To enhance the effectiveness and efficiency of operations, ensure the reliability of financial statements, comply with laws and ordinances, and safeguard assets, the Company has adopted a Basic Policy for the Establishment of Internal Control System, as described below, under Article 362, Paragraph 5 and Article 362, Paragraph 4, Item 6 of the Companies Act, and Article 100, Paragraph 1 and Article 100, Paragraph 3 of the Ordinance for Enforcement of the Companies Act.

(1) To maintain and improve the functions to supervise the execution of duties by directors, the Company will strive to continually elect outside directors with a focus on the independence and segregation of executive functions and supervisory functions by adopting an officer system.

(2) The Company will establish a governance committee, an advisory body for the Board of Directors, in which an outside director serves as its chairperson. The committee will offer to the Board advices on the appointment and remuneration of directors and officers with titles, and other matters related to corporate governance to enhance the transparency and objectivity of the decision-making process.

(3) Officers and employees will strive to engage in fair and legitimate business activities that meet the demands of society pursuant to the “Code of Conduct and Guidelines for Action of the AUTOBACS SEVEN Group.”

(4) The Company will establish regulations concerning compliance, and will manage company-wide compliance issues by appointing an officer in charge as general manager and establishing a compliance department that operates under the supervision of the officer in charge.

(5) The Company will develop a foundation for complying with legal requirements by identifying laws and ordinances, etc. applicable to the Company’s businesses, and will carry out training and enlightenment activities as needed.

(6)To detect and correct violations of laws & regulations and other problems related to compliance at an early stage, the Company will establish an “Orange Hot Line” (an inter-Group whistleblowing system), which serves as a notification system for reporting issues directly to an outside commissioned company.

(7) Corporate auditors will audit the execution of directors’ duties from an independent standpoint, including the development and implementation statuses of the internal control system.

(8) The internal audit department will evaluate internal control and audit the appropriateness and the effectiveness of operations.

(9) The Company will establish rules related to antisocial forces, and will develop a system to terminate any relationships with antisocial forces and reject any unlawful demands from them.

 

With respect to information concerning decision-making at the meetings of the Board of Directors, Executive Committee, Officers’ Committee and any other important meetings, and with respect to information concerning important approvals of the Representative Director and Chief Executive Officer, and other, and with respect to information concerning financial and other administrative operations, risks, and compliance, the Company will store and control said information in the reliable and searchable conditions that suit relevant storage media and keep them available for view as may be necessary, pursuant to laws & ordinances, the Company’s article of incorporation and internal rules, etc.

 

(1) The Company will develop a risk management system designed to accurately identify and evaluate and appropriately control risks. It will also establish an integrated risk management system that combines a crisis management system allowing the prevention of the spread of harm and the minimization of damage and loss in the event of serious incidents.

(2) The Risk Management Committee, which will be chaired by the Representative Director and Chief Executive Officer, formulate annual risk management policies. In accordance with said annual policies and risk management rules, the Committee will promote risk management activities in a smooth and appropriate manner.

(3) In the event of serious incidents, the Representative Director and Chief Executive Officer who chairs the Risk Management Committee will set up a Crisis Management Headquarters in accordance with the internal rules of the crisis management for serious incidents, and take a leadership in ensuring quick and appropriate response and fast recovery.

(4) Corporate auditors and the Corporate Audit Office will audit the effectiveness of the Company’s integrated risk management systems.

 

(1) The Company will maintain the number of directors at an appropriate level to improve the quality of deliberations and ensure prompt decision making at meetings of the Board of Directors.

(2) The Board of Directors will establish an “Executive Committee” as a venue in which a consensus of officers is formed. The Executive Committee will hold preliminary discussions and meetings on agenda items to be proposed to a meeting of the Board of Directors, and will provide the Board of Directors with the results of discussions and other information, which are sufficient for the Board of Directors in making its decisions.

(3) The Board of Directors will develop a medium-term business plan and annual business plan, and will primarily monitor on a regular basis the progress of business strategies and other initiatives that are carried out in accordance with the plans.

(4) The Board of Directors will delegate the execution of operations to a representative director and officers in accordance with the management system and the division of duties that have been established by the Board of Directors.

(5) The representative director, as the responsible officer in charge of execution, will manage the overall execution of duties by consolidated Group companies to achieve the Group’s goals. Officers will determine specific goals of the businesses under their control and develop an efficient system for the execution of operations.

 

(1) The Company will strive to work in close cooperation with the AUTOBACS Group, including franchisee companies. It will also ensure that its corporate group, which includes subsidiaries (hereinafter referred to as the “Consolidated Group”), will be engaged in fair and legitimate business activities in accordance with the “Code of Conduct and Guidelines for Action of the AUTOBACS SEVEN Group” by carrying out compliance promotion activities for the Consolidated Group.

(2) The Company will draw up basic policies and operational policies for the management of subsidiaries to ensure the appropriate and efficient management of the Consolidated Group while respecting the management autonomy and independence of subsidiaries.

(3) The Company will appropriately carry out transactions with companies who belong to the Consolidated Group in accordance with laws and ordinances, accounting principles, and other social norms.

(4) The Company will appropriately and effectively use information technology for communication with its subsidiaries and its operations to an effective extent.

(5) Corporate auditors and the internal audit department will audit the appropriateness of the business operations of the Consolidated Group.

 

The Company will deploy full-time employee(s) to assist with the duties of corporate auditors. The number and selection of the said employees will be determined by consultations between corporate auditors and directors.

 

Employees who assist with the duties of corporate auditors shall obey to the command and order of corporate auditors. The Board of Corporate Auditors will be responsible for evaluating the performance of employees who assist with the duties of corporate auditors, and corporate auditors and directors will consult with each other with respect to the transfer of said employees.

 

(1) Directors and officers will report the status of the execution of their duties to corporate auditors on a regular basis at a meeting of the Board of Directors and other important meetings, and as needed without delay.

(2) Directors, officers and its employees will promptly and accurately respond to corporate auditors when corporate auditors request reports on operations or when they examine the status of operations and properties of the Consolidated Group.

(3) Directors will immediately report to corporate auditors should they discover anything that has inflicted or may inflict substantial damage on the Company.

 

(1) To enhance the auditing functions of corporate auditors, the Company will take into consideration not only the specialty but also the independence of corporate auditors and other factors when it elects outside corporate auditors.

(2) Corporate auditors will hold meetings on a regular basis and strive to maintain close cooperation with accounting auditors, internal audit departments, corporate auditors of the Consolidated Group, and other parties to exchange information and opinions and take other initiatives.

(3) Corporate auditors will hold a meeting with the representative director on a regular basis to audit the execution of duties of directors and to develop an audit system.

(4) Corporate auditors will work with lawyers, certified public accountants, and other experts outside the Company, when they believe it necessary to do so in executing their duties.

 

Established on May 19, 2006
Revised on March 29, 2012