Sustainability
Basic Policy for the Development of Internal Control Systems
Basic Policy for the Development of Internal Control Systems
(from April 2024 to March 2025)
- System to ensure that the performance of duties by directors and employees complies with laws and regulations and the Articles of Incorporation
- Corporate governance
- The Board of Directors makes decisions on important management matters and supervises the execution of duties by directors in accordance with the "Laws and Regulations," "Articles of Incorporation," "Resolutions of the Stockholders' Meeting," "Rules of the Board of Directors," "Corporate Philosophy," "Management Philosophy," and "Code of Conduct."
- Directors execute the Company's duties based on the roles determined by the Board of Directors and in accordance with the "Laws and Regulations," "Articles of Incorporation," "Resolutions of the Board of Directors," "Rules on Administrative Authority," and other internal rules.
- The representative director reports on the status of the execution of their duties at the monthly Board of Directors meetings.
- Audit and supervisory board members exercise the authority provided by laws and regulations, and in cooperation with the internal audit organization and accounting auditors, conduct audits of the appropriateness of the execution of duties by the directors in accordance with the "Rules of the Audit and Supervisory Board" and the "Audit and Supervisory Board Member Auditing Standards."
- Compliance
Directors and employees shall act in accordance with the "Laws and Regulations," "Corporate Philosophy," "Management Philosophy," "Code of Conduct," and other internal rules.
The entire organization takes a resolute stance against antisocial forces that threaten the order and safety of society, and has established an internal system that does not involve any business relationships or any other relationships with antisocial forces.
- System to ensure the appropriateness of financial reporting
In accordance with the "Accounting Regulations" and other internal rules, we comply with accounting standards and other relevant laws and regulations, and have established a system to ensure appropriate financial reporting. To balance management efficiency and risk management, and ensure that internal controls related to financial reporting function effectively, a dedicated department maintains our IT systems and optimizes them at a company-wide level.
- The representative director establishes and operates internal controls related to financial reporting.
- The Board of Directors monitors and supervises directors to ensure that internal controls over financial reporting are implemented reliably.
- Audit and supervisory board members audit the construction and operational status of internal controls over financial reporting from an independent standpoint.
- Internal audits
An internal audit organization has been established under the direct control of the representative director, and one person responsible for auditing, as well as a person in charge of auditing, is appointed as necessary. The internal audit organization conducts regular internal audits regarding overall business operations, including the status of compliance with the internal rules and the validity of the procedures and content for the execution of duties etc., based on the "Internal Audit Rules," and reports the results to the representative director. In addition, the internal audit organization conducts follow-up audits to assess the status of improvement measures related to the issues and recommendations identified through internal audits.
- System for storing and managing information related to the execution of duties by directors
- Storage and management of information
Directors record information related to the execution of their duties in documents (including electronic records; the same shall apply hereinafter), as stipulated in the "Document Management Rules" and other internal rules, and store and manage such information together with statutory documents, such as minutes of the stockholders' meetings, Board of Directors' meetings, and other related materials.
In addition, the "Information Security Policy" and other relevant policies have been established to clarify the Company's policy for the appropriate management of its information assets, and to develop a system to protect such information assets from leakage, tampering, accidents, malfunctions, and damage caused by natural disasters and fires.
- Access to information
Directors and audit and supervisory board members may inspect the information described in the preceding paragraph at any time.
- Regulations and other systems for managing the risk of loss
We establish internal rules to ensure that all risks associated with the Company's business development are properly and promptly addressed, and accurately identify risks and take appropriate actions while clarifying our monitoring and responsibility systems. In addition to establishing various internal committees and utilizing various management systems, we strengthen our risk detection system by raising risk management awareness through education and training for employees and improving monitoring methods. These enhance the effectiveness of identification, evaluation, monitoring, and management of specific risks associated with the execution of individual duties, thereby improving risk management.
