CSR Report > CSR Report 2021 - Management and Compliance

CSR Report

Management and Compliance To gain and secure the trust of our stakeholders, we exercise fair and sound judgment when running our business, and emphasize corporate compliance and risk management.

Corporate Governance

 We make concerted efforts to build transparent and robust corporate governance systems, to enable optimization of corporate value continuously over the long term, while considering how to bring benefits to everyone involved with Nintendo.

Corporate Governance System

 For the purpose of strengthening the supervisory function of the Board of Directors and further enhancing the corporate governance system, Nintendo Co., Ltd. has chosen the governance structure of a Company with an Audit and Supervisory Committee. We adopt the Executive Officer System for the purpose of clarifying the responsibility for the execution of operations and establishing a more flexible management structure which can appropriately and swiftly respond to the rapidly changing business environment. The foregoing will be enabled through separating the management decision-making and supervisory functions from the execution of operations as well as by accelerating the delegation of authority to execute operations.
 The Board of Directors consists of six Directors (excluding Directors who are Audit and Supervisory Committee Members, and including one who is an Outside Director) and four Directors who are Audit and Supervisory Committee Members (including three Outside Directors). The term of office of Directors (excluding Directors who are Audit and Supervisory Committee Members) is one year, and the term of office of Directors who are Audit and Supervisory Committee Members is two years.
 In addition to the meetings of the Board of Directors, which are generally held monthly, Nintendo Co., Ltd. also holds meetings of the Executive Management Committee, which consists of Representative Directors and Directors who serve concurrently as Senior Executive Officers, twice a month in principle, in order to strongly drive management activities and thereby ensure prompt and efficient decision-making. Furthermore, Nintendo Co., Ltd. maintains a system in which Executive Officers appointed by the Board of Directors every year perform their respective duties under the President's supervision and instructions.
 Furthermore, as a non-mandatory advisory body to the Board of Directors, the Nomination Advisory Committee, which consists of the Representative Director and President and all Directors serving on the Audit and Supervisory Committee, deliberates on matters related to the nomination and compensation of Directors and reports to the Board of Directors.
 The Audit and Supervisory Committee consists of one full-time Internal Director and three Outside Directors. All Outside Directors meet the standards for independent officers established by Tokyo Stock Exchange, Inc. The Audit and Supervisory Committee Members attend meetings of the Board of Directors and other important meetings, inspect important documents, have regular meetings with the President and hold monthly meetings of the Audit and Supervisory Committee as a general rule to share audit opinions. Furthermore, the full-time Audit and Supervisory Committee Member conducts fieldwork auditing over each division of the Company, etc., based on the annual audit plan.
 With respect to internal auditing, the Internal Auditing Department, under the direct supervision of the President, conducts internal auditing from a fair and unbiased perspective independent from business divisions, and works on the promotion and improvement of internal control including that of subsidiaries and affiliates.
 The Accounting Auditor maintains close coordination with the Audit and Supervisory Committee, as well as the Internal Auditing Department, regarding accounting auditing, including the report on the audit plan and audit results, as well as information and opinion exchanges as necessary even during the accounting period, in order to ensure effective and efficient auditing.

Internal Controls

 Nintendo Co., Ltd. (Japan) and its domestic and overseas subsidiaries operate and maintain an internal control system according to legal and regulatory circumstances, and the actual state of each organization in the Nintendo Group. For more information on our system of internal controls, please refer to this link.

Corporate Governance System

Corporate Governance System

Status of the Corporate Governance System (as of the end of June 2021)
Organizational Structure Company with Audit and Supervisory Committee
Board of Directors (excluding Audit and Supervisory Committee Members) Number of Directors 6 people
Number of which are Outside Directors 1 person (satisfies the standards for independent officers as defined by the Tokyo Stock Exchange)
Term 1 year
Implementation of Incentives to Directors Performance-based compensation (excluding Outside Directors)
Directors (Audit and Supervisory Committee Members) Number of Audit and Supervisory Committee members 4 people
Number of which are full-time Audit and Supervisory Committee members 1 person
Number of which are Outside Directors 3 people (Independent Officers as provided by Tokyo Stock Exchange, Inc.)
Term 2 years
Implementation of Incentives to Directors

Corporate Governance Report

Compensation to Directors

 Compensation limits for each Director (excluding Audit and Supervisory Committee Members) and Audit and Supervisory Committee Members are determined by resolution of the General Meeting of Shareholders.
 Compensation for Directors (excluding Audit and Supervisory Committee Members) consists of a fixed component of compensation and a performance-based component of compensation designed to raise incentives for higher performance. However, compensation to Directors who do not engage in the execution of operations consists only of fixed compensation.
 The compensation for Directors who are Audit and Supervisory Committee Members consists only of fixed compensation.

