Corporate Governance

The SG Holdings Group supports the concept of "Stakeholder Management" as the foundation of its management philosophy and promotes business activities which meet the expectations of our various stakeholders by 1) continuous improvement of our level of customer service, 2) stabilization and improvement of the living foundations of our employees and their families, 3) contribution to local communities, their safety and environment through diverse business and social activities, 4) enhancement of corporate value for our shareholders and 5) equal and fair transactions with business partners. We have formulated the SG Holdings Basic Policy of Internal Control System as a statement of our internal control policies and work to strengthen all of our systems accordingly based on the firm conviction that creating a transparent management and administrative structure through strong and comprehensive corporate governance is a key requisite for realizing stakeholder management.

SG Holdings, as a pure holding company, strives to streamline the Group's management structure and achieve rapid management decision making. The Board of Directors is responsible for management of the Group as a whole, and provides oversight of the execution of business. SG Holdings has introduced an Executive Officer System in order to separate the management oversight function and the business execution to ensure that authority and responsibilities are clear. In addition, the Audit & Supervisory Board has been established to supervise and audit management. We are striving to further strengthen the Company's business management structure and the foundations of our businesses to respond to changes in the business environment and to implement highly transparent management.

SG Holdings' Audit & Supervisory Board holds regular meetings of the Audit & Supervisory Board every month, in addition to extraordinary meetings when necessary. Its responsibilities include reporting on business audits by the full-time Audit & Supervisory Board Member and discussing proposals to the Board of Directors in advance. Furthermore, Audit & Supervisory Board Members attend meetings of the Board of Directors, and continually audit the business execution by Directors, such as stating opinions from their perspective as necessary. In addition, the full-time Audit & Supervisory Board Member attends committees and meetings other than meetings of the Board of Directors as an observer in order to gain a deeper understanding of internal conditions and management, actively works to maintain an effective auditing environment and collect internal information, and also routinely monitors the development and operation of the internal control system and expresses objective opinions and provides advice.

The Audit & Supervisory Board holds regular meetings of the Audit & Supervisory Board every month, in addition to extraordinary meetings when necessary. Its responsibilities include reporting on business audits by the full-time Audit & Supervisory Board Member and discussing proposals to the Board of Directors in advance. Furthermore, Audit & Supervisory Board Members continually audit and supervise the business execution by Directors and attend Board of Directors meetings, stating as necessary their opinions from their perspective. In addition, the full-time Audit & Supervisory Board Member attends committees and meetings other than Board of Directors meetings as an observer in order to deepen his/her understanding of internal conditions and management, actively works to maintain an effective auditing environment and collect internal information and, moreover, routinely monitors, expresses an objective opinion and provides advice in regard to the development and operation of the internal control system.

SG Holdings has appointed Outside Directors and Outside Audit & Supervisory Board Members. Their role is to improve the appropriateness of decisions of the Board of Directors by making the necessary comments from a specialized perspective principally on management and business strategy. Furthermore, certified public accountants with extensive knowledge on finance and accounting, attorneys with extensive knowledge on the law and specified labor and social security attorneys with extensive knowledge of human resources and labor affairs are appointed as Outside Audit & Supervisory Board Members who conduct stringent auditing of the appropriateness of the decision-making and business execution of Directors from a specialized perspective while maintaining a high level of independence The Outside Directors and Outside Audit & Supervisory Board Members have no business relationships or other interests with the Company. Furthermore, the election of Outside Directors and Outside Audit & Supervisory Board Members is determined based on the assumption that adequate independence for executing duties as outside officers from a perspective independent from the Company’s management can be ensured based on their backgrounds and relationships with the Company.

In their audit work, Audit & Supervisory Board Members attend Board of Directors meetings and other important meetings as well as conduct site visits to Group companies and business locations to ensure effective monitoring. To perform their audit functions as efficiently as possible they collaborate closely with the Company's internal Audit Department and subsidiaries‘ Audit & Supervisory board members.

The Company has established the Internal Audit Department as an independent unit to conduct the Company’s internal audits and pursuant to the Comprehensive Internal Audit Regulations carry out the functions required for comprehensive internal auditing of the Group to ensure the conservation of its assets and promote efficient management. The Internal Audit Department reports the results of its audits to President and COO,Board of Directors  and the Audit & Supervisory Board Members and provides advice, proposals and directives for improvements to the units it audits. Sagawa Express Co., Ltd. and some other Group subsidiaries also have their own internal audit units which conduct audits as appropriate in addition to audit by the Internal Audit Department of the Company.
In addition, internal audits are conducted as necessary to ensure that policies and plans for risk countermeasures discussed at other meetings are properly implemented.

The auditing firm with which SG Holdings has an auditing contract performs accounting audits based on an annual audit plan. The Company pays compensation based on it.

In accordance with the spirit of the Corporate Governance Code, our Group periodically reviews the rationale and effectiveness of our strategic equity holdings from the perspective of whether they contribute to the enhancement of corporate value over the medium- to long-term. With regard to our strategic shareholdings, we carefully examine the purpose of holding them, the presence or absence of synergies, and whether the risk-return profile is commensurate with the cost of capital, and review the appropriateness of continuing to hold them annually at a meeting of the Board of Directors. As a result, we hold a portion of the shares of business partners (strategic shareholdings) where the necessity and economic rationality of holding them have been determined to exist, such as for the maintenance and development of medium- to long-term business relationships and the creation of synergies.

With regard to transaction synergies arising from dividend income and shareholdings, our company conducts quantitative verification by comparing them to the hurdle rate calculated annually based on our cost of capital, while also comprehensively taking qualitative factors into account. After thoroughly reviewing the results of this verification, for stocks deemed unreasonable to continue holding, the company will proceed with their sale while taking into consideration factors such as market impact and other business-related matters.Furthermore, in fiscal year 2025, the Board of Directors confirmed the necessity of maintaining business relationships and the economic rationality of all holdings. At the same time, from the perspectives of management and financial strategy, and through careful dialogue with the relevant companies, 4 companies that demonstrated a certain level of understanding have seen a portion of their holdings sold, generating 3.8 billion yen in proceeds.

The approach to exercising voting rights of shares held by the Company is that voting rights will be exercised to contribute to the sustained growth and enhancement of corporate value of the relevant company in the medium- to long-term, on the premise that it will contribute to the enhancement of the Company's corporate growth.
We regularly communicate with the relevant companies to confirm the statuspositioning of our shareholdings, but if there are any changes in the relevant company's performance or business relationships, we will endeavor to promptly establish a forum for discussion and use the results as a reference for deciding whether to approve or reject proposals.

• Corporate Governance
• Basic Policy on Internal Control
• Risk Management/BCP/Information Security