Internal Control Systems
Basic approach to internal control systems and state of implementation
Our basic approach to internal control systems, the status of their implementation, and the basic policy of the Company relating to internal control systems are as follows.
A. Systems to ensure that the execution of director and employee duties complies with laws, regulations, and the Articles of Incorporation
(a) A compliance structure has been established so that directors and employees comply with laws, regulations, the Articles of Incorporation, social norms, etc., to increase enterprise value, become a company that is widely trusted as a member of society, and build a corporate culture in which actions are fair and based on high ethical standards.
(b) We promote necessary knowledge and educational activities through training, etc. to ensure the effectiveness of the structure for compliance with laws, regulations, the Articles of Incorporation, social norms, etc., and its stable and thorough operation. (c) We have established an internal reporting system for the early detection and correction of violations, etc. of laws, regulations, the Articles of Incorporation, social norms, etc., and we ensure its effective operation.
(d) The Group has no relationship whatsoever with anti-social forces, and strives to work against unreasonable demands from anti-social forces with external experts, such as the police department in the jurisdiction in question and legal advisors, and has set up a system that firmly excludes such forces from the organization overall.
(e) In order to ensure the reliability of our financial reports and maintain and improve social credibility, we establish systems that ensure practical and effective internal control.
(f) The Internal Audit Office conducts regular audits of the state of business execution, compliance, etc. in each division, reports to the Representative Director, President and CEO, and regularly shares information and coordinates with the Audit Committee to conduct effective audits.
B. Retention and management of information concerning performance of directors’ duties
Records concerning decisions at the Board of Directors and other material meetings, documented decisions by each director pursuant to the “Authority Regulations,” and other information concerning the performance of directors’ duties is managed appropriately pursuant to laws, regulations, the “Information and Document Management Regulations,” the “Document Retention and Disposal Regulations,” etc.
C. Regulations and other systems related to management of risk of loss
(a) We have established a “Risk Management Committee” pursuant to the “Risk Management Committee Regulations” and aim to mitigate risks by appropriately managing business risks throughout the group.
(b) We maintain a system to mitigate losses by being able to promptly implement crisis management measures, including information disclosures, should unforeseen circumstances occur.
(c) For risks related to management decisions such as decisions related to management strategy, decisions are made after adequate debate is held by the Board of Directors, etc., and opinions of outside advisors are heard as necessary.
(d) The Internal Audit Office conducts regular audits of the state of risk management systems, etc. in each division, reports to the Representative Director, President and CEO, and regularly shares information and coordinates with the Audit Committee in order to conduct effective audits.
D. Systems to ensure effective performance of directors’ duties
(a) The Board of Directors meets once per month in principle, makes decisions on material matters of management, and supervises the state of the execution of duties.
(b) The division of duties and authority among directors and employees is clarified in internal regulations, and systems have been ensured for appropriate and effective performance of duties.
E. Systems to ensure the appropriateness of business in the company group comprised by the Company and its affiliated companies
(a) Pursuant to the “Affiliated Company Management Regulations,” a group manager responsible for the affiliated companies of the Company has been established, who supervises and monitors the execution of business at affiliated companies.
(b) Material management decisions at affiliated companies are reported to the Board of Directors of the Company.
(c) Representatives of affiliated companies regularly report to the Company regarding the state of operations at their companies, and aim to share information and communicate among affiliated companies.
(d) The Internal Audit Office of the Company conducts regular audits of affiliated companies pursuant to the “Internal Audit Regulations,” reports the results to the Representative Director, President and CEO, and regularly shares information and coordinates with the Audit Committee in order to conduct effective audits.
F. Matters relating to employees requested by the Audit Committee to support its duties
An Audit Committee Secretariat has been established to support the duties of Audit Committee members as requested by the Audit Committee.
G. Independence of employees from directors
Transfers and evaluations of such employees require the consent of the Audit Committee.
H. Ensuring effectiveness of Audit Committee directions to directors and employees
Employees of the Audit Committee Secretariat are not given directions or orders by directors (other than Audit Committee members), officers and employees of the Company, or officers and employees of Company group companies in relation to the implementation of work directed by the Audit Committee.
I. Systems for directors and employees of the Company, directors, statutory auditors, and employees of affiliated companies, and persons to whom they have reported to report to the Audit Committee, and systems to ensure no detrimental treatment based on the matters reported by such persons
(a) Directors and employees of the Company and affiliated companies and statutory auditors of affiliated companies shall immediately report to the Audit Committee if they have found legal or financial problems that may materially impact the management of or cause harm to the Company or affiliated companies.
(b) The “Internal Reporting System Management Regulations” provide that reporting persons under paragraph (a) will not be subject to detrimental treatment based on having reported, and this fact has been made known to the officers and employees of the Company and affiliated companies.
J. Policies concerning handling of expenses and liabilities arising from execution of duties of Audit Committee members
If an Audit Committee member has requested the prepayment, payment, etc. of expenses arising from the execution of their duties (limited to those relating to the execution of Audit Committee duties), they will promptly be handled.
K. Other systems to ensure effective conducting of audits by Audit Committee
(a) The Audit Committee members, Representative Director, President and CEO, and other directors exchange opinions as appropriate.
(b) The Audit Committee members and the Internal Audit Office aim to coordinate with the accounting auditor by exchanging information, etc.
Basic approach to exclusion of anti-social forces and state of implementation
(a) The Company has provided in the “Basic Policy Regarding Anti-Social Forces” and “Anti-Social Forces Countermeasures Regulations” that it will have no relations with anti-social forces and organizations that threaten the order and security of civil society, and it firmly refuses to be coerced into improper transactions.
(b) The Company has designated the Legal and Compliance Division as the responsible division for responding to anti-social forces, and has built a structure to appropriately respond in coordination with law enforcement agencies, other related administrative bodies, and outside attorneys in the event of an improper demand, etc. or improper direct or indirect involvement by anti-social forces, etc.
(c) Upon commencing transactions with new counterparties, there is always a prior investigation by using outside investigative bodies, collecting information from existing counterparties, etc.