Based on the Japanese Companies Act and the Ordinance for Enforcement of the Japanese Companies Act, we established this Basic Policies for Internal Controls as outlined below in order to ensure integrity in business activity.
1．The system for securing job execution compliance by directors and employees with laws and regulations as well as the Company Statute
We shall establish the “Code of Conduct for the SHINKAWA Group” so that all the board members and employees of the entire Group shall perform their jobs in compliance with laws, regulations, the Company Statute and the norms of society. In order to attain a thorough understanding, the president shall also control the Companywide promotion of compliance having instituted the basic rules of compliance. Moreover, the education of employees shall be conducted mainly through the Personnel & Administration Department. The Audit Department under the direct control of the president shall audit the degree of compliance in collaboration with the Personnel & Administration Department. We shall create an internal reporting system with the aim of deterring questionable behavior and conduct in terms of laws, regulations, the Company Statute and the norms of society, prepare contact points for internal reporting both inside and outside the Company to allow all the board members and employees to report information directly, and ensure that reporters will not receive detrimental treatment because of such reporting.
By establishing and promoting these systems, we shall take organized responses to block any relationships with antisocial forces and organizations. In the face of unacceptable demands from antisocial forces and organizations, we shall strive to cut off relations and prevent damage by cooperating with the police and other law enforcement authorities mainly through the Personnel & Administration Department as the controlling division.
2．Systems concerning the maintenance and control of information related to job execution by directors
We shall record and keep information related to decision making and job execution by directors in the form of printed or electronic documents (hereinafter collectively referred to as “documents”) pursuant to the rules relating to document control.
These documents shall be made available for inspection by directors and corporate auditors at any time pursuant to the rules relating to document control.
3．Regulations and other systems concerning the management of risk of loss
In accordance with the risk management rules, each department and each company of the SHINKAWA Group shall manage any risks derived from the operations they are responsible for, whereas the status of cross-organizational risks and Companywide responses shall be managed by the Corporate Planning Department.
4．The system of ensuring that directors execute their duties in an efficient manner
We have adopted the operating officer system to ensure that decision making is undertaken in a swift and agile manner and to clarify responsibilities with respect to the execution of duties. In the context of operating execution function in accordance with decisions of the Board of Directors, the rules relating to management authority clearly define the responsibilities and authority of each officer. In this manner, the Company has taken steps to build a system that is conductive to the appropriate and efficient execution of duties.
In addition, specific objectives and targets are set for each division and department. The Board of Directors regularly reviews the status of progress and results. This helps raise the probability of achieving established objectives and goals and securing efficient Group-wide operations.
5．System to secure the appropriateness of the Company’s operations as well as of the Company Group including its subsidiaries
- The department in charge of internal control for the entire Group shall be the Corporate Planning Department, which provides necessary guidance and support to enhance the effectiveness of internal control and the efficiency of business execution at each Group company.
- Regarding compliance and risk management, the Company’s department in charge of compliance and risk management shall conduct activities covering the entire Group.
- The internal reporting system shall be applied to each Group company.
- The rules for decision making on business execution at the Company’s subsidiaries shall be put in place, and the Company shall have its subsidiaries report the status of their business execution and financial position regularly.
6．In the event corporate auditors request that employees be assigned to assist in their duties; matters related to the relevant employees, matters related to the independence of such employees from directors, and matters related to ensuring the effectiveness of the instructions given to such employees
In the event employees are required to assist in the duties of corporate auditors, we shall assign employees who have the ability and knowledge to examine the operations of the Company. The employees shall not be subject to instruction and/or order of directors and others insofar as their capacity to assist in the duties of corporate auditors is concerned. Personnel transfers and other employment conditions regarding such employees shall be subject to prior approval by the board of corporate auditors.
7．Systems for directors and employees of the Company and its subsidiaries to report to corporate auditors, systems for other reporting to corporate auditors, and systems to ensure that reporters will not receive detrimental treatment because of such reporting
All the board members and employees of the SHINKAWA Group shall report to the board of corporate auditors without delay on important matters that have a significant impact on the Company and the Company Group, the degree to which internal audits have been implemented in addition to matters designated by law. Methods of reporting (reporter, recipient of report, timing of report, etc.) shall be determined through consultation between directors and the board of corporate auditors.
The SHINKAWA Group shall not treat reporters in a detrimental way because of their providing related information to the corporate auditors.
8．Other systems to secure the effective implementation of audits by corporate auditors
We shall provide active support for the preparation of an appropriate environment that allows audits by corporate auditors, and arrange regular meetings for the exchange of opinions between the board of corporate auditors and representative directors.
The Company shall cover the necessary expenses for audit duties such as using external advisors who support the corporate auditors’ audit duties in case it is deemed necessary by the corporate auditors.
Revised on April 24, 2015