TEIJIN | About TEIJIN | Corporate Governance | Resolutions on Basic Systems for Internal Control

Home>About TEIJIN>Corporate Governance>Resolutions on Basic Systems for Internal Control

Systems for Ensuring the Compliance with Laws and the Articles of Incorporation in the Performance of Duties by Directors and Employees
1. (1)Teijin has declared the basic principles of compliance in its Teijin Group "Corporate Governance Guide" which include the following statement: "All directors, officers and employees of the company are required not only to comply with any laws and regulations but also to act with good faith as a businessperson and as a member of society based on ethics and social norm. In this regard, Teijin strives not only to make fair and proper management decisions but also to harmonize with the civil society based on the full compliance with social norm, ethics, laws and regulations.
2. (2)To practice these basic principles, Teijin shall establish systems and organizational structures that ensure practical operation and observation of Teijin's Corporate Philosophy, Corporate Code of Conduct, Corporate Standards of Conduct, Group Ethics Regulations and other related internal regulations. Representative directors, other executive directors and corporate officers shall take the initiative and set good examples in observing laws, the Articles of Incorporation, social rules and ethics, and shall promote compliance awareness among Teijin Group's employees.
3. (3)In order to supervise of the entire Teijin Group's compliance and identify and address any potential issues, Teijin appoints a Chief Social Responsibility Officer (CSRO) as the officer in charge of compliance and for supervising CSR Planning Office.
4. (4)All directors, officers and employees of Teijin Group shall be required to report to Teijin entity they belong or to the Group's holding company, i.e. Teijin Limited, any significant violations of laws or other serious information concerning compliance, in accordance with Group Ethics Regulations and others. CSRO shall direct and supervise investigations to confirm such facts and, upon consultation with President　(CEO), determine appropriate measures.
5. (5)Teijin shall provide necessary means for directors, officers, employees and business partners to directly report any violation or doubtful activities of non-compliance. As one of such means, Teijin shall establish and operate a compliance hotline with outside counsel, so that any director, officer or employee can directly contact the outside counsel. The anonymity of the caller shall be protected, i.e. no name of the caller shall be disclosed without his/her consent, and any repercussions to the caller shall be prevented.
6. (6)Important reports as well as measures taken by the relevant Teijin entity and their results shall be announced as appropriate to, and shall be recognized by, all directors, officers and employees of Teijin Group.
7. (7)Teijin places Corporate Audit Office directly supervised by CEO, which performs internal auditing of Teijin Group's business operations as instructed by CEO and conducts the evaluation of the internal control system and proposes its improvement.
8. (8)Teijin shall maintain a resolute attitude toward pressure from antisocial forces, including demands for payoffs from specific shareholders or interference by crime syndicates, and shall not allow such interference. CSRO shall be appointed as the person in charge of actions against antisocial forces and will supervise CSR Planning Office. CSR Planning Office shall, in collaboration with Human Resources and Administration Office, establish action policies and other rules and shall ensure observance of such policies and rules by directors, officers and employees within Teijin Group.
Systems for the Preservation and Management of Information in relation with the Directors' Performance of Their Duties
1. (1)Directors shall preserve and manage, in an appropriate manner as required by their respective duty and in accordance with the relevant company regulations, the following documents (including documents in electromagnetic media) and other important information concerning the performance of their duties:
  1. (a)Minutes and related materials of shareholders' general meetings;
  2. (b)Minutes and related materials of board of directors' meetings;
  3. (c)Minutes and related materials of, other important meetings convened by directors;
  4. (d)Documents (including decision making documents and any related documents thereof) concerning decisions made by any director; and
  5. (e)Other important documents concerning the performance of directors' duties.
2. (2)The Chairperson of the board of directors shall act as the "Internal Control Supervisor", who shall supervise the preservation and management of the information specified in paragraph 1 above.
3. (3)The General Manager of the Legal Office shall assist the Internal Control Supervisor, and shall provide Teijin Group with the guidance concerning the preservation and management of the documents listed in paragraph 1 above and other information.
4. (4)The documents listed in paragraph 1 above shall be preserved for at least ten (10) years and shall be accessible whenever necessary.
5. (5)In order to maintain and manage the system above-mentioned, the Group Rules for Handling Information Concerning the Duties of Directors shall be enacted and revised as necessary.
