Basic Policy on Internal Control System
“We are Social Beauty Innovators for the Chain of Happiness.” This is the mission statement of the I-ne Group, which consists of I-ne and its subsidiaries. Our products aim to bring happiness and smiles to our customers and their families. We aim to create a chain of happiness that extends to our business partners and their families, local communities, and our own employees and their families by generating opportunities and profits. Guided by this corporate philosophy, we, as a unified group, establish the following policy on internal control to achieve transparent and efficient management for enhancing corporate value.
1.Establishing a framework to ensure compliance with laws and articles of incorporation in the execution of executive directors’ duties
- To establish a corporate culture where directors and employees comply with laws and regulations and conduct business activities with ethical standards, we have formulated a “Compliance Policy” and “Compliance Regulations” that apply to the entire I-ne Group.
- The Compliance and Risk Management Committee promotes compliance and risk awareness culture as part of the compliance framework. The committee develops and implements a “Compliance Program” based on established policies and guidelines. This includes planning and organizing regular training sessions and other initiatives to ensure a thorough understanding and adherence to compliance standards throughout the organization.
- We provide an internal whistleblower hotline for reporting suspected legal violations or other compliance concerns. The hotline operates per the Internal Whistleblowing Standards. Persons using the hotline are protected from retaliation.
- The Internal Audit Department conducts internal audits to ensure the proper execution of business activities across I-ne Group in compliance with the established Standards on Internal Auditing. Additionally, the department provides necessary compliance guidance when needed.
2.Creating frameworks and guidelines for managing the risk of loss and other related measures
- We recognize that the key risks are compliance, reputational, operational, disaster, quality, environmental, and information leakage risks. To ensure effective risk management, we have established the “Risk Management Rules” as guidelines and promote the development of a robust risk management framework following these rules.
- The Compliance and Risk Management Committee is established to make the fundamental policy for risk management across the entire group, monitor and follow up on implementing risk mitigation measures, and ensure effective control if risks become apparent. If significant risks materialize, a task force will be assembled to minimize the damage.
- As part of our crisis response measures, we establish the “Business Continuity Plan Guidelines” to guide the development of business continuity plans, crisis management plans, and disaster-response plans. Additionally, we conduct emergency evacuation drills and training on business continuity management.
3.Establishing a system to ensure efficient execution of executive directors’ duties
- I-ne’s Board of Directors operates in compliance with the Board Management Rules. During regular meetings, the board makes decisions on significant matters and oversees the execution of business by requesting business reports from the executive directors and holds irregular meetings when necessary.
- The roles and responsibilities of directors and executive officers are defined. Additionally, internal regulations such as the “Authority and Responsibility Regulations” are established to ensure the efficient and appropriate execution of duties by I-ne’s executive directors and executive officers.
- Based on the business plan, we set specific quantitative targets for the budget period and clarify each business unit’s and subsidiary’s objectives and responsibilities. We strive to achieve the desired performance targets through a variance analysis (comparing budgets with actual outcomes).
4.Establishing an organizational structure to ensure proper conduct of business activities within the company and its subsidiaries
- We establish the “Affiliate Company Management Rules” and other related regulations to ensure the proper and efficient operation of I-ne Group while respecting the independent management of each subsidiary. Subsidiaries develop rules and regulations based on these guidelines for conducting business appropriately. They must report regularly to the I-ne’s Board of Directors regarding their management activities and business execution.
- The Compliance and Risk Management Committee, along with other important committees, operates with the perspective of considering each subsidiary, and the representatives of each subsidiary report on significant risks to the Compliance and Risk Management Committee.
- The Internal Audit Department conducts or oversees audits of each subsidiary and monitors and guides them to establish and operate a system that aligns with our internal controls.
5.Establishing an information storage and management system for the execution of the director’s duties
- Executive directors’ business activities are documented (including electronic records) and stored following the Record Management Policy. The policy outlines guidelines for document organization, storage, retention period, and disposal, ensuring proper preservation and management of the records.
- Information related to the execution of directors’ duties shall be maintained in a readily accessible state in preparation for requests from directors or other relevant parties to view such information.
6. Appointing executive directors or employees to assist the Audit & Supervisory Committee, ensuring the independence of these appointed individuals from other executive directors within our company (excluding directors who are members of the Audit & Supervisory Committee), and ensuring the effectiveness of instructions given by the Audit & Supervisory Committee to these directors and employees.
- The Internal Audit Department assists the Audit & Supervisory Committee as required.
- The transfer and evaluation of personnel in the Internal Audit Department shall be conducted with due respect to the opinions of the Audit & Supervisory Committee, ensuring independence from the executive directors (excluding those who are members of the Audit & Supervisory Committee).
- The personnel in the Internal Audit Department shall strictly adhere to the directives and instructions of the Audit & Supervisory Committee while assisting in performing their duties.
7.Reporting framework for directors (excluding directors who are members of the Audit & Supervisory Committee) and employees to the Audit & Supervisory Committee
- Executive directors (excluding those members of the Audit & Supervisory Committee) and employees report on the status of their duties through their attendance at the Board of Directors Meeting and other important meetings. The Internal Audit Office reports to the Audit & Supervisory Committee on the progress of internal audit operations. The Audit & Supervisory Committee Members may request reports on the status of business and financial matters.
- Executive directors (excluding those members of the Audit & Supervisory Committee) and employees must promptly report to the Audit & Supervisory Committee upon discovering major legal violations, compliance issues, or significant risks within I-ne and its subsidiaries.
- Executive directors who are Audit & Supervisory Committee members attend various committees and critical meetings about internal controls as observers. They also have the right to view documentation regarding I-ne’s important decisions.
8.Ensuring an Effective Framework for the Audit & Supervisory Committee’s Auditing Process and Oversight.
- The directors who are Audit & Supervisory Committee Members enhance the effectiveness of audits by attending Board of Directors Meetings and other significant meetings as necessary. They collaborate with the internal audit department and external auditors/auditing firms.
- An adequate budget is allocated in advance for expenses that the directors who are Audit & Supervisory Committee Members deem necessary for the execution of their duties. The members can claim expenses after the event for emergency or unexpected expenses.。
- The CEO regularly exchanges opinions with the Audit & Supervisory Committee to enhance the committee’s auditing and supervision effectiveness.
