Internal Control System
Latest Update : Jan.17, 2019
Internal Control System
Enhancement of Internal Control System
Based on the "Basic Policy for Internal Control System", the Company has comprehensively implemented such systems as the compliance system, information storage and management system, risk management system, efficiently performing duties system, group company control system, and auditing system, and is working to further strengthen them.
Basic Views on Internal Control System and the Progress of System Development
By establishing an internal control system that disciplines business management, we will reinforce corporate governance and strongly fulfill the company's social responsibilities, as well as further increase corporate value.
Based on the Companies Act, the Company enacted its Basic Policy for Formulation of an Internal Control System by a resolution of the Meeting of the Board of Directors in an effort to ensure the sound management of the Company.
Structure of Internal Control System, etc.
1. Structure to assure that Directors', Executive Officers' & Technical Officers' and employees' execution of duties conform to laws and regulations and Articles of Incorporation
- (1) The MinebeaMitsumi Group has set up a management structure regarding compliance and established the MinebeaMitsumi Group Code of Conduct (hereafter the "Code of Conduct"), the MinebeaMitsumi Group Officer and Employee Compliance Guidelines (hereafter the "Compliance Guidelines") and Compliance Management Rules (hereafter the "Rules") in order to have group company Directors, Executive Officers & Technical Officers and Employees follow laws and regulations, the Company's Articles of Incorporation and the Company Credo.
- (2) These Code of Conduct and Compliance Guidelines have set the specific guidelines and standards that have to be observed for labor, safety and health, environment protection, and ethical management. In order to enforce this, the Compliance Committee was established to control the Group's compliance efforts in a cross-sectional manner, as well as educating officers and staff members. In the Rules, the basic policy, such as a basic policy of the compliance in our group, organization, and management rules are defined, and the various measures regarding maintenance of organization and compliance are implemented appropriately.
- (3) The MinebeaMitsumi Group will have nothing to do with anti-social forces and organizations that threaten social order or safety. It will not acquiesce to unreasonable demands, and it will work uncompromisingly in cooperation with external authorized institutions such as police and lawyers. Moreover, it is also written in the Code of Conduct and the Compliance Guidelines.
- (4) Activities of the Compliance Committee are reported to the Board of Directors regularly, or whenever Necessary.
- (5) Outside directors in the Board of Directors will be appointed in order to have the check-and-balance system that assures the legality of the Directors' execution of duties.
2. Storage and management of information related to execution of duties by Directors and Executive Officers & Technical Officers
- (1) The MinebeaMitsumi Group has established the MinebeaMitsumi Group Document Management Rules for maintaining documents (including electronic records) and other relevant materials.
- (2) If the documents should be kept for a certain period of time or at a certain location, the preservation period and location must follow these rules except in cases where there are specific provisions in any law. The documents are stored by a method as it can be viewed within 2 days, if there is an inspection request from a Director or Audit & Supervisory Board Member.
3. Rules for risk of loss management and other structures
- (1) The MinebeaMitsumi Group established "MinebeaMitsumi Group Basic Rules for Risk Management" that systematically sets up risk management. The Chief Officer of the risk management of MinebeaMitsumi Group shall be the Representative Director, President and Chief Executive Officer, and the Risk Management Committee is under his direct control.
- (2) Based on these Rules, the individual risks will be monitored continuously by each responsive organization, and we also assume and classify specific risks in advance, and develop a quick, adequate communication and emergency structure in case of an emergency.
- (3) The Risk Management Committee will regularly review above structure, verify specific items and report the status of risk management including such verification results to the Board of Directors regularly, or whenever necessary.
4. Structure to assures that the execution of duties by the Directors and Executive Officers & Technical Officers are efficiently performed
- (1) The Company makes rapid and highly strategic management judgments by limiting the number of Directors to 12 or less. At the same time, the Company makes significant transfer of the authority for business execution from Directors to Executive Officers by introducing an Executive Officer System to facilitate a clear distinction between management and supervisory functions and business executing functions and speed up the business execution.
- (2) The MinebeaMitsumi Group sets group-wide goals that are shared by Directors, Executive Officers & Technical Officers and employees and spreads those goals across the group. In addition, to achieve the goals, chiefs of headquarters and officers in charge of divisions and chiefs of business units determine specific objectives to be implemented by each headquarters, division or business unit and efficient methods of achieving the objectives. Their performance results are converted into verifiable data via an IT system and are regularly reviewed by the Board of Directors after being analyzed by each relevant headquarters, division and business unit. Leveraging the inherent strength of this process, enables us to sweep away obstacles to efficiency, bring everyone closer to achieving their goals, and lay a solid foundation upon which we can build a more efficient organization.
