Basic Policy on Internal Management and Control

INNOTECH, in line with the Companies Act of Japan and the Ordinance for Enforcement of the Companies Act of Japan, establishes its “Basic Policy on Internal Management and Control” with a resolution of the Board of Directors. Also, INNOTECH organizes and operates its internal control system under the leadership of the Internal Management and Control Office which is established in the company. INNOTECH has set forth its “Basic Policy on Internal Management and Control” as follows.

1. Scheme to ensure that execution of duties by the Directors and employees of INNOTECH and its group companies (hereinafter collectively “INNOTECH Group”) comply with laws and regulations as well as their articles of incorporation.

  • ①INNOTECH Group shall devise the “INNOTECH Group Internal Code of Conduct and Ethics” so that INNOTECH Group Directors will thoroughly comply with applicable laws and regulations and act sincerely.
  • ②In the event that any of the Directors discovers any material violations of laws and regulations or of the company internal rules inside the company, such Directors shall, without delay, report such violations at the Board Meeting.
  • ③INNOTECH Corporation shall designate the “INNOTECH Group External Whistleblowing Office” as a whistleblower System at INNOTECH Group.

■INNOTECH Group Whistleblowing Flow※Click the following chart to enlarge.

INNOTECH Group Whistleblowing Flow
INNOTECH Group Whistleblowing Flow

2. Scheme for Maintenance and management of information and records related to execution of duties by INNOTECH Directors

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

3. Rules and scheme to manage INNOTECH Group risk of loss:

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

4.  Scheme to ensure efficient execution of duties by INNOTECH Group Directors

  • ①Periodic Board 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; Extraordinary Board Meetings shall be held on a needed basis.
  • ②Segregation of business shall be determined at the Board of Directors and duties of Directors shall be efficiently executed based on each Director’s authority set by the Administrative Authority Rules.
  • ③Management Meetings shall be held periodically to deliberate and review management policies and other overall important matters

5. Scheme to ensure fairness of work at INNOTECH Group

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

6. Matters related to employees who are requested by the Audit & Supervisory Committee to assist their work as well as such employees’ independence from the Directors

  • ①Employees who are requested to assist the Audit & Supervisory Committee shall collect necessary information for audits conducted by the Audit & Supervisory Committee based on such Audit & Supervisory Committee’s instructions and directions and the employees shall appropriately report to such Audit & Supervisory Committee with respect to the status and progress of their work.
  • ②Audit & Supervisory Committee’s views and opinions shall be respected and its prior approval shall be required for a job transfer, personal assessment and other matters related to employees who assist the Audit & Supervisory Committee.
  • ③Activities of employees to assist the Audit & Supervisory Committee shall not be unfairly prejudiced by the Directors, Internal Audit Office and so on.

7. Scheme for reporting to INNOTECH Audit & Supervisory Committee by INNOTECH Group Directors, Audit & Supervisory Board Members, and employee as well as other reporting to Audit & Supervisory Committee

  • ①INNOTECH Group Directors, the Audit & Supervisory Board Members, and employees shall promptly report their status and progress of work to the Audit & Supervisory Committee as requested by such Audit & Supervisory Committee as well as report other matters which may materially affect the company to the Audit & Supervisory Committee.
  • ②INNOTECH Group Directors and employees shall report the matters related to their execution of work to the Audit & Supervisory Committee upon request by such Audit & Supervisory Committee.
  • ③INNOTECH Internal Audit Office as well as its related divisions shall report the consultation status of INNOTECH Group Whistleblowing Office to the Audit & Supervisory Committee on a periodic basis.
  • ④Any employee shall not be treated unfairly by reason of making reports to the Audit & Supervisory Committee.

8. Other scheme for INNOTECH Audit & Supervisory Committee to conduct their audits effectively

  • ①Audit & Supervisory Committee Members shall comply with the audit policies and the audit plan set by the Audit & Supervisory Committee and shall regulary exchange views and opinions with the Representative Director, the Accounting Auditors, and the Internal Audit Office.
  • ②Audit & Supervisory Committee Members or employees who assist the Audit & Supervisory Committee 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.
  • ③Audit & Supervisory Committee may consult with experts such as attorneys, certified public accountants, tax accountants and so on whenever they determine as necessary for their execution of work, and expenses for such professional services required by the Audit & Supervisory Committee shall be borne by the company.
  • ④In the event that the Audit & Supervisory Committee Members request advance payment of expenses for their execution of work, the company shall promptly address such requests unless its necessity is denied.

9. Scheme to ensure reliability of financial reports

In order to ensure reliability and properness of INNOTECH Group financial reports according to the Financial Instruments and Exchange Act of Japan, INNOTECH shall lay groundwork for its internal control under the instructions of the Representative Director; INNOTECH Internal Audit Office shall be in charge of execution of such groundwork and its evaluation from operational point of view.

10. Fundamental policies and measures in eliminating antisocial forces

From the viewpoint of avoiding any involvement with and any influence from economic activities by the antisocial forces, INNOTECH Group shall devise the “INNOTECH Group Internal Code of Conduct and Ethics” as well as the “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.