Internal Control System
Basic Policies for the Internal Control System
The Board of Directors has decided on the following systems to ensure that the framework for working operations coincide with the law and its articles of incorporation and that the framework and operations for the Company and its subsidiaries are appropriate in accordance with the transfer to a company with an Audit & Supervisory Committee and the enforcement of pertaining laws.
1. The framework to secure appropriate working operations that coincide with the law and the articles of incorporation for the directors and employees of the Company and its subsidiaries
The directors and employees of the Company and its subsidiaries will work in accordance to the “Compliance Rules” with high moral ethics and a good conscience and will behave responsibly and comply with social norms as they strictly follow the law, articles of incorporation and corporate rules. Furthermore it will form a Compliance Committee that will maintain an internal reporting system for any persons violating any laws, articles of incorporation or corporate rules.
2. The framework to eliminate any antisocial forces
The Company and its subsidiaries will sever all deals and support with antisocial forces, will not succumb to any undue claims by antisocial forces, maintain an infrastructure at an administrative level to collectively administer against any interference, damages, mental or physical abuse from antisocial forces and cooperate with the police and other relevant agencies to take a firm stance as an organization against such forces.
3. Items to store and administer the execution of duties of the Company’s directors
In order to store and administer the execution of duties of the Company’s directors, the administrative section shall take charge in recording, in writing or electronically, all applicable execution of duties and saving and administrating it for the applicable period of time in accordance with the “Document Handling Rules”.
The Company’s director will be able to see the recordings at any time and the officer in charge must quickly respond to the director’s request.
4. The regulations and framework to administer to any losses or danger to the Company or its subsidiaries
The risk management infrastructure for the Company and its subsidiaries will be done under the “Risk Management Rules” overseen by the Director in charge of the administrative section. The Business Process Re-engineering Department will foresee and assess specific risks to create a speedy and appropriate reporting process and emergency plan, and report all matters regarding risk management regularly to the Board of Directors.
In the case an unexpected incident occurs, a task force will be created with the CEO at the helm and a resolution will be made immediately along with a plan to prevent repeated incidents.
Furthermore, subsidiaries will also comply with company rules and regulations to avert any losses or danger and adopt policies into their respective circumstances.
5. The framework for directors and employees to execute duties efficiently
The Board of Directors will create a corporate-wide plan and each appropriate director will create specific measurable goals and action plans for each segment to accomplish those goals. Progress on key indicators will be reported on a weekly basis while budgets will be updated monthly.
The Board of Directors will meet on a monthly basis to report on business progress and monthly closing, take care of any items regarding the execution of duties of the directors and decide on any important matters for the execution of operations.
The Company will create appropriate committees under the “Administrative Authority Rules” to facilitate the decisions of decisive matters.
The Company will place a director and auditor at each subsidiary to secure efficiency of work execution. They will also monitor the monthly progress of the Company and its subsidiaries of its annual budget and mid-long term plan. They will receive reports on other important information regarding each subsidiary.
6. The framework to secure appropriate work for the Corporate Group within the Company and its subsidiaries
The company will place a director and auditor at each subsidiary to monitor execution of duties.
The Related Company Administration Department will gather the administration of each subsidiary and will work under the “Related Company Administration Rules” to receive reports beforehand so to be able to bring any appropriate agenda items to the Board Meeting. The Process Re-engineering Department will internally checkup on the subsidiaries for risk management and legal compliance under the “Internal Auditing Rules”.
7. Framework to secure the reliability of financial reports
The Company will create an internal control system to secure the reliability of financial reports and create an internal control report as determined by the Financial Instruments and Exchange Act. The Process Re-engineering Department will periodically evaluate the system so to secure its validity with the Financial Instruments and Exchange Act and other related laws.
8. Items regarding employees to aid the work of the Audit & Supervisory Committee (hereby known as “Aid Employees”) as well as items to keep Aid Employees independent from the Company’s directors (excluding the Audit & Supervisory Committee) and items to secure a workable system to designate Aid Employees
The Audit & Supervisory Committee can arrange for a specific Aid Employee to assist in the work of the Committee and the Company will council with the Committee to select the Aid Employee.
The Aid Employee will not receive any direction from directors (excluding the Audit & Supervisory Committee) and employees. If the Aid Employee is transferred or evaluated, they will hear and respect the decision of the Audit & Supervisory Committee.
9. The framework for the Company and its subsidiaries’ directors and employees to report to the Audit & Supervisory Committee
The Full-time Audit & Supervisory Committee Member will attend all Board of Director’s meetings and other important meetings and will see all final documents as well as related materials. If the Company or its subsidiaries’ director or employee commits a grave crime or greatly damages the Company or its subsidiary, the Audit & Supervisory Committee Member will immediately report it to the Audit & Supervisory Committee and can request a report from the director or employee if necessary. The Full-time Audit & Supervisory Committee Member will also serve as an auditor for a main subsidiary to further authenticate the reporting process of the director, other auditors and employees of said subsidiary. The Full-time Audit & Supervisory Committee Member will report on a monthly basis to the Audit & Supervisory Committee.
The Company and its subsidiaries will not improperly handle anybody who files such a report and will report it throughout to the directors and employees of the Company and its subsidiaries.
10. The framework to secure an effective audit for the Audit & Supervisory Committee
The Board of Directors will not refuse the attendance of an Audit & Supervisory Committee member to an important company meeting to ensure that the Audit & Supervisory Committee member can be readily available to receive reports from a director or employee to effectively understand the decision making process and working status of the Company. The Audit & Supervisory Committee member will cooperate closely with the financial auditor and the Process Re-engineering Department and exchange information regularly and will exchange information with the legal advisor if necessary.
11. Items that will need to be paid in advance for Audit & Supervisory Committee members for the execution of duties or reimbursement procedures for expenditures for the execution of duties or the policy for the processing of liabilities
The Company will quickly process any expenses or liabilities that are necessary for the Audit & Supervisory Committee member to execute duties upon reviewing it with the proper department under the condition that the department does not deem the expense or liability unnecessary.