Basic Policy of Internal Control System
To comply with laws and regulations and the Articles of Incorporation and to enhance corporate value through appropriate and efficient business operations based on our corporate philosophy, “Contribute to Society Through the Expansion of Business,” the Company established a system to ensure the appropriateness of operations of the corporate group (“the Group”) consisting of the Company and its subsidiaries, based on the Companies Act and the Regulations for Enforcement of the Companies Act, as follows:
1. Systems to ensure that the execution of duties by Directors, Executive Officers and employees complies with laws, regulations and the Articles of Incorporation
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1.1 Systems related to compliance
- 1.1.1 The Company shall establish a Compliance Manual and related regulations as a code of conduct for Directors, Executive Officers and employees, and the President and other Directors and Executive Officers shall take the lead in practicing this code of conduct, while also establishing a Compliance Managing Office under the direct control of the President, and striving to enhance awareness and understanding among employees.
- 1.1.2 The Company shall establish an Export Control Committee under the direct control of the President and Export Control Regulations, and appropriately implement security export controls.
- 1.1.3 The Company shall construct an internal reporting system, to ensure early detection of any compliance violation by a Director, Executive Officer or employee. The Company shall also establish and appropriately operate Internal Reporting System Regulations, to ensure that whistleblowers are not treated disadvantageously.
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1.2 Systems related to internal audit
- 1.2.1 The Company shall establish an Internal Audit Division under the direct control of the President, and Internal Controls and Audit Regulations, and conduct internal audits to evaluate the appropriateness of internal controls and their operation within the Group.
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1.3 Systems related to the elimination of antisocial forces
- 1.3.1 The Company shall stipulate in its Compliance Manual that it shall confront antisocial activities or forces and have no relationship with them. Should it be contacted by such groups, the Company shall respond systematically in cooperation with attorneys, the police, and other pertinent parties.
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1.4 Systems related to ensuring proper financial reporting
- 1.4.1 The Company shall establish a Basic Policy on Financial Reporting, and construct systems to ensure proper financial reporting in accordance with the requirements of the Financial Instruments and Exchange Act and other relevant laws and regulations.
2. System for the storage and management of information related to the execution of duties by Directors
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2.1 System for the storage and management of information
- 2.1.1 The Company record in documentary or electronic form, and shall appropriately store and manage information related to the execution of duties by Directors in accordance with the Regulations of the Board of Directors, the Corporate Management Meeting Regulations and the Document Management Regulations, and make them available for inspection by Directors at all times.
3. Regulations and other systems for managing the risk of loss
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3.1 Establishment of duties and authority
- The Company shall establish Regulations of the Board of Directors, Corporate Management Meeting Regulations and Regulations on Various Sales Requests, etc., clarify the duties and necessary authority of Directors, Executive Officers and employees, and appropriately manage the risk associated with the execution of these duties.
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3.2 Risk management systems in each division
- The Company shall establish an Organization Table, and construct systems to enable risk to be managed in accordance with the duties and responsibilities of each division.
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3.3 Information security systems
- The Company shall establish a Basic Policy on Information Security concerning its information assets, and construct systems to handle these assets correctly and safely.
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3.4 Company-wide risk management systems
- Company-wide risks and individual risks that affect the entire Company shall be comprehensively managed by the Corporate Management Meeting, including risk countermeasures and subsequent evaluation, etc.
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3.5 Auditing and monitoring systems
- The Internal Audit Division, under the direct control of the President, shall provide advice and recommendations to improve management systems for company-wide risks and individual risks, through auditing and monitoring.
4. Systems to ensure the efficient execution of duties by Directors
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4.1 Board of Directors
- In accordance with the Regulations of the Board of Directors, a meeting of the Board of Directors shall be held once a month, in principle, and extraordinary meetings shall be held as necessary.
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4.2 Corporate Management Meeting
- In order to expedite the decision-making, the Company shall establish a Corporate Management Meeting, which shall be held at least twice a month in principle, to deliberate and make decisions on matters determined by the Board of Directors.
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4.3 Executive Officer System
- The Company shall promote efficient management by strengthening the decision-making and supervisory functions of the Board of Directors through the use of the Executive Officer System and the delegation of Directors’ authority for business execution to Executive Officers.
5. Systems to ensure the appropriateness of operations in the Group
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5.1 System for reporting to the Company on the execution of duties by Directors of subsidiaries
- 5.1.1 The Company shall establish Regulations for the Support and Operation of Subsidiaries and Affiliates, designating the responsibilities and authority of each subsidiary, to achieve smoother Group operation and promote business.