Furthermore, business continuity plans are developed and implemented to ensure that business activities and critical business processes are not interrupted or, in the event of an interruption, can be resumed quickly to an acceptable level, due to natural disasters such as earthquakes and typhoons, regional disasters, public infrastructure shutdowns, declarations of emergency by the government and local governments to prevent the spread of designated infectious diseases, and other major management failures.
- System to ensure efficient execution of duties by directors
- Management Conference and internal committees
To make appropriate and flexible decisions on the execution of duties, the Management Conference and various internal committees have been established to assist the representative director in sharing management issues, conducting effective discussions, and submitting matters requiring company-wide decision-making to the Board of Directors.
- Clarification of job authority and responsibilities
To ensure proper and efficient execution of duties, we have established various internal rules, such as the "Duty Segregation Rules" and "Duty Authority Rules," to clarify the authority and responsibilities of each officer.
- System to ensure the appropriateness of operations in the Group consisting of the Company and its subsidiaries
To ensure the appropriateness of operations of the entire corporate group while respecting the autonomy and independence of the management of subsidiaries, we ensure that the "Corporate Philosophy," "Management Philosophy," and "Code of Conduct" are well known throughout the Group. We also discuss and report important business execution and other matters concerning the subsidiaries to the Board of Directors to accurately grasp their business execution. We hold liaison meetings with our subsidiaries as appropriate, or dispatch directors or auditor and supervisory board members from the Company as necessary, to receive reports on the status of the business execution and financial conditions of our subsidiaries, and to provide advice and guidance necessary to ensure appropriate business operations and establish appropriate compliance systems at the subsidiaries by the respective organizations in charge.
- Matters concerning employees who are requested to assist the audit and supervisory board members in their duties, matters concerning the independence of such employees from directors, and matters concerning ensuring the effectiveness of instructions given to such employees
At the request of the audit and supervisory board members, we assign personnel to assist in the execution of their duties. In cases where assistants are assigned to audit and supervisory board members, their performance evaluation shall be performed by the audit and supervisory board members, and their appointment, dismissal, transfer, revision of wages, etc., shall be decided by the representative directors with the consent of the audit and supervisory board members, thereby ensuring their independence from the directors. Furthermore, the assistants shall not concurrently hold any positions related to the execution of duties, and the necessary authority shall be granted to such employees to investigate and gather information.
- System for directors and employees to report to audit and supervisory board members, and other systems related to reporting
- Audit and supervisory board members may request reports from directors and employees of the Company and its subsidiaries at any time regarding matters necessary for the performance of the audit and supervisory board members' duties.
- Audit and supervisory board members are allowed the opportunity to exchange opinions with directors of the Company and its subsidiaries, attend important meetings to express their opinions from the viewpoint of legality, etc., when they deem it necessary, and obtain essential information.
- Audit and supervisory board members may ensure the effectiveness of audits by collaborating with accounting auditors and the internal audit organization.
- We establish a reporting system to the audit and supervisory board members, and clarify and disseminate the prohibition of any prejudicial treatment of those who make such reports.
- Matters related to policies concerning the processing of expenses arising from the execution of such duties by the audit and supervisory board members
With respect to the procedures for advance payment or reimbursement of expenses arising from the execution of duties by the audit and supervisory board members and other expenses or reimbursements arising from the execution of such duties, such procedures shall be promptly carried out after confirmation by the organization in charge.
- Other systems to ensure that audits by the audit and supervisory board members are conducted effectively
- Collaboration between the internal audit organization and the audit and supervisory board members
The internal audit organization discusses the internal audit plan with the audit and supervisory board members for each fiscal year, as well as discusses and exchanges opinions on the results of the internal audits and issues and recommendations, etc., to closely exchange information and collaborate with the audit and supervisory board members.
- Appointment of external experts
Audit and supervisory board members may independently appoint lawyers, accounting auditors, and other external experts when they deem it necessary to conduct an audit.
