The MEITEC Group’s Board of Directors resolves the basic policy regarding the development and maintenance of an internal control system in accordance with the Companies Act and develops and maintains its internal control system appropriately based on such resolution. Also the MEITEC Group has adopted a system applicable to the entire Group in which critical management information regarding the appropriateness and effectiveness of business processes throughout the Group that have been examined by departments, relating to internal control and the person in charge of the MEITEC Group internal audits. is suitably discussed and reported upon to the MEITEC Group’s Board of Directors.
Outline of the Board of Directors’ resolution is as follows.
The Company and its subsidiaries (hereinafter collectively referred to as the MEITEC Group) with the purpose that continue to improve profitability and capital efficiency while actively pursuing opportunities for high-added value. Accordingly, in order to achieve this purpose the scope of the internal control system is the entire MEITEC Group, and the Company, which is responsible for the management and supervision of the MEITEC Group, shall take the lead to develop and operate the internal control system
In its interaction with the rest of society, the MEITEC Group shall comply with all laws and regulations and its articles of incorporation. The MEITEC Group shall maintain high ethical standards and management that is sound and highly transparent. Concerning directors’ execution of duties, the MEITEC Group shall establish the Group’s internal rules that are appropriate to the particular characteristics of the business and size of each company of the MEITEC Group to clarify the process and results of its decision-making. At the same time, the MEITEC Group shall establish a framework where directors and audit & supervisory board members (roles of directors and audit & supervisory board members of subsidiaries are limited to those of the company in which they hold office) can view such process and results as necessary.
In addition, through the establishment of the MEITEC Group Helpline System—based on a framework that provides measures to protect whistleblowers in personnel terms—and programs to inform employees about this helpline, the Company shall endeavor to quickly detect and take appropriate action against any malfeasance that may occur relating to the MEITEC Group’s directors’ execution of duties
In accordance with the stipulations of all laws and regulations, the Company’s articles of incorporation and internal rules, the MEITEC Group shall record, store and manage information regarding the execution of duties by directors in an appropriate and timely manner.
Moreover, the Company shall build an appropriate management system for safekeeping media to ensure there is no loss of trust as a company or fatal damage inflicted on the MEITEC Group through conduct involving leakage, alterations, loss, or unauthorized use, or conduct involving unauthorized disclosure, etc.
Based on the risk management rules, the MEITEC Group shall work to comprehensively and systematically gather information on risk of loss faced by the Company before such risks emerge. Risks trends shall be monitored appropriately, and timely measures shall be taken in response to risks, commensurate with the severity of the risk. By responding quickly to the risks when they materialize, the Company aims to minimize the impact of such risks, develop a system to restore operations as soon as possible. The Company shall continually strive to maintain and enhance the soundness of its management.
The MEITEC Group shall make the directors appropriately divide up their duties and supervisory responsibilities and delegate authority in accordance with internal rules to speed up decision-making. In addition, the directors shall formulate a business plan stipulating clear targets and goals, and undertake appropriate management of operations and progress based on this plan. Targets and goals shall be revised as necessary.
The MEITEC Group shall formulate the MEITEC Group Management Concept, the MEITEC Group Charter of Employee Behavior, the Employee Code of Conduct and other related documents. And with these, the MEITEC Group shall continuously strive to take initiatives to raise awareness of the MEITEC Group’s employees to carry out their duties in compliance with all laws and regulations, the MEITEC Group’s articles of incorporation and internal rules in a fair and reasonable manner.
In addition, through the establishment of the MEITEC Group Helpline System—based on a framework that provides measures to protect whistleblowers in personnel terms—and programs to inform employees about this helpline, the MEITEC Group shall endeavor to quickly detect and take appropriate action against any malfeasance that may occur relating to the employees’ execution of duties.
The Company shall respect the right of each subsidiary to develop its business operations in an autonomous manner. The Company shall design the institution in accordance with the subsidiary’s purpose, business characteristics and size, and place its directors and employees in all of its subsidiaries and manage and supervise the subsidiaries’ business execution appropriately to maximize the MEITEC Group’s corporate value.
In addition, the Company shall formulate rules on the administration of subsidiaries and establish the department in charge of administrating the Group companies (the “Group Company Administration Department”) and develop a framework by which important matters related to the business execution of directors in subsidiaries are reported to the Company regularly.
