Site Map | For Inquiry | Japanese

Corporate Governance

Basic Stance on Corporate Governance

The Sony Financial Holdings Group's corporate vision and philosophy is its basis for setting management strategy and expediting decision-making initiatives. One goal of our corporate vision is to become the financial services group foremost in customers' minds and trust. Although group subsidiaries have different histories, scales of operation, and business characteristics, Sony Financial Holdings as a group works to achieve this goal by making the most effective use of the operating characteristics of, and information available from, each subsidiary within the scope permitted by law. In taking this approach, we place the utmost importance on the soundness and accuracy of our operations. To this end, we have designed a management structure to ensure groupwide compliance and risk management.
Sony Financial Holdings' Board of Directors* comprises nine members. Of these, six are concurrently directors of subsidiaries of Sony Financial Holdings (of which, three are Sony Financial Holdings' representative directors), one is concurrently representative corporate executive officer of Sony Corporation, one is concurrently an independent director of Sony Corporation, and one is an outside director. This structure is designed to ensure and expand the trustworthiness of the Sony Financial Holdings Group.
The Board of Statutory Auditors* has five members, of whom three are outside statutory auditors. In line with the audit standards for statutory auditors and based on the audit policy and plans stipulated by the Board of Statutory Auditors, members are responsible for attending important meetings, including Board of Directors' meetings, and for examining operations and financial conditions of the company as well as supervising the duties executed by directors.
We carefully monitor each subsidiary's management in a respectful manner and promote management's control with a view toward maximizing the group's corporate value.

*As of June 23, 2009

Corporate Governance Structure

• Execution of Operations
  The Board of Directors meets monthly, in principal, and is responsible for deliberating and determining important Company issues. The Board of Directors delegates to the Executive Committee the authority to deliberate and determine the execution of certain daily activities. The Executive Committee is composed of standing directors, Sony Financial Holdings executives and Sony Financial Holdings employees who are selected by resolution of the Board of Directors. This committee meets twice a month, in principal, and is attended by the standing statutory auditors. Non-executive directors may also attend these meetings.
• Audits and Supervision
  
  • Audits by Statutory Auditors
    Sony Financial Holdings has a Board of Statutory Auditors (five auditors, of whom three are outside auditors).
  • Internal Audits
    Sony Financial Holdings has established an Audit Department, which is independent of the Company's operating divisions and is composed of dedicated internal audit personnel.
  • Accounting Audits
    The Company has appointed PricewaterhouseCoopers Aarata as its accounting auditor.
• Determining Compensation
  Sony Financial Holdings has formulated Compensation Advisory Committee Regulations to clarify the policies, systems and the process for determining the compensation of the representative directors of Sony Financial Holdings and the companies under Sony Financial Holdings' umbrella: Sony Life Insurance Co., Ltd., Sony Assurance Inc. and Sony Bank Inc. (the "subsidiaries"). Sony Financial Holdings has established the Compensation Advisory Committee to deliberate these matters. The committee consists of a small number of Sony Financial Holdings directors, including an outside director. Whenever necessary, the committee receives advice from the Sony Financial Holdings Board of Directors and comparable boards at its subsidiaries, and reports the results of its deliberations at each board meeting.

Corporate Governance Report

The English translation of the "Corporate Governance Report" that are filed to the Tokyo Stock Exchange is available here.

Corporate Governance Report (Filed on Dec. 18, 2009)(PDF / 136KB)

Compliance

Basic Stance on Compliance

To ensure the ongoing health and appropriateness of business operations, Sony Financial Holdings must encourage all the executives and employees to deepen their understanding of Sony Financial Holdings' corporate philosophy and the laws and regulations that pertain to its businesses, foster compliance with these laws and regulations and manage its operations in a transparent and appropriate manner based on a strong sense of ethics. Including all these factors in its definition of "compliance", Sony Financial Holdings considers compliance one of its most important management tasks. Accordingly, Sony Financial Holdings has established systems to ensure that all executives and employees are fully aware of their duties and responsibilities under those laws and regulations.
As a financial holding company with insurance and banking subsidiaries, Sony Financial Holdings is responsible for understanding the state of compliance of its group companies and advising these companies on compliance issues as it deems necessary. The first level of compliance-related responsibility lies with individual group companies, which are responsible for establishing systems to raise their level of compliance in line with their specific industry, type of operations and scale of business. Sony Financial Holdings, on the other hand, has the role of maintaining an ongoing understanding of and promoting group companies' compliance from the viewpoint of group management.

Compliance Systems at Sony Financial Holdings and Sony Financial Holdings Group Companies

Internal Hotline System

An internal hotline system is in place to enable executives and employees of Sony Financial Holdings and the Sony Financial Holdings Group companies, as well as temporary employees and the employees of business partners, to report business policies of the Sony Group, Sony Financial Holdings and the Sony Financial Holdings Group or operating or other activities that they are convinced contravene (or are in danger of contravening) laws and regulations or the internal regulations of the Sony Group, Sony Financial Holdings or Sony Financial Holdings Group companies. Informants may notify any of the hotline desks that have been established at each Sony Financial Holdings Group company or the Compliance Hotline at Sony Corporation, which serves as the desk for the Sony Group, as appropriate. Sony Financial Holdings is responsible for taking appropriate measures to protect informants and strictly managing and responding to any information they provide.
Sony Financial Holdings communicates with Sony Corporation regarding appropriate responses to notification received via the Compliance Hotline at Sony Corporation, as well as about notification of issues having the potential to affect Sony Group companies other than those in the Sony Financial Holdings Group.

