Internal Control System

   The Company has established the Basic Policy for Internal Control System for the purpose of developing a system to ensure that the performance of duties by Directors complies with laws and regulations and the Articles of Incorporation, and other systems to ensure the properness of the Company’s operations (Board of Directors Resolution dated June 12, 2015). The main points of the Basic Policy are as follows.

 

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

   The Company raises the awareness for and holds training on legal compliance to increase awareness of compliance as well as establishes “Whistle-Blowing Regulations” providing the procedure for reporting violations.

 

2.    System for keeping and managing the information on business execution of the Company’s Directors

   Information is kept and managed according to laws and regulations, and internal regulations (including “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)” and “Regulations for the Proper Handling of Specific Personal Information,” etc.).

 

3.    Regulations on and other systems for risk management of losses of the Company and its subsidiaries

   Risk of currently estimated losses is managed by setting a committee and making discussion according to degree of its significance. Events delivering losses to the Company would be reported to Directors and Corporate Auditors by the Executive in charge and discussed and managed by all executives.

 

4.    System to ensure effective business execution by Directors of the Company and its subsidiaries

   Effective business execution by Directors is ensured by followings:

1.  The Board of Directors determines significant matters and oversees business execution by Directors.
2.  Information is shared among Directors, Executives, and Corporate Auditors at executive meetings.
3.  Notice of significant matters on management, understanding of status and business instructions are conducted at management meetings and YSM management conference.
4.  The information about the Company and subsidiaries are shared at the group company meeting, and significant matters are discussed in the Board of Directors to solve issues.

 

5.    The systems to ensure appropriate works of the corporate group consisting of the Company and its subsidiaries, and to make reports to the Company on matters concerning business execution by Directors of subsidiaries

   The Internal Control System is developed as “Subsidiaries Management Regulations” obligate subsidiaries to make periodic reports relating to business results, fiscal conditions and other significant information of subsidiaries.

   The information about the Company and subsidiaries are shared at the group company meeting, and significant matters are discussed in the Board of Directors to solve issues.

 

6.    System to ensure effective Corporate Auditors’ audit

   Corporate Auditors attend the Board of Directors Meetings and required significant meetings including management conference as well as read major approval documents and other significant documents concerning business execution and receives 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 when Corporate Auditors require allocation of the assisting employees

   Employees assisting the work of the Company’s Corporate Auditors can be allocated as staff as necessary. Corporate Auditor has the authority to give instructions and orders to the staff.

 

8.     System to ensure that those reporting to Board of Corporate Auditors and Corporate Auditors, etc. are not unfavorably treated for the reason of the report

   The Company ensures that executives and employees reporting to Board of Corporate Auditors and Corporate Auditors are not treated unfavorably because of the report and thoroughly inform the whole company of this. In the “Whistle-Blowing Regulations,” it is prescribed to prohibit dismissal and give other unfavorable treatment for the reason of the report.

 

9.    Matters on the policy for dealing with expenses or debts resulting from business execution of the Company’s Corporate Auditors

   The Company, when Corporate Auditors require the Company to make advance payment in respect of business execution according to Article 388 of the Companies Act, immediately deals with the relevant expenses and debts unless it is considered unnecessary to make advance payments.

 

   In order to improve the effectiveness and efficiency of operations, to ensure reliability of financial reports, and to expansively develop the operations of the internal control system aimed at securing assets and compliance to laws and regulations pertaining to business activities according to 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 as well as the system for implementation and details of activities for executives and employees, and the procedures for evaluation and reporting were clarified in the Internal Control Regulations. Furthermore, 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 were clarified in the Committee of Internal Control Operations Regulations, and the activities are promoted.

 

   The Company assumes a resolute attitude to anti-social forces threatening order and security of civil society as well as closely exchanges information and cooperates with the relevant specialized agencies including police against anti-social forces and thoroughly informs employees of the above policy.