Internal Control Policy

Policies regarding the establishment of an internal-control system

1.
A structure for ensuring the Board of Directors’ duties conform to laws and regulations and the articles of incorporation
So that our company’s entire business is conducted in a proper and sound manner, the Board of Directors shall work on the establishment of an effective internal-control system and the development of a company-wide structure for observing laws and regulations and the articles of incorporation from the perspective of further strengthening corporate governance.
2.
A structure regarding the storage and management of information related to the execution of the Board of Directors’ duties
(1)
The Board of Directors, in accordance with what is specified in the document management rules , shall store and manage minutes of general meetings of shareholders, minutes of the Board of Directors’ meetings, written requests for managerial decisions; and other information related to the execution of their duties.
(2)
Upon a request by a board member, they shall be made available to him/her.
3.
Rules and other structures regarding the management of the risk of losses
(1)
To prevent risks and minimize the company’s losses, we shall establish the Risk Management Committee with the President as its chairman.
(2)
The Risk Management Committee, based on the risk-management rules, shall check the development and operational situation of the manuals and other materials for risk management, and report to the Board of Directors.
(3)
The Audit Office shall implement audits about the effectiveness of the risk-management structure of each section.
4.
A structure ensuring the Board of Directors’ duties are efficiently executed
We shall develop a structure where the duties of the Board of Directors are properly and efficiently executed in accordance with the administrative-authority and decision-making rules that are based on the Board of Directors rules and the Board of Operating Officers rules.
5.
A structure ensuring our employees’ duties conform to laws and regulations and the articles of incorporation
(1)
We shall develop codes and ethics rules/guidelines that have our employees act in accordance with laws and regulations and other company rules and social norms, and the Board of Operating Officers shall keep everyone informed about them and promote their observance. We shall also establish the Risk Management Committee inside the company.
(2)
We shall develop a system by which, when we learn that an employee has violated any laws or regulations or any of the articles of incorporation, has violated any company rules or has acted against social norms, we can report to or consult with the Corporate Ethics Hotline so that the case shall be swiftly reported to the Audit and Supervisory Committee . In addition, we shall hold a compliance-investigation committee as necessary to conduct investigations.
(3)
As for the whistle-blower system, we shall ensure the protection of the whistle-blower while maintaining transparency and properly handling respective cases.
6.
Structures for ensuring proper business operations within a corporate group consisting of the company and its parent and affiliated companies
Although we currently do not have any parent companies or affiliated companies, if we organize a corporate group in the future, we shall work on the sound development of the entire corporate group centering around us in accordance with the management rules of related companies, and shall make every effort to ensure the sharing of information and proper business operations within the group as much as possible. In addition, we shall develop structures based on the following:
a:
A structure regarding reporting to us about matters related to the execution of the duties of the Board of Directors of our affiliated companies
b:
Rules and other structures regarding the management of the risk of losses of our affiliated companies
c:
A structure ensuring the efficient execution of duties of our affiliated companies’ Board of Directors
d:
A structure ensuring our affiliated companies’ Board of Directors and employees’ duties conform to laws and regulations and the articles of incorporation
7.
Provisions regarding requests by the Audit and Supervisory Committee for an employee to be allocated to assist with their duties
Provisions regarding the employee’s independence from the company’s board members and ensuring the effectiveness of instructions to the person
(1)
If the Audit and Supervisory Committee requests the allocation of an employee for assistance with their duties, we shall allocate an employee after discussion with the Audit and Supervisory Committee.
(2)
The employee assisting the Audit and Supervisory Committee shall not receive any instructions or orders from our board members (excluding those belonging to the Audit and Supervisory Committee) or his/her superiors regarding the duties assigned by the Audit and Supervisory Committee.
(3)
The personnel evaluation, treatment, transfer and disciplinary action of the employee shall be decided upon previous agreement by the Audit and Supervisory Committee.
8.
Structures regarding reporting to the Audit and Supervisory Committee
a:
A structure for our board members (excluding those belonging to the Audit and Supervisory Committee) and employees to make reports to our Audit and Supervisory Committee
(1)
If our board members (excluding those belonging to the Audit and Supervisory Committee) or employees have learned about the existence of a significant duty-related violation against any laws or regulations or any of the articles of incorporation, any act of dishonesty or any fact that could cause significant damage to the company, they shall swiftly report to the Audit and Supervisory Committee.
(2)
Our board members (excluding those belonging to the Audit and Supervisory Committee) and employees shall swiftly report to the Audit and Supervisory Committee about decisions that would have a significant effect on the business or organization, as well as the results of internal audits.
b:
A structure for our affiliated companies’ board members, auditors and employees or those who have received a report from them, to make reports to our Audit and Supervisory Committee Although we currently do not have any affiliated companies, if we do in the future, we shall develop structures based on the following:
(1)
If our affiliated companies’ board members, auditors or employees have learned about the existence of a significant duty-related violation against any laws or regulations or any of the articles of incorporation, any act of dishonesty or a fact that could cause significant damage to the company, they shall swiftly report to our Audit and Supervisory Committee.
(2)
Our affiliated companies’ board members, auditors and employees shall swiftly report to our Audit and Supervisory Committee about decisions that would have a significant effect on the business or organization, as well as the results of internal audits.
(3)
Our affiliated companies’ board members, auditors and employees, when requested to make a report by our Audit and Supervisory Committee, shall swiftly provide the necessary report and information.
9.
A structure for ensuring that a person who has made a report to the Audit and Supervisory Committee won’t receive unfavorable treatment on the grounds that he/she has made the report
We prohibit detrimental treatment to a person who has made a report to our Audit and Supervisory Committee on the grounds that he/she has made the report, and specify it in the Corporate Ethics Hotline’s operational rules and keep our board members (excluding those belonging to the Audit and Supervisory Committee) and employees informed about it.
10.
Procedure of advanced payment or reimbursement of an expense incurred in the execution of the duties of the Audit and Supervisory Committee members
Provision regarding the handling of the expenses or debts incurred in the execution of their duties
When the Audit and Supervisory Committee or one of its members makes a claim for the advanced payment or reimbursement of an expense incurred in their execution of their duties, we shall swiftly process the expense or the debt excluding cases where we consider the expense to be unnecessary for the execution of the duties of the Audit and Supervisory Committee or its members.
11.
Other structure for ensuring that audits by the Audit and Supervisory Committee are effectively conducted
(1)
The President shall have meetings with the Audit and Supervisory Committee as often as possible in order to exchange opinions about company management separately from business reports and shall communicate with them.
(2)
The Board of Directors shall ensure the attendance of the Audit and Supervisory Committee at the meetings of the Board of Operating Officers and Risk Management Committee, which are important meeting bodies in ensuring proper business operations.
12.
A structure for ensuring the reliability of financial reporting
(1)
In order to ensure the reliability of financial reporting, we shall keep our employees informed about internal control through education, training, etc., and shall exercise control aimed at ensuring the reliability of financial reporting in the entire company and in respective work processes.
(2)
The Board of Directors shall supervise financial reporting and its internal control, and evaluate and improve the development and operational situation of financial reporting and its internal control based on laws and regulations.
13.
Basic attitude toward the removal of antisocial forces, and the status of its development
We shall not have any relationship, including business connections, with antisocial forces that threaten the social order and sound corporate activities, and shall organizationally handle unreasonable requests from antisocial forces in a resolute manner.

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