporate governance.
  4. When a corporate auditor or the accounting auditor reports inadequacy or a problem, or discovers a fraudulent act, the Board of Directors promptly establishes a framework to deal with these matters.

(3) Operation of the Board of Directors

  1. The operations of the Board of Directors are conducted in compliance with rules for the Board of Directors.
  2. The chairperson of the Board of Directors has the duty of facilitating frank and unrestricted discussions by the internal and outside directors.
  3. The schedule for meetings of the Board of Directors is determined in advance with care exercised to enable all directors to attend meetings.
  4. All directors receive information about proposals as well as documents involving these proposals at least three business days before the Board of Directors meeting. This gives directors adequate time to study these issues in order to prepare for the meeting.
  5. The Administration Division is the secretariat for the Board of Directors. For particularly significant proposals to be submitted to the directors, this division provides preliminary explanations and uses other measures to supply the directors with sufficient information.

(4) Roles of the Board of Corporate Auditors

  1. The operations of the Board of Corporate Auditors are conducted in compliance with rules for the Board of Corporate Auditors.
  2. Based on an awareness of their fiduciary responsibility to shareholders, the Board of Corporate Auditors takes actions from an independent and objective standpoint for the purposes of maintaining the soundness of Scala and protecting the interests of shareholders.
  3. The Board of Corporate Auditors establishes an auditing framework that ensures the effectiveness of audits by the corporate auditors.

(5) Cooperation among Corporate Auditors, the Accounting Auditor and the Internal Audit Department

  1. The Board of Corporate Auditors, the accounting auditor and the Internal Audit Department work together in order to maintain a framework for collecting information that is needed and performing proper and sufficient audit.
  2. The Board of Corporate Auditors establishes standards for the selection and evaluation of the accounting auditor to confirm the independence and professional skills of the accounting auditor.
  3. The Board of Corporate Auditors establishes a framework to deal with the cases where an accounting auditor discovers a fraudulent act or reports inadequacy or a problem.
  4. The Board of Corporate Auditors periodically interviews the accounting auditor, manager of the Internal Audit Department and the representative director.

(6) Duties of the Directors and Corporate Auditors

  1. When directors or corporate auditors are newly elected, these individuals must acquire a sound understanding of laws and regulations concerning management, the Articles of Incorporation, the rules for the Board of Directors and Board of Corporate Auditors, and other rules of Scala in order to perform their duties based on a thorough understanding of the associated responsibilities.
  2. The directors and corporate auditors work together mutually in order to collect sufficient information for performing their respective duties. The directors and corporate auditors must also actively express opinions, hold discussions and conduct other activities in order to perform their respective duties while fully utilizing their capabilities.

(7) Roles of Independent Outside Directors

  1. The independent outside directors supervise management, provide advice concerning management and perform oversight to prevent conflicts of interest from an independent standpoint.
  2. The opinions of stakeholders are incorporated in the discussions and decisions of the Board of Directors.

(8) Roles and Duties of the Accounting Auditor

  1. The accounting auditor fulfills its duties to Scala’s shareholders and other investors by performing the critical role of confirming the reliability of information disclosed by Scala.
  2. The accounting auditor must be independent and have excellent professional skills.
  3. The accounting auditor works with the Board of Corporate Auditors in order to maintain a suitable framework for performing audits.
  4. The accounting auditor must maintain certain quality standards as required in order to perform accounting audits properly.

(9) Policies and Procedures for Selecting Directors

  1. Candidates for election as directors are discussed and selected by the Board of Directors.

(10) Policies and Procedures for Selecting Corporate Auditors

  1. Candidates for election as corporate auditors are discussed and selected by the Board of Directors after obtaining the prior agreement of the Board of Corporate Auditors.

(11) Explanations of Selections and Nominations

  1. Internal directors must have the considerable experience and knowledge required to perform system development, sales and other activities with the primary function of “transforming customers’ needs into solutions.” These directors also require a deep understanding of the competitive landscape, Scala’s strengths, important issues and other subjects. Another requirement is considerable knowledge and experience concerning the preservation of financial soundness and effective risk management. Individuals who can fully use this experience and knowledge for proposing and discussing management strategies at the Board of Directors and for overseeing the implementation of these strategies are qualified to be nominated.
  2. Outside directors are attorneys with expertise concerning corporate law who have knowledge and experience that the internal directors do not have. Outside directors are also expected to actively supervise management and provide advice from the standpoint of their professional knowledge. Individuals who can fulfill these roles are qualified to be nominated.
  3. The full-time corporate auditor uses experience involving business operations and management to perform audits properly from a standpoint that is independent of the people who conduct business operations. An individual who can fulfill these roles is qualified to be nominated.
  4. Outside corporate auditors have considerable experience and knowledge as certified public accountants and use this experience and knowledge to perform audits properly from an independent standpoint. Individuals who can fulfill these roles are qualified to be nominated.
    For outside director and outside corporate auditor candidates, Scala confirms that these individuals will have sufficient time and energy to perform their expected roles and duties.

