AB&Company Co., Ltd. (hereinafter, "we" or the "Company") establishes its "Internal Control Policy" as follows.
1. Systems to ensure that the execution of duties by directors and employees complies with laws and regulations and the Articles of Incorporation
- (1) The Company's Management Philosophy, Code of Ethics and other rules concerning the compliance system will serve as the code of conduct for directors and employees of the Company to conduct themselves in compliance with laws and regulations, the Articles of Incorporation and social norms.
- (2) We will establish a department that will oversee compliance across the board to educate and enlighten directors and employees.
- (3) The Internal Audit Office will audit the status of compliance on a regular basis in cooperation with the Business Management Department, and report the results of its audit to the Management Committee, etc.
- (4) We will secure the means for employees to directly report any suspected act of non-compliance with laws and regulations within the Company. With regard to important information, the details thereof and the status and results of actions taken by the Company will be disclosed to the Company's directors and employees as necessary to ensure that they are thoroughly informed of such information.
2. System for the storage and management of information on the execution of duties by directors
- (1) Information and documents (including electromagnetic records) on the execution of duties by directors will be stored and managed in accordance with the Document Management Rules, and we will secure a system whereby directors and auditors can learn about the details of such information and documents, etc.
- (2) The Document Management Rules prescribe the definition of information to be stored, the retention period, the department responsible for retention and other matters.
3. Rules concerning risk management for loss and other systems
- (1) We will establish a cross-organizational risk management system to prevent and minimize risks, and exhaustively and comprehensively manage risks of the Company and its subsidiaries.
- (2) With regard to new risks, the responsible department will establish rules in accordance with the "Risk Management Rules" and report them to the Board of Directors.
- (3) Regular study sessions and training sessions will be held to raise awareness of risk management among directors and employees. In addition, internal audits will be conducted as necessary to ensure thorough daily risk management.
4. Systems to ensure efficient execution of duties by directors
- (1) We will ensure the efficiency of the execution of duties through the division of roles, division of duties and reporting line, etc. among the directors and employees of the Company and its subsidiaries.
- (2) The division of duties and authority rules, etc. will be reviewed from time to time when laws or regulations are revised or abolished or it is necessary to improve the efficiency of the execution of duties.
- (3) We will develop other systems to ensure the efficiency of the execution of duties through efforts to streamline and computerize our operations.
- (4) The Management Committee and the Board of Directors will review monthly performance and implement improvement measures.
5. Systems to ensure the appropriateness of business operations of the corporate group consisting of the Company and its subsidiaries
- (1) From the perspective of ensuring the appropriateness of business operations of the Company and its subsidiaries, the Company's risk management and compliance systems will be applied to the entire Group, and necessary guidance and support will be provided to subsidiaries.
- (2) The Internal Audit Office will conduct internal audits of the Company and its subsidiaries on a regular basis to ensure the effectiveness and adequacy of the internal controls of the Company and its subsidiaries. In addition, audit results will be reported to the CEO and President and the Management Committee, etc.
- (3) Executives or a responsible department in charge of subsidiaries will be specified, and they will provide appropriate guidance and management as necessary. In addition, they will report to the Company the business operations of the subsidiaries and the status of execution of duties by directors, etc. on a regular basis.
6. Matters concerning the system for employees who are requested by auditors to assist them in their duties (auxiliary employees) and the independence of such employees from directors in the case where auditors request that such employees be appointed
- (1) In the case where auditors require auxiliary employees in order to conduct a complete audit, the Board of Directors will decide whether to appoint auxiliary employees and on their number, remuneration and status (exclusive or concurrent).
- (2) Any transfer of such auxiliary employees will require the consent of auditors, and their personnel evaluation will be performed by auditors.
- (3) Any auxiliary employees to whom an order necessary for audit operations is given by auditors will not follow any direction or order of directors or the General Manager of the Audit Department, etc. with respect to such order.
7. Systems for directors and employees to report to auditors and other systems for reporting to auditors
- (1) In addition to the statutory matters, the directors and employees of the Company and its subsidiaries will promptly report the following matters to auditors as soon as they are discovered:
- (i) Those that have significantly diminished or may significantly diminish the company's credibility;
- (ii) those that have significantly affected or may significantly affect the company's business performance; or
- (iii) other serious violations of the Company's Code of Conduct or Code of Ethics.
- (2) We will ensure that persons who made reports to auditors are not treated disadvantageously due to making such report.
- (3) We will develop a system to promptly report the status of internal audit implementation, the status of reporting and details of compliance violations.
8. Other systems to ensure that audits by auditors are performed effectively
- (1) We will ensure opportunities for auditors to cooperate with outside experts such as lawyers and certified public accountants and receive advice on audit operations when deemed necessary by auditors in conducting audits.
- (2) We will hold regular meetings to exchange opinions between the Board of Auditors and the CEO and Director.
9. Policies related to the processing of expenses, etc. arising from the execution of duties by auditors
- We will establish a system to smoothly perform procedures for advance payment or reimbursement of expenses incurred in the execution of duties by auditors and process other expenses or reimbursements incurred in the execution of such duties in accordance with requests from auditors, etc.
10. Systems to ensure the reliability of financial reporting
- (1) We will establish a system for the development and operation of internal controls over financial reporting in order to prepare reliable financial reporting.
- (2) We will continuously evaluate the proper functioning of the system and make necessary corrections if any deficiencies are found.
11. Basic views on eliminating anti-social forces and the status of development
- (1) In order to prevent damage caused by anti-social forces and to eliminate anti-social forces, the Company's Code of Ethics stipulates that we will "take a firm stance against anti-social forces and organizations that threaten public order and morals of civil society, and all directors and employees will be fully informed of such provisions.
- (2) In order to eliminate anti-social forces, we will establish response rules that stipulate basic policies for dealing with unreasonable demands, departments responsible for dealing with such demands, measures for dealing with such demands, reporting and notification systems, etc., and will develop a system to promptly deal with such demands when an incident occurs.
Established: September 1, 2019