The Fuji Electric Group adopted the pure holding company system in October 2003. Under this system, the holding company formulates strategy to optimize the entire Group performance and provides oversight over activities at the consolidated level, while the four core operating companies and other Group companies retain the necessary authority and responsibilities for conducting their own operations.

The intent of this structure is to afford autonomous management at operating companies, rapid decision-making, and responsive management that will strengthen the competitiveness of each business.

Because the Group has been laid out so as to separate the management and oversight functions from the business execution functions, Fuji Electric has adopted an organizational design with auditors in key locations. This system clarifies the authority and responsibilities of each company and organization. We have also established a disciplined management system that makes proactive use of outside directors to enhance transparency in management, as well as monitoring and oversight functions.

To clarify management responsibility and to allow for a quick response to changes in the operating environment, the term of directors of the holding company and core operating companies has been set at one year. To ensure clear separation of the respective responsibilities and authority of the holding company and its core operating companies, directors of the holding company are barred from holding directorships of core operating companies, and vice versa. Presidents of the operating companies, however, may be appointed as directors of the holding company, subject to approval at a shareholders' meeting. This is because to speed up a decision-making process and strengthen accountability to stakeholders through reinforcement of group strategy, further commitment to addressing future challenges such as internal control and environmental problems, and enhancement of oversight functions to monitor business execution. Three members of the holding company's Board of Directors are outside appointments, helping to strengthen oversight functions and transparency.

The Board of Auditors of the holding company comprises five individuals, including three outside appointments, enhancing management monitoring and oversight functions. To strengthen the holding company's auditing of Group companies, we have put in place a framework where one standing auditor from the holding company also serves as a part-time auditor of each of the core operating companies.