Basic Policy on Internal Management and Control

Innotech, in line with the Companies Act and Ordinance for Enforcement of the Companies Act of Japan, establishes its scheme (“Internal Management and Control System”) to ensure its fair business practices.

1. Scheme to ensure that execution of duties by the directors of the board as well as employees comply with laws and regulations as well as articles of incorporation:

  • 1. Innotech Group shall devise “Innotech Group Internal Code of Conduct and Ethics” so that Innotech Group directors of the board will thoroughly comply with applicable laws and regulations and act sincerely.
  • 2. In the event that any of the directors of the board discovers any material violations of laws and regulations or of company internal rules inside the company, such directors of the board shall, without delay, report such violations at the board meeting.
  • 3. Innotech Corporation shall designate the “Innotech Group External Reporting Office” so that Innotech Group Company members may be able to report on problematic matters and events taking place inside Innotech headquarters.

2. Maintenance and management of information and records related to execution of duties by the directors of the board:

  • 1. Innotech Corporation shall appropriately maintain the records and manage information based on its company internal rules such as “Rules for Document Management” for any documents, electronic records and other important information related to execution of work.
  • 2. Directors of the board as well as company auditors may be able to access to such documents and information any time.
  • 3. Innotech Corporation shall establish an organization which is in charge of appropriate disclosure of company’s material information as well as disclosure of other necessary information and the directors of the board shall immediately and thoroughly organize and appropriately disclose such information which must be disclosed under the applicable laws and regulations.

3. Rules and scheme for managing risk of loss:

  • 1. Innotech Corporation shall establish “Management Rules for Company Crisis” which addresses risk management and any risk of loss which could take place at Innoteh Group, as well as make sure that employees are fully informed and aware of Innotech Group measures against such risk.
  • 2. In the event of company crisis, Innotech Corporation shall immediately organize a special task force.

4. Ensuring efficient execution of duties by the directors of the board:

  • 1. Periodic board member meetings shall be held monthly as a principle so that they will serve as the basis for efficient execution of duties by Innotech Group directors of the board; extraordinary board meetings shall be held on a needed basis.
  • 2. Segregation of business shall be determined at board meetings and duties of directors of the board shall be efficiently executed based on each of such director’s authority set by the Innotech Internal Regulations of Administrative Authority.
  • 3. Management meetings shall be held periodically to set management policies and discuss and review important matters.

5. Ensuring fair execution of work at Innotech Group:

  • 1. Innotech shall set up “Management Rules for Affiliate Companies” to ensure fair execution of work as a whole in Innotech Group
  • 2. Directors of the board of Innotech Corporation shall also serve as group companies’ directors of the board so that the group companies’ business status and other important matters are reported to them in a constant and appropriate manner.
  • 3. Innotech Corporation Audit Office shall conduct audits of Innotech Group companies and ensure effectiveness and appropriateness of internal control throughout Innotech Group.

6. Employees who are requested by company auditors to assist their work as well as such employees’ independence from the directors of the board:

  • 1. Innotech shall set up “Management Rules for Affiliate Companies” to ensure fair execution of work as a whole in Innotech Group
  • 2. Employees who are requested to assist company auditors shall collect necessary information for company auditors based on such company auditors’ instructions and directions and the employees shall report to such company auditors with respect to the status and progress of their work.
  • 3. Activities of employees to assist company auditors shall not be unfairly prejudiced by the directors of the board and the Internal Audit Office.

7. Reporting to company auditors by the directors of the board as well as by employees and other reporting:

  • 1. Innotech Group directors of the board and employees shall report to company auditors their status of work as requested by the company auditors as well as report to company auditors other matters which may materially affect the company.
  • 2. Innotech Group directors of the board and employees shall report to company auditors their status of work upon request from such company auditors.
  • 3. Internal Audit Office as well as its related divisions shall report to company auditors all the issues brought to the Innotech Group External Reporting Office on a periodic basis.
  • 4. Any employee shall not be treated unfairly by reason of making reports to company auditors.

8. Other matters for company auditors to conduct their audits effectively:

  • 1. Company auditors shall comply with the audit policies and the audit plan set by the auditors’ meeting and shall constantly exchange views and opinions with the managing director, accounting auditors and Internal Audit Office.
  • 2. Company auditors shall attend important company meetings such as board meetings and go through materials which are used in such meetings to ensure effectiveness of their audits.
  • 3. Company auditors may be able to consult with experts such as attorneys, certified public accountants, tax accountants and so on whenever they determines as necessary for their execution of work, and expenses for such professional services required by the company auditors shall be borne by the company.
  • 4. In the event that company auditors request advance payment of expenses for their execution of work, company shall promptly address such requests unless its necessity is denied.

9. Ensuring reliability of financial reports

  • In order to ensure reliability and properness of Inntech Group financial reports according to the Financial Instruments and Exchange Act of Japan, Innotech shall lay ground work for its internal control under the instructions of the managing director; Innotech Internal Audit Office shall be in charge of execution of such ground work and its evaluation from operational point of view.

10. Fundamental policies and measures in eliminating anti-social forces

  • Innotech Group shall devise “Innotech Group Code of Conduct and Ethics” as well as “Rules to Counter Antisocial Forces” so that the employees will have official rules and guidance on how to counter antisocial forces and make efforts to eliminate them.