Rules and Systems for Risk Management
1. (1)According to the basic principles for total risk management declared in the Teijin Group "Corporate Governance Guide", the board of directors shall operate a total risk management system as described below to deal with every risk (uncertainty) that may threaten the mission of enhancing corporate value and achieving sustainable business development.
2. (2)The Total Risk Management (TRM) Committee, to be established under the board of directors, shall mainly deal with both the business operational risks and the managing strategic risks, and shall propose basic policies and annual plans related to TRM to the board of directors.
3. (3)CSRO in charge of the business operation risk shall undertake groupwide efforts for Teijin Group to enhance the Group's risk management system, identify problems and deal with risks upon occurrence thereof, all in accordance with the Group Risk Management Regulations.
4. (4)CEO shall assess strategic risks, which is necessary for formulating management strategies and plans and making strategic decisions. CEO shall present his assessment to the board of directors so that the directors can use it in the course of making managerial decisions.
5. (5)In addition, necessary measures shall be implemented to ensure the continuation of businesses when faced with the following events:
  1. (a)Significant losses due to disasters, such as earthquakes, floods, accidents and fire;
  2. (b)Significant problems affecting the production, sales and other business activities due to the inappropriate performance of duties of directors, officers and employees;
  3. (c)Significant damage due to technical problems in of the critical IT systems; and
  4. (d)Other events that may be deemed significant by the board of directors.
Systems for Ensuring that Directors' Duties Are Performed Efficiently
1. (1)More than one independent outside director shall be appointed as members of the board of directors in order to intensify the validity of the decisions to be made by the board of directors. These outside directors must satisfy the requirements for independence stipulated in the Rules for Independent Directors to be adopted by the board of directors
2. (2)The board of directors shall ensure that the representative directors and other executive directors and corporate officers perform their respective duties within the scope of their responsibilities and in accordance with the managerial structure specified by the board of directors.
3. (3)When the representative directors and other executive directors and corporate officers have been delegated decision-making powers, their decisions shall be made through the organization, and in compliance with the procedures, stipulated in the Group Organization Regulations and the Group Rules of Responsibility and Authority. These regulations shall be revised as may be necessary to reflect any revision and/or abolition of laws and/or to increase efficiency.
4. (4)The board of directors shall organize the basic structure of Teijin Group, and shall promote efficient management and supervision of these organizational bodies.
Systems for Ensuring that Proper Business Operations Are Conducted within the Group of Companies, including Subsidiaries and Parent Companies
1. (1)Teijin shall prepare Group Regulations that encompass all the rules and standards by which the Teijin Group entities must abide to ensure appropriate and efficient business operations, in addition to taking measures to ensure that the conduct of activities are in compliance with the relevant laws and regulations and the Articles of Incorporation.
2. (2)Teijin Group entities shall conduct business transactions among themselves in an appropriate manner according to the relevant laws, accounting principles, tax regulations and other social norm.
3. (3)The representative directors and other executive directors and corporate officers shall provide necessary instructions within the scope of their responsibilities to ensure that Teijin Group entities have appropriate internal control systems. For example, CEO shall provide instructions to the directors of the Teijin Group entities for enhancing systems and measures to preserve and manage information concerning the performance of directors' duties.
4. (4)Corporate Audit Office shall operate and supervise internal audits of Teijin Group's business operations to ensure the efficiency and validity of internal control functions over the entire business of Teijin Group. Annual plans for, and the status and results of, internal audits must be reported to specified bodies, including the board of directors, according to the audit's level of importance.
5. (5)Corporate Auditors shall, by themselves or through Board of Group Auditors, establish appropriate systems, such as those for close cooperation with outside accounting auditors and Corporate Audit Office, to ensure effective and appropriate supervision and auditing of Group's entire business operations that concern the consolidated management of Teijin Group.
6. (6)To ensure the reliability of its financial reporting, Teijin shall enact Teijin Group Regulations for Internal Control over Financial Reporting and establish a general internal control system over Financial Reporting covering the general operation of Teijin Group and specific internal control systems covering individual operational processes, which shall be properly and efficiently operated and assessed.
