Basic Views on Internal Control System and the Progress of System Development
The Company has established the basic policy of Internal Control System for the development of a system to ensure that the performance of duties by Directors complies with laws and regulations, and the Articles of Incorporation as well as other systems to ensure the propriety of the Company’s operations (Board of Directors Resolution on June 12, 2015). The main points of the Basic Policy are as follows.
1. System to ensure that the conduct of business by Directors and employees complies with laws and regulations and the Articles of Incorporation
The Company provides legal compliance awareness and training to increase compliance awareness and has established “Whistle-Blowing Regulations” that outlines the process for reporting violations.
2. System for keeping and managing the information on the business activities of the Company’s Directors
Information is maintained and managed in accordance with laws and regulations, and internal policies (“Document Regulations,” “Contract management rules,” “Internal Information Management Regulations,” “Basic policy on information security”, “Information System Management Regulations”, “Personal Information Management Regulations”, “Personal Information Protection Policy (Privacy Policy)”, “Regulations for the Proper Handling of Specific Personal Information”, etc.)
3. Policies and other systems for managing the risk of loss to the Company and our subsidiaries
The risk of currently estimated losses is managed by setting up a committee and discussing them according to their importance.
Events resulting in losses to the Company would be reported by the responsible officer to Directors and Corporate Auditors and discussed and managed by all officers.
4. System to ensure the effective conduct of business by Directors of the Company and our subsidiaries
The effective conduct of business by Directors is ensured by the following.
- The Board of Directors determines significant matters and oversees the conduct of business by Directors.
- Information is shared among Directors, Executives, and Corporate Auditors at executive meetings.
- Notification of significant matters on management, understanding of status and business instructions are conducted at management meetings and YSM management meetings.
- At subsidiary meetings, the information regarding the Company and its subsidiaries is shared and important matters are discussed at the Company’s Board of Directors, etc. to resolve issues.
5. Systems to ensure the proper operation of the corporate group consisting of the Company and its subsidiaries and to report to the Company on matters concerning the conduct of business by Directors of subsidiaries
The Internal Control System is developed as well as “Subsidiaries Management Regulations” which require subsidiaries to provide regular reports relating on the business results, financial conditions and other important information of subsidiaries.
Subsidiary meetings are held to share information about the Company and its subsidiaries, and the Company's Board of Directors, etc. discusses and resolves important matters.
6. System to ensure effective audit by Corporate Auditors
Corporate Auditors attend the meetings of Board of Directors and necessary important meetings including the management conference, etc., and read important approval documents and other important documents concerning the conduct of business and receive explanation from Directors and employees of the Company and Directors of subsidiaries as necessary.
7. System on employees assisting works of the Company’s Corporate Auditors if Corporate Auditors require the assignment of the assisting employees
Employees assisting the work of the Company’s Corporate Auditors may be assigned as needed. Corporate Auditor shall have the authority to issue instructions and orders to the staff of Corporate Auditor.
8. System for ensuring that persons reporting to the Board of Corporate Auditors and Corporate Auditors, etc., are not treated unfavorably on the basis of reporting
The Company shall ensure that executives and employees who report to Board of Corporate Auditors and Corporate Auditors, etc. are not treated unfavorably as a result of the report and shall thoroughly inform the entire company of this.
The “Whistle-Blowing Regulations,” shall prohibit dismissal and give other adverse treatment for the reason of reporting.
9. Matters concerning the policy for handling expenses or debts resulting from business execution of the Company’s Corporate Auditors
The Company shall, if Corporate Auditors require the Company to make advance payment for the execution of business in accordance with Article 388 of the Companies Act, immediately deal with the related expenses and debts unless it is deemed unnecessary to make advance payment.
10. Systems on eliminating anti-social forces
The Company takes a firm stance against anti-social forces that threaten the order and safety of civil society, and closely exchanges information and cooperates with the relevant specialized agencies, including the police, against anti-social forces, and thoroughly informs employees of the above policy.
In order to improve the effectiveness and efficiency of operations, to ensure the reliability of financial reports, and to expand the operations of the internal control system aimed at safeguarding assets and complying with laws and regulations pertaining to business activities in accordance with the Basic Policy for Internal Control System, the Internal Control Regulations and the Committee of Internal Control Operations Regulations have been enacted.
The scope of responsibility of the Board of Directors and Corporate Auditors, the system of implementation and details of activities for executives and employees, and the procedures for evaluation and reporting have been clarified in the internal control Regulations. In addition, a basic policy on the maintenance and operation of Internal Control is formulated. The structure of the committee aimed at facilitating internal control, as well as how to promote its mission and activities has been clarified in the Committee of Internal Control Operations Regulations, and the activities are being promoted.