Basic Policy on Internal Control Systems
I-ne and I-ne group companies were establised to create a "Chain of Happiness, which brings happiness to the world through our products." Our management philosophy is to make our customers and their families happy through bringing smiles, joy, employment opportunities, and profit, and to link this chain through "our clients and their families", "our local society", and "I-ne employees and their families" to generate the Chain of Happiness. Under this management philosophy, the entire I-ne Group is harmonized in realizing a highly transparent and efficient management for raising the Company's corporate value. To this end, we stipulate the following basic policy on internal control systems.
1.Structure to ensure the execution of duties by directors and employees is in accordance with the laws and regulations and the Company’s articles of incorporation
- The Company shall establish its Compliance Regulations that apply to the entire I-ne group, in order for creating a corporate climate in which directors and employees comply with the laws and regulations and the articles of incorporation with maintaining high ethical standard to conduct our business activities.
- The Company shall set up a Compliance Committee for establishing and promoting the strict compliance structure in conformity with laws and regulations, in order to ensure the directors and employees have an full awareness and through practice on compliance abide by the laws and regulations.
- The Company shall have absolutely no relations with any antisocial forces, including any business dealings. The Company shall adopt a resolute stand as a unified company to unreasonable requests from antisocial forces.
- The Company shall set up a whistle-blower system to ensure whistleblowers are not subject to any disadvantages for making an internal notification of actions alleged to be in violation of laws and regulations.
2.Rules and other structures concerning the risk management of loss
- The Company recognizes the following as main risks: compliance risk, operational risk, disaster risk, quality risk, environmental risk, and information leakage risk. Accordingly, the Company shall stipulate Risk Management Rules, and maintain and implement a risk management system for the management of these risks.
- The Company shall establish a Risk Management Committee to establish the basic policy on risk countermeasures for the entire group concerning risk management, to inspect and follow up on the implementation of these risk countermeasures, and to control any actualized risks. The Company shall set up a task force to minimize any damage caused by substantial risks that have become actualized.
3.Structure to ensure the efficient execution of duties by directors
- In addition to formulating the Rules for the Board of Directors concerning the operation of the board of directors, the Company shall determine the key items at the regular board of directors’meetings and supervise the execution of duties by directors through the reports presented by the directors, and hold timely extraordinary board meetings as required.
- The Company shall stipulate the division of duties of directors and executive officers and the Company shall also define internal rules such as the Rules on Administrative Authorities to ensure that duties of directors are being executed efficiently and appropriately.
- In accordance with the business plan, the Company shall indicate the calculated targets in the budget period and clarify the targets and responsibilities of each business division and subsidiary. The Company shall also endeavor to achieve the expected performance targets by analyzing the variation in the budget figures and actual results.
4.Structure to ensure the proper execution of work duties in the corporate group (group companies) comprising the Company and its subsidiaries
- The Company shall respect the autonomy and independence of each group company, while also stipulating the Administrative Regulations for Affiliated Companies and other related provisions to facilitate appropriate and efficient group management. The subsidiaries shall stipulate other regulations that are based on these rules and provisions in order to facilitate the proper execution of work, and regularly report on the business performance and execution of work duties to the Company’s board of directors.
- The Compliance Committee, Risk Management Committee and other key committees shall observe the activities of the group subsidiaries, and representatives from each subsidiary shall report to these committees on any serious risks.
- The internal audit office shall implement and supervise the auditing of each subsidiary, and monitor and guide each subsidiary in constructing a system in accordance with the Company’s internal control to ensure the proper operation its proper operation.
5.Structure for the storage and management of information concerning the execution of directors’ duties
- The Company shall document (including electronic records) information concerning the execution of directors’ duties, and store it with related materials used for management decisions and other matters. The Company shall establish a principal department for document management, and stipulate rules on the documents for management and the department for their storage, the storage period and management method, and other matters.
- Information concerning the execution of directors' duties shall be prepared and maintained for timely perusal in response to a request for such information from directors, auditors, or others.
6.Matters concerning employees who have been assigned to assist auditors in their duties as requested by the auditors and matters concerning the independence of employees from directors
- The Company shall assign employees to assist auditors, so as to ensure the effective implementation of the audit by the auditors.
- The employees who assist the auditors shall be independent from reporting to directors, and personnel matters concerning those employees shall be determined through consultations with the auditors.
7.Structure for directors and employees to report to auditors and other structures concerning reporting to auditors
- Directors and employees shall report to auditors on the execution of their duties at board of directors’ meetings and other important meetings that are attended by auditors. The internal audit office shall also report to the board of auditors on the implementation status of internal audits and their work duties. Additionally, reports on business condition and financial position shall be made in accordance with requests from auditors.
- Directors and employees shall immediately report to auditors on any serious violation of laws and regulations detected in the Company and in the affiliated companies in the group, and on any substantial compliance-related facts that have been discovered.
- Auditors shall attend as observers key meetings and various committees related to internal control, and also peruse the requests for approval, which are the Company’s important documents on managerial decisions.
8.Other structure to ensure effective implementation of audit by auditors
- Auditors shall attend board of directors’ meetings and other important meetings, etc., as required, and cooperate with the internal audit office and audit corporations to improve the effectiveness of audits.
- Expenses recognized as necessary for auditors to execute their duties shall be posted to the budget in advance, and any emergency and ad-hoc expenses incurred by auditors may be subsequently claimed from the company after the fact.