Corporate Policy over Internal Control
The Group Vision“Look Beyond”of the AGC Group provides that all members of the AGC Group are expected to adopt and follow the four shared values of “Innovation &Operational Excellence”, ”Diversity”, “Environment” and “Integrity”, which shall serve as the basis for every action they take.
In addition to the above, the AGC Group declares its corporate social responsibility in the form of “AGC Group Charter of Corporate Behavior”, which is intended to lead the group members properly toward realization of the Group Vision“Look Beyond”.
Systems to ensure fair and legal business transactions are as follows.
1. System to ensure compliance with the relevant laws and the Articles of Incorporations(Compliance Program)
The AGC Group defines “Integrity” as one of the most important shared values in its Group Vision “Look Beyond” and establishes and strengthens its compliance program based thereon.
More specifically, the President & CEO of this Company (hereinafter referred to as the President & CEO) nominates, among executive officers, the Chief Compliance Officer (abbreviated to CCO) who shall be responsible to control over the establishment and promotion of the AGC Group’s compliance program under the authorization of the President & CEO. Further, this Company establishes the Compliance Committee as a professional body for legal compliance and corporate ethics. Chaired by a Global Compliance Leader, this Committee shall plan, formulate and execute a compliance program. It shall establish global common compliance rules and country/region specific rules in the Code of Conduct (AGG Group Code of Conduct) and establish the compliance system as AGC Group as well as promote educational activities therefore to ensure business conduct based on laws and corporate ethics.
In order to handle whistle-blowing and consultation on compliance, the AGC Group sets up contact points (helpline). All the corporate officers and employees of the Company and executives of subsidiaries are obligated to submit the personal certificate.
Actual status of compliance and usage of whistle-blowing and consultation system on compliance of the AGC Group shall be reported to the Board of Directors of the Company (hereinafter referred to as the Board of Directors) periodically.
This Company shall also establish a legal administration system of the AGC Group to grasp information on important legal issues, which shall be reported to the Board of Directors periodically.
With regard to internal audit of the AGC Group, the Internal Audit Division and the internal audit staff in each region shall audit managerial and operational systems as well as legality and rationality of execution of business process, pursuant to an annual auditing plan. Results of such internal audits shall be timely reported to the President & CEO and further to the Board of Directors periodically.
In accordance with “Financial Instruments and Exchange Act” in Japan, the AGC group shall establish “AGC Group Internal Control over Financial Reporting Implementation Regulations” and form the compliance system for financial reporting.
2. Information Retention and Management System with respect to business operations of the AGC Group (Information retention / management system)
Retention and management of important business documents and information shall be made pursuant to the applicable laws and the relevant internal rules of the AGC Group.
Confidentiality and security of important business documents and information shall be maintained in accordance with the applicable procedures provided in the Information Security Policy to be made available through the Company.
3. System to control risk of damage of the AGC Group (Risk Management System)
The AGC Group shall establish “AGC Group Enterprise Risk Management Basic Policies” and form the risk management system and crisis management system.
According to the relevant internal rules, important risk factors for the AGC Group shall be specified and control of these factors shall be discussed and monitored periodically at the Management Committee of this Company (hereinafter referred to as the Management Committee) and the Board of Directors. As for the risks associated with business activities of the AGC Group, each Corporate Division, in-house Company and SBU analyzes the risks of individual operations and projects and discusses necessary countermeasures. If necessary and appropriate, the Management Committee and the Board of Directors deliberate the matters as well.
Each responsible division provides and announces a respective guideline over those risks associated with compliance, environment, accidents and product quality etc. of the AGC Group and conducts training sessions and/or internal audits if necessary and appropriate.
Preparing for unforeseen events that could seriously affect both operating results and financial condition of the AGC Group, in accordance with the relevant internal rules, a crisis management report line has been established so that critical information can be reported speedily and surely to the President & CEO, and further distributed and shared among the officers and the employees concerned. The Company shall establish the system where the Group Taskforce Headquarters can be set up immediately upon the President & CEO’s judgment, in order to take initial measures without delay and appropriately.