Provisions Concerning the Individuals Assisting the Corporate Auditors in Performing Their Duties
1. (1)Corporate Auditors shall appoint, as a general rule, two or more Auditor Assistants to assist them in performing their duties. Auditor Assistants shall work full-time and have proficient accounting abilities required for that purpose. Auditor Assistants may concurrently serve as corporate auditors of Teijin Group entities.
2. (2)The Auditor Assistants shall perform their duties under the direction of the Corporate Auditors. Auditor Assistants shall also function as secretariat for the Board of Teijin Group Auditors.
Provisions Concerning the Independence from Directors of the Individuals Assisting the Corporate Auditors in Performing Their Duties
1. (1)To secure the independence of Auditor Assistants above, all decisions concerning the appointment, transfer and other personnel issues affecting Auditor Assistants require the prior consent of the full-time Corporate Auditors.
2. (2)The full-time Corporate Auditors shall assess the performance of Auditor Assistants.
3. (3)No Auditor Assistants can assume any executive post or function in any Teijin Group entity.
Provisions for Directors' and Employees' Reporting to Corporate Auditors and Other Forms of Reporting to Corporate Auditors
1. (1)Representative directors, other executive directors and corporate officers shall report at the meetings of the board of directors and other important meetings the status of the business operations they are in charge.
2. (2)Representative directors, other executive directors and corporate officers shall immediately report the followings to Corporate Auditors:
  1. (a)Incidents that have significantly eroded or might erode public trust of the Company;
  2. (b)Incidents that have caused or might cause adverse effects on the performance of the Company;
  3. (c)Incidents that have caused or might cause any significant damage to the environment, safety and health (ESH) and product liability (PL);
  4. (d)Significant violations of the Corporate Standards of Conduct, Group Ethics Regulations and other internal rules; and
  5. (e)Other events similar to items (a) through (d) above.
3. (3)Directors, corporate officers and employees shall promptly and appropriately respond to requests made by Corporate Auditors on the business operations or inquiries on the conditions of the assets and business operations of Teijin Group.
Other Provisions for Ensuring that the Audits of Corporate Auditors Are Conducted Effectively
1. (1)The majority of Corporate Auditors shall consist of independent and outside auditors to secure the transparency. The outside Corporate Auditors must satisfy the requirements for independence to be stated in the Rules for Independent Auditors determined by the board of directors, and approved by the board of Corporate Auditors.
2. (2)Corporate Auditors shall enter into advisory agreements with outside law firms in order for themselves and Teijin Group entities' corporate auditors to form independent opinions. When they consider it necessary in the course of conducting audits, the Auditors can, at their own discretion, retain outside advisers, including Certified Public Accountants and other consultants.

Page Top

Russian Chinese Japanese Related Links Home
About TEIJIN News Corporate Social Responsibility Research and Development For Investors
Corporate Governance Guide Introduction of Countermeasures to Large-Scale Acquisitions of Teijin Shares Independent Director and Independent Corporate Requirements Resolutions on Basic Systems for Internal Control Purchasing and Procurement Company Introduction Video About TEIJIN Site Map Home>About TEIJIN>Corporate Governance>Resolutions on Basic Systems for Internal Control Print About TEIJIN Japanese Systems for Ensuring the Compliance with Laws and the Articles of Incorporation in the Performance of Duties by Directors and Employees (1)Teijin has declared the basic principles of compliance in its Teijin Group "Corporate Governance Guide" which include the following statement: "All directors, officers and employees of the company are required not only to comply with any laws and regulations but also to act with good faith as a businessperson and as a member of society based on ethics and social norm. In this regard, Teijin strives not only to make fair and proper management decisions but also to harmonize with the civil society based on the full compliance with social norm, ethics, laws and regulations. (2)To practice these basic principles, Teijin shall establish systems and organizational structures that ensure practical operation and observation of Teijin's Corporate Philosophy, Corporate Code of Conduct, Corporate Standards of Conduct, Group Ethics Regulations and other related internal regulations. Representative directors, other executive directors and corporate officers shall take the initiative and set good examples in observing laws, the Articles of Incorporation, social rules and ethics, and shall promote compliance awareness among Teijin Group's employees. (3)In order to supervise of the entire Teijin Group's compliance and identify and address any potential issues, Teijin appoints a Chief Social Responsibility Officer (CSRO) as the officer in charge of compliance and for supervising CSR Planning Office. (4)All directors, officers and employees of Teijin Group shall be required