Corporate Governance

Corporate Governance

Internal Control System Basic Policy

The Company has established the following internal control system to ensure the appropriateness of business operations, the reliability of financial reporting, compliance with laws, loss risk management, and efficient execution of operations.

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 Group Code of Conduct has been laid down, and the President has conveyed the spirit of the Code to all officers and 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 appoints an executive officer with specific responsibility for compliance and designates 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 Corporate Ethics Committee has also been established under the Sustainability Committee, thereby improving the structure for addressing compliance-related issues.

(3) Unipres Hotline is established in order to enable officers 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 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.

(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 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 members of the board

The President 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 Rules of the Board of Directors, Rules of the Executive Committee, 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 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 Committee has also been established under the Sustainability Committee, thereby improving the structure for addressing issues relating to the implementation of risk management.

4. Structure to ensure that duties of members of the board are performed efficiently

The following management system is employed for the purpose of enhancing the efficiency with which the members of the board 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, has been established to validate policy for business execution based on decision-making by the Board of Directors, and to progress business execution.

(3) The Executive Committee and Board of Directors formulate and approve three-year medium-term management plans. 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. Structure for ensuring the appropriateness of business operations within the Unipres Group

To ensure the proper execution of business operations within the Unipres Group, the Company provides the following assistance and guidance to its subsidiaries.

(1) The Company provides education based on the Unipres Group Code of Conduct to ensure thoroughgoing compliance with laws and regulations and social ethics.

(2) The Company establishes Unipres Hotline whistle-blowing and consultation liaison points at each subsidiary to facilitate early detection and correction of misconduct.

(3) The internal audit division of the Company provides support and advice through audits to strengthen the internal audit and internal control of each subsidiary.

(4) Important information on each subsidiary is reported to the Board of Directors or the Executive Committee of the Company after first being reported to the division responsible for corporate planning and related divisions of the Company in accordance with the Company's Management Regulations of Related Affiliates.

(5) Risk management is implemented at subsidiaries based on the Company's Regulations of Risk Management Committee and Risk Management Operating Procedure Manual.

(6) To ensure the efficient execution of duties by directors, each subsidiary establishes rules for directors' committees appropriate to its size.

6. Matters relating to directors and employees assisting the Audit and Supervisory Committee in its 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.

7. Matters relating to independence from other directors (excluding members of the board who are members of the Audit and Supervisory Committee) of members of the board and employees assisting the Audit and Supervisory Committee in its duties

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

8. Matters relating to ensuring effectiveness of the instructions to members of the board and employees assisting the Audit and Supervisory Committee in its duties

9. System for reporting by the Company's members of the board (excluding members of the board who are members of the Audit and Supervisory Committee) and 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; members of the Board, 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 have the potential to cause significant 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 conducts internal audits in cooperation with the Audit and Supervisory Committee, and reports audit results to the Audit and Supervisory Committee on a quarterly basis or an as-needed basis. In the event an employee finds a material fact, the employee may consult directly with the Audit and Supervisory Committee.

10. System for ensuring that the person making the report in the above 9 is not unfavorably treated for reasons due to that report

The Company ensures 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 establishes the rules and regulations for the Company's internal control to indicate so, and makes all officers and employees of the Company and its subsidiaries aware of this.

11. Matters concerning policies on the handling of expenses or debts resulting from the execution of the duties by the Audit and Supervisory Committee members (limited to those related to the execution of duties by the Audit and Supervisory Committee), including procedures for the advance payment or indemnification of expenses incurred in the execution of such duties

The Company, upon receiving a request from a member of the Audit and Supervisory Committee for reimbursement of expenses, etc. necessary for the execution of its duties, promptly provides reimbursement on the basis of paragraph 4 of Article 399-2 of the Companies Act.

12. 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 the 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.