(12) Study and Training for Directors and Corporate Auditors

Scala provides training and information as needed to enable directors and corporate auditors to properly perform their roles and duties.
  1. Scala urges directors and corporate auditors to attend seminars and other training programs conducted by external organizations that cover valuable knowledge and skills for corporate executives.
  2. Scala gives newly elected directors and corporate auditors opportunities to acquire knowledge about the company’s businesses, organization, finances and other subjects as needed as well as a better understanding of the Companies Act and associated laws and regulations, and corporate governance.
  3. Every fiscal year, the directors receive an explanation of that year’s business strategy and other items.
  4. Independent outside directors and outside corporate auditors can receive information about management and business issues as needed at any time.

(13) Support System and Access of Independent Outside Directors and Outside Corporate Auditors to Internal Information

Directors and corporate auditors receive training and information required to properly perform their roles and duties.
  1. The Administration Division performs the following activities as the secretariat of the Board of Directors in order to enable the directors to hold thorough discussions of agenda items.
    • Preparation of a Board of Directors meeting schedule every six months and a six-month plan for agenda items for these meetings
    • Establishment of time for discussions so that the directors have sufficient time to discuss each topic
    • Distribution of documents concerning agenda items by no later than three business days prior to each Board of Directors meeting
  2. The Administration Division and Office of the President serve as the secretariat of the Board of Corporate Auditors in order to provide assistance to the corporate auditors.
  3. In addition to the preceding activities, the outside directors and outside corporate auditors can ask internal directors or employees for explanation, reports or documents at any time as needed.
  4. Internal Audit Department provides at any time information as needed concerning how the directors and corporate auditors perform their duties.

Remuneration Policy

(1) Remuneration of Directors, etc.

  1. For directors, emphasis is placed on linking remuneration with the long-term profit received by shareholders. This remuneration must increase the motivation of directors to maximize Scala’s corporate value as well as be suitable, fair and balanced.
  2. Remuneration for directors consists of fixed remuneration that reflects results of operations in the previous fiscal year, remuneration that links to results of operations, and remuneration in the form of stock. Independent outside directors and outside corporate auditors, who are independent of the operation of business activities, receive only fixed remuneration that does not reflect results of operations in the previous fiscal year because remuneration linked to results of operations is not appropriate for these individuals.
  3. The Articles of Incorporation limit the annual total remuneration for directors to 500,000 thousand yen. Based on a resolution approved by the Board of Directors, the president and representative director has the authority to determine remuneration of individual directors. The president and representative director receives advice from a Personnel Remuneration Advisory Committee, a voluntarily established body consisting of a representative director, outside director and one other person. The president and representative director uses the advice of this committee as the basis for determining remuneration for each director. The Articles of Incorporation limit the annual total remuneration for corporate auditors to 100,000 thousand yen. Remuneration for individual corporate auditors is determined by the Board of Corporate Auditors.
  4. The amount of remuneration reflects Scala’s results of operations and takes into account remuneration at other listed companies in the same industry.

Policy for Constructive Dialogue with Shareholders

Scala has a strong commitment to IR activities because maintaining constructive dialogues with shareholders contributes to the sustained growth of Scala and the growth of its corporate value.

  1. The department responsible for IR and PR oversees dialogues (meetings) with shareholders and these activities are supervised by the director responsible for IR and PR.
  2. With the department responsible for IR and PR playing a central role, shareholder dialogues are conducted while cooperating with accounting, administrative and other related departments, such as by sharing and collecting information, in order to ensure the effectiveness and efficiency of these dialogues.
  3. For institutional investors, Scala holds an information meeting for results of operations twice every year and meets with institutional investors individually as needed in Japan and overseas.
  4. For individual investors, Scala holds an information meeting following the annual general meeting of shareholders for the purpose of explaining business strategies and other subjects. Scala also holds information meetings for individual investors with the assistance of securities companies and other companies.
  5. Summaries of opinions and other information received during dialogues with shareholders that are prepared by the department responsible for IR and PR are reported as needed to the Board of Directors by the director responsible for IR and PR.
  6. Significant internal information that has not been made public (insider information) is managed strictly in accordance with the Rules for the Prevention of Insider Trading to prevent any external leaks of this information.

Established/Revised/Deleted

The establishment of this policy as well as revisions and deletions require a resolution of the Board of Directors.

Established on March 14, 2016
Partially revised on September 29, 2016
Partially revised on September 25, 2017
Partially revised on January 9, 2019
Partially revised on October 4, 2019