Internal control basic policy

Our company shall establish a framework (hereinafter referred to as ‘internal control’) to ensure the appropriateness of our company’s operations in accordance with the Companies Act and its enforcement regulations.

1.System to ensure that the execution of duties by directors and employees of our company and its subsidiaries conforms to laws and articles of incorporation

1. The provisions regarding the compliance framework, including the Corporate Ethics Code, shall serve as the code of conduct for directors and employees to ensure compliance with laws, articles of incorporation, and social norms.
2. A Compliance Officer shall be selected from among the directors to establish a comprehensive compliance framework across the entire company and to identify any issues.
   The Compliance Officer shall collaborate with the Management Headquarters to review the compliance situation and report the results to the board of directors.
   Each business unit director shall analyze the compliance risks specific to their respective departments and develop specific countermeasures.
3. An Internal Audit Department shall be established to formulate an annual plan in accordance with the internal audit regulations, conduct internal audits, prepare implementation reports, and provide advice and recommendations for business improvement issues.
4. If directors or auditors discover compliance issues, they shall promptly report them to the General Affairs Department.

 

2.Matters regarding the preservation and management of information related to the execution of duties by the directors of our company

In accordance with the document regulations, information related to the execution of duties by directors shall be recorded and preserved in documents or electronic media (hereinafter referred to as “documents, etc.”). Directors and auditors shall have access to these documents, etc.

 

3.Provisions and other frameworks related to the management of risks of loss for our company and its subsidiaries

For risks such as compliance, environment, disasters, quality, information security, and export control, each responsible department shall establish rules and guidelines, conduct training, and create and distribute manuals. Monitoring of cross-organizational risk situations and overall responses shall be carried out by the Management Headquarters.

 

4.Framework to ensure the efficient execution of duties by directors of our company and its subsidiaries

1. Establishment of job authorities and decision-making rules.
2. Setting business objectives and budgets for each business unit and implementing monthly and quarterly performance management utilizing IT.
3. Monthly performance review by the Board of Directors and implementation of improvement measures.

 

5.Framework to ensure the appropriateness of operations within the corporate group consisting of our company and its subsidiaries, and the reporting system regarding the execution of duties by directors and others in subsidiaries to our company

We appoint directors responsible for the segments of the group’s businesses and empower them with the authority and responsibility to establish compliance and risk management systems. The Management Headquarters oversees and manages these initiatives in a cross-functional manner.
 

6.Matters related to the employee requested by our company’s auditors to assist in their duties, as well as the independence of such employee from our company’s directors and ensuring the feasibility of instructions given to such employee

If the auditors request the appointment of an employee to assist them in their duties, the directors may, upon consultation with the Audit Committee, nominate an internal audit staff member as the employee to assist the auditors. During the designated period of assistance specified by the auditors, the authority to give instructions to the appointed employee shall be delegated to the auditors, and the directors shall not issue any instructions or directives to the appointed employee.

 

7.System for reporting to our company’s auditors by directors, employees, as well as directors and employees of subsidiaries, or individuals who have received reports from these parties, and other reporting mechanisms to the auditors

In consultation with the auditors, a regulation shall be established to define the matters to be reported to the auditors. Based on this regulation, the directors shall report the following matters.

1. Potential Issues with Significant Impact on the Company
2. Monthly financial performance.
3. Significant matters related to internal audit findings and risk management.
4. Major legal or statutory violations.
5. Other critical compliance matters.

 

8.Framework to ensure that individuals who report as per the previous issue do not face adverse treatment due to their reporting

Our company and its subsidiaries prohibit any adverse treatment towards directors and employees of the entire group who report to the auditors, including the use of internal reporting systems, on the grounds of their reporting. This policy shall be widely disseminated and enforced among directors and employees of our group.

 

9.Matters concerning the procedures for advance payment or reimbursement of expenses arising from the execution of the duties of our company’s auditors, as well as policies related to the handling of expenses or debts arising from the execution of other duties

Our company shall promptly process expenses or debts related to claims for advance payment or other expenses made by auditors in the execution of their duties, unless it is determined that such expenses or debts are not necessary for the performance of the auditor’s duties. In addition to normal audit fees, in cases where urgent audit expenses or new investigation expenses using specialists are incurred, the auditor shall provide advance notice.

 

10.Other measures to ensure the effective conduct of audits by our company’s auditors

The auditors shall hold regular meetings for exchange of views with the President and Representative Director, as well as with the accounting auditors.

 

11.System to ensure the reliability of financial reporting

We will establish an internal control system to ensure the reliability of financial reporting and to submit internal control reports based on the Financial Instruments and Exchange Act effectively and appropriately. Additionally, we will continuously evaluate the functioning of this system and make necessary improvements.

 

12.System for the exclusion of antisocial forces

We will establish a system to exclude antisocial forces and will not engage with any antisocial forces that threaten the order and safety of civil society. Furthermore, we will resolutely refuse any unreasonable demands.