UNIPRES

Corporate Governance

Corporate Governance

Internal Control System Basic Policy

To ensure that business is conducted properly, Unipres Corporation maintains the following internal control system.

  1. Unipres separates the management from business execution, where the directors shall make important decisions relating to management and supervise the business execution, and the executive officers shall execute the business delegated by the Board of Directors.
  2. The Internal Control Committee and three subcommittees - Risk Management, Financial Information Disclosure, and Compliance - have been established and Unipres determines policies and measures, and promotes the centralized implementation of the internal control system.

[Specific contents]

1. Structure to ensure that the execution of duties by directors, executive officers, and employees is conducted in compliance with laws and ordinances and with the Company's articles of incorporation.

  1. The Unipres Corporation Code of Conduct has been laid down, and the President and Chief Executive Officer has conveyed the spirit of the Code to all employees and is taking thorough steps to ensure that legal compliance and adherence to social ethics constitute the basis of corporate activity.
  2. The President and Chief Executive Officer appoints an executive officer with specific responsibility for compliance and designate the division responsible for general administration as the compliance supervisory unit, in order to enhance the Company-wide compliance structure and identify problem areas. The Compliance Subcommittee has also been established, thereby improving the structure for addressing compliance-related issues.
  3. Unipres Hotline is established in order to enable directors and employees having found a compliance-related issue to directly bring whistle-blowing and have consultation, where liaison points of whistle-blowing and consultation are set in the compliance supervisory unit and an external organization designated by the compliance supervisory unit, so as to ensure fairness and transparency.
  4. The President and Chief Executive Officer appoints an executive officer with specific responsibility for disclosure of financial information, and designates the division responsible for accounting as the financial information disclosure supervisory unit, in order to enhance the structure for disclosure of financial information and identify problem areas. The Financial Information Disclosure Subcommittee has also been established, thereby improving the structure for addressing issues related to disclosure of financial information.
  5. The Audit and Supervisory Committee has been established as an independent body to audit the execution of duties by directors.
  6. The internal audit division, under the direct control of the President and Chief Executive Officer conducts internal auditing for the purpose of ensuring the effectiveness of internal control.

2. Matters relating to the storage and management of information concerning the execution of duties by directors

The President and Chief Executive Officer stores information concerning the execution of the duties of the Board of Directors, the Executive Committee, etc., together with related documents in accordance with the Internal Management Decision-making Rules and other internal Company rules. Board of Directors information is managed by the division responsible for general administration, and Executive Committee information is managed by the division responsible for corporate planning.
The information-management unit keeps the aforesaid documents in a state that enables them to be inspected at any time by directors.

3. Rules relating to management of risk of loss and other structures

The President and Chief Executive Officer appoints an executive officer with specific responsibility for risk management, and designates the division responsible for general administration as the risk management supervisory unit, in order to enhance the Company-wide risk-management structure and identify problem areas. The Risk Management Subcommittee has also been established, thereby improving the structure for addressing issues relating to the implementation of risk management.

4. Structure to ensure that directors' duties are performed efficiently

The following management system is employed for the purpose of enhancing the efficiency with which the directors perform their duties.

  1. An executive-officer system has been established with the objective of separating decision-making and business-execution relating to management by the directors, thereby ensuring the transparency of management decision-making and efficient conduct of business.
  2. The Executive Committee, composed principally of executive officers serving concurrently as directors, has been established to validate policy for business execution based on decision-making by the Board of Directors, and to progress business execution.
  3. Each executive officer in charge formulates policy for each fiscal year based on the medium-term management plans, and approves the business plan for individual divisions.
  4. The executive officers in charge of individual divisions manage the business progress of each such division under efficient monitoring systems for business execution.
  5. The Executive Committee manages the progress of monthly business results.

5. Report of matters concerning execution of the duties of the directors of the subsidiaries to the Company

Important information of individual subsidiaries shall be reported to the Corporate Planning Department and its relevant departments based on the management regulations of related affiliates to report to the Executive Committee of the Company.

6. Rules relating to management of risk of loss of the subsidiaries and other structures

Individual subsidiaries maintain the risk management structure and identify problem areas based on our risk management structure. Based on the management regulations of related affiliates, risk management programs of individual subsidiaries shall be reported to the Risk Management Subcommittee of the Company after having been reported to the General Administration Department.

7. Structure to ensure that duties of the subsidiary's directors are performed efficiently

Individual subsidiaries shall establish the rules and regulations for the director meeting committee structure in proportion to its size to efficiently perform the duties based on said rules and regulations.