With regard to the development of rules and other frameworks for loss risk management of subsidiaries, a framework to ensure the efficient execution of duties by directors of subsidiaries and a framework to ensure compliance by directors and employees of subsidiaries with laws and regulations and the Company’s articles of incorporation in the course of the execution of their duties, the Company requests each of the subsidiaries to develop a framework that is suitable for their respective business characteristics and size by referring to the above-mentioned (3) to (5) as basic guidelines. The Company shall regularly receive reports on the development status of the framework and request improvements as necessary.
In order to improve the effectiveness of audits by the Company's Audit & Supervisory Committee and the the Audit & supervisory board members of subsidiaries, the Company shall establish the Office of Audit & Supervisory Committee which consists of employees who exclusively work in the said office and are independent from the execution of business, subsidiaries of large companies under the Companies Act establish an auditor's office with a similar structure.
In order to reflect the opinion from the Company’s Audit & Supervisory Committee and Audit & supervisory members of subsidiaries as much as possible, the evaluation and re-assignment of the said exclusively working employees, who are to assist the Company’s Audit & Supervisory Committee and Audit & supervisory board members of subsidiaries, are carried out with the consent of the Audit & Supervisory Committee, and instructions to such employees shall be given by the Company’s Audit & Supervisory Committee (For subsidiaries, the Audit & supervisory board members of the subsidiaries).
1. Framework for reporting by directors and employees to the Audit& Supervisory Committee or Audit & supervisory board members
The Meitec Group shall develop a framework for reporting to the Company’s Audit & Supervisory Committee or Audit & supervisory board members of subsidiaries, to ensure that proper reports are made by directors and employees. The Company’s directors who are audit & supervisory committee members (hereinafter referred to as the Audit & supervisory committee members) or Audit & supervisory board members of subsidiaries shall be given the autority to attend the Board of Directors’ meetings and all other internal meetings of the company to which they belong. Furthermore, the Audit & supervisory committee members and Audit & supervisory board members shall have access to all important information relating to decision-making and the execution of business operations.
2. Framework for reporting by subsidiaries’ directors, Audit & supervisory board members, employees or those who received reports from them to the Audit & Supervisory Committee of the Company
The Company shall develop a framework by which any matters that took place at subsidiaries are reported to the Company’s audit & supervisory board members from subsidiaries’ directors and employees through the Company’s Executive officer in charge of Management Administration and the Group Company Administration Department. In the case where the Company’s Audit & Supervisory Committee requests that subsidiaries’ directors and employees directly report, etc. concerning matters that have been deemed necessary in order to ensure appropriateness of the Group’s operation, the subsidiaries’ directors and employees are obliged to meet the aforesaid request.
In addition, Audit & supervisory board members of subsidiaries and via communication with the Company’s Audit & supervisory committee members, they report the situation of subsidiaries in a timely way to the Company’s Audit & Supervisory Committee.
The MEITEC Group prohibits any disadvantageous treatment being given to directors, audit & supervisory board members and employees of the Company and subsidiaries who made a report to the Company’s Audit & Supervisory Committee or Audit & supervisory board members of subsidiaries. The Company shall disseminate this policy throughout the Group.
The Company (For subsidiary, the company to which the Audit & Supervisory Board Member belongs) shall, in principle, be liable to pay the costs or liabilities that accrue as a result of execution of duties by the Company’s Audit & Supervisory Committee or Audit & supervisory board members of subsidiaries. The Company shall settle such costs or liabilities as appropriate each time the Audit & Supervisory Committee or Audit & supervisory board members of subsidiaries submit such request to the Company, with the exception of cases where the Company (For subsidiary, the company to which the Audit & Supervisory Board Member belongs) has proven that such costs or liabilities were not necessary in the execution of duties by the Company’s Audit & Supervisory Committee or Audit & supervisory board members of subsidiaries.
The MEITEC Group shall develop a framework to deepen the mutual cooperation among the person in charge of the group internal audits and the accounting auditor for internal audits, the Company’s Audit & Supervisory Committee audits or Audit & supervisory board members of subsidiaries and accounting audits by exchanging their opinions regularly or as necessary.
The MEITEC Group shall also strive to improve, on an ongoing basis, the effectiveness of audit function performed by the Company’s Audit & Supervisory Committee by making directors and employees cooperate with inspections or hearing request submitted by the Company’s Audit & Supervisory Committee.
The Company shall interdict any and all relationship with anti-social forces and groups which threaten the order and safety of the civil society. And against such anti-social forces, the entire MEITEC Group, from the presidents of each company down, shall respond in uncompromising manner.
Enacted on May 10, 2006
Revised on October 1, 2023