5. Structures to ensure that the operations of the Company's and its subsidiaries are adequate
- (1) The Company's headquarters, divisions and business units take all necessary steps to provide effective guidance on group company business operations.
- (2) Our common commitment to legal and ethical standards is reflected in the "MinebeaMitsumi Group Code of Conduct" and the "Compliance Guidelines".
- (3) "Rules for Management of Group Companies" that are common to our group are established in order to establish the management standards and management procedures for its Group Companies located domestically in Japan and overseas as well, and to facilitate business development of the corporate Group Consisting of the Company and the Group Companies, strengthen its corporate governance structure and enhance its corporate value.
- (4) In order to increase the effects of the internal control system audits for Group Companies currently done by the Audit & Supervisory Board Members, we maintain a cooperative posture toward the Audit & Supervisory Board Members.
- (5) We set numerical goals for each Group Company, review them regularly, and provide relevant organizations with feedback after performing a thorough performance review.
- (6) The Internal Auditing Office regularly audits the Group Companies.
6. Issues concerning when an Audit & Supervisory Board Member requests for an employee to assist him/her and issues concerning such employee's independence from Directors
- (1) When such employee is required, he/she is properly set, and we assist the audit.
- (2) When an employee in charge of work to assist duties of an Audit & Supervisory Board Member receives directions on the work from the Audit & Supervisory Board Member, a system that allows such employee to concentrate on following commands and orders is established.
- (3) The audit support by such employee is done under the Audit & Supervisory Board Member's directions and orders.
- (4) The Audit & Supervisory Board's opinion is respected on the personnel changes and personnel evaluation regarding such employee.
7. Structure of Directors', Executive Officers' & Technical Officers' and employees' report to the Audit & Supervisory Board Member, and other reporting structure to the Audit & Supervisory Board Member
- (1) The Directors report the following to the Audit & Supervisory Board
a. Matters discussed at the Senior Executive Officers Council
b. Matters that might cause the Company a significant loss
c. Monthly business conditions that are important
d. Important matters regarding internal audit status and risk management
e. Significant violations of law or Articles of Incorporation
f. Status of calls to the compliance hotline and their contents
g. Other important matters related to compliance
h. Matters related to request for approval decided by Directors or Executive Officers & Technical Officers
i. Agreements executed by Directors or Executive Officers & Technical Officers
j. Matters related to litigations
- (2) Executive Officers & Technical Officers directly report (b) or (e) in the previous paragraph (1) hereof to the Audit & Supervisory Board. Also, if the employee discovers a significant fact related to (b) and (e) in the previous paragraph (1) hereof, he/she may directly report it to the Audit & Supervisory Board.
- (3) Group companies' Directors, Audit & Supervisory Board Members or employees who execute business operations or any person who receives a report from them may report a matter concerning (b) or (e) of (1) above directly to the Audit & Supervisory Board.
- (4) Executives and employees of the Company and Group Companies shall not to be treated disadvantageously by reason of their reporting on each item listed above.
8. Other matters in order to ensure the efficiency of the Audit & Supervisory Board Member's audit
- (1) The Audit & Supervisory Board Member has an opportunity to interview Directors, Executive Officers & Technical Officers and important employees, as well as hold informal meetings regularly with Representative Director, President and Chief Executive Officer and the Independent Auditor respectively.
- (2) The Internal Auditing Office carries out the internal audit items requested by the Audit & Supervisory Board Members based on discussions with the Audit & Supervisory Board and reports those results to the Audit & Supervisory Board.
- (3) As a general rule, costs arising from execution of duties by Audit & Supervisory Board Members are expensed based on the annual budget planned by the Audit & Supervisory Board. When an Audit & Supervisory Board Member asks for advance payment of costs, etc. required for execution of his or her duties by necessity, the costs or obligations are processed promptly.
Overview of operation of the Internal Control System
Based on the "Basic Policy for Internal Control System," the Company operates the international control system as follows:
|Compliance system||The Company holds meetings of the Compliance Committee that one independent Outside Director attends, considers various measures regarding compliance, and reports these measures to the Board of Directors. In addition, the compliance consultation center for which the internal responsible department and an external outsourced company act as a contact point has been set up, and the provided information shall also be notified to Audit & Supervisory Board Members.
In the fiscal year under review (ended March, 31 ,2018), the Company implemented training and education programs such as seminars on the Antimonopoly Act for sales positions and basic seminars on compliance for new employees and experienced employees who newly joined the Company, and also provided compliance-related training in Thailand, which is a major overseas business site.
