Basic Policy on Internal Controls
Basic policy on development of the internal controls structure
The Pack Corporation (“Company” hereinafter) will develop and maintain the internal controls structure necessary for the Company and its group companies (collectively, “Group” hereinafter) to ensure the propriety of business operations and implement efficient management, pursuant to the Companies Act of Japan and the Ordinance for Enforcement of the Companies Act.
1. Structure for ensuring Group directors and employees perform their duties in accordance with laws, regulations, and the Articles of Association
(1) Company audit and supervisory board members will carry out audit and supervisory board member audits of the Group in accordance with the Audit and Supervisory Board Rules and Audit Standards. The Audit Office will conduct internal audits in accordance with the Internal Audit Rules.
(2) The Divisional General Manager of the Company’s Corporate Division will supervise and develop a structure for compliance management within the Group.
(3) The Company will undertake awareness promotion and educational activities related to compliance and adherence to The Pack Group Code of Conduct for Group directors, executive officers (Group directors and executive officers; collectively, “directors etc.” hereinafter), audit and supervisory board members, and employees.
(4) As part of efforts to identify and prevent improprieties and the risk thereof, the C-Line internal whistleblowing program will be established and maintained. The program will accept consultations from Group employees related to compliance issues and the reporting of irregularities, including violations of laws, regulations, and the Articles of Association.
(5) The Company will appoint outside directors to maintain and enhance oversight functions related to business execution.
2.Structure for retaining and managing information concerning the performance of duties of Group directors etc.
(1) Minutes of the Board of Directors and other important Group meetings, applications for approval, and other important documents concerning the execution of the duties of the directors will be retained, and their preparation, retention, management, and other related activities will be undertaken in accordance with the Document Rules, Application for Approval Procedural Rules, Confidential Information Management Rules, and other in-house rules and regulations.
(2) Company directors and audit and supervisory board members may view the minutes of important meetings, applications for approval, and other documents referred to in the preceding paragraph as necessary.
3.Group rules and other structures for managing the risk of losses
(1) Risk management regarding credit management, quality control, health and safety, and other everyday operations will be conducted pursuant to the in-house rules, manuals, procedures, etc. of the Company and individual Group member companies, and the Company will guide Group companies in undertaking the maintenance and implementation of such in-house rules, manuals, procedures, etc.
(2) The structure for information security risk management will be revised to keep pace with various developments, including the growing importance of information management as the adoption of information technologies continues to expand.
(3) Responses to disasters, major accidents, and other emergencies related to business administration will be rapidly implemented under the guidance of the president of the Company or of the relevant Group member company, in accordance with the Emergency Response Rules and other in-house rules.
(4) If an internal audit by the Audit Office identifies a risk of losses for the Group, the Audit Office will report this promptly to the Company president and notify the heads of the sections in charge, pursuant to the Internal Audit Rules.
4.Structure for ensuring the efficient performance of duties of Group directors etc.
(1) To assure efficient management, in addition to Board of Directors meetings, the Company implements Executive Committee meetings attended by Company directors, audit and supervisory board members, and some executive officers. These meetings will deliberate on important matters and execution policies in corporate management and submit them for further discussion to the Board of Directors. In addition, the Company implements monthly Business Division Conference meetings attended by directors etc., executives at the rank of business division heads and above, and Group company presidents. These meetings will review the state of business execution as reported by relevant sections and Group companies and deliberate and decide on measures intended to realize the execution policies determined by the Board of Directors.
(2) Organizations, division of responsibilities, and job authority concerning business execution will be based on the in-house rules of each Group company.
(3) The Company adopted an executive officer system to realize swift and highly efficient corporate management, separating the roles of directors who fulfill decision-making and oversight roles and executive officers who oversee business execution.
5.Structure for ensuring the propriety of the operations of each Group company
(1) The Company will manage Group companies in accordance with the Affiliate Company Management Rules and maintain structures to ensure regular reporting by Group companies to the Company on matters such as the state of their business execution and financial standing. Group companies will report to the Company regularly on business results and as needed if important business matters arise.
(2) To respond to various risks related to Group business activities, the Company will direct each Group company to develop and maintain its own structure of internal controls, including in-house rules, as well as awareness promotion and educational activities related to compliance and adherence to The Pack Group Code of Conduct. When a Group company requests assistance, guidance, or other support in this area, the Divisional General Manager of the Company’s Corporate Division will, as necessary, give instructions to the Legal Department and other relevant sections to implement Group risk management under mutual cooperation among Group companies.
(3) The Company will establish sections to oversee the management of Group companies to contribute to appropriate and efficient Group management and provide guidance on the maintenance and operation of IT and other infrastructures to the extent necessary to ensure effective communication and exchange of information between the Company and Group companies and for effective business operations.
6.Structures concerning employees appointed to assist in the duties of audit and supervisory board members as requested by such members
(1) For the time being, no employees are to be assigned exclusively to assist in the duties of audit and supervisory board members. However, the Audit Office may assign staff to assist audit and supervisory board members in the performance of their duties as necessary under the command and control of the audit and supervisory board members, concurrently with their regular duties.
7.Matters concerning independence from directors of employees assisting audit and supervisory board members
(1) The Audit Office will take steps to ensure that those assisting audit and supervisory board members under their command and control are not subject to command and control by any parties other than audit and supervisory board members.
(2) The consent of the audit and supervisory board is required for transfers, HR evaluations, treatment, and disciplinary action regarding members of the Audit Office.
8.Structures for reporting by Group directors etc. and employees to audit and supervisory board members, other structures related to reporting to audit and supervisory board members, and structures to ensure that those who submit such reports are not placed at a disadvantage as a result of such reports
(1) In addition to attending Company board of directors and business department meetings, audit and supervisory board members may choose to attend other meetings as they deem necessary, including meetings of Group companies.
(2) The Group will submit to audit and supervisory board members minutes and documents from important meetings, documents concerning important litigation and disputes, documents on the results of inspections by authorities and external audits, documents concerning improprieties reported through the internal whistleblowing system or by other means, and other documents requested by the audit and supervisory board members.
(3) Any Group director etc. or employee who learns of a matter that could lead to significant harm to any Group company will promptly report the matter to an audit and supervisory board member. The reporting party will not be subject to dismissal or other disadvantageous treatment as a result.
(4) Group employees who have used the C-Line internal whistleblowing program to consult concerning compliance or to report the facts of violations of laws, regulations, or the Articles of Association or similar matters will not be subject to dismissal or other disadvantageous treatment by the Company or by any of the Group companies as a result.
9.Procedures for the prepayment or reimbursement of costs directly related to the duties of audit and supervisory board members and other matters concerning policies related to processing of costs or obligations incurred regarding the performance of their duties
(1) The Company will promptly fulfill requests from audit and supervisory board members for the prepayment or reimbursement of costs necessary for the performance of their duties.
(2) As deemed appropriate by an audit and supervisory board member, the Company will authorize necessary audit costs, including costs incurred for services provided by attorneys, certified public accountants, consultants, and other outside advisors.
10.Other structures for ensuring that audits are undertaken effectively
(1) Group directors etc. and employees will actively cooperate in audits undertaken by audit and supervisory board members.
(2) In close cooperation with the Audit Office and as their own plans and schedules allow, audit and supervisory board members may interview the heads and employees of the sections being audited.
(3) Audit and supervisory board members will exchange opinions in individual meetings with the President and the audit firm held regularly and as needed.
11.Maintenance of in-house rules, etc.
(1) The Group will review in-house rules, structures, systems, manuals, and methods related to this Basic Policy on an ongoing basis and take appropriate measures, including revising, abolishing, establishing, and improving them, as needed.