Corporate Governance

We have positioned the board of directors as the organization for determining basic Group management policies and strategies and other important matters relating to business execution, as well as for supervising the implementation of business affairs. Our Articles of Incorporation stipulate that the board can consist of up to 12 directors. Currently, the board has eight directors, including one outside director. The board's regular meetings are held, in principle, once a month, with extraordinary board meetings held on an as-required basis. In addition, certain matters are deliberated and resolved flexibly at board meetings convened by directors with special authority. To better clarify their missions and responsibilities, our directors have a one-year term of office.

Meanwhile, we have adopted a remuneration system under the stock option plan to make our directors, excluding outside directors, share a mutual interest―the effect of stock price fluctuations―with our shareholders. In this way, the directors are in actual fact encouraged to have stronger drive and morale toward achieving higher corporate value.

We have adopted an executive officer system to facilitate speedier business execution. Executive officers carry out business affairs in accordance with the basic policies and strategies formulated by the board of directors. We currently have 13 executive officers, including four concurrently serving as directors. The executive officers have a one-year term of office, the same as our directors.

The management council makes decisions on the submission of matters to be exclusively deliberated by the board of directors. At the same time, the council considers the methods used by executive officers to implement particularly important initiatives in accordance with the basic policies, plans and strategies formulated by the board of directors. The council consists of full-time members.president and executive officers responsible for corporate planning and corporate R&D―and meetings of the management council are flexibly convened, with the attendance of relevant executive officers requested, depending on the matters concerned.

We have adopted a corporate auditor system with a board of corporate auditors, which currently consists of four members, including two outside corporate auditors. As an independent organization with key roles and responsibilities in our corporate governance system, the auditors audit the entire range of the directors' performance of their duties following audit policies and an audit plan in conformity with corporate auditors' audit standards determined by the board of corporate auditors. At meetings of the board of corporate auditors, which are held, in principle, once a month, information is shared on the details of matters subject to auditing. In addition, all corporate auditors attend meetings of the board of directors, while the full-time corporate auditors also attend every management council meeting, regularly exchange opinions with the representative directors and audit the entire range of business execution. We have currently appointed two personnel to perform internal audits and to support the corporate auditors, with the aim of strengthening the audit functions of the corporate auditors.

We have an Internal Audit Division, which currently comprises 10 personnel, as an internal auditing unit that is independent from divisions responsible for the execution of business affairs. From the standpoint of a holding company, this division audits operational processes and other relevant matters at our individual divisions and Group companies through cooperation with the internal auditing units at the operating companies. In this way, the divisionevaluates and verifies that these processes are appropriate.

In addition, the division is in charge of assessing internal control over financial reporting by FUJIFILM Holdings and our Group companies, in response to the April 2008 application of the internal control reporting system in Japan. We compile the outcome of the assessment in a management's report on internal control over financial reporting. We submit this report, together with an annual securities report, to the Kanto Local Finance Bureau. In addition, personnel in specialized units at the operating companies audit operations regulated by the Pharmaceutical Affairs Law of Japan, as well as those in the quality control, environmental and export control fields.

We engage Ernst & Young ShinNihon LLC as our independent auditor. Ernst & Young ShinNihon expresses an opinion on our financial statements from an independent standpoint as an auditor. In addition to accounting audits, Ernst & Young ShinNihon commenced auditing internal control of the Company's financial reporting from the fiscal year ended March 31, 2009.

We have appointed Mr. Teisuke Kitayama as our outside director to enable him to impart his ample experience and wide range of knowledge as a management executive of a global financial group. He currently holds the post of representative director at both Sumitomo Mitsui Financial Group and Sumitomo Mitsui Banking Corporation.

Outside director Kitayama attended seven of the 10 board of directors meetings during the fiscal year ended March 31, 2009. Mr. Kitayama requested explanations when necessary and offered advice where appropriate at the meetings he attended to ensure the adequacy and appropriateness of the decisions made by the board.

Outside corporate auditor Kiichiro Furusawa attended nine of the 10 board of directors meetings and 12 of the 13 board of corporate auditors meetings during the fiscal year ended March 31, 2009. Outside corporate auditor Daisuke Ogawa attended eight board of directors meetings and 11 board of corporate auditors meetings during the same period. Both outside corporate auditors requested explanations when necessary and made comments where appropriate at the board of directors meetings they attended to ensure the adequacy and appropriateness of the decisions made by the board of directors. They also asked questions and expressed their opinions, as appropriate, at the board of corporate auditors meetings they attended.

The Legal Department, the secretariat for the board of directors, prepares materials and provides the outside directors and outside corporate auditors with information relating to proposals submitted to regular board of directors meetings. The department also provides them with supplementary explanations where requested. The internal auditing unit, the secretariat for the board of corporate auditors, provides support to outside corporate auditors in such areas as the preparation of materials and provision of relevant information for regular meetings of the board of corporate auditors. The materials prepared are used to promote information sharing between full-time and outside corporate auditors.

With the aim of improving corporate governance, the Fujifilm Group promotes mutual cooperation among the internal auditing unit, corporate auditors and the independent auditor. When audits are planned, performed and reviewed every fiscal year, these three groups exchange information and opinions. In addition, deliberations are held as needed when interim and year-end audits are carried out. In auditing Group companies, the internal auditing unit and the independent auditor report the results to corporate auditors, while the three groups share information by simultaneously conducting their individual audit operations. These efforts enable effective and efficient audits.

The Fujifilm Group maintains an aggressive stance in disclosing such corporate information as management strategies and financial results, with due consideration given to disclosure timeliness, fairness, accuracy and continuity. This stance is based on a principle interwoven in the Fujifilm Group Charter for Corporate Behavior. In legal terms, we disclose information in strict compliance with the Financial Instruments and Exchange Act of Japan and other relevant laws and regulations as well as timely information disclosure rules of the bourses on which our stock is listed. We disclose information that is not required by said laws, regulations and guidelines but may have material influence on investors' decision-making in a proactive manner and facilitate deeper understanding of Fujifilm. Such information disclosure is carried out through press conferences and briefings and through various IR tools, which include our website.