Many Japanese companies use a statutory auditor system (Option B) instead of board committees for oversight. In this approach:

A statutory board of auditors (kansayaku) monitors management rather than a traditional audit or governance committee.

This structure is legally permitted in Japan and is different from Western corporate governance models that require independent board committees.

Option A (cross-shareholding practice) refers to companies holding each other’s shares to maintain business stability but does not directly explain the lack of board committees.

Option C is incorrect because Japan’s Corporate Governance Code allows the statutory auditor model.