Internal Governance | CSR

Basic Policy for Internal Governance System Construction

Vitec adopted the following basic policy to build the internal governance system for highly transparent and efficient management. The system has been developed as described below.

(1) Framework to ensure that directors and staff perform their duties complying with applicable laws and the articles of incorporation

Vitec has established the Vitec Code of Conduct regarding compliance with applicable laws, the articles of incorporation, regulations and corporate ethics. The Company has adopted the following framework for all its directors and employees to thoroughly comply with, and to ensure the effectiveness of, the Vitec Code of Conduct.

1. The Auditing Department in charge of internal auditing monitors how the Vitec Code of Conduct is upheld and reports on its findings at the Corporate Management Meeting.
2. Each director shall immediately inform the auditors of any serious violation within the Company of a law or of the articles of incorporation, or of any other important fact concerning compliance, and promptly report it at the Corporate Management Meeting or the like.

(2) Framework for storage and management of information on performance of directors' duties

Information on the performance of directors' duties is stored and managed properly in accordance with the Documents Management Regulations of the Company.

(3) Regulations concerning risk management of loss and other frameworks

Each director is required to build risk management framework covering duties within the director's responsibility. Construction of important risk management framework shall be discussed at the Corporate Management Meeting.

1. Division Head Meeting and Inventory Meeting. is held on each month to identify, extract, and deal with problems of market and inventory risks.
2. Regarding receivables, currency exchange, etc., especially of Vitec subsidiaries and overseas offices, the Accounting Finance Division takes a leadership position in early identification and listing up of problems at the monthly Accounting Finance Division Meeting.
3. Concerning investment risks, the investment committee is set up and the Administration Headquarters takes a leadership position in thoroughly examining and deliberating on investment details in advance. Investment details are then submitted to the decision-making body.

(4) Framework for ensuring efficient performance of directors' duties

1. The Board Meeting and the Corporate Management Meeting are held every month and on an as-needed basis as a framework for efficient performance of directors' duties. Before being submitted to the decisionmaking body, important issues are subject to deliberation at various committees. By doing so, decision making processes are efficiently made.
2. Operations based on decisions made by the Board of Directors are carried out according to the scope of responsibility and authority of each division/department head as specified in the Duty Regulations and the Authority Regulations.

(5) Framework for ensuring fair business operations in group companies

Vitec has adopted Subsidiaries Management Regulations and an approval/report framework has been prepared to ensure that Vitec group companies conduct fair business operations. Compliance to the regulations is regularly checked by internal audit, and matters resolved at the Board of directors of each group company are reported to the Corporate Management Meeting of Vitec. These monitoring processes, followed when necessary, ensure fair business operations in Vitec group companies.

(6) Framework for assistant staff to help auditors' duties and matters relating to the assistant staff's independence from directors

1. Though no assistant staff to help auditors' duties are appointed, the auditors are allowed to request the Auditing Department to conduct inspections on an as-needed basis. The auditors have the command authority, and the directors and other employees do not, over the Auditing Department within the scope of assistance to the auditors in carrying out audits.
2. The Auditing Department assists the auditors' duties by working in concert with the auditors. This is to be specified by the Internal Audit Regulations.
- The Auditing Department shall conduct a thorough consultation with the auditors before formulating an audit plan.
- The Auditing Department shall report audit results to the Corporate Management Meeting and to the auditors.
- The Auditing Department shall reply in written form to inquiries from the auditors about audit results.

(7) Frameworks for the directors and staff to report to the auditors, for other reports to the auditors, and for audits by the auditors to be carried out effectively

The directors and staff shall report on the following to the auditors.

1. Matters resolved at the Corporate Management Meeting
2. Discovery of facts that may cause the Company to incur substantial losses
3. Any possibility of employees to violate the Regulations or the articles of incorporation
4. Important matters having impact on the Company's performance
5. Matters on which a report or data is requested by the auditors