Basic policy for Internal Control
Pursuant to the Japanese Corporate Law (and the Enforcement Regulation of the Corporate Law), the basic policies for the system to properly ensure appropriateness of the Company's operations (internal control system) shall be as follows:
I. System to ensure that business execution by Directors and employees conforms to laws and regulations as well as Articles of Incorporation and the appropriateness of other operations of the joint-stock company
1. System to ensure that business execution by Directors and employees conforms to laws and regulations as well as Articles of Incorporation
- The persons who are involved in management take the lead in adhering to the Declaration of Corporate Policy as well as the Code of Ethics, Quality Assurance Code and Environment Code which have been set forth in line with our business philosophy, and ensure conformity through informal meetings with department chiefs and management discussions with employees.
- To ensure that business activities adhere to laws and regulations as well as company rules, the Ethics Committee, an organization which includes external attorneys and is directly controlled by the President, plans and manages programs seeking thorough compliance through enhancement of staff education and training, and makes final decisions on compliance with various business issues. An officer responsible for risk management reports the detailed activities of the Committee to the Board of Directors.
- To deal with doubtful matters on compliance in the Group, the Company establishes an internal reporting system which allows each administrator to directly inform the Ethics Committee of such matters. The liaison contacts are set both inside and outside the Company, which even receives information from external sources such as business partners. The Company keeps the information secret and does not treat the informing party disadvantageously.
2.System for storage and administration of information relating to duties performed by Directors
- Minutes of the General Meeting of Shareholders, minutes of the meetings of the Board of Directors, minutes of meetings of various committees chaired by Directors, and approval forms (ringi-sho), execution reports, etc., produced in accordance with internal rules (hereinafter referred to as "Documents") shall be properly stored and managed in accordance with laws and regulations as well as internal rules such as the Basic Information Security Policies.
- The Directors and Auditors may examine such Documents at any time.
3.Rules and other systems for management the of risk of loss
- The Risk Management Committee, an organization under the direct control of the President shall strive to build, maintain and improve the risk management system of the Nissui Group based on the risk management rules. The risk management officer shall periodically report the Risk Management Committee's activities to the Board of Directors.
- The respective heads of business divisions shall execute risk management properly in relation to their operations. For high-priority risks, such as those relating to compliance, environment, quality and financial affairs, the organization in charge of such risks shall establish rules and guidelines, conduct training, prepare and distribute manuals, etc., for risk management on behalf of the Nissui Group.
4. System to ensure the efficient performance of duties by Directors
- In principle, a meeting of the Board of Directors shall be convened at least once a month. The Board of Directors shall determine the management framework and matters under the control of the Representative Director and Directors in charge of other operations, make decisions on important matters, and oversee the Directors' execution of operations.
- For the execution of operations, the President shall govern the Nissui Group, and each Director shall assume executive responsibility over the divisions he/she has control over and/or is in charge of. A management conference attended by all Directors working in Japan shall be held at least once a month to discuss important matters concerning corporate management.
- The Board of Directors shall resolve medium-term management plans and the budget for each fiscal year. Each Director shall determine measures to be taken by the divisions under his/her control in concrete terms, as well as an efficient operation system including the delegation of authority, strictly carry out progress management to achieve goals, and periodically report the progress to the Board of Directors.
5. System to ensure the appropriateness of operations in the enterprise group consisting of the Company and its subsidiaries
The Nissui Group shall set forth measures to ensure that its operations are executed in compliance with laws and regulations as well as the Articles of Incorporation, and build the system described below.
1) Systems under which matters related to the execution of duties by the Board Members of subsidiaries are reported to the Company
- A Group Management Conference attended by representatives of Group companies shall be held periodically(quarterly in Japan and semiannually overseas) and shall report and discuss important matters concerning the execution of operations. As a function to assist Directors, an officer shall be appointed in each field to enhance the management functions of the Nissui Group as a whole.
- The Company requests that each group company periodically reports to the Company about the operational performance, financial status and other important information of such group company.
2) Regulations and other systems concerning management of the risk of loss within subsidiaries
The Company operates the Risk Management Committee, where the issues and measures relating to the promotion of group-wide risk management are deliberated.
3) Systems which ensure that the Board Members of subsidiaries execute their duties efficiently
While respecting the autonomy of management of Group companies, the Company shall prepare various rules for the management of Group companies and enhance governance within the Company Group.