8. Structure to ensure that the execution of duties by the subsidiary's directors and employees follows laws and articles of incorporation

  1. Individual subsidiaries shall prepare an internal control environment based on the rules and regulations of the Company's internal control and other related rules and regulations.
  2. Unipres has implemented the Code of Conduct at subsidiaries, ensuring thoroughness throughout the individual subsidiaries in regard to legal compliance and adherence to social ethics.
  3. The Unipres internal audit division provides support and advice for enhancing internal auditing and internal control at individual subsidiaries.

9. Matters relating to directors and employees when it is required to appoint directors and employees to assist the Audit and Supervisory Committee with their duties

The division responsible for general administration takes charge of assisting the duties of the Audit and Supervisory Committee; assistants are appointed, and they provide assistance in auditing activities at the direction of the Audit and Supervisory Committee.

10. Matters relating to independence of directors and employees from other directors (excluding directors who are members of the Audit and Supervisory Committee) when designated to assist the duties of the Audit and Supervisory Committee

The consultation with the Audit and Supervisory Committee must be required with regard to personnel reassignment and disciplining of the above-mentioned assistants.

11. Matters related to ensuring effectiveness of the instructions for directors and employees designated to assist the duties of the Audit and Supervisory Committee

  1. In the following cases, the Audit and Supervisory Committee make necessary requests to the President and chief executive officer, or the board of directors.
    (1) If attendance at meetings that assistant employees will be holding, collection of information, and other necessary actions are unduly restricted at the direction of the Audit and Supervisory Committee.
    (2) If the rights of the Audit and Supervisory Committee to supervise and give orders to assistant employees are unduly restricted.
  2. If the president and chief executive officer, or the board of directors, without just cause, do not to take appropriate measures against such requests of the Audit and Supervisory Committee, such failure is pointed out in the auditing report or the like after deliberation by the Audit and Supervisory Committee.

12. System for reporting by directors (excluding directors who are members of the Audit and Supervisory Committee), employees and directors of subsidiaries, etc. to the Audit and Supervisory Committee.

Matters to be reported to the Audit and Supervisory Committee are determined by consultation with the Audit and Supervisory Committee; directors, or executive officers delegated by the board of directors, shall report the matters set out below.

  1. Matters deliberated upon at meetings of the executive committee (attended by the full-time Audit and Supervisory Committee members).
  2. Matters that risk causing substantial damage to the company or its subsidiaries.
  3. Matters relating to serious violations of laws, ordinances, or the company's articles of incorporation.
  4. Matters relating to the status or content of reports received on the Unipres Hotline.
  5. Other important matters concerning internal control.

In addition, the internal audit division consults with the audit and supervisory committee on a quarterly basis, and reports audit results to the audit and supervisory committee and consults with audit and supervisory committee on such results on an as-needed basis.

13. System for ensuring that the person making the report in the above 12 is not unfavorably treated for reasons due to that report

Ensure that the person who made the relevant report to the Audit and Supervisory Committee based on the above system is not unfavorably treated for reasons due to that report, and establish the rules and regulations for the Company's internal control to indicate so, and make all directors and employees of the company and its subsidiaries aware of this.

14. Matters concerning policies on the handling of expenses or debts resulting from the execution of the duties by the Audit and Supervisory Committee, including procedures for the advance payment or indemnification of expenses, etc.

The company, upon receiving a request for expenses necessary for the execution of the duties by the Audit and Supervisory Committee, promptly processes the relevant expenses on the basis of paragraph 4 of Article 399-2 of the Companies Act.

15. Other systems for ensuring that auditing by the Audit and Supervisory Committee is conducted effectively

The Audit and Supervisory Committee engages in regular exchanges of opinion with the representative director and the accounting auditor, and all business divisions cooperate with auditing by audit and supervisory committee at the direction of the executive officer in charge.
The Audit and Supervisory Committee may, if necessary, appoint attorneys, certified public accountants, or other advisers relevant to auditing activity.

16. Basic philosophy regarding the elimination of antisocial forces, and the current status thereof

In order to eradicate any involvement with antisocial forces, the Unipres Corporation has set down the following commitment in its Code of Conduct: "Always aware of ourselves as a member of society, we do not engage in transactions or profit-sharing with antisocial influences for any reason or under any circumstance." This is adhered to strictly by all directors and employees.
In addition, the executive officer with specific responsibility for compliance and the compliance supervisory unit take steps to make relevant departments thoroughly conversant with the methods for addressing this issue, and have been collaborating with specialist outside institutions to develop a rapid-response system.

Board Meeting, UNIPRES CORPORATION
 May 10, 2017


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