The Basic Policy Regarding Maintenance of the Internal Control System
Basic philosophy and development status of internal control system.
We are developing an internal control system based on the decision of the board of directors as described below.
1. A system to ensure compliance with laws and our articles of incorporation during execution of duties by directors and employees
- This corporation and its subsidiaries (hereafter referred to as the Torex group) shall establish common internal regulations and a code of conduct. We will also develop compliance regulations concerning directors and employees to be put into practice and made widely known.
- We shall cut off any relationships with antisocial forces that threaten the safety and order of society, and respond to them firmly as an organization.
- Regarding the internal system for reporting Torex group financial information, we shall carry out evaluation, maintenance and improvement based on the Financial Instruments and Exchange Act and other applicable international and domestic laws to ensure the reliability of financial reporting.
- We shall establish a Risk/Compliance Committee chaired by the president in order to implement compliance. This Risk/Compliance Committee will maintain regulations related to compliance, investigate cases of compliance violation, implement measures to deal with violations and prevent future violations, and conduct training, etc.
- We shall quickly detect conduct that violates laws and internal regulations, etc., then with the goal of swiftly and appropriately correcting it, employ the Torex Group internal reporting system to report the relevant activity to the Risk/Compliance Committee.
- The Risk/Compliance Committee shall report the details of serious compliance violations, important activities, etc. to the board of directors and the Audit etc. Committee.
- The internal auditing department shall audit the status of company activities and their compliance with laws and internal regulations, and give directions for improvement.
2. A system related to preservation and control of information pertaining to the execution of duties by directors
- We shall properly create, preserve and manage documents and other information concerning the execution of duties by directors in accordance with pertinent laws and internal regulations.
- Concerning information security, we will establish relevant regulations based on our Information Security Policy and appropriately manage information in accordance with its type as determined by our management standards.
- We shall make stored documents and other information available to be viewed by directors at all times.
3. A system of regulations concerning management of risk of loss and other relevant risk management
- We shall manage risk by establishing risk management regulations aimed at directors and employees in order to prevent the occurrence of risks that might have serious impacts, as well as to minimize the impact of those that do occur.
- We shall establish a Risk/Compliance Committee chaired by the president in order to evaluate risks and effectively and comprehensively manage risk. This Risk/Compliance Committee will maintain regulations related to risk management, evaluate risks, implement measures to deal with accidents, prevent recurrence, and conduct training, etc.
- The Risk/Compliance Committee shall report information on serious risks, etc. to the board of directors and the Audit etc. Committee.
4. A system to ensure that directors perform their duties efficiently
- The board of directors shall promote efficient execution of duties by directors, and swift decision-making with the Principles of Management Decisions in mind.
- In addition to holding meetings once a month, the board of directors shall hold interim meetings as necessary. They shall deliberate on all serious matters relating to items stipulated in the regulations for the board of directors, as well as items that meet these standards for discussion. At the same time, they shall make decisions rapidly by conducting progress management of management plans, etc.
- We will promote efficient execution of duties by establishing an executive council within the board of directors as a decision making body for board of directors decisions and deliberation towards approval by the president. As a rule, this executive council should meet once a week.
- In order to clarify job allocation and authority, we will establish regulations and ensure directors perform their duties efficiently.
- We shall report the status of execution of duties by directors to the board of directors.
5. A system for ensuring appropriateness of work by the corporate group comprised of this company and its subsidiaries
We will establish corporate group management regulations that conform to the common internal regulations and code of conduct of the Torex Group, and maintain a system that includes the following items.
- We shall establish management regulations relating to subsidiaries and control decisions on important matters of subsidiary management in order to maintain a system for reporting matters pertaining to the execution of duties by subsidiary directors, etc. to the parent company.
- In order to maintain a system of regulations relating to managing the risk of losses by subsidiaries, we will establish a Risk/Compliance Committee chaired by the president to evaluate risks regarding our subsidiaries, implement measures to deal with accidents, prevent recurrence, and conduct training, etc.
- In order to maintain a system to ensure that directors perform their duties efficiently, important matters pertaining to execution of business by each subsidiary shall be decided by our board of directors. Directors of our company who also act as directors of subsidiaries shall exercise control over subsidiary business efficiency.
- In order to maintain a system to ensure compliance with laws and our articles of incorporation during execution of duties by directors and employees of subsidiaries, we strive to monitor the execution of duties by directors of our company for appropriateness. At the same time our internal auditing department strive to conduct audits and provide guidance for improvement, while our Audit etc. Committee shall conduct audits and promote mutual understanding and information sharing between each subsidiary.
6. Matters concerning directors and employees who assist the work of the Audit etc. Committee, matters concerning the independence of these directors from other directors (excluding directors on the Audit etc. Committee), and matters related to ensuring the effectiveness of instructions to these directors and employees
- When the Audit etc. Committee requests the assistance of employees for its work, it shall appoint a person to be in charge of this assistance.
- The person in charge of assistance set forth in the preceding item shall be outside the chain of command of directors (excluding directors on the Audit etc. Committee) and any performance evaluation, transfer, disciplinary action, etc. shall be subject to approval by the Audit etc. Committee.
7. A system for company and subsidiary directors, employees, etc. to report to the Audit etc. Committee, a system concerning other reporting to the Audit etc. Committee, and a system for ensuring they do not receive disadvantageous treatment as a result of reporting
- In addition to legal matters, directors, employees, etc. shall report the followings to the Audit etc. Committee.
- The results of internal audits
- Important matters that affect group management
- Matters relating to compliance violations
- Matters which the Audit etc. Committee requires be reported
- Matters that are important as monthly management conditions
- We shall maintain a Torex Group internal reporting system as one means of reporting to the Audit etc. Committee, and establish internal reporting system regulations that make it clear that those who report something will not be subject to disadvantageous treatment. We will also ensure these are well known throughout the group.
8. A system to ensure that the Audit etc. Committee can perform its duties effectively
- In order to ensure that the Audit etc. Committee can perform its duties effectively, directors and employees shall aim for adequate mutual understanding with the Audit etc. Committee concerning environmental maintenance, etc. Also the Audit etc. Committee shall implement the following items in order to carry out efficient auditing.
- Participate in important meetings of the board of directors, etc., and audit the execution of duties by directors who are not members of the Audit etc. Committee
- Review documents involving important decisions
- Participate in regular dialogue with the president, accounting auditors, internal auditing department, etc.
- When deemed necessary by the Audit etc. Committee members, appoint lawyers, certified public accountants, consultants, interpreters and other external advisors to support audits by committee members, and pay necessary expenses.