Compliance

 In order to build and maintain trust as a company that aims for persistent growth and expansion, Nintendo realizes the crucial importance of adherence to laws, social norms and Nintendo's internal rules and conventions. To base its business operations firmly on compliance, Nintendo has established and implemented region-specific codes of conduct.

Activities of the Compliance Committee

 Nintendo Co., Ltd. (Japan) has established the Compliance Committee, under the supervision of the Executive Management Committee, to develop measures and policies for facilitating compliance. The Compliance Committee periodically updates the Compliance Manual, which sets out the basic rules that all employees are expected to follow.
 Although no legal or other violations were found in fiscal year 2020 audits, the Compliance Committee stays informed about current global issues and makes appropriate improvements to foster a firmly rooted awareness of compliance.

Compliance Code of Conduct
  • Abide by all laws and regulations.
    We strictly abide by all laws, Nintendo's internal rules and conventions, and social norms. We participate in fair and open competition. Our work rests on high ethical standards.
  • Strive to create a highly transparent business.
    We promote the appropriate disclosure of information to our shareholders and our communities as we work to create a highly transparent business.
  • Maintain a resolute stance against anti-social forces.
    Our position on anti-social forces is unwavering.
  • Strive to be a trusted corporate citizen.
    We fully recognize the social scope of our business. We strive to be a company that society, including first and foremost our users, can trust as we perform sound business expansion activities.

Extract from the Compliance Manual

Promotion System for Compliance in the Group

 To enhance and promote compliance throughout the Nintendo Group, we set up, under the Compliance Committee, the Global Compliance Committee (GCC), comprising executive management and core personnel responsible for legal affairs and compliance from Nintendo Co., Ltd. (Japan), and our major overseas subsidiaries. Specifically, this Committee holds global meetings twice a year for core personnel at the major group companies. These meetings also serve as a practical channel for the GCC to establish a common understanding and share information, while exchanging opinions about compliance-related issues and future legal risks that may affect each of our companies.

Employee Comment

Tammo Godel

Tammo Godel

Legal Department

Nintendo of Europe GmbH
(Germany)

Global Cooperation for Legal Compliance

 As a global company, with products and services being distributed and offered in many countries around the world, Nintendo is required to comply with each of these country's laws and regulations.
 We maintain close cooperation between our legal teams in the different group companies to coordinate compliance matters, ensure our products and services are compliant, and to detect and tackle any upcoming potential risks.
 Besides steady communication on a daily basis among our different Nintendo group companies all over the world in legal, regulatory and compliance matters, we hold global meetings twice a year with legal colleagues from all major group companies. Here we share the latest relevant legal developments that might affect Nintendo and discuss current and future plans and legal strategies. For particular global legal topics, which require stronger coordination and education, we hold additional global meetings with legal experts from the group companies together with stakeholders of the affected business departments.
 Compliance is essential for business and an important part of our work!

Compliance Hotline

 Nintendo Co., Ltd. (Japan) has established a system, called the Compliance Hotline, for the internal reporting of compliance-related issues. Using the Hotline, employees can confidentially report suspected illegal actions or other misconduct directly to the President, the Audit and Supervisory Committee, or both if desired. It is established to protect employees from any disadvantage when they use this Hotline. Information about the Hotline is shared with new recruits during orientation training.
 Our major subsidiaries also have established similar reporting systems, adapted to the laws and regulations of their respective regions. In the unlikely event that employees at one of our subsidiaries become aware of any misconduct by a member of their executive management, the system in place enables any employees to report the incident directly to the President of Nintendo Co., Ltd.

Prevention of Corruption

 Nintendo Co., Ltd. (Japan) has established rules that prohibit bribery of public officials and restrict hospitality and gifts. In addition, we promote an internal understanding of bribery and other forms of corruption by describing them in detail in relation to our business activities in the Compliance Manual. In addition to designating departments for handling corruption and working to prevent these activities, we also have measures in place to promptly investigate and prevent recurrence if such an issue were to occur. Furthermore, our overseas subsidiaries have also incorporated anti-corruption measures into their codes of conduct in accordance with local laws.
 Since publishing our first CSR Report in 2007, we have not identified any cases of corruption.

[November 12, 2021 addition]
The final sentence has been revised.
Nintendo Co., Ltd. (Japan) Code of Conduct (Excerpt)
Position on Hospitality and Gifts
  • As a general principle, we do not accept hospitality or gifts. However, in such cases where it is unavoidable, we strictly refuse those which exceed the appropriate scope commonly accepted by society.
  • We do not extort our business partners or otherwise make requests for the purpose of any individual benefit, nor do we take any action that would intimate the same.
  • Hospitality and gifts for our business partners are conducted in accordance with our internal standards, and within the appropriate scope commonly accepted by society.
  • We build and maintain fair and sound relationships regarding politics (political parties) and administrations (government authorities) within and outside of Japan. We do not engage in any collusive or misleading activities. When making contributions or donations, we follow internal procedures and do not make any bribes or illegal political contributions or donations.

