INTERNAL CONTROL SYSTEM
Basic policy for internal control systems
1. System to ensure that the execution of duties by directors and employees of the company and its subsidiaries complies with applicable laws and regulations, and with the company's articles of incorporation
In addition, systems for reporting to the company matters pertaining to the execution of duties by directors of subsidiaries
- We recognize that compliance is the fundamental basis of corporate activities, and all directors and employees of our company and its subsidiaries (collectively, "Entire Company") work together to ensure that compliance is pursued company-wide.
- The board of directors formalizes a compliance system for the Entire Company and maintains and improve the systems at the company's corporate planning department.
- The company's internal audit department regularly audits the effectiveness of the compliance system in place for the Entire Company and reports the results to the board of directors.
- The Entire Company takes a resolute stand against antisocial forces that threaten the order of society and sound corporate activities, working with the relevant authorities to refuse any interaction with such groups.
- By company directors and employees concurrently serving as a director or auditor of a subsidiary, the company is better able to ascertain operations at the subsidiary and have relevant matters reported back to the company. This in turn allows for establishing a system for reporting on the execution of subsidiary directors' duties back to the company.
2. Systems pertaining to storage and management of information on execution of duties by company directors
- Directors of the company properly store and manage documents, materials, and other information pertaining to the performance of their duties in accordance with applicable laws and regulations, and the company's document management regulations.
- Changes to or abolition of the company's document management regulations require approval from the board of directors.
3. Regulations and systems pertaining to management of risk of loss of company and subsidiary assets
- The board of directors is responsible for risk management for the Entire Company, and allocates and deploys a risk management system.
- The corporate planning department is responsible for company-wide monitoring of and responses to cross-divisional risks, and periodically investigates the status of risk management at each department and at subsidiaries, reporting its findings to the board of directors.
- In the event of an incident that may cause a serious impact on management, the company immediately establishes a “special measures office” through a meeting of the board of directors and appoints a person responsible for said measures from among the directors of the company. The special measures office responds to the situation in cooperation with the board of directors of the company and reports its findings to the board of directors as appropriate.
4. Systems to ensure the efficient execution of duties by directors of the company and its subsidiaries
- As a general rule, the company and its subsidiaries each convene meetings of the board of directors once a month as a venue to determine management matters. As necessary, extraordinary meetings of the board of directors are convened to supervise execution of business. Based on the core understanding that the board of directors serves to make decisions aimed at maximizing shareholder interests and corporate value, all important matters are discussed therein, with additional discussion on the progress of business outcomes, and measures to respond to these issues taken with alacrity.
- The Company convenes a weekly business promotion meeting with the participation of directors, managers, and audit & supervisory committee members and serving as a venue to plan and coordinate management strategies. In addition, weekly departmental meetings are convened with the participation of company directors and managers in order to communicate and report on execution of duties per the company's management strategy, and share information at a practical level. The company and its subsidiaries maintain an organizational structure that allows for the maximization of the impact of these organic efforts and activities.
5. Other systems to ensure the appropriateness of corporate groups consisting of the company and its subsidiaries
- The company's corporate planning department acts as the department overseeing internal control for the Entire Company, and communicates closely with each department and subsidiary, as well as provides guidance and instruction on compliance as necessary, ensuring proper use of the internal control system.
- The internal auditing division of the company periodically conducts audits of the Entire Company and reports its findings to the board of directors.
6. Matters pertaining to personnel installed at the request of audit and supervisory committee members for assistance with their duties
Per the request of members of the audit and supervisory committee, the company allocates personnel (reporting to audit and supervisory committee members) to assist them in their duties. Audit and supervisory committee personnel may hold concurrent posts, or exclusively assist committee members in their duties.
7. Matters pertaining to the autonomy of the audit and supervisory committee personnel and independence from influence by directors of the company, and matters pertaining to ensuring the effectiveness of instructions given to personnel serving under audit and supervisory committee members
- Personnel changes and considerations regarding audit and supervisory committee staff are determined after consultation between directors and the corresponding audit and supervisory committee members.
- The audit and supervisory committee is able to issue orders regarding audit and supervisory work to their staff, and said staff shall not receive instructions from company directors or the internal audit department regarding said orders.
8. A system for directors and employees of the company and its subsidiaries, and those receiving reports from said parties, to report to the audit and supervisory committee members, and other systems for reporting to the audit and supervisory committee
- Where requested by members of the audit and supervisory committee, directors and employees of the company and its subsidiaries provide it with the necessary reports and information in accordance with the audit and supervisory committee regulations and whistleblowing regulations.
- Whistleblowers are protected per the company's internal whistleblowing regulations such that they are not subject to disadvantages or adverse treatment as a result of having reported an issue per the preceding item.
9. Other systems to ensure effective audits by the audit and supervisory committee
- Company directors and audit committee members periodically convene meetings with each other to foster mutual understanding and communication.
- The company maintains a system whereby, as requested by auditors, company directors can obtain counsel from attorneys, certified public accountants, and other external experts as necessary.
- Where the audit and supervisory committee requests a prepayment or reimbursement of expenses incurred in the execution of its duties, or requests processing of other expenses or liabilities, excluding where it is deemed that this is not necessary from the standpoint of execution of said committee's duties, the company shall promptly process and handle the matter.