Internal controls

1. System to ensure that the execution of duties by Directors and employees complies with laws and regulations and the Articles of Incorporation 

1. In order to enhance corporate governance, the Company and its Group companies have formed a corporate group consisting of the Company as the holding company responsible for management and supervision functions within the Group and the Group companies responsible for business execution functions. The Company has a management control system as a company with an Audit and Supervisory Committee, and each Group company has a management control system as a company with the Audit & Supervisory Board, with responsibilities clearly designed based on their respective authorities. 
2. The Company and its Group companies have established the Code of Corporate Conduct and a compliance manual for Directors and employees as the basis of the compliance system, and ensure compliance with such code of conduct and manual. 
3. The Company has established the Compliance Committee, chaired by the President, to develop and maintain a compliance system, and periodically provides training and education on compliance to Officers and employees of the Company and its Group companies. The Company has appointed persons in charge of compliance promotion at each Group company, and each Group company participates in the Compliance Committee as a member or an observer. 
4. Presidents of each Group company periodically educate their own Officers and employees regarding compliance and report the details of such education to the Board of Directors of the Company. 
5. In accordance with the Board of Directors Rules, the Company and its Group companies hold monthly meetings of the Board of Directors and extraordinary meetings of the Board of Directors as appropriate to ensure communication among the Directors, supervise each other's business execution, and prevent violations of laws and regulations and the Articles of Incorporation by appointing outside experts as necessary. 
6. As a company with an Audit and Supervisory Committee, of which the majority is composed of outside Directors, the Audit and Supervisory Committee shall audit the execution of duties by Directors in accordance with the audit policy established by the Audit and Supervisory Committee. 
7. The Company has appointed several outside Directors to strengthen supervision of the Company's business execution. In addition, in order to ensure transparency and objectivity in decision-making regarding the nomination and remuneration of Directors, the Nomination and Remuneration Advisory Committee consisting of six Directors, including four outside Directors, has been established. 
8. The Boards of Directors of the Company and its Group companies receive reports on risk information, including compliance, and manage and supervise such information. 
9. The Company and its Group companies have established a whistle-blowing system for reporting violations of laws and regulations, violations of the Articles of Incorporation, and other material facts related to compliance, with the General Affairs Dept. Legal Office as the direct recipient of information within the Company and a law firm as the external recipient, and maintain the system in accordance with the Whistle-blowing Rules. In addition, the Company and its Group companies continuously inform their employees of the whistle-blowing system. 
10. If Audit and Supervisory Committee Members of the Company or Audit & Supervisory Board Members of the Group companies recognize any problem in the operation of the legal compliance system or the whistle-blowing system, they may express their opinions and request to formulate remedial measures. 
11. If any Director or employee of the Company or its Group companies discovers any violation of laws and regulations, or the Articles of Incorporation by a Director or employee, he/she immediately reports such violation to the Audit and Supervisory Committee and the Board of Directors of the Company, and the Company and its Group companies take corrective measures. 
12. Directors and employees of the Company and its Group companies have no relationship with antisocial forces, and take a firm stand against any unreasonable demands from antisocial forces. 
     

2. Rules and other systems for managing the risk of loss 

1. The Company has established the Group Risk Management Rules that systematically define risk management for the entire Group, designate a department responsible for each risk category, and continuously monitor the risk management. 
2. The Company has established the Risk Management Committee, chaired by the Head of Administrative Management Division, which shall periodically evaluate the progress of the above-mentioned system and assess the appropriateness of the company-wide system through verification of specific individual cases. Each Group company participates in the Risk Management Committee as a member. 
3. The Chairman of the Risk Management Committee is responsible for overseeing risk-related matters for the entire Group, and the General Affairs Department assists the Chairman of the Risk Management Committee. 
4. The Director in charge of a risk category shall, in accordance with the Group Management Crisis Response Rules, promptly and appropriately communicate information and establish an emergency system in the event of a contingency in accordance with the assumed risk. 
5. The Internal Control Office of the Company, in cooperation with the General Affairs Departments of the Company and its Group companies, conducts audits of the daily risk management status of the Company and its Group companies. 
6. The results of the above internal audits and evaluations are regularly reported to the Board of Directors of the Company as matters related to risk management. 

 

3. System to ensure that the duties of Directors are executed efficiently 

1. The Company and its Group companies hold regular monthly meetings of the Board of Directors and extraordinary meetings of the Board of Directors as appropriate to make decisions on management policies and important management matters, and to manage and supervise the execution of operations by Directors. 
2. The Company has established the "Executive Committee" (held once a week in principle) as an organ to assist the President, which holds discussions to enhance the discussions and deliberations of the Board of Directors, as well as to discuss key business execution issues in terms of management. 
3. Each Group company has established its "Management Committee" (held once a week in principle) as an organ to assist its President, which holds discussions to enhance the discussions and deliberations of the Board of Directors, as well as to discuss key business execution issues in terms of management. 
4. The Company and its major subsidiaries have introduced an executive officer system in order to accelerate decision-making regarding business execution and to separate management and business execution. 
5. The term of office of Directors of the Company and its Group companies is one year in order to build a management structure that can respond quickly to changes in the business environment and to clarify the management responsibility of Directors. 
6. With respect to the execution of operations based on the decisions of the Boards of Directors of the Company and its Group companies, the Organization Rules and the Rules on Division of Duties specify the respective responsible persons, their responsibilities, and details of execution procedures. 
    

