Internal Control System
Basic Policy on Internal Control System and the Status of Its Development
1. System to Ensure that the Performance of Duties by the Company’s Directors and Employees and Directors, etc. and Employees of the Company’s Subsidiaries Comply with Laws, Regulations, and the Articles of Incorporation
(1) The Company has established the Corporate Ethics Guidelines, Compliance Standards of Conduct, Basic Human Rights Policy, Environmental Policy, Security Policy, and Social Media Policy. Based on these policies, the Company will clearly define the standards of conduct of Officers and employees to ensure compliance with laws and regulations, the Articles of Incorporation, internal rules and so forth.(2) The Company will strive to spread awareness of the aforementioned guidelines, standards of conduct, and other rules by providing regular education and training to Officers and employees.
(3) The Company will conduct audits of the status of day-to-day business execution by Directors (excluding Audit & Supervisory Committee Members) and each department, and confirm the status of compliance with guidelines, standards of conduct, and other rules.
(4) Once a month, the Company will hold morning meetings attended by all employees to raise employees’ knowledge of the importance of participation in management. The President will explain management policies, the status of progress on businesses, and related matters, and endeavor to foster a shared Company-wide awareness of these issues.
(5) The Company will resolutely oppose anti-social forces that have a negative impact on social order and the sound operations of businesses and will cut all relations with such entities.
(6) In accordance with the Group Company Management Rules, the Company has established the authority to conduct investigations of subsidiaries and the right to require reports from them within the scope necessary for the Company’s audits by its Full-time Audit & Supervisory Committee Members. In addition, the Company’s Internal Audit Office conducts regular and special audits of subsidiaries either directly or via the subsidiaries’ internal audit offices.
(7) The Company will introduce an internal reporting system (whistleblowing system) that Officers and employees of the Company and its subsidiaries can use. It will strictly deal with any compliance violations or other misconduct.
2. System for the Storage and Preservation of Information Related to the Performance of Duties of the Company’s Directors
(1) In accordance with Document Management Rules, the Company will appropriately store and manage (including disposal) the following documents (including electromagnetic records) along with related materials. It will also verify the status of implementation and revise the rules as necessary.・Minutes of the General Meeting of Shareholders
・Minutes of Meetings of the Board of Directors
・Minutes of Meetings of the Executive Committee
・Copies of documents submitted to tax offices and other government and public organizations, and to stock exchanges
・Other documents stipulated by the Document Management Rules
(2) The Company will endeavor to manage information assets in compliance with JIS Q 27001 (ISMS).
(3) The Company will achieve appropriate document storage and management (including disposal) by having subsidiaries introduce systems that are equivalent to those of the Company.
3. Rules Concerning the Management of the Risk of Loss at the Company and its Subsidiaries and Other Relevant Risk Management Systems
(1) The Company has established Crisis Management Rules. Under these rules, the Company will establish a crisis management system and strive to prevent crises, including the risk of loss. Concurrently, if a crisis occurs or is detected, the Company will work to avoid and prevent the spread of damage through such means as establishing a Crisis Response Headquarters. Additionally, the Company will establish a business continuity plan in accordance with the rules and share the plan with subsidiaries. By doing so, the Company and its subsidiaries will endeavor to minimize risk by formulating a business continuity plan, identifying risks associated with business continuity, and implementing measures to address those risks.(2) The Company will obtain JIS Q 27001 (ISMS) certification. Through this certification’s maintenance and improvement activities, the Company will strive to manage and operate systems in compliance with standards to address the risk of loss arising from information security and the protection of personal information. In addition, if deemed necessary, the Company will require its subsidiaries to obtain JIS Q 27001 (ISMS) or the Privacy Mark certification in order to establish information security systems that are equivalent to its own.
(3) The Company will conduct internal control system audits related to the status of day-to-day business execution of the departments of the Company and its subsidiaries through the Internal Audit Office, which is under the direct control of the President. It will identify risks that could lead to the risk of loss and evaluate those risks, along with confirming the status of responses to risks. If there is an Internal Audit Office within a subsidiary, with the permission of the Company’s Internal Control Committee, the Company may delegate a portion or all of the evaluation process for internal control system audits at its subsidiary to the Internal Audit Office of the subsidiary.
4. System to Ensure the Efficient Performance of Duties by the Company’s Directors and the Directors, etc. of the Company’s Subsidiaries
(1) The Company will streamline the Board of Directors by adopting an Executive Officer System, thereby ensuring speedy and efficient management decision-making in accordance with the Rules of the Board of Directors. The Board of Directors will hold regular meetings once a month and convene extraordinary meetings as necessary.(2) In accordance with the Rules of the Executive Committee, the Company will establish the Executive Committee comprising Full-time Directors, Full-time Audit & Supervisory Committee Members, Executive Officers, Division Managers, and certain other personnel. The Executive Committee will discuss issues related to business execution, along with evaluating key agenda issues that should be brought before the Board of Directors and reporting to the Board of Directors, and the President and CEO. The Executive Committee will meet once a month on a regular basis and convene extraordinary meetings as necessary.
(3) To pursue business efficiency, the Company will continue to move forward on developing its internal control systems and reforming its business processes.
