Internal Controls

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Basic Approach

The Company is committed to further enhancing our compliance system and risk management to improve corporate value and fulfill our corporate social responsibility (CSR) through sound management and sustainable growth, enabled by the fair and transparent operation of our business. Additionally, we strive to enhance appropriate role distribution, collaboration, and control between organizational and positional levels, and aim to continuously improve corporate governance through proper evaluations of operational systems.

Basic Policy on the Building of an Internal Control System

  1. System to ensure that the execution of duties by directors and employees complies with laws, regulations, and the Articles of Incorporation
    1. Based on our Corporate Philosophy, the CSR Charter, and Corporate Code of Conduct, the directors and employees of the Company take the lead in not only complying with laws and regulations, but also adhering to and promoting corporate ethics.
    2. The Board of Directors includes outside directors to maintain and improve the supervision of directors’ performance of their duties.
    3. Based on the Compliance Regulations, the Company has established a Compliance Committee, chaired by the officer in charge of compliance. We also maintain an internal CSR promotion division which implements education and awareness measures, and develops and promotes a comprehensive compliance framework across the entire Takachiho Koheki Group.
    4. For our whistleblowing system, we have established Helpline Regulations and set up multiple reporting channels, including external lawyers.
    5. We adopt a resolute stance against anti-social forces and organizations that threaten public order and safety, and we will not comply with any unjust or illegal demands.
  2. System to store and manage information on the execution of duties by directors
    1. The Company has established Basic Regulations on Information Security and the Document Management Regulations. Under the Information Security Committee, for which the president is responsible, information related to the execution of directors’ duties (including electronic records) is appropriately stored and managed.
    2. The types of documents to be stored and their storage periods are stipulated in the Document Management Regulations.
    3. Directors and Audit & Supervisory Committee members can access information related to the execution of directors’ duties at any time.
  3. Regulations and other systems for managing the risk of loss
    1. The Company has established Crisis Management Regulations and Basic Regulations on Information Security, and has established and operates respective committees chaired by the president.
    2. To enhance corporate value and address risks (uncertainties) that threaten the sustainable development of corporate activities, the Board of Directors has developed a cross-functional risk management system that encompasses the entire Takachiho Koheki Group. The Company has established and operates a dedicated department for risk prevention and countermeasures.
  4. System to ensure the efficient execution of duties by directors
    1. Based on the Board of Directors Regulations, the Board of Directors has established criteria for submission and reporting of matters, and clarifies the roles, authorities, and responsibilities of each director. It also oversees the formulation and progress of basic management policies, key issues, medium-term management plans, and management strategies.
    2. The Company has introduced an executive officer system. Based on the Executive Officer Regulations, management decision-making and supervisory functions are separated from business execution functions, to enhance the efficiency of directors’ duties.
    3. At the beginning of each fiscal year, the Company formulates a medium-term management plan, annual management policy, and annual budget. Thorough dissemination of these policies is ensured and their progress is monitored on a regular basis.
    4. The internal audit division conducts regular internal audits, provides feedback to the audited departments, and reports the results to the management team and the Audit & Supervisory Board.
  5. System to ensure operational appropriateness within the Group comprising the Company and its subsidiaries
    1. In accordance with the Affiliated Company Management Regulations, subsidiaries are required to report or obtain approval from the Company on critical matters. Additionally, subsidiaries report business plan progress at quarterly meetings held by the Company.
    2. A committee chaired by the Company’s president has been established and operates based on the Crisis Management Regulations.
    3. The Company dispatches a director and an auditor to each subsidiary. The dispatched director monitors and supervises the execution of duties by subsidiary directors, and the dispatched auditor audits the execution of work by the subsidiary directors.
    4. Each subsidiary conducts business operations to align with the Takachiho Koheki Group CSR Charter, Takachiho Koheki Group Code of Corporate Conduct, and Compliance Regulations, and has established systems tailored to the circumstances at each subsidiary, based on the Company’s frameworks.
  6. System for staff to support the duties of Audit & Supervisory Board members, as requested by them
    1. If necessary for the execution of their duties, the Audit & Supervisory Board members appoint staff who are independent of the directors to assist them.
    2. The staff who assist the Audit & Supervisory Board members perform their duties under the direction and instruction of Audit & Supervisory Board members. Their appointment, transfer, and evaluation are subject to prior consultation with Audit & Supervisory Board members.
  7. System for reporting to Audit & Supervisory Board members by directors and employees and other related reporting systems
    1. Audit & Supervisory Board members attend meetings of the Board of Directors and other key meetings, such as the Executive Officers Meeting, company-wide meetings, and departmental budget and performance analysis meetings, to gain an understanding of operational activities and receive reports and explanations.
    2. Directors and employees report significant matters that affect the Company’s operations and performance.
    3. In addition to attending key meetings and reviewing important documents, the Audit & Supervisory Board members may, at any time and as necessary, request reports from directors and employees regarding matters that directors and employees should report to the Audit & Supervisory Board members.
    4. Audit & Supervisory Board members may request information on internal audits from the internal audit division, receive internal audit reports and related findings, and attend internal audit report meetings and other meetings to obtain reports and explanations.
  8. Other systems to ensure the effective execution of audits by Audit & Supervisory Board members
    1. The representative director and Audit & Supervisory Board members hold regular meetings to exchange views on matters such as management-related issues.
    2. The financial auditor and Audit & Supervisory Board members hold regular meetings to exchange views on matters such as financial audits.