4. System for retention and management of information concerning the execution of duties of Directors 

1. The Head of Administrative Management Division of the Company oversees the company-wide retention and management of information related to the execution of duties by Directors. 
2. The Company records and retains information related to the execution of duties in documents or electromagnetic media in accordance with laws and regulations and internal rules for document management (Document Retention Rules and Standards for Document Retention). 
3. The Directors of the Company have access to these documents, etc., at all times. 

　

5. System to ensure the appropriateness of operations of the corporate group consisting of the Company and its Group companies 

1. By concurrently serving as Directors of each Group company, management executives of the Company or its major subsidiaries are involved in management of each company through its Board of Directors to strengthen management control and management of risk information including compliance. In addition, in accordance with the Rules for Management of Affiliated Companies, important matters of each Group company are discussed and deliberated by the Executive Committee and the Board of Directors of the Company. 
2. Risk information, including compliance information, is reported along with business reports at the Executive Committee of the Company and the Management Committee of each Group company, and the minutes of such meetings are shared with all Directors and Auditors of the company concerned. In addition, risk information is reported to the person in charge of the administrative management division of the company concerned. 
3. The Corporate Planning Department of the Company has overall control over the entire Group, manages the business conditions of each Group company, and promotes efficient group management. 
4. The General Affairs Dept. Legal Office of the Company cooperates with the persons in charge of compliance promotion at each Group company and identifies risk information, including compliance, at an early stage. 
5. The Internal Control Office of the Company audits the appropriateness of operations of the Company and its Group companies. 
6. The Audit and Supervisory Committee of the Company cooperates with the Accounting Auditor and the Internal Control Office of the Company to audit and supervise the entire Group corresponding to the consolidated management of the Group. 

　

6. System to ensure the reliability of financial reporting 

1. In order to ensure the reliability of financial reporting, the Company establishes, operates and evaluates internal control over financial reporting effectively and efficiently based on the "Statement of Basic Policy for Establishment, Operation and Evaluation of Internal Control Over Financial Reporting" established by the Company. 
2. The Internal Control Office oversees the evaluation of the status of the establishment and operation of internal controls at the Company and its Group companies.

　 

7. Matters concerning employees who assist the duties of the Audit and Supervisory Committee and matters concerning the independence of such employees from Directors (excluding Directors who are Audit and Supervisory Committee Members) and the effectiveness of instructions from the Audit and Supervisory Committee 

1. The Company establishes a secretariat for the Audit and Supervisory Committee in the Internal Control Office, and its staff members perform administrative work related to the operation of the Audit and Supervisory Committee. 
2. The prior consent of the Audit and Supervisory Committee is required for personnel matters and changes related to the secretariat staff members. 
3. Instructions to the secretariat staff members are given independently from the Directors (excluding Directors who are Audit and Supervisory Committee Members), and the secretariat staff members perform their duties in accordance with the instructions of Audit and Supervisory Committee Members. 

　

8. System for Directors and employees to report to the Audit and Supervisory Committee 

1. Audit and Supervisory Committee Members of the Company attend meetings of the Board of Directors, Executive Committee, etc., and receive important reports. 
2. Directors or employees of the Company and its Group companies report to the Audit and Supervisory Committee on matters that have a material impact on the Company and its Group companies, in addition to matters required by law. 
3. Notwithstanding the preceding item, the Audit and Supervisory Committee Members of the Company may, at any time and as necessary, request reports from Directors and employees of the Company and its Group companies. 
4. The Company and its Group companies establish and maintain appropriate rules for whistle-blowing to ensure an appropriate reporting system to the Audit and Supervisory Committee regarding violations of laws and regulations, the Articles of Incorporation, and other compliance issues. 

　

9. Other systems to ensure that audits by the Audit and Supervisory Committee are conducted effectively 

1. The Audit and Supervisory Committee of the Company provides opportunities for individual hearings with each Director and key employees as necessary, and regularly exchanges opinions with the President and Representative Director and the Accounting Auditor, respectively. 
2. Any Audit and Supervisory Committee Member who receives a report from the Accounting Auditor or any Director or other person of the Company shall report it to the Audit and Supervisory Committee. 
3. Directors of the Company, Officers of the Group companies, employees of the Company and its Group companies, and persons who receive reports from them may report directly or indirectly to the Audit and Supervisory Committee of the Company on matters that they deem necessary to be reported to the Audit and Supervisory Committee of the Company. 
4. No person who makes a report under the preceding item shall be subjected to any disadvantageous treatment on account of such report. 
5. If an Audit and Supervisory Committee Member requests advance payment of expenses necessary for the performance of his/her duties, the Company promptly pays such expenses.