4. System to ensure efficient and effective business execution of the AGC Group (System for efficient business execution)
As basic policy over corporate governance structure, this Company clearly distinguishes management oversight function and business execution function, aiming at realization of reinforced business oversight and quick decision making at the business execution.
As to management oversight, in this Company the Board of Directors including independent directors shall decide on the important business matters and oversee the business performance of the AGC Group. In addition, the Nomination Committee and the Compensation Committee (both non-statutory) are established in order to warrant objectivity of evaluation/selection and compensation package with respect to directors and executive officers of this Company.
Authorities and duties with respect to business execution are delegated to each in-house Company and SBU in accordance with a certain standard under the in-house Company System and the Executive Officer System in this Company. These business operations are managed and evaluated in accordance with specific consolidated key performance index established in line with the AGC Group’s basic management policy and its performance target.
Business transactions in the AGC Group shall be conducted in accordance with the internal decision making rules including business authorization rules and job descriptions. These operations shall be monitored and verified by internal audit periodically.
5. System to report matters concerning business execution of executives of subsidiaries to this Company (System for reports to AGC by AGC Group companies)
Subsidiaries shall report certain matters concerning business operations, etc. to this Company. Of such matters, important ones shall be reported to the Management Committee and/or the Board of Directors.
Under the compliance system and legal administration system of the AGC Group, subsidiaries shall quickly report any important compliance issue, important legal issue, etc. of the subsidiaries to this Company. These matters shall be reported to the Board of Directors periodically.
The internal audit division shall timely report the results of internal audit conducted over subsidiaries to the President & CEO and further to the Board of Directors periodically.
6. Matters related to the audit system of the Audit & Supervisory Board Members
- Staff to the Audit & Supervisory Board Members
This Company establishes the Staff Office of the Audit & Supervisory Board to support activities of the Audit & Supervisory Board Members.
- Independence of the said Staff to the Audit & Supervisory Board Members from Directors
Change of Staff of the Audit & Supervisory Board and performance evaluation of such staff shall be subject to the consent of the Audit & Supervisory Board.
- Ensuring of effectiveness of the Audit & Supervisory Board Members’ directions to the said Staff
Staff of the Audit & Supervisory Board shall not concurrently serve as employees of other departments. Such staff shall exclusively perform duties related to the Audit & Supervisory Board and follow directions of the Audit & Supervisory Board Members.
- System for reports to the Audit & Supervisory Board Members by Directors and employees of this Company, Directors and employees of subsidiaries, or those who received report from them
The Directors and employees of this Company shall report to the Audit & Supervisory Board Members any event that may violate the laws and regulations or articles of incorporation of this Company, or do substantial damage to the Company, and other matters provided in the relevant internal rules.
Subsidiaries shall report to this Company any event that may violate the laws and regulations or articles of incorporation of this Company, or do substantial damage to this Company. Divisions to which these matters are reported shall quickly report them to the Audit & Supervisory Board Members of this Company.
- System to ensure that those who made reports described in the preceding item shall not receive disadvantageous treatments on the ground that they made the said report
The AGC Group shall ban disadvantageous treatments and retaliatory action against those who made reports concerning the violation of Code of Conduct, etc. under the AGC Group Code of Conduct, and keep employees of the AGC Group well informed.
- Matters related to policy on procedures for reimbursement of expenses that occurred from performance of duties of the Audit & Supervisory Board Members
This Company shall quickly handle expenses paid by the Audit & Supervisory Board Members, excluding cases where the said expenses are judged to be unnecessary for performance of duties of the Audit & Supervisory Board Members.
- Other system to ensure effective audit by the Audit & Supervisory Board Members
The Audit & Supervisory Board Members shall attend at the important meeting such as the Management Committee, the Mid-Term Plan & Budget Committee, and the Monthly Performance Monitoring Meeting etc. In addition, Representative Directors shall have periodical meetings with the Audit & Supervisory Board Members.
Meetings between the Audit & Supervisory Board Members and Internal Audit Division etc. shall be held periodically so that the Audit & Supervisory Board Members may have access to information respecting the results and the proceedings of internal audit. The Company establishes the system where the Audit & Supervisory Board Members may enhance effectiveness of its audit through exchange of views and information with the Internal Audit Division and the Accounting Auditors, etc.
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