Prohibition of Acts that Restrict Competition

 Nintendo Co., Ltd. (Japan) takes measures to ensure full compliance with laws and regulations related to fair competition, such as antitrust laws. For example, we have implemented an Antitrust Law Manual that incorporates specific explanations of antitrust laws and subcontracting laws, in relation to Nintendo's business activities, and revise this manual every year. In addition to including information on prohibition of antitrust activities in our training for new employees, we also provide training to employees in our advertising and public relations departments to further employee understanding. Since publishing our first CSR Report in 2007, there have been no instances in which Nintendo was found to have engaged in anticompetitive behavior.

[November 12, 2021 addition]
The final sentence has been revised.
Nintendo Co., Ltd. (Japan) Code of Conduct (Excerpt)
Fair and Impartial Transactions
  • We do not use an advantageous position to engage in any inappropriate transactions. We conduct fair and impartial transactions with our business partners, and establish sound and transparent transactional relationships.
  • When selecting business partners, we provide broad participation opportunities and make comprehensive and logical decisions based on business benefits including factors such as necessity, services, quality, pricing and delivery time, regardless of nationality or company size.

Protecting and Managing Information

 Nintendo Co., Ltd. (Japan) has established in-house standards, including the Information Management Standards, the Personal Information Management Standards and the Information Security Policy to ensure that various types of important information are handled appropriately. We have established the Information Security Committee, with the General Manager of the Platform Technology Development Division, who also serves as a Director, as the committee chair, and conduct periodic audits in an effort to continually improve our level of information security. We employ physical and technological measures, including access controls, to facilitate proper management of confidential and personal information. In addition, we conduct internal seminars and self-learning trainings to supplement and establish employee awareness of the importance of information security.
 Our overseas subsidiaries also have established information management policies. Each organization employs physical and technological measures based on its policy and conducts internal training sessions in order to increase awareness of information security. Training sessions on personal and confidential information management are held periodically at various subsidiaries' offices.

Nintendo Co., Ltd. (Japan)

Working with the Social Security and Tax Number System

 Nintendo Co., Ltd. (Japan) has revised policy and internal guidelines to implement controls that allow us to work with the social security and tax number system that was introduced in fiscal year 2015. Part of this effort has been to limit the addition of employees who need to handle social security and tax numbers as a part of our business. Non-related personnel are unable to interact with the systems we created. Data is encrypted and stored on trusted, dedicated servers external to the company, and there are new terminals designed to exclusively access those servers. Users of those terminals are also limited, and our safety protocols include the use of dedicated lines for connecting to and exchanging data with those servers. We also created an internal bulletin to ensure that employees have a proper understanding of the national I.D. number system. It summarizes the system and includes points of caution to be aware of in handling national identity numbers.

Compliance System for Payment Services Laws

 Nintendo offers consumers Nintendo eShop Cards as a way to purchase our products. In-game currencies can also be purchased using our smart device applications. With these types of payment methods, we receive money from consumers in advance of providing the products or services, so we must avoid situations in which we cannot provide them. To ensure that consumers can enjoy our products and services with peace of mind, we have a system to review and comply with the applicable laws in each country.
 At Nintendo Co., Ltd. (Japan), payment methods such as Nintendo Prepaid Cards are subject to the Prepaid Payments Instruments chapter of the Payment Services Act. Therefore, we have registered as an issuer that abides by the provisions of Prepaid Payments Instruments and established a system to comply with the Payment Services Act under the supervision of the Financial Services Agency and Kinki Local Finance Bureau.

Proper Handling of Credit Card Information

 To ensure that cardholder information is handled appropriately, Nintendo operates according to related laws and the Payment Card Industry Data Security Standard (PCI DSS). Due to a revision to the Installment Sales Act in June 2018, all merchants that have contracts with credit card companies are obliged to appropriately manage information such as credit card numbers. Nintendo systems and business processes dealing with credit card numbers therefore comply with PCI DSS, the internationally unified standard for the protection of cardholder information. In addition, credit card fraud is increasing worldwide, and we are working to prevent it through the use of a system that detects suspicious transactions. Nintendo Co., Ltd. (Japan) leads initiatives to maintain PCI DSS compliance, as well as measures against unauthorized access, in consultation with external specialists. These activities are conducted not only in Japan, but on a global basis in close cooperation with subsidiaries abroad.

