Regression to "Company with Auditors"

May 29, CHARLE CO., LTD., women’s underwear company, announced that they will change themselves from "Company with Committees" to "Company with Auditors".

"Company with Auditors" is Japanese traditional company whose outside directors are optional.

"Company with Committees" is American style company which has to have outside directors occupying majority of board of directors.

Generally in Japan, it is thought that "Company with Committees" is more suitable for corporate governance than "Company with Auditors".

But according to Companies Act, outside director is neither an Executive Director nor an executive officer, nor an employee, including a manager, of such Stock Company or any of its Subsidiaries, and who has neither ever served in the past as an executive director nor executive officer, nor as an employee, including a manager, of such Stock Company or any of its Subsidiaries.

Former CHARLE’s outside directors are founding families and CEO from founding families gave a tender offer to shareholders for going private.

The CEO did conflict of interest act then and outside directors were useless because they had a common interest with the CEO.

So, they thought "Company with Auditors" is suit for them.