4) Systems which ensure that the execution of the duties of the Board Members and employees of subsidiaries conforms to laws and ordinances and the articles of incorporation
- The Company strengthens the governance of the Company Group by such means as the dispatch of officers to the Board of Directors of each group company. Especially in South America and North America, a Business Supervisor in South America and a Business Supervisor in North America shall be appointed, respectively.
- Group companies shall promote compliance activities by appointing a compliance officer and by establishing a compliance-promoting organization based on self-imposed internal rules, such as the Code of Ethics. The Ethics Committee of the Company shall support such activities.
5) Other systems to ensure the properness of business within the company group
The internal audit division, an organization under the direct control of the President, shall conduct an internal audit on the Nissui Group based on an annual plan, report the audit results to the Directors, Auditors and the head of the audited organization, and periodically report the summary of the results to the Board of Directors.
6. The basic policy and preparation towards the expulsion of antisocial forces
The Nissui Group's basic policy is to refuse any undue claims or other requests from antisocial forces or organizations that pose a threat to civic order and safety. As preparation, the Group has drawn the attention of its employees to its policy to have no relationship with antisocial forces by clearly articulating it in its Code of Ethics and its Ethical Behavior Standards. The Group has also established a system to appropriately deal with this issue whereby information from related governmental agencies are collected on an ongoing basis, responsible divisions are immediately reported to and consulted in the event of incidents and close liaison is maintained with related governmental agencies and legal experts.
II.System to ensure that Auditors' audit is conducted effectively
1.Employee-related matters in cases where an employee is appointed by an Auditor to serve as his/her assistant
- Employees of the internal audit division, the Secretarial Office and other divisions shall assist the duties of Auditors upon the Auditors' request.
- If the Auditors requests, the Company shall appoint employees as staff members working for the Auditors.
2. Matters relating to independence of employees referred to in preceding paragraph from Directors and the matters for ensuring the effectiveness of the directions given by the Auditors to the employee
- An employee who assists the duties of the Auditors as referred to in the preceding paragraph shall not be subject to instructions or orders from Directors, etc.
- When the Company appoints staff members working for the Auditors, the Company shall respect the opinions of the Auditors for the personnel affairs and evaluation of the staff.
3. System for Directors and employees to report to Auditors and other systems to report to Auditors
1) Systems under which the Company's Board Members and employees report to the Auditors
- Directors and employees shall promptly pass on the prepared documents, etc., (referred to in Section 2 of I. above) to Auditors, and shall provide an explanation in a prompt and precise fashion when so requested.
- Directors, Executive Officers and employees shall promptly report to the Auditors if they become aware of any fact which may cause considerable damage to the Company Group, or any other fact relating to the management of the Company Group.
- The internal audit division shall report Nissui Group's operational audit results to Auditors.
- Auditors shall examine the deliberations, resolutions and reports of the Board of Directors, and as necessary, enhance the system to interview and confirm with Directors about the status of execution of operations.
2) Systems under which the Board Members, Auditors, and employees of subsidiaries, or any person receiving report from them, report to the Auditors
- When the Auditors request the officers and employees of a group company to report the execution of their duties, the officers and employees shall respond to such request in a swift and accurate manner.
- If the officers and employees of a group company discover any fact which may cause considerable damage to the Company Group, or any other important fact relating to the management of the Company Group, they shall immediately report to the Auditors via the division responsible for the management of their own company or the Company, or report to the Company's internal reporting system
- The Company's Ethics Committee periodically reports to the Auditor about the contents of and measures taken for any reports made to the internal reporting system.
4. Systems to ensure that the reporters to the Auditors will not be treated disadvantageously on the grounds of the reports
If any officer or employee of the Company Group reports to the Auditors, it is prohibited to treat the officer or employee disadvantageously on the grounds of the reports and the Company disseminates this policy to all the officers and employees of the Company Group.
5. Policy relating to the processing of expenses incurred with respect to the execution of duties by the Auditors
If the Auditors request the payment of any expenses incurred with respect to the execution of the duties, the Secretarial Office shall immediately process the expenses except where such expenses are found unnecessary for the execution of the duties of the Auditors in light of the regulations concerned.
6. Other systems to ensure that Auditors' audit is conducted effectively
- Auditors shall conduct audits according to the implementation procedures relating to internal control established by the Board of Auditors for the purpose of ensuring the effectiveness of audits, and whenever necessary, discuss with Directors and enhance the effectiveness of audits.
- The Independent Auditors shall periodically report the audit plans and audit results to Auditors, and as necessary, Auditors shall exchange information and opinions with the internal audit division.