Promotion of Employee Understanding of the Code of Conduct

 Nintendo of America's Code of Business Conduct sets forth clear professional and ethical guidelines for the conduct expected from all employees. In an effort to ensure that employees remain familiar with the Code of Business Conduct, all employees are required annually to complete an online Code of Business Conduct Review. After the deadline for responses has passed, correct responses and detailed analyses are published.
 In addition to employee Code of Conduct training for new recruits, Nintendo of Europe (Germany) regularly provides training for all European subsidiaries. The training is conducted through intranet e-learning.
 With each reissue of the employee Code of Conduct at Nintendo Australia, the Human Resources Department sends each employee an email containing a Code of Conduct questionnaire and requires them to sign off to acknowledge their understanding and compliance with the new version. This process was undertaken in September 2019 and all employees consented to the new employee Code of Conduct.

Risk Management

 Nintendo recognizes the importance of identifying, understanding and evaluating the various risks affecting the company in order to thoroughly reduce and avoid such risks, and the importance of seeking prompt resolution in the event of an incident or accident.

Risk Management

 Nintendo gives each division of the Nintendo Group companies direct responsibility for the management of its own risks. Nintendo Co., Ltd.'s Internal Auditing Department (in Japan) verifies the risk-management system of each division and Group company and suggests policy changes and offers advice as needed.
 We consult outside lawyers and professionals on important legal or compliance issues to ensure that they are handled with due consideration. In addition to standard accounting audits, we consult the Accounting Auditor to discuss and investigate important accounting issues to ensure that they are handled with due consideration. We have a policy of taking a resolute stand against antisocial forces which pose threats to the social order and safety, and have established responsible departments as a system to act on behalf of the company.
 The Compliance Committee promotes compliance measures in every department throughout the company, maintaining the Compliance Manual based on our Compliance Program (Legal Risk Management Policy) and conducting seminars featuring external experts for employees and Directors. We have established a Product Safety Committee, which maintains the Product Safety Assurance system to prevent product-related problems and facilitate prompt action in the event a problem should occur.

Risk Management for Potential Emergencies

The Crisis Management Manual

The Crisis Management Manual is the size of a business card so that employees can carry it at all times.

 In preparation for emergencies, including natural disasters, Nintendo Co., Ltd. (Japan) has created the Emergency Action Plan, which outlines the company's initial response to an emergency, and the Business Continuity Plan, which provides a strategy for business recovery and continuation. In addition, Nintendo Co., Ltd. (Japan) has created and published the Crisis Management Manual for all employees (available on the company intranet), which defines the fundamental actions employees should take in the event of an emergency. Furthermore, Nintendo Co., Ltd. (Japan) has introduced a system for confirming employee safety in the event of an emergency. We periodically conduct drills to administer the system in addition to carrying out fire drills to ensure that employees can quickly evacuate the building.
 Our overseas subsidiaries also have created manuals for responding to emergencies in their various regions. For example, Nintendo of America has a Business Continuity Plan that takes into account regional risks and defines corresponding plans for business recovery and continuity. Employees receive periodic training on these plans and conduct evacuation drills and other exercises.

Information Disclosure

 To gain and secure the trust of our shareholders and investors, Nintendo works to ensure the fair, appropriate and timely disclosure of information. We also work to improve on an environment for the exercise of voting rights.

Financial Results Briefings and Corporate Management Policy Briefings

 At Nintendo, we believe that it is vital to not only provide information about our business performance, but to also make sure that our corporate management policy is well understood. After the announcement of our financial results for the second and third quarters, and the full-year term, Nintendo Co., Ltd. (Japan) holds Financial Results Briefings (conference calls) to explain the outline of the financial results and the future outlook and conduct a Q&A session for securities analysts and institutional investors. A Corporate Management Policy Briefing is also held once a year.

Smooth Operation of Shareholders' Meetings

 To provide our shareholders with even more time to exercise their voting rights, Nintendo Co., Ltd. issues the Convocation Notice three weeks prior to the General Meeting of Shareholders (one week earlier than the legal requirement) and shareholders can vote via the Internet. In addition, for the benefit of our overseas shareholders, we have made the Convocation Notice available in English and have adopted the Electronic Voting Platform system for institutional investors.

* Information regarding the General Meeting of Shareholders
https://www.nintendo.co.jp/ir/en/stock/meeting/

Nintendo Co., Ltd. (Japan)

Information Disclosure

 We strive to provide all stakeholders with prompt access to information provided at these meetings by posting reports from the meetings, including the Q&A sessions, on our website in both Japanese and English.
 In addition, since fiscal year 2010, we have posted summaries of the Q&A sessions from the General Meeting of Shareholders on our website as a part of our efforts to achieve broader disclosure.