Furthermore, the Company has conducted "Employee Compliance Awareness Survey" to measure the extent of awareness of compliance, and continues its efforts to increase awareness about compliance.
|Information storage and management system||Based on the "MinebeaMitsumi Group Document Management Rules," the Company has appropriately stored significant minutes of meetings, various written decisions, financial statements and other documents.|
|Risk management structure||The Risk Management Committee develops the risk management structure in the Group and promotes the development of business continuity plans (BCP) that provide for remediation activities in case any risk occurs at major production sites
In the fiscal year under review (ended March 31, 2018), the Company held meetings of the Risk Management Committee and conducted examinations for further enhancement and strengthening of the Group's risk management structure.
The examinations results were discussed at a Board of Directors meeting, and it was decided that the Risk Management Committee was to be reorganized into a new Risk Management Committee and the system was to change to a structure where a person responsible for risk management, etc. is placed in each region and business site, led by Directors at the Head Office. In order to prepare for risks that are diversified further in line with the expansion of the Group, the Company will examine and understand risks for each business site and strive to effectively promote preventive and control activities tailored to characteristics of each business site.
|System for an efficient execution of duties||Based on the "Board of Directors' Rules" and other regulations, necessary resolutions are made at the Board of Directors meetings. The Company made significant transfer of the authority to Executive Officers by an Executive Officer System to ensure efficient execution of duties. With the Company's goals as the company credo, the Board of Directors formulates mid-term and annual business plans and gives direction strategically.
When plans are considered, constructive discussions are made at a business plan review meeting that all Directors, Audit & Supervisory Board Members, Executive Officers & Technical Officers, chiefs of business units, etc. attend, a Top Meeting held around the end of the first half where achievement of the plans is confirmed and deliberations are conducted for the future and other meetings. Based on the results of these discussions, the Company makes decisions on business execution through deliberations at the Board of Directors after discussions at the Senior Executive Officers Council, which is an advisory body for President and Chief Executive Officer.
The progress of plans is reported at the Board of Directors on a quarterly basis and monitored.
|Management of group companies||Each headquarters, division and business unit of the Company provide effective guidance on group company business operations.
Based on the "Rules for Management of Group Companies," group companies are managed and operated.
The status of operations is confirmed through audits by Audit & Supervisory Board Members and internal audits. A periodic audit is made for particularly important business sites.
|Audit system matters||Audit & Supervisory Board Members attend the Board of Directors' meetings and other important meetings, interview the Company's Directors and Executive Officers & Technical Officers and review important written decisions while visiting domestic and overseas group companies for audits and interviewing directors and other persons concerned of group companies.
Audit & Supervisory Board Members periodically have a meeting with the Internal Auditing Office, hear an annual audit plan and its objectives, etc. and receive a report about all internal audit results. In implementing audits, Audit & Supervisory Board Members have prior discussions on auditing points and other matters, and join and observe internal audits where necessary.
Audit & Supervisory Board Members periodically interview President and Chief Executive Officer, and also hold a regular meeting with the Independent Auditor to confirm the audit system and an audit plan, receive an explanation on implementation of an audit, etc. and exchange opinions. Furthermore, a liaison council with Outside Directors has been set up to periodically exchange views.
An employee to assist Audit & Supervisory Board Members on a full-time basis has been assigned to the Audit & Supervisory Board Members Office. Directions and orders to and personnel evaluations of such employee are given by Audit & Supervisory Board Members.
An annual budget is appropriated by the Audit & Supervisory Board, and relevant costs are expensed based on the annual budget.
Basic Views on Eliminating Anti-Social Forces
In recent years so-called "antisocial forces," i.e. criminal entities, have been taking ever more shadowy paths as they mask their illicit activities behind various business fronts and employ cunning means of appropriating funds. Any society that aims to maintain public order and safety must root out these dark forces wherever they exist. The same goes for companies that wish to fulfill their social responsibilities, ensure compliance with the law, and eliminate risks.
MinebeaMitsumi's Code of Conduct promises that the MinebeaMitsumi Group will have nothing to do with antisocial influences that threaten social order or safety. It guarantees that we will not acquiesce to unreasonable demands and will work uncompromisingly in cooperation with external authorized institutions such as police and lawyers. The MinebeaMitsumi Group Officer and Employee Compliance Guidelines maintains that "we shall take a resolute attitude toward antisocial forces and groups that pose a threat to the order and safety of civil society, and shall sever any relations with those forces and groups." At MinebeaMitsumi we make sure that all employees across the Group are aware of these rules and guidelines. We have even set up an internal organization responsible for overseeing employees and departments with an eye to ensuring that they have absolutely no ties with any criminal entities, etc.
On top of that we do everything possible to make all employees of MinebeaMitsumi and its Group companies informed of initiatives aimed at weeding out and preventing these corrupt entities from casting their dark shadow over our organization. We also incorporate provisions designed to root out these "antisocial forces" in basic business agreements signed by our Group's suppliers so they can join us in our efforts to stamp out corruption.