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Internal Control
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Outline of the Basic Policies Regarding Internal Control System
Notes
| 1. System to Ensure Compliance by Directors and Employees with Laws, Regulations and the Articles of Incorporation |
| (1) |
Corporate Governance |
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As the decision-making body, the Board of Directors is to decide important matters in accordance with laws and regulations, the Articles of Incorporation, the “Board of Directors’ Regulations,” and other internal regulations, and, as the supervisory body, the Board of Directors is to supervise the individual Director’s performance. |
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Each Director is to carry out such Director’s functions and duties in accordance with laws and regulations, the Articles of Incorporation, resolutions of the Board of Directors, and internal regulations and inform the Board of Directors of the situation with regard to his/her performance of his/her work at least once every three months and whenever deemed necessary. |
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MISI is to adopt an Executive Officer System to strengthen the decision-making function and supervisory function of the Board of Directors, and to streamline executive decision-making. The executive officers are to be appointed pursuant to a resolution of the Board of Directors, and are to carry out their designated functions and duties under the command and supervision of the Representative Directors. |
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The Corporate Auditors are to oversee the performance of the Directors based on the "Board of Corporate Auditors' Regulations" and "Corporate Auditors' Auditing Standards." |
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Compliance |
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Directors and employees are to conduct themselves in accordance with the "MISI Group Compliance Program." |
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MISI is to establish a Chief Compliance Officer and a Compliance Committee in accordance with the MISI Group Compliance Program.In addition, a Compliance Officer is to be appointed in each department, training regarding compliance is to be provided and certain other systems are to be established in order to further enhance our compliance system. |
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Internal Controls to Ensure Reliability of Financial Reporting |
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MISI is to have in place “Commercial Transaction Regulations”, “Accounting Regulations” and other internal regulations and is to establish an internal system in order to ensure compliance with the laws and regulations for accounting and reliability of financial reporting. |
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Internal Audits |
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MISI is to establish an Audit Department under the direct control of the President. The Audit Department is to regularly implement internal audits of all aspects of business operations based on the “Audit Regulations.” Such internal audits are to examine compliance with laws and regulations, the Articles of Incorporation, and internal regulations, as well as, among other matters, the appropriateness of the procedures and nature of the exercise of duties and responsibilities. The Audit Department shall submit a report with regard to such audits to the President and monitor whether the improvements are made regarding unsatisfactory matters. |
| 2. System for the Storage and Preservation of Information Related to Director’s Duties |
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Storage and Preservation of Information |
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The Directors are to appropriately store and preserve important documents and related materials concerning the performance of their duties, including the minutes of the General Meeting of Shareholders, in accordance with the "Document Management Regulations", the "Information Management Regulations," and other internal regulations. |
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Inspection of Information |
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All documents and information so stored and preserved are to be available for inspection by the Directors and Corporate Auditors at any time. |
| 3. Regulations Concerning the Management of Risk of Loss and Other Relevant Risk Management Systems |
| To adequately address the various risks associated with our business operations, such as market risk, credit risk, country risk, and investment risk, MISI is to establish internal committees and responsible departments, and is to develop the necessary risk management systems and risk management techniques by, for example, establishing a full range of management regulations, investment criteria, risk limits and transaction limits, and developing reporting and monitoring systems, and managing company-wide as well as matter-specific risks . Furthermore, MISI is to regularly review the effectiveness of the risk management system. |
| 4. System to Ensure Efficient Performance of Directors |
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The Management Committee and other Internal Committees |
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The Management Committee, as a body advising the President, shall examine general business policy, business plans and other important matters related to business management. Other internal committees are to facilitate proper and flexible decision-making by the President and the Board of Directors. |
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Business Divisions and Corporate Division |
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Under the Business Division System, each General Manager of a Business Division, by delegation of the power by the Board of Directors, is to make prompt decisions with regard to the products to be handled by the relevant division. Furthermore, each Business Division is to establish its own numerical targets, and regularly evaluate its performance by comparing its actual results against such numerical targets.
In addition, the Corporate Division is also to control, supervise and support the Business Divisions with its special functions and promote more efficient performance.
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Clearly Define the Scope of Authority and Responsibilities |
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In order to ensure the appropriateness and efficacy of management’s performance, MISI is to develop internal regulations to clearly define the scope of authority and responsibilities of each corporate officer and general manager. |
| 5. System to Ensure the Adequacy of Operations of the MISI Group (Consisting of MISI and its Subsidiaries) |
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Subsidiary Management System |
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MISI is to establish a department that oversees all of MISI’s subsidiaries. Furthermore, each relevant department within MISI is to exercise jurisdiction over its responsible subsidiaries, and provide managerial guidance to such subsidiaries in accordance with the internal regulations concerning consolidated company management.In principle, MISI is to send directors and corporate auditors to each subsidiary to ensure the adequacy of the subsidiary’s operations. |
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Compliance |
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MISI is to provide guidance to its subsidiaries for the purpose of implementing a compliance system at each subsidiary in accordance with the “MISI Group Compliance Program,” and is to implement full compliance within the entire MISI Group through education and training. |
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Internal Audits |
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All of the operations and activities of the subsidiaries are to be subject to internal audits by the Audit Department. The Audit Department shall establish an internal audit system for the MISI Group, cooperate with each of the audit organizationsof MISI Group companies and enhance the quality of the skills auditing within the MISI Group. |
| 6. Matters Concerning Support Personnel for Corporate Auditors and Independence of such Personnel from the Directors |
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If requested by a Corporate Auditor, MISI is to examine the possibility of putting in place full-time employees whose responsibility is to support the work of the relevant Corporate Auditors (including temporally employees for a specified matter). |
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Supervisory authority over such employees is to belong exclusively to the Board of Corporate Auditors. |
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| 7. System for Reporting by Directors and Employees to Corporate Auditors |
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Attendance at Important Meetings |
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The Corporate Auditors are to attend meetings of the Board of Directors, meetings of the Management Committee, and other important meetings, and interview the Directors and other relevant persons regarding the performance of their duties. In addition, the Corporate Auditors are to have the right to inspect all relevant materials. |
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Reporting System |
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The Directors, executive officers and the general managers of each department in the Corporate Division are to report to the Corporate Auditors regularly about their performance. |
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In addition to the matters required by laws and regulations, the Directors, executive officers and the general managers of each department in the Corporate Division are to report concerning all decisions that could have a major impact on the finances or business of MISI to the Corporate Auditors immediately after such decisions are made. |
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Employees are to have the right to report directly to the Corporate Auditors any matter that could cause serious damage to MISI. |
| 8. Other Relevant Systems to Ensure the Proper Functioning of Corporate Audits |
The Corporate Auditors are to meet regularly with the Representative Directors.
The Corporate Auditors are to maintain close communication and coordination with the Audit Department and CPA with respect to matters such as formulation of the internal audit plan for each business year and internal audit results.
The Corporate Auditors are to communicate with the full time Corporate Auditors of MISI’s subsidiaries and solicit their opinions related to the work of such subsidiaries.
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