Chugai is committed to continuously increasing corporate value and responding appropriately and fairly to the requests of all stakeholders, including shareholders. To fulfill this commitment, the Company believes that prompt decision making, clear executive responsibility and management transparency are crucial. Accordingly, Chugai has been improving its governance system through measures that include appointing outside directors and introducing an executive officer system. Although the Company is affiliated with Roche Pharmholding B.V. on a consolidated basis, it is an independently listed company, and its decision-making is conducted under the principles of autonomy and independence.

Corporate Governance Report [147KB]

The Internal Control System by the Board of Directors [44KB]

Chugai's Board of Directors is composed of 12 members including seven outside directors. It makes decisions on the most important management issues and oversees business execution based on the status reports it receives.

All major decisions concerning business execution are delegated by the Board of Directors to the Executive Committee, which is composed of the president and other key executive officers. Full-time corporate auditors also attend Executive Committee meetings to express their views from the standpoint of sound corporate governance.

The Board of Auditors is made up of four corporate auditors, two of whom are outside auditors. They carefully audit management decision-making and the status of business execution by attending meetings of the Board of Directors and Executive Committee and by examining business reports from members of the Board of Directors.

Chugai has also established an International Advisory Council (IAC) composed of specialists from Japan and other countries. In an effort to further enhance decision-making, Chugai receives valuable counsel from the IAC to ensure that the Company continues to respond effectively to the rapidly changing global business environment.

(Numbers are as of December 31, 2010)

Corporate Governance System (As of April 1, 2011)

In order to maintain its independence and objectivity as the department in charge of internal auditing, the Audit Department was set up with corporate staff in an independent organizational structure. The Audit Department audits the activities of each department of the Chugai Group and reports the results to the Executive Committee.

Relevant departments are advised of items needing improvement, and follow-up audits are conducted six months later to verify the status of improvements. The results of these audits are reported to the vice presidents in charge. In addition, the Audit Department reports results of internal audits to the full-time corporate auditors.

The Audit Department also works with all departments to conduct an annual internal control self-assessment. This enhances awareness of internal controls among department heads, and the feedback they receive on their assessment results helps them to improve their internal controls.

To meet the requirements of internal control reporting system in Japan's Financial Instruments and Exchange Law (commonly called "J-SOX"), Chugai has finalized basic policies regarding establishment and assessment of internal controls over financial reporting, has established a robust system to provide reasonable assurance of the reliability of the Chugai Group's financial reporting, and has been conducting assessments properly. Chugai recognizes that the approaches to J-SOX system are important and meaningful activities which enhance our corporate value by securing the trust of shareholders, investors and other stakeholders. Chugai will continue to manage our internal control reporting system with an attempt to improve efficiency and effectiveness in business procedures.

The Chugai Group has established Risk Management Regulations and has a Risk Management Committee and a Risk Management & Compliance Department that implement Group-wide risk management. Risks that could have a material impact on the Group's business activities are treated as Group-wide risks. Management policies are established for each type of risk, and concrete measures are taken proactively in an effort to prevent them from materializing. In addition, divisional risk management committees identify risks in each division and implement countermeasures.

The progress of, and response to, these major risks are reviewed every quarter, confirmed by the Risk Management Committee and reported to the Executive Committee.

To deal with emergencies, Chugai has a disaster response mechanism in place. In the event of a crisis, an emergency headquarters will be established, headed by a representative director.

Chugai has established Compliance Regulations and has set up a Compliance Committee under the Risk Management Committee to regularly ascertain the status of compliance throughout the Group. The compliance managers and others responsible for compliance in each organization within the Chugai Group strive to ensure that all laws are properly observed.

Department managers are surveyed each quarter to assess compliance and reconfirm compliance items. The results and response policies are discussed by the Compliance Committee and then reported to the Executive Committee.

If a suspected compliance issue arises, it is reported to the Risk Management & Compliance Department and the department in charge of the issue involved. Suitable response measures are then taken.