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Internal Controls

1. Internal Control Guidelines

We resolve and promote ten internal control guidelines.

(1) A System to Maintain a Board of Directors that Complies with the Laws, Regulations, and the Infocom Articles of Incorporation

  1. Our company is structured with a management that "observes the common principles of compliance," "prioritizes acts based on high ethical views," and "acts faithfully in management and operation policies," and with executives and employees who act faithfully based on the ethical views and values expected of a corporate body that abides by laws. We plan out model actions and action criteria according to these policies and apply them to our daily activities.
  2. Our company sets official regulations to ensure that our executives duly perform their duties as directors, to realize fair and proper administration based on audits conducted in compliance with the "auditing criteria for auditors" set in audit committees, and to keep our corporate conduct in conformance with societal norms and ethics.
  3. Our company appoints a CSRO (Chief Social Responsibility Officer) as a compliance controller and strives to develop a horizontally structured compliance system and grasp problematic points in Infocom Group.

(2) A System to Keep the Performance of the Directors Compliant with Laws, Regulations, and the Articles of Incorporation

  1. The execution of the duties of the employees of our company shall be continually guided by compliance education and Infocom's relationship with the public based on Infocom Group's management strategy, action strategy, standards, and criteria for compliance with laws, regulations, and the Articles of Incorporation. The executives and employees will also maintain practical compliance in their respective positions.
  2. Our company operates a compliance hotline under the supervision of an external attorney as a channel for directly reporting important facts that executives and employees may discover in relation to potential violations of laws or compliance in the company. If a potential violation is reported, our company protects the confidentiality of the whistleblower and ensures that the whistleblower will never incur any disadvantage or receive untoward treatment as a consequence of his or her whistle-blowing report.
  3. Our company properly discloses countermeasures and effects on the company regarding important reports to executives and servants.
  4. Our company prevents the concentration of supervisory authority over the organization and over individuals by clarifying a division of tasks in the organization and the responsibilities of positions within the organization based on rules, administrative authority, and a table of separate authority criteria. All opinions related to the authorities and rules assigned are duly recorded in minutes at meetings.

(3) System for the Preservation and Management of Information Related to the Duties of Directors

  1. Our company stores and manages information related to the performance of duties as directors in highly searchable formats and storage mediums based on the internal rules applied to that information and maintains the information in a viewable condition at all times during its storage.
  2. The CEO is in charge of the monitoring and auditing the storage and management of the information mentioned in 1 above.

(4) Rules Related to the Management of the Risk of Loss and Risk Control Systems

  1. The meetings of the directors raise the corporate value and address many types of risk that threaten the continual development of our corporate activities.
  2. A set of "group risk management regulations" has been established under an integrated risk management policy. A "group risk management committee" chaired by the CSRO was installed as a body to manage risk in conformance with those regulations and to systematically and effectively grasp, assess, and manage risk related to the performance of group duties.
  3. A system has been formed to respond to integrated crisis management in the group that abides by the "crisis management manual" in order to avoid chaos from state of emergencies and minimize the effects of losses that accompany major incidents and accidents that occur. Additionally, in order to minimize losses that may be incurred in the event of an emergency situation such as a large-scale disaster, a business continuity plan (BCP) has been developed, as we work to maintain a system to protect the continuity of business.

(5) A System to Ensure the Efficient Performance of Duties by Directors

  1. Our company holds extraordinary meetings to make decisions at appropriate times, as deemed necessary for the performance of duties, besides holding regular director meetings once a month. Deliberative councils are also held in investment committees formed by the directors.
  2. The performance of duties based on the decisions of the director meetings will establish the details of the authority of each person with administrative authority for each procedure and division regulation. These regulations shall be revised as necessary to reflect any revision or abolition of laws or to increase efficiency.
  3. To ensure effective and speedy management, decision-making and auditing functions for duties and their execution functions have been separated, and an executive officer system has been introduced. Additionally, in order to improve the validity and rationality of decision-making at director meetings, an independent outside director has been appointed.

(6) System to Ensure the Proper Performance of Duties in Corporate Groups Formed by the Said Stock Company, Parent, and Subsidiary

  1. Infocom Group is structured with a management that "observes the common principles of compliance" and "prioritizes acts based on high ethical views," and with operation policies, executives, and employees who act faithfully based on the ethical views and values expected of a corporate body that abides by laws. Infocom Group never associates with individuals or groups that disturb the peace or interrupt work operations, and always maintains a resolute attitude against pressures from antisocial forces such as demands for payoffs from specific shareholders or interference by crime syndicates. In no event will Infocom Group ever succumb to such demands or interference.
  2. The presidents of group companies in Infocom Group have been appointed as members of the "group risk management committee" and have organized a system for compliance risk management based on a group integration policy that conforms to the "group risk management regulations."
  3. The audit room is a venue for the performance of internal audits in the Infocom Group and serves to secure the effectiveness and validity of internal controls throughout the entire group.
  4. We perform all of our all duties as a listed company based on independent management decisions.
  5. Auditors, either acting individually or through the audit committee, constitute a precise structure closely coordinated with the accounting auditors and auditing room in order to effectively and appropriately monitor and audit the group as a whole.

(7) Items Concerning Employees Appointed to Assist with Auditing Duties

  1. The audit room staff maintains independence from other operating lines and assists in auditing duties at the request of the auditors. Additionally, in order to ensure the independence of the auditing room staff, the auditors will be asked their opinions for performance reviews.

(8) Items Concerning the Independence from Employee Directors in the Previous Clause

  1. The audit room staff never receives orders from directors regarding its work to assist the duties of the auditors.

(9) System to Report Directors and Employees to Auditors and System to Report Auditors to other Auditors

  1. Auditors can attend important company meetings in order to understand critical decision-making processes and the performance of duties.
  2. Directors and auditors shall report the following items to the auditors immediately upon discovering such items.
    1) Actions, conditions, or events that significantly reduce or may reduce trust in the company.
    2) Actions, conditions, or events that have or may have significantly negative effects on the company's performance.
    3) Significant violations of the company's action policy and compliance.
    4) Others actions, conditions, or events equivalent to 1)-3) above.

(10) A System to Ensure the Effective Performance of Duties by Auditors

  1. The auditors hold opinion exchanges with the directors, important employees, and audit corporations, as deemed necessary.
  2. The company keeps all information related to the performance of duties in a viewable condition at all times to ensure that the auditors can effectively carry out the audits.

2. Elimination of Organized Crime Guidelines

Infocom Group is structured with a management that "observes the common principles of compliance" and "prioritizes acts based on high ethical views" in accordance with sound management and operation policies, along with executives and employees who act faithfully based on the ethical views and values expected of a corporate body that abides by laws. Infocom Group never associates with individuals or groups that disturb the peace or interrupt work operations and always maintains a resolute attitude against pressures from antisocial forces such as demands for payoffs from specific shareholders or interference by crime syndicates. In no event will Infocom Group ever succumb to such demands or interference.

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