Risk Management

One of Sony Financial Holdings' roles as a financial holding company is to further enhance and integrate group-wide risk management by centralizing the Group's management resources.

Basic Policy on Group Risk Management

• As a financial holding company, Sony Financial Holdings enhances corporate value of the group by aligning risk management with group-wide strategic objectives and management policies, while tailoring operating subsidiaries' risk management to the types of risk inherent in their respective lines of business.
• Sony Financial Holdings adopts all necessary supplemental measures to ensure effective risk management, after confirming each operating subsidiary independently and responsibly to establish its own risk management structure to achieve its own management objectives.
• Sony Financial Holdings takes steps to eliminate excessive concentration of risk in specific areas, establish appropriate controls over intra-group transactions and control the ripple effect of risk within the group.

Risk Management Structure

Sony Financial Holdings's Board of Directors formulates fundamental principles for risk management and communicates them to directors and employees throughout the Sony Financial Holdings Group. The Board also identifies the types of risks specific to subsidiaries scale, business content, and other attributes and establishes structures designed to manage them effectively. Sony Financial Holdings's Executive Committee, appointed by the Board of Directors, executes routine tasks pertaining to group risk anagement; specifically, while subsidiaries each assess, monitor, and manage their risks on their own, the Corporate Control Department, responsible for Sony Financial Holdings 's risk management, controls their risks through monitoring and holding the Risk Management Meetings with subsidiaries' risk management divisions. The Corporate Control Department also reports its finding on the state of risk management regularly to Sony Financial Holdings's Board of Directors and Executive Committee.

Types of Risk Managed by Sony Financial Holdings and Subsidiaries

Definitions

Each Group company establishes its own framework for managing risk as appropriate for its scale and the attributes and type of its business, and they optimize their frameworks for the types of risks they face according to internal definitions.
As the operating and business environment changes, their risk management departments review the risk types and definitions set forth below, amending them as appropriate for new conditions.

• Market Risk
  Risks associated with losses due to changes in the value of assets, including off-balance-sheet assets such as derivative instruments, as a result of unfavorable fluctuations in interest rates, the value of securities held, exchange rates, and other factors.
• Credit Risk
  Risks associated with losses due to declines in the value of assets, including off-balance-sheet assets such as derivative instruments, resulting from deteriorations in the financial position of the issuers of the debt obligations held, or of counterparties to derivatives and other contracts entered into.
• Real Estate Investment Risk
  Risks associated with losses due to declines in the market value of owned real estate or in the profitability of real estate holdings on account of unfavorable trends in rents or other factors.
• Liquidity Risk, Including
  • Cash Flow Risk
    Risks associated with losses due to our inability to make cash payments because of an inability to maintain sufficient cash reserves, as well as risks associated with losses if Sony Financial Holdings and group companies are forced to raise funds under unfavorable conditions in order to fulfill its cash-payment obligations.
  • Market Liquidity Risk
    Risks associated with losses due to inability to conduct market transactions, in particular from an inability to change our market position at a given time, as well as risks associate with losses if we are forced to complete transactions under unfavorable market conditions, in each case due to market turmoil or other factors.
• Insurance Underwriting Risk
  Risks associated with losses due to significant differences between the assumptions Sony Financial Holdings and group companies use to establish appropriate premium levels, including assumptions regarding the expected frequency and scale of insured events and future economic conditions.
• Administrative Risk
  Risks associated with losses due to errors, misconduct, malfunction, and other factors related to problems with our internal administrative processes.
• Systems Risk
  Risks associated with losses arising from IT-system malfunction or breakdown, improper use or leakage of confidential information stemming from IT system problems.
• Legal Risk
  Risks associated with losses due to violations of applicable laws, rules and regulations occurring during the course of doing business operations, as well as the risk of loss due to litigation. In particular, we are exposed to legal risk with respect to:
  • the provision of services, including the introduction of new businesses, products and services;
  • entry into various legal agreements, as well as the renewal, amendment, termination or rescission of agreements; and
  • various legal and administrative proceedings.
• Reputational Risk
  Risks associated with losses resulting from harm to our reputation in the market and among customers as a result of unethical behavior, unfair business practices, improper disclosure, or other factors.
• Going Concern Risk
  The risk that Sony Financial Holdings and group companies will be unable to continue operations as the result of a deterioration in our financial position, liquidity problems, system failures, scandals, accidents, and other crises.

Internal Audits

Sony Financial Holdings performs internal audits through its Audit Department. Reporting directly to the president and representative director, this department operates outside the other lines of operational reporting and, from an independent and objective standpoint, conducts internal audits to check and evaluate the appropriateness of work processes and risk management.
Sony Financial Holdings subsidiaries each have their own internal audit departments to perform internal audits designed to match their specific industry sector, the scale of their businesses, and the types of risk they face. Sony Financial Holdings's Audit Department keeps abreast of subsidiaries' internal audits by monitoring their audit plans and audit reports and on the basis of information shared at Sony Financial Holdings Group Internal Audit Meetings. When necessary, Sony Financial Holdings's Audit Department provides advice and proposals to its subsidiaries' internal audit departments. Sony Financial Holdings's Audit Department regularly reports the results of its monitoring activities to the president and representative director and the Board of Directors. Should Sony Financial Holdings's president and representative director perceive it necessary, as a result of the monitoring, Sony Financial Holdings's Audit Department may directly audit subsidiaries within the scope of governing laws and regulations.
The Audit Department also cooperates with Sony Financial Holdings's statutory auditors and external auditors, such as the independent auditor.

• 

Home | About Us | Investor Relations | Share Information | Press Releases