Home > Investor Relations > Corporate Governance > Internal Control SystemSecurities code: 6904

Corporate Governance

Internal Control System

The following outlines decisions made regarding the establishment of a framework to ensure that performance of duties by directors complies with laws and articles of incorporation, as well as the establishment of a framework to ensure the appropriateness of other company's operations.

Structure to Ensure Exercise of Functions of Directors and Employees to Comply with Statues and Articles of Incorporation

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The Company shall stipulate its management philosophy and the code of conduct to ensure its directors and employees to comply with statues and the Articles of Incorporation in their exercise of respective functions.

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The Board of Directors shall, in accordance with the Rules of the Board of Directors, make resolutions on matters set forth in relevant statues and the Articles of Incorporation and other important businesses, procure reports from directors on business operation status, etc., and supervise directors' exercise of business functions.

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The Company shall, through stipulation and communication of the Compliance Rules and other internal rules setting forth corporate ethics, compliance structures, etc., organize structures to ensure directors and employees of the Company and its group companies to abide by statutes, etc.

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The Company's risk management committee, comprised mainly of directors of the Company, shall exert crossover control over the compliance approaches of the Company and its group companies.

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The Company and its group companies shall establish and operate an internal information system, aside from the regular reporting channels, that apprises of and consults on problematical compliance-related conducts such as acts of violating laws and infringing on corporate ethics, etc.

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The Company and its group companies shall organize and implement for their employees training seminars, etc. on compliance.

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The internal audit department shall, in coordination with the risk management committee, audit the compliance status at the Company and its group companies, which activities shall be reported regularly to directors and auditors of the Company.

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The code of conduct, stipulating clearly prohibition and expulsion of any profit sharing with anti-social forces, shall isolate any relations whatsoever including transactions with anti-social forces.

Structure to Preserve and Manage Information Relevant to Exercise of Director Functions

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Documents provided for in statues as related to exercise of functions by directors of the Company and other internal documents of significant managerial importance (including those recorded on electro-magnetic media) shall, based on the relevant internal rules such as the Document Management Rules, be stored and managed properly and securely in highly-retrievable conditions.

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Directors and auditors of the Company shall have access to these important managerial documents, etc. at any time.

Structure to Maintain Rules, etc. for Management of Risk of Loss

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The Company shall, based on the Risk Management Basic Rules, cause the responsible department, the risk management committee, etc. to stipulate rules, guidelines, manuals, etc. in regard to risks related to compliance, environment, disasters, quality, information security, export control, etc., implement measures for communication and recurrence prevention, and conduct necessary trainings, etc.

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Each director of the Company, a member of the risk management committee of the Company, shall be responsible for monitoring and responding on a company-wide level to cross-organizational risks. For any newly arising risks, the risk management committee shall assign promptly a director in charge to cope with such risk.

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In case the Company and its group companies are confronted by a management risk under serious unforeseen circumstances, the Company shall respond with utmost efforts in accordance with the Rules of Management Risk Control to prevent expansion of loss, resolve, overcome or steer clear of the risk.

Structure to Secure Efficient Business Execution by Directors

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The Board of Directors shall convene regular meetings in accordance with the Rules of Board of Directors, hold extraordinary meetings, as needed, to operate efficiently, and secure structures for the proper business execution.

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The Company shall install the management meeting comprised of directors, etc. to which the Board of Directors shall delegate decision-making authority on specific matters. The management meeting shall make decision on delegated matters and deliberate in advance, as needed, agenda for the Board of Directors meeting to facilitate its decision making.

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To ensure efficient business execution based on the decision of the Board of Directors, the daily business operation shall be controlled by the Rules of Division of Duties and the Table of Division of Duties/Administrative Authorities, etc., establishing structures for accountability of business functions and assisting efficient business execution.

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The objectives of the group of companies including the Company shall be set forth based on the long-term visions and long-term management plans, etc. established by the Board of Directors of the Company for the entire group, which objectives the directors and employees of the Company and its group companies shall share.

Structure to Secure Proper Business Operation at Corporate Group Comprised of Company and Its Subsidiaries

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The Company shall appoint directors who will be responsible for respective professional business functions within the group, who will also be in charge to establish both legal compliance and risk management system, which shall be managed in a cross-cutting manner by the risk management committee of the Company.

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In regard to financial reports such as consolidated financial statements, etc., the Company shall put in place a system for ensuring their reliability, a structure required for continuous monitoring, and a structure required for ensuring proper acquisition, preservation and disposal of assets owned by respective group companies. The Company shall also conduct regular evaluations of their operation status and take charge of maintenance and improvement thereof.

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The Company administers management of affiliated companies by the Rules of Affiliate Company Administration that stipulate matters, as needed, for approval by or reporting to the Company and ensures efficient business operation of the group as a whole.

Matters Related to Employees Required by Auditors for Assisting Auditor Functions, Matters Related to Said Employees' Independence from Directors, and Securement of Effectuality of Auditor's Directions to Said Employees

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Auditors are entitled to ask employees at the internal audit department for matters necessary for auditing functions. In case auditors have asked for assignment of dedicated employees to assist auditor functions, directors and auditors shall consult, as needed, and discuss such assignment.

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The internal audit department shall not report to directors as regards the audit matters requested by auditors. Moreover, assignment, transfer and evaluation, etc. of the dedicated employees assisting auditor functions shall require auditors' agreement.

Structure for Directors and Employees to Report to Auditors

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Directors and employees of the Company and its group companies shall report to auditors properly in a timely manner any acts that violate or threaten to violate any statutes or the Articles of Incorporation, matters that may affect seriously the Company and its group companies, and the status of reporting pursuant to the internal information system, etc. and the contents thereof.

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The internal audit department shall report the status of conducting internal audits to the auditors of the Company.

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Auditors of the Company may ask for reports, as needed, from directors and employees of the Company and its group of companies. Furthermore, auditors of the Company may express opinions by way of advice, recommendation, etc. to directors or employees, or take necessary measures in a timely manner such as injunction against directors' acts.

Structure to Secure Prevention of Undue Treatment of Those Who Reported According to Preceding Article for Reasons of Such Reporting

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Any directors or employees shall not be treated unfairly by reason of making reports to company auditors. Directors and employees of the Company shall be advised to the same effect.

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The Company and its group companies shall document in the Compliance Rules that anyone who reported according to the internal information system shall not be treated unfairly, retaliated or discriminated by reason of making such reports.

Matters Related to Policy of Procedures for Making Advance Payment or Refund of Expenses for Executing Auditor Functions and Disposing of Expenses or Liabilities Accrued in Such Auditor Functions

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With regard to the procedures for making advance payment or refund of expenses for executing auditor functions and the disposing of other expenses or liabilities accrued in executing such auditor functions, prompt handling shall be made upon auditors' claim.

Structure to Secure Effective Auditing by Auditors

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The representative directors and the internal audit department shall consult with auditors periodically and ensure auditors' auditing to be effectively conducted by securing auditors' presence at various meetings, etc.

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Directors and employees of the Company shall respect the Audit Standards and the Rules of Board of Auditors set by auditors.

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