Internal Control System
Internal Control System
The Company believes that integrity and transparency are vital components of effective management. Accordingly, the Company has developed a Management Philosophy that emphasizes the importance of our Corporate Social Responsibility (CSR). To ensure Company adherence to this Management Philosophy, Members of the Board and the Board of Directors have created and implemented a policy of internal controls based on the Company Law (Company Law Article 362, Paragraph 5) to ensure complete and thorough compliance with risk management and legal statues, as well as the proper and efficient execution of business duties.
(1) System for the preservation and management of information related to the execution of Member of the Board duties
(Company Law Enforcement Regulations, Article 100 Paragraph 1.1)
In accordance with Board of Director Rules and internal company policy, the Company shall properly record and file minutes of Board of Director meetings and other important corporate meetings.
(2) Rules and other systems to protect against the risk of loss
- The Company shall manage loss risk by designing and implementing risk management measures related to compliance, finances, information, quality and safety environment, and business continuity in accordance with established risk management rules and related business division regulations. The Company shall implement training as necessary, and create/distribute written manuals, guidelines, etc.
- The Risk Management Committee is responsible for guiding risk management at the Company, and shall engage in the continued improvement of the Company's risk management system via audits conducted by the Internal Audit Department and other activities.
- Under the system of risk management enacted by the Risk Management Committee, executives and managers are responsible to immediately notify the appropriate level of management upon the occurrence of a risk-related incident, taking prompt and appropriate action in the event of an emergency. The Risk Management Committee shall establish a suitable organization responsible for responding to risk factors, preventing the escalation of damages, and engaging in activities to keep damages to the minimum level possible.
(3) System to ensure that Members of the Board execute their duties efficiently
(Company Law Enforcement Regulations, Article 100 Paragraph 1.3)
The Company shall design and implement policies, including Board of Director Rules, an Executive Officer System, Executive Officer Rules and Approval Authority Standards for the proper and efficient execution of duties by Members of the Board. These rules and standards will facilitate Board of Director activity, as well as rapid decision-making by those in authority.
(4) System to ensure Member of the Board and employee duties are executed in compliance with laws and articles of incorporation
- The Board of Directors shall create basic CSR policies and a Code of Conduct to establish corporate ethics and ensure that Members of the Board and other executives execute their duties in compliance with laws and Company articles of incorporation. These policies are designed to ensure comprehensive and thorough compliance, including the rejection of anti-social influences.
- The Risk Management Committee shall create basic compliance policies or guidelines to ensure corporate-wide compliance. Each individual operating department is responsible for overseeing compliance by conducting training or other means in accordance with the policies or guidelines established by the Risk Management Committee.
- The Board of Directors shall require Members of the Board and other employees to submit reports periodically about the state of operations. Such reports may also be required at other times as deemed necessary. This will facilitate the understanding of the Board of Directors related to adherence to laws, articles of incorporation and internal Company policies related to Member of the Board and employee duties. The Company shall use these reports to prevent violations of the law, or in the event a violation occurs, to strictly deal with the violating party, as well as to design and implement internal systems to prevent recurrence.
- In compliance with Company policies, the Internal Audit Department shall conduct internal audits to verify the state of employee compliance with laws, articles of incorporation and internal corporate policies, reporting the results of said audits to the Board of Directors.
- The Company shall ensure a thorough and complete understanding of the essentials of the Whistleblower Protection Act protecting employees who communicate violations of the law within the Company. The Company shall also establish a compliance consultation desk as a means of preventing corporate fraud.
(5) System to ensure the corporate group (consisting of the Company, Company parent company and Company subsidiaries) engages in the proper execution of duties
- In accordance with Board of Director Rules, the Board of Directors shall resolve important matters related to group company management policies and plans, implementing and managing a system to ensure all group companies (including the Company) engages in the proper execution of duties, as well as a system to ensure the reliability of financial reports etc.
- In accordance with affiliated company management regulations, Members of the Board and executive officers shall require that significant matters related to group company execution of duties be reported, conducting discussions as deemed necessary.
- Each group company shall establish a Compliance Committee responsible for training employees in a thorough and complete understanding of compliance-related issues. The Compliance Committee shall also design and implement rules that take the business format of the group company into consideration.
- The Internal Audit Committee shall conduct audits related to the execution of business duties and the management of group companies as mandated under Internal Audit Rules. These audits shall be conducted based on group company management policies and affiliated company management rules as resolved by the Board of Directors. The results of internal audits shall be reported to the Board of Directors.
(6) Matters related to Audit & Supervisory Board Members
1) Matters related to employees who are asked to assist Audit & Supervisory Board Members
When requested by the Audit & Supervisory Board Member or the Audit Committee, an employee of the Company shall be selected to assist in audit activities. Such employee shall not have a direct reporting relationship to any Member of the Board or executive officer.
2) Matters related to employee independence from Members of the Board discussed above
With respect to personnel changes related to an employee to assist the Audit & Supervisory Board Member, the prior approval of the Audit & Supervisory Board Member or Audit Committee is required.
3) System for Members of the Board and employees to report to the Audit & Supervisory Board Member; system related to other reports to the Audit & Supervisory Board Member
- Rules shall be designed and implemented by Members of the Board and employees with respect to matters of potential violation of laws or articles of incorporation or other matters that may have a material effect on company management; reports of such violations shall be submitted to the Audit & Supervisory Board Member according to the rules stated herein.
- The Internal Audit Department shall report the results of internal audits to the Audit & Supervisory Board Member.
4) System to ensure that other Audit & Supervisory Board Member audits are conducted efficiently
- The Audit & Supervisory Board Member and the Audit Committee shall maintain constant communication and coordination with the Internal Audit Department, asking for the cooperation of other related departments as deemed necessary.
- The Audit & Supervisory Board Member shall attend important meetings to facilitate the proper execution of his or her duties.