Basic Concept and Status of Internal Control System
1. System to ensure the duties of all directors and employees of IRISO are carried out in compliance with applicable laws and regulations, as well as with the Articles of Incorporation
The Board of Directors develops the "Regulations of the Board of Directors,” and makes decisions on all business operations of IRISO in line with the requirements for a valid board resolution.
To develop and improve the compliance system, the Compliance Committee chaired by the President has been established, and the members hold regular monthly meetings. At the Compliance Committee meetings, a compliance framework is developed as a compliance program and applied to general business activities (a compliance program). The Compliance Committee ensures the program is well understood and is run across the company, as well as following up on the program progress. Reports and recommendations are made to the Board of Directors as necessary. A compliance officer is appointed in each department to ensure the compliance program is run effectively at the department level. At the same time, IRISO runs e-learning programs for all directors, executives officers and employees (in Japan) to learn such topics as "Corporate Ethics and Compliance," "Insider Trading," "CSR," "Sexual Harassment," "Workplace Harassment," "Personal Information Protection and Information Security," and "Intellectual Property (copyright, trade secrets, trademarks, and trade names).
As one element of the compliance program, IRISO has the "Whistleblower Protection Regulations," which is an internal reporting system.
The Audit Department performs regular internal audit, reports the results to the management and the Audit and Supervisory Committee and provides feedbacks to the audited departments.
IRISO does not tolerate any relationship, including business partnerships, with antisocial forces or groups. Their unreasonable demands are rejected firmly and in accordance with appliable laws and regulations, as well as with the company rules and regulations.
With regard to anti-bribery and corruption, IRISO does not tolerate any relationship with antisocial forces, as well as specifying "ethical sales activities in compliance with applicable laws and regulations," "purchasing in consideration of legal compliance, quality and safety, environmental conservation, information security, health and safety, human rights and labor, and others" and "compliance with international rules and local laws in global business activities" in the "IRISO Group Code of Business Conduct and Ethics," which was introduced in September 2009.
2. System to save and manage information on the duties of directors
Retention periods for requests for approval and documents are specified in the "Approval Requests Guidelines" and "Document Management Rules." The minutes of the Board of Directors meetings are saved and archived after being sealed by directors. Other documents are appropriately and reliably recorded, saved, and managed in a highly retrievable state, depending on the storage medium
The "Information Security Regulations" are provided to ensure confidential information is managed perfectly well. Based on these regulations, IRISO is committed to building and developing a confidential information management system.
The preparation, storage, and management of information on the duties of directors are audited by the Audit and Supervisory Committee.
3. Regulations and other systems for loss risk management
Business risks that may have a significant impact on our management are resolved by the Board of Directors based on the proposal of the Administration Division. They are described and disclosed in the Annual Securities Report.
Based on the "Risk Management Regulations," risk assessments are performed. A response system is also developed to minimize the negative impact of risks once they are identified.
Executive officers and employees, who are the heads of each division, identify inherent risks in their divisions, analyze and assess them, take appropriate measures to control them, and periodically review their effectiveness.
In preparation for emergencies such as natural disasters, major fires, and terrorist attacks, the "BCP Business Continuity Plan Regulations" has been introduced. A system for minimizing business interruption has also been developed.
By introducing an ERP system, IRISO ensures risks such as information leaks are prevented by improving operational efficiency and information security level.
4. System to ensure the duties of directors are carried out effectively
The Operating Officer System was introduced in May 2001 with the aim of separating management from business operations, as well as of clarifying the responsibilities and authorities of operating officers. As of June 27, 2023, the number of operating officers is eleven in total (four of them are also acting as directors). The Board of Directors focuses on supervising business operations as originally expected, whereas the President and CEO and other operating officers have their own duties.
The responsibilities of Executive Officers who are also acting as directors are decided by the Board of Directors, and they are responsible for all business areas of IRISO, including sales, manufacturing, technology, quality management and administration. Monthly executive meetings for monthly performance management are held to manage the responsibilities of each Executive Officer, as well as to report the results to the Board of Directors.
5. System to ensure our corporate group comprised of IRISO and its subsidiaries conducts business appropriately
In accordance with the "Regulations for Group Companies Management," the Production Management Division and Sales Headquarters are responsible for supporting and managing the day-to-day operations of the group manufacturing companies and sales companies, respectively.
The Accounting Department, and Human Resources and General Affairs Department are responsible for controlling the roles and functions of each group company, as well as managing group-wide operations.
The Group Companies Administration Department supervises and administers group companies management in cooperation with the divisions involved in the management and control of the group companies.
6. System for employee management when the Audit and Supervisory Committee requests the appointment of employees to assist with the operation of the Committee functions and duties, as well as matters related to the independence of such employees from directors
The Audit and Supervisory Committee Support Office has been established and staffed with one employee to assist with the operation of the Committee functions and duties.
The staff of the Audit and Supervisory Committee Support Office follow not the directions and orders of directors who are not Audit and Supervisory Committee members but those of the Committee. Staff transfers, evaluations and others shall be agreed by the Committee. IRISO ensures the independence of the Audit and Supervisory Committee from 0perating officers, as well as that the Committee's instructions have an effect on the staff of the Audit and Supervisory Committee Support Office.
7. System for directors and employees who report to the Audit and Supervisory Committee, as well as for reporting by others to the Committee
Directors, Executive officers, and employees who conduct business operations are required to make a progress report on the business operations of IRISO to the Audit and Supervisory Committee upon its request.
Audit and Supervisory Committee members attend the Board of Directors meetings, Executive Committee meetings, and other important meetings, and hold regular meetings with accounting auditors to exchange opinions and information.
A system for directors and employees of IRISO and its subsidiaries who report to the Audit and Supervisory Committee has been developed. Anyone who has reported to the Committee would not be treated unfairly for the reason of reporting.
8. System to ensure audits are performed effectively by the Audit and Supervisory Committee
The Audit and Supervisory Committee works in cooperation with the Audit Department, which is responsible for performing internal audits, and requests the Internal Audit Department to conduct investigations as necessary, whereas the Audit Department supports audits performed by the Committee.
The Audit and Supervisory Committee holds regular meetings with the President and CEO to discuss important issues, etc.
Expenses necessary for business operations of Audit and Supervisory Committee members are properly budgeted in advance. However, unexpected expenses necessary for business operations of Committee members to meet urgent needs or temporarily are promptly paid in advance or reimbursed later in each case.