Basic Strategies for Corporate Governance
The main purpose of our management system is to respond quickly and accurately to changes in our business climate and to maintain fair business operations. Achieving stable growth in shareholder value is another top priority of management. To maintain positive relations with our stakeholders, including shareholders, business partners, members of regional communities, and employees, we are endeavoring to expand and improve our corporate governance. We acknowledge the importance of establishing an internal control system that provides stakeholders with important information in a timely manner and of reinforcing corporate governance throughout the Group. Based on that recognition, we plan to establish administrative rules for Group companies and a reporting structure to maintain fair business practices and share information.
Corporate Governance Structure
Consolidation of Internal Control
Our Company has prepared the 'Basic Policy on Internal Control' pursuant to the Corporation Law and Ordinance for Enforcement of the Corporation Law. In the basic policy, we have established a basic understanding of the system to supervise the proper execution of operations in the Group.
Basic Policy on Internal Control
Our Company has established a 'system to secure appropriateness of operations'(Hereafter, 'internal control') pursuant to the Corporation Law and the Ordinance for Enforcement of the Corporation Law.
1. The system is to secure compliance of job execution by directors and employees with laws and regulations as well as the Article of Association.
- 1) We shall position the Iseki Group Code of Ethical Behavior and Ethical Code as the basis of the compliance system, and promote their complete awareness by all group members through education, training seminars and other means.
- 2) We shall manage the Group Internal Communications System ('Ethical Hotline' which was created as a reporting system concerning compliance, pursuant to the internal communications system management regulations.
- 3) Integrated control of compliance shall be conducted by the director in charge and shall be implemented by the compliance team.
- 4) Internal Control & Audit Department shall audit the state of compliance and report the results to the Management Supervisory Committee.
- 5) Directors and employees shall report to the Management Supervisory Committee whenever they discover significant violation of laws and regulations and other misconducts without delay.
- 6) Based on the guidelines in the Iseki Group Code of Ethical Behavior and Ethical Code, we shall not have any relationship with the antisocial forces or groups. Also, we shall maintain the system and take action in order for them to be eradicated from the society.
2. The system concerning maintenance and control of information related to job execution by directors
With respect to information related to job execution by directors such as minutes of the board of directors and approval documents, it shall be maintained and controlled properly and firmly in highly retrievable condition according to the media of maintenance and pursuant to the board of director' regulations and the rules of documents.
3. Regulations and other systems concerning management of risk of loss
- 1) We shall formulate risk management regulations and conduct total management of risks with the Corporate Planning Department as the leading department. The department will implement a thorough study and evaluation of every risk surrounding the Company and ISEKI Group and take appropriate measures.
- 2) Directors and employees shall report to the Management Meeting and corporate auditors whenever a significant risk has occurred without delay.
4. The system to secure efficient job execution by directors
- 1) Directors shall consolidate various regulations like the regulation of authority/regulation of division of duties, internal control system, budget system, personnel-management system and others to secure efficient job execution by them.
- 2) Important issues shall be given multidimensional deliberation at the Management Meeting.
5. The system to secure appropriateness of operations of the Company and the company group which consists of subsidiaries.
- 1) In order to secure appropriateness and effectiveness of operations related to all group companies, we shall strengthen our cooperative system by preparing various regulations at each company group based on the sales company control regulations and the affiliated company control regulations. With respect to management control, we shall control management of subsidiaries mainly by approval of important matters of management as well as reporting on execution conditions of the operations/financial situation pursuant to the sales company control regulations and affiliated company control regulations.
- 2) Upon the occurrence of risk and violation of compliance, group companies shall report to the department in charge of the operation without delay, and the department in charge shall work together with the Internal Control & Audit Department and give proper instruction.
- 3) In order to secure the appropriateness and reliability of financial reporting, we shall consolidate our system pursuant to the Financial Products Transaction Law and other applicable laws and regulations, and evaluate its effectiveness and make improvements, etc.
- 4) The Internal Control & Audit Department shall conduct internal control audit on a regular and irregular basis, and report to the Management Supervisory Committee concerning important matters.
- 5) In the event subsidiaries should recognize that contents of management control/management guidance etc. from the Company break the ordinance or has other problems of compliance, the subsidiaries shall report to the department in charge of the operation to such an effect. With respect to a serious violation of laws and regulations and other misconducts, the department in charge of the operation shall work together with The Internal Control & Audit Department and report to the Management Supervisory Committee and the corporate auditors without delay.
6. In the event corporate auditors requested to have employees assigned to assist in their duties, matters related to such employees and matters related to the independence of such employees from directors.
- 1) In the event there was a request from corporate auditors, we shall assign employees to assist the duties of the corporate auditors.
- 2) Matters related to assignment, transfer, disciplinary punishment, evaluation, etc. of the employees shall be decided upon approval of the Corporate Auditors' Meeting.
- 3) The employees shall be dedicated to the duties of the corporate auditor and shall not hold other posts concurrently.
7. A system for directors and employees to report to auditors, a system for other reporting to auditors, and other system to secure effective implementation of auditing by auditors.
- 1) Directors, the Internal Control & Audit Department, other employees, directors of subsidiaries and employees or those who receive reports from the aforementioned (hereafter ‘ Directors and employees, etc.’) shall report to the corporate auditors when they have found serious violation of laws and regulations or when serious risk has occurred.
- 2) Directors and employees, etc. shall report on important matters related to the operation or business performance of the Company and group companies as they think proper.
- 3) Corporate auditors shall be authorized to request a report from Directors and employees, etc. whenever in accordance with necessity.
- 4) We shall secure the system in order for Directors and employees, etc. not to be mistreated when they make above formulated reports
- 5) Whenever they acknowledge problems in management of the compliance system and internal reporting system, corporate auditors shall be authorized to express opinions to Directors and employees, etc. and also request formulation of measures for improvement.
8.Regarding cost and debt disposal on the execution of duties of the corporate auditors.
Regarding cost and debt produced from execution of duties of the corporate auditors, we shall pay in advance or reimburse without delay upon request from them.
Enacted on May 12, 2006
Revised on June 21, 2007
Revised on December 26, 2008
Revised on March 28, 2013
Revised on May 28, 2015