SEGA SAMMY Group regards corporate governance as the key foundation for its corporate activities. The fundamental principles of the Group’s corporate governance policy are to enhance efficiency, secure a sound corporate organization, and enhance transparency. This policy is the basis for addressing such important management issues as selecting candidates for directorships, deciding compensation for directors, implementing management oversight, and determining compensation for corporate auditors.

SEGA SAMMY Group has adopted a corporate auditor system in consideration of its objective of enabling directors, who have abundant knowledge and experience of industry, market trends, products, merchandise, and services, to make quick and optimal management decisions in a rapidly changing management environment. At the same time, we have appointed outside directors and strengthened our executive officer and internal control systems, reinforcing our corporate governance organization from the aspects of business execution and organizational oversight.

Board of Directors: Comprising six directors, the Board of Directors convenes once a month and additionally as required and implements responsive management. Further, the Board of Directors and other bodies of the Company undertake decision making and reporting for certain significant management issues of Group companies.
Board of Corporate Auditors: The Board of Corporate Auditors, consisting of four corporate auditors, meets once a month and additionally as required to conduct deliberations and thoroughly analyze specific issues.
In addition, we implement various measures through the Group Management Liaison Committee, Group Audit Liaison Committee and other bodies based on the structure shown in the below diagram.

To enhance corporate governance, the Group established the Group Internal Control Project in FY 2006, the year ended March 31, 2006, and moved forward with the establishment of a framework for evaluating and reporting on internal control systems in response to the Financial Instruments and Exchange Law, commonly known as J-SOX, which stipulates a system for evaluation and auditing standards for internal control for financial reports. Consequently, initiatives targeting reliability in financial reporting have been established, and internal control for the Group’s financial reports for FY 2010 has been judged to be effective. In the future, the Group will continuously ensure the reliability of financial reporting and, at the same time, with consideration for efficiency and soundness, will work to maintain and develop its internal control systems.

A strong compliance awareness is central to effective risk management. We accordingly expanded compliance education, reinforced internal auditing, and have acted otherwise as needed. We devised Group business-specific management measures. We obtain and share information with other companies as needed as part of groupwide risk management.