Internal Control System

Basic policy and the status of the development of internal control systems

The Group’s name comes from our motto “turning dreams into reality and pursuing ideals,” which is what we aim to achieve as a company. To ensure that we continue to enhance corporate value, we have also set out the following three commitments as our Corporate Philosophy.

  • We will help society to achieve prosperity and will continue to grow.
  • We will ensure compliance in our management.
  • We will strive to enhance stakeholder satisfaction.

To put these commitments into practice, a meeting of the Board of Directors on April 22, 2013 approved plans for the “development of systems necessary to ensure that the execution of duties by directors complies with laws and regulations and the articles of incorporation, as necessary to ensure the properness of operations of a stock company ” in accordance with Article 362, Paragraph 4, Item 6 of the Companies Act. As a result, we have set out the following basic policy on the establishment of internal control systems.

(Revised May 12, 2015)

1.Systems to ensure that directors and employees comply with legislation, and risk management systems

  • (1)The Board of Directors shall establish a risk management system and ensure that directors and employees execute their duties in compliance with applicable legislation. It shall also establish an internal reporting system, and make every effort to prevent actions in violation of legislation and to detect such actions as quickly as possible.
  • (2)The Board of Directors shall make every effort to strengthen initiatives against unreasonable demands and other approaches from antisocial organizations and individuals, in recognition of the need to sever ties with antisocial forces in order to protect the Company.

2.Ensuring that directors execute their duties efficiently, keeping records relating to the execution of duties.

  • (1)The Board of Directors shall delegate authorities in an appropriate manner and set out an approval system, in accordance with regulations on matters such as executive authorities and division of duties, and shall maintain an environment in which directors can execute their duties efficiently.
  • (2)The Board of Directors shall set out necessary regulations in areas such as document management, and ensure that records are kept in an adequate manner, including minutes and other documents from key meetings, and important documents and reports relating to the execution of duties.

3.Systems to ensure the legitimacy of operations carried out by the Company and its subsidiaries as a corporate group

  • (1)The Board of Directors shall establish a division to manage its subsidiaries and set out regulations accordingly. It shall also oversee the execution of operations by the Company and its subsidiaries as a corporate group, monitor compliance with legislation, supervise risk management systems, and ensure that operations are carried out appropriately and efficiently.
  • (2)If necessary, the Board of Directors shall instruct subsidiaries to submit reports regarding matters such as the execution of duties by officers and employees.

4.Assigning support staff to assist auditors with their duties, independence of support staff, and ensuring the effectiveness of instructions given to support staff

  • (1)If an auditor requests support staff to assist with their duties, the Board of Directors shall assign staff to the auditor accordingly.
  • (2)Staff assisting auditors shall carry out duties as instructed by the relevant auditor. Matters relating to transfers, evaluations or remuneration for support staff shall be determined with the advance agreement of the relevant auditor.

5.Systems for reporting to auditors, handling expenses, and ensuring that auditors conduct audits effectively

  • (1)If requested by an auditor of the Company, directors of the Company, officers at subsidiaries, and employees at the Company or any of its subsidiaries shall provide a report on important matters relating to corporate management and business operations, and on the execution of duties and their results.
  • (2)If directors of the Company, officers at subsidiaries, or employees at the Company or any of its subsidiaries discover any action that is in violation of legislation, or that could have a significant detrimental effect on the Company and its subsidiaries as a corporate group, they shall report details to an auditor immediately.
  • (3)It is prohibited to subject any party that has submitted a report to an auditor of the Company to unfair treatment as a result of submitting the relevant report. Directors of the Company, officers at subsidiaries, and employees at the Company and its subsidiaries shall be made well aware of this fact.
  • (4)The Company shall make advance payment of expenses associated with the execution of duties by auditors, in accordance with Article 388 of the Companies Act. Upon receipt of a claim for reimbursement of expenses, unless the relevant expenses or payments are deemed to be unnecessary for the execution of duties by the relevant auditor, the Company shall make the relevant payments without delay.
  • (5)The President shall hold meetings and communicate with auditors as necessary on an ongoing basis, and shall maintain an environment in which auditors can conduct audits effectively.

6.The internal auditing division shall conduct internal audits of the Company and its subsidiaries as a corporate group, in relation to the establishment and operation of the above internal control systems. Auditors shall audit the execution of duties by directors.

Basic policy and development to eradicate antisocial forces

In response to growing public demand to eliminate antisocial forces, we have long since made every effort to sever ties with antisocial forces, from individual employees all the way through to the President.

In light of the Tokyo Metropolitan Ordinance for Eliminating Organized Crime Groups, enforced on October 1, 2011, we have made sure that contracts relating to the sale or purchase of property contain provisions regarding the elimination of antisocial forces, in an effort to prevent any such ties from being formed. We have also set out internal regulations stating that checks must be carried out on new partners (using newspaper databases, etc.) before entering into new transactions, including selling and purchasing property, ordering construction work and purchasing supplies. All checks are handled by the General Affairs Department and are carried out in line with procedures set out in a manual.

There is a possibility that antisocial forces may acquire shares in the Company through transactions on the open market. We make every effort to monitor whether or not antisocial forces have become shareholders however by regularly obtaining information from the shareholder registry administrator. As part of our recruitment activities, we also run checks on prospective officers and employees (using newspaper databases, etc.) before finalizing their appointment.

In addition to the above internal checking system, we also signed up to the Special Violence Prevention Measures Association (Metropolitan Police Department) in April 2008. We are working to strengthen relationships with local police stations, and make every effort to obtain information that will help to prevent ties with antisocial forces, including making inquiries regarding the status of partners as antisocial forces if necessary.

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