- 5.1.2 The Company shall require the supervisor in charge of each subsidiary to report to the Company on matters related to the execution of business, based on the Regulations for the Support and Operation of Subsidiaries and Affiliates.
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5.2 Regulations for managing the risk of loss at subsidiaries
- 5.2.1 The Company shall require subsidiaries to construct risk management systems based on their individual businesses forms, management environments, etc.
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5.3 Systems to ensure that the execution of duties by Directors of subsidiaries are efficiently executed
- 5.3.1 The Company shall establish a Subsidiary and Affiliate Business Strategy Division for the purpose of supporting corporate management by the Directors of its subsidiaries. The Company shall designate through regulations the scope of authority that it retains over the execution of business by subsidiaries.
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5.4 Systems to ensure that the execution of duties by Directors and employees of subsidiaries complies with laws, regulations and the Articles of Incorporation
- 5.4.1 The Company shall establish compliance systems at each subsidiary, based on each country’s laws and regulations, etc., and endeavor to ensure thorough compliance across the Group.
- 5.4.2 In addition to dispatching its Directors and Auditors to oversee compliance, the Company shall construct systems to report to the Company promptly and appropriately on any issues that might arise.
6. Matters concerning the system for Directors and employees to assist the duties of Audit and Supervisory Committee and the ensuring of independence of such Directors and employees from Directors (excluding Directors serving as members of the Audit and Supervisory Committee) and the effectiveness of instructions by Audit and Supervisory Committee to such DIrectors and employees
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6.1 Assisting employees and their independence
- 6.1.1 When requested by Audit and Supervisory Committee to assign employees to assist in its duties, the Company shall assign employees for this purpose, and the said employees shall follow the instructions of Audit and Supervisory Committee.
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6.2 Personnel decisions regarding assisting employees
- 6.2.1 The Company shall obtain the consent of the Audit and Supervisory Committee for the appointment of employees to assist the Audit and Supervisory Committee in its duties.
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6.3 Director assigned to support duties
- The Company will not appoint any Director who is assigned to support duties of the Audit and Supervisory Committee.
7. System for reporting to the Audit and Supervisory Committee, Matters concerning the policy on procedures for the handling of expenses or liabilities arising from the execution of duties of the Audit and Supervisory Committee, such as the prepayment or repayment of expenses arising from the execution of such duties, and other systems for ensuring effective auditing by the Audit and Supervisory Committee
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7.1 Reporting systems
- 7.1.1 The Company shall secure systems so that, in the event that any Director, Executive Officer, employee or supervisor in charge of a subsidiary discovers any matter that may cause serious loss to the Group, or any compliance violation or improper act, the matter shall be reported to the Audit and Supervisory Committee.
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7.2 Audit expenses
- 7.2.1 Members of the Audit and Supervisory Committee shall have the ability to arrange and process advance payment, refund of expenses and handling of liabilities incurred in the execution of their duties.
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7.3 Other systems to ensure effective execution of duties by the Audit and Supervisory Committee
- 7.3.1 The Company shall develop systems to enable members of the Audit and Supervisory Committee to attend meetings of the Board of Directors and other important meetings to gain an understanding of the management decision-making process and the status of business execution.
- 7.3.2 Members of the Audit and Supervisory Committee may, as necessary, request access to documents concerning important matters, etc., and request explanations from Directors, Executive Officers and employees.
- 7.3.3 The Company shall endeavor to secure and strengthen an effective auditing system so that members of the Audit and Supervisory Committee can regularly exchange opinions with the President and Outside Directors, and regularly receive audit reports and cooperation from the Accounting Auditor and the Internal Audit Division.
- 7.3.4 The Audit and Supervisory Committee may provide instructions on audit operational matters to the Internal Audit Division to assist in their duties, and no directions or commands from Directors other than Audit and Supervisory Committee Members shall be received with regard to those instructions.
- 7.3.5 The Company ensures the Audit and Supervisory Committee receives regular reports on the status of whistle-blowing within the Group.
8. Systems to ensure that no person who reported to the Audit and Supervisory Committee is treated disadvantageously by reason of the report
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8. System to ensure that no reporting person is treated disadvantageously
- The Company prescribes the rule to ensure unfair treatment is not given to any Director, Executive Officer or employee, etc. of the Group, by reason of making a report to the Audit and Supervisory Committee, and thoroughly promotes awareness of this rule.
9．Review of the Basic Policy of the Internal Control System
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9. Revision
- The Company will review the Basic Policy of the Internal Control System, as needed.