(4) The Company will dispatch Officers to significant subsidiaries to determine whether their Boards of Directors have developed a system to ensure the efficient performance of duties by Directors and are implementing the system effectively. If it is judged that there is a need for improvement, the Officers will request that the Directors or Board of Directors implement improvements.
5. System for Reporting Matters Related to the Performance of Duties by Directors, etc. of the Company’s Subsidiaries and Other Systems to Ensure the Proper Operations of the Corporate Group Comprising the Company and Its Subsidiaries
(1) In accordance with this basic policy, the Company will establish internal control systems appropriate to the Company’s size and business activities, along with implementing and evaluating the system. At the same time, the Company will evaluate the establishment and implementation of internal control systems at subsidiaries.(2) If approved by the Company’s Internal Audit Office and its Internal Control Committee, the evaluation work will be carried out by the internal audit offices of subsidiaries.
(3) The Company will dispatch Officers to significant subsidiaries and monitor the business and financial condition of subsidiaries through their executive committees. The Company’s Board of Directors and Executive Committee receive reports on the subsidiaries’ business and financial condition from the dispatched Officers or the Officers of the subsidiaries, along with discussing important matters.
(4) In accordance with the Group Company Management Rules, the Company will stipulate matters requiring prior approval as well as matters requiring prior and ex post facto reporting, and subsidiaries will be required to comply with those stipulations.
6. Matters Concerning Directors and Employees Responsible for Assisting the Duties of the Company’s Audit & Supervisory Committee
If the Audit & Supervisory Committee requests the assignment of assistants, the staff members of the Internal Audit Office shall be entrusted to assist the duties of the Audit & Supervisory Committee.7. Matters Concerning the Independence of Directors and Employees Described in the Previous Item from Other Directors of the Company (excluding Audit & Supervisory Committee Members) and Matters Concerning Ensuring the Effectiveness of Instructions to Such Directors and Employees by the Company’s Audit & Supervisory Committee
Any personnel transfers of and disciplinary measures against the assistants described above will require the approval of the Audit & Supervisory Committee. Moreover, personnel evaluations will be undertaken based on a hearing of the opinions of the Audit & Supervisory Committee. During the period designated for assistance by the Audit & Supervisory Committee, the Audit & Supervisory Committee will have the authority to direct the assistance duties of the designated employees, and the employees will not be subject to the directions and orders of the Directors.8. System for Reporting to the Company’s Audit & Supervisory Committee
(1) The Company’s Full-time Audit & Supervisory Committee Members attend important meetings such as meetings of the Board of Directors, Executive Committee, and Internal Control Committee, as well as the Group Presidents’ Meeting, to ascertain the status of management decision-making and business execution at the Company and its subsidiaries. The Directors (excluding Audit & Supervisory Committee Members) and Executive Officers provide necessary reporting to the Full-time Audit & Supervisory Committee Members through the above meetings or day-to-day operations. Furthermore, the Full-time Audit & Supervisory Committee Members view materials such as documents about business execution, including circular approval forms, and seek explanations from Officers and employees as necessary. The Full-time Audit & Supervisory Committee Members will provide the necessary reporting to the Part-time Outside Director on a timely basis through the Audit & Supervisory Committee or other appropriate means.(2) In accordance with the Group Company Management Rules, the Company will stipulate matters requiring prior approval as well as matters requiring prior and ex post facto reporting, and subsidiaries will be required to comply with those stipulations. Managers of departments that receive reports from subsidiaries will report to the Company’s Audit & Supervisory Committee on a timely basis. If such reporting is provided only to Full-time Audit & Supervisory Committee Members, the Full-time Audit & Supervisory Committee Members will provide the necessary reporting to the Part-time Audit & Supervisory Committee Members on a timely basis through the Audit & Supervisory Committee or other appropriate means.
(3) The Audit & Supervisory Committee will conduct monitoring to ensure that informants reporting to the Audit & Supervisory Committee are not treated unfavorably as a result of making such reports and will request that improvements and other measures be undertaken by the Board of Directors as necessary.
9. Other Systems to Ensure that Audits by the Company’s Audit & Supervisory Committee Are Performed Effectively
(1) The Company will strive to strengthen coordination among the three types of audits performed by the Audit & Supervisory Committee, Internal Audit Office, and the audit firm. Moreover, the Audit & Supervisory Committee will regularly exchange opinions with the President and CEO, and the audit firm.(2) To enhance the effectiveness of audits of the Group as a whole, the Company has established the Liaison Meeting for Group Corporate Auditors, which meets regularly. Through the Liaison Meeting, the Company’s Audit & Supervisory Committee and the Corporate Auditors of subsidiaries exchange information and opinions and work to enhance audit operations as a corporate group, contribute to risk management, and support management from a defensive perspective. The Liaison Meeting for Group Corporate Auditors holds regular meetings once every quarter and convenes extraordinary meetings as necessary.
(3) The Company budgets for the expenses necessary for the performance of the Audit & Supervisory Committee Members’ duties (limited to expenses related to the performance of the duties of the Audit & Supervisory Committee) at the beginning of the fiscal year. If expenses necessary to the performance of duties other than the budgeted expenses arise, the Company will pay those expenses in advance on a case-by-case basis or the Audit & Supervisory Committee Members may claim reimbursement for those expenses after they are incurred.