Internal Control Systems
Akebono established the "Basic Policy regarding the Establishment of Internal Control Systems" to respond to risks related to company size, business characteristics and management actions. On the basis of this policy, Akebono maintains systems related to risk management, adherence to laws and regulations, effective business performance, accurate financial reporting and the promotion of the development and operation of internal control systems throughout the Group.
Akebono announces that the Board of Directors meeting, held on April 16, 2015, approved a partial revision of the Basic Policy Regarding the Establishment of ln-House Regulatory Systems as "the Act for Partial Revision of the Companies Act (Act No.90 of 2014) and "the Ordinance for Partial Revision of the Enforcement Regulations of the Companies Act (Ordinance of Ministry of Justice No.6 of 2015) which will come into effect on May 1, 2015. Please note that revision of expressions has been made within the framework of not changing the essence of the basic policy.
Basic Policy Regarding the Establishment of Internal Control Systems
I. Systems to Ensure that Execution of Duties of the Directors and Employees of the Company and of the Directors, etc. and Employees of the Company's Subsidiaries Complies with Laws and Regulations and the Articles of Incorporation
1. Fundamental Stance
The concept of compliance held by the Company and the Company's group companies shall be based on "the Global Compliance Manual," which includes "the Company's Philosophy," messages from President & CEO, the akebono Global Code of Conduct, and the akebono Global Standard of Behavior.
For the implementation of compliance activities, a compliance committee shall be established under the direction of the President & CEO to establish a compliance system through educating officers and employees so that each member acts in line with the concept of compliance. The status of compliance activities shall be reported on by the Compliance Committee to Directors and Audit & Supervisory Board Members in a timely manner, and the Internal Audit Division shall also report on the implementation status of each division of the Company and each of the Company's group companies to Directors and Audit & Supervisory Board Members on a regular basis.
In addition, for the prevention, early detection and early resolution of problems, in-house and external consultation services shall be set up to receive inquiries from any employee of the Company and the Company's group companies including temporary employees. To operate the in-house consultation services, staff in charge of consultation shall be assigned to the main business bases of the Company and the Company's group companies so that employees can consult any staff in charge of consultation. External consultation services shall be outsourced to a specialist agent and shall be equipped with a hotline. Inquiries, received by consultation services, shall be investigated primarily by the Compliance Committee to determine whether they are factual, and if the investigation identifies problems, the Compliance Committee shall play a central role in taking corrective measures and preventing reoccurrence. The consultation services shall also accept inquiries made anonymously. The Company and the Company's group companies shall keep the content of inquiries and the personal information of inquirers confidential and shall not treat disadvantageously those making inquiries.
To further promote compliance of the Company and the Company's group companies, a manager responsible for the promotion of compliance shall be appointed in each of the Company's group companies to establish a preventive system on the assumption of risks that are liable to occur in the Company and the Company's group companies.
2. Key Details to Address
- (1)The Company and the Company's group companies shall state in "the Global Compliance Manual" that directors and employees shall take a resolute stance against anti-social forces that threaten social order and proper corporate activities, and attempt to act with good sense based on sense of justice consistently, and directors and employees shall be made fully aware of the same. The general affairs divisions in the Company and the Company's group companies shall lead the effort to prevent anti-social forces from becoming involved in management activities and avoid damage from such forces by gathering information on anti-social forces in normal times. Company-wide actions shall also be taken in case of emergency in coordination with external specialist agents, as necessary.
- (2)The Company and the Company's group companies shall state prohibited acts by Competition Laws in order to comply with regulations by Competition Laws of each country, especially regulations against cartels, and clarify rules for contacting competitors and trade associations, retaining information and preparing documents. The sales divisions and legal divisions in the Company and the Company's group companies shall ascertain the existence of acts that appear to violate laws, and in the case that a violation by the Company, the Company's group companies or business partners is confirmed, the said divisions shall report on the incident to the Compliance Committee and try to prevent the spread of damage in cooperation with regulatory authorities.
- (3)To secure the trustworthiness of financial statements and information that is likely to seriously affect financial statements, the Financial Instruments and Exchange Act and other laws and regulations shall be observed, and internal controls related to financial reporting shall be established and operated.
II. System Concerning Retention and Management of Information Related to Execution of Duties of Directors
The Company shall record, retain and manage information related to the execution of duties of Directors via paper or electronic media (hereinafter referred to as "Documents") pursuant to the Document Management Rules. The Document Management Rules stipulate those who are responsible for managing Documents, the scope, retention period, retention place of Documents that should be retained, and other systems for retention and management of Documents. Directors and Audit & Supervisory Board Members shall be allowed to view these Documents at any time.
III. Rules and Other Systems Concerning Management of Risk of Loss of the Company and the Company's Subsidiaries
To integrate risks that each division in the Company and the Company's group companies is managing at present, and build a risk management system, a risk management committee composed of members elected by persons responsible for the competent divisions that manage company-wide key risks in each financial year, and chaired by President & CEO, shall be set up as the organ for promoting risk management of the Company and the Company's group companies.
The Risk Management Committee shall formulate and implement targets and plans regarding risk management that have been approved at the Board of Directors meeting, formulate internal rules concerning risk management, assess the implementation status and effectiveness of risk management, and formulate and implement corrective and improvement measures regarding the risk management system. In addition, the Risk Management Committee shall ensure that information is circulated promptly according to the level of risk in case of emergency, and establish an emergency response system.
Regarding risks that are deemed to be liable to seriously affect the Company's business and performance, the Risk Management Committee shall assess the level of their impact each year, select company-wide key risks, formulate proper counter-measures, goals and schedules for achieving them, and take actions to mitigate the possibility of their occurrence and resulting damage.
In addition to company-wide key risks to the Company and the Company's group companies, those who are responsible for each division of the Company and the Company's group companies shall select key risks that each division should address, formulate proper counter-measures, goals and schedules for achieving them and take actions to mitigate the possibility of their occurrence and resulting damage.
To minimize damage (impact and losses) in preparation for the case that a crisis such as an earthquake or other disaster occurs, the above responsible people shall prepare and distribute a response manual and hold drills and education seminars for raising awareness to prepare for such emergency situation.
IV. System to Ensure that Execution of Duties of Directors of the Company and of Directors, etc. of the Company's Group Companies is Conducted Effectively
The Company and the Company's group companies shall formulate medium-and long-term business plans based on future business environments, draft budgets for each business year, and draft and implement specific plans toward achieving the goals.
The Company shall adopt an Executive Officer system that separates management and execution in order to clarify responsibilities and authority. The Board of Directors meeting shall be held at a fixed time monthly and as the need arises. In addition, a prior-deliberation system shall be in place under which several key meetings of Directors and Executive Officers are set up to discuss management issues in advance, and after deliberation at such meetings, approval shall be obtained at the Board of Directors meeting. Furthermore, for prior deliberation, information on management and deliberations shall be shared by means of electronic media in an effort to make distribution of information more efficient.
Directors or Executive Officers responsible shall report on the status of execution of decided duties at Board of Directors meetings or Board of Executive Officers meetings, as necessary, and Audit & Supervisory Board Members and Internal Audit Division shall also audit them on a regular basis.
V. Matters Concerning Reporting to the Company on Matters related to Execution of Duties of Directors, etc. in the Company's Subsidiaries
The Company shall establish internal rules for building a system under which each of the Company's group companies reports to the Company on business results, financial conditions and other important management matters and appoint a division in charge of managing the Company's group companies.
The Company's Directors and each person responsible in the Company's group companies shall have the authority and responsibility to establish and operate an internal control that can secure the appropriateness of execution of duties of each division in the Company and the Company's group companies.
The Company's Audit & Supervisory Board Members and Internal Audit Division shall audit the Company's group companies, including those overseas, on a regular basis, and report the audit results to the Company's Board of Directors and the divisions in charge.
To further secure the appropriateness of duties in the Company and the Company's group companies, rules concerning the division of duties shall be determined in each of the Company's group companies with the Company as the center. Each Audit & Supervisory Board Member of the Company's group companies shall have the authority to conduct not only accounting audits but also audits of duties.
VI. Matters Concerning Employees in the Case that Audit & Supervisory Board Members Request Employees to be Assigned to Assist in Audit & Supervisory Board Members' Duties
The Audit & Supervisory Members' office shall be set up to assist in their duties, and dedicated staff (hereinafter Staff of the Audit & Supervisory Members' Office) shall be assigned.
VII. Matters Concerning Ensuring the Independence from Directors of the Employees in the Preceding Paragraph and Effectiveness of Instructions Given by Audit & Supervisory Board Members to Employees
To ensure the independence of Staff of the Audit & Supervisory Board Members' Office from Directors and the effectiveness of instructions given Audit & Supervisory Board Members to Staff of the Audit & Supervisory Board Members' Office, Staff of the Audit & Supervisory Board Members' Office shall exercise their duties under the direction of Audit & Supervisory Board Members and shall not be subject to the instructions of Directors. The appointment of, assessment of, and disciplinary action against Staff of the Audit & Supervisory Board Members' Office shall be subject to discussion with the Audit and Supervisory Board. The staff of the Audit & Supervisory Board Members' Office shall be dedicated to Audit & Supervisory Board Members and shall not be allowed to execute other duties concurrently, in order to secure the effectiveness of instructions from Audit & Supervisory Board Members to Staff of the Audit & Supervisory Board Members' Office.
VIII. System to Report to the Company's Audit & Supervisory Board Members and Other Systems to Report to Audit & Supervisory Board Members
Directors and employees of the Company and of each of the Company's group companies (including people who receive reports from the above people) shall report to Audit & Supervisory Board Members in an appropriate way on facts that may seriously affect the management and performance of the Company and the Company's group companies, serious violations against laws and regulations and the articles of incorporation and similar facts, and facts that may lead to violation as soon as they come to know such facts.
The Company and the Company's group companies shall not treat those who made the above reports disadvantageously for the reason of their reporting.
Full-time Audit & Supervisory Board Members shall attend important meetings, including the Board of Directors meetings and the Board of Executive Officers meetings, in order to grasp the process of important decision-making and the status of execution of duties. Prior to these meetings, all Audit & Supervisory Board Members may view relevant documents and materials that are distributed beforehand through electronic media and request additional explanations and reports, as necessary, from Directors and Employees.
IX. Matters Concerning Procedures for Advance Payment of Expenses Incurred for Execution of Duties of Audit & Supervisory Board Members, and their Redemption and Other Policies for Treatment of Expenses or Liabilities Incurred for Execution of the Said Duties
When Audit & Supervisory Board Members claim advance payment of expenses for the execution of their duties, the Company shall deal with the said expenses and liabilities without delay except when the claimed expenses and liabilities are regarded as not connected with the execution of duties of the said Audit & Supervisory Board Members.
X. Other Systems to Ensure that Audits by Audit & Supervisory Board Members are Conducted Effectively
The Audit and Supervisory Board shall attempt to coordinate through exchanging information and other means when the Board receives explanations on the contents of accounting audits from independent accounting auditors and on the contents of audits of duties from Internal Audit Division.
The Audit and Supervisory Board shall hold regular meetings for an exchange of opinions with the Company's top management team.