Internal Control

Basic views on Internal Control System
and the progress of system development

The Company makes decisions on the following matters at the Board of Directors meetings in accordance with the Companies Act and an ordinance of the Ministry of Commerce with regard to the system to ensure that the execution of duties by directors is in compliance with laws, regulations, and the Articles of Incorporation and the system to ensure the appropriateness of operations.

The system to ensure appropriateness of the operations

The Company has established to prescribe the Compliance code of conduct to be followed by all directors and employees to ensure that corporate activities are appropriate based not only on compliance with laws and regulations, but also on high ethical standards, and has established the following structure to continuously reinforce the compliance system:

  1. (1)A chief compliance officer (CCO) is appointed. The CCO proposes and carries out measures required to establish and enhance the Company’s compliance system.
  2. (2)Compliance Office is established. The Compliance Office assists the CCO.
  3. (3)The person responsible for the Compliance Department and the person to promote compliance are placed in each department for thorough compliance.
  4. (4)Internal and external hotlines (the reporting contact office for compliance) are established for direct reporting and consultations by directors and employees, to quickly identify, rectify, and prevent the reoccurrence of any inappropriate issues in corporate activities. The Company ensures that persons who have reported or consulted on the hotlines will not be treated disadvantageously by prohibiting the disadvantageous treatment of persons on the grounds of having reported or consulted on the hotline in the Compliance Regulations.
  5. (5)Audit & Supervisory Board Members and the Audit & Supervisory Board request measures for improvements to the Board of Directors, if they identify issues in the system for compliance with laws, regulations, and the Articles of Incorporation.

System for the storage and management of information
regarding the execution of duties by directors

The Company has established the following system to appropriately store and maintain documents and other important information related to the execution of duties by directors including minutes and proposals of the Board of Directors meetings and requests for approval:

  1. (1)The Company determines retention periods and methods and measures to prevent accidents, based on the Information Management Regulations, and classifies and appropriately stores these documents according to their degree of confidentiality.
  2. (2)A chief information security officer (CISO) is appointed as the person responsible for information security management, and persons responsible for information security are placed in each department to establish a system to store and maintain information, based on the Information Security Basic Regulations.

Regulations and systems related to risk management 

The Company has established the following system to avoid or minimize risk and to implement necessary measures related to the variety of risks in its business operations:

  1. (1)Responsible divisions are designated to address various risks, manage risks in each responsible division and work to reduce risks and prevent its occurrence based on the Risk Management Regulations. When an emergency situation arises, an Emergency Response Department will be established according to the escalation flow designated in the Risk Management Regulations, and efforts will be made to minimize the damage (loss) based on the instructions of the Emergency Response Department.
  2. (2)The Risk Management Department summarizes the status of risk evaluation, analysis and response at each responsible division, and periodically reports its findings to the board of directors.

System to ensure the efficiency of directors
in the execution of their duties

The Company has established the following structure to maintain an efficient management system:

  1. (1)The Company has set out the Board of Directors Rules to clarify matters to be resolved and reported by the Board of Directors, and the Internal Approval Regulations and other regulations related to institutional decision-making to clarify decision-making authority.
  2. (2)To strengthen functions for overseeing the execution of duties and enhance objectivity in management, the Board of Directors includes external directors who are independent of the Company.
  3. (3)To ensure that the directors can discuss matters fully at Board of Directors meetings, they are provided with materials for the meeting in advance, and with additional or supplementary materials upon their request.
  4. (4)The scope of operations, authority and responsibilities necessary for operations are clearly defined in the Regulations on Segregation and Authority of Duties.

System for excluding organized crime and other criminal elements

The Company clearly states in the Regulations on Countermeasures against Antisocial Forces its policy of having absolutely no association with antisocial forces that pose a threat to public order and safety. The Company establishes an internal system against antisocial forces and has a responsible division in place to carry out overall management. For dealing with unfair requests from antisocial forces, the Company will firmly refuse those requests in a resolute manner in cooperation with the police and other external specialist institutions.