Q（Question）

Can a person belonging to a global organization who is not under the supervisory authority of the Japanese subsidiary's president—for example, where the compliance department of a Japanese subsidiary belongs to a global compliance organization rather than being under the Japanese president's authority—qualify as a "person with independence from the company"?

A（MHLW answer）

Because such a person shares the same interests as a group company, they do not qualify as a person with independence, regardless of whether they are under the supervisory authority of the Japanese subsidiary's president.

So what (meaning): A global-organization compliance officer does not qualify as an independent committee member, because group-wide shared interests override the formal reporting structure.

So why (rationale): Independence means separation from the group's commercial interests as a whole, not merely from the Japanese president's chain of command.

Commentary — background, application, practical notes

This Q&A makes clear that independence is judged not by formal separation in the chain of command but by the substantive criterion of shared interests. In Japanese subsidiaries of global pharmaceutical companies, compliance functions reporting directly to global headquarters are common, but such personnel share the group's commercial interests and cannot be considered independent from the company. This Q&A directly addresses this issue arising from global organizational design.

A typical scenario is a foreign-affiliated pharmaceutical company's Japanese subsidiary designating the global Head of Compliance as a committee member. Even if that person reports to the global CEO rather than the Japanese subsidiary's representative director, independence is negated because they share the group's consolidated financial results and interests to shareholders. For the same reason, global headquarters' Medical Affairs personnel cannot serve as independent committee members.

A border case is an external attorney or former regulatory official who is formally outside the group but holds a continuous advisory contract with a group company. As long as advisory fees are paid on a continuing basis, that person's independence may be considered substantively constrained. Conversely, a truly independent third party is one who receives no remuneration or economic benefit whatsoever from the group—securing qualified candidates who meet this condition is a practical challenge for the Japanese pharmaceutical industry's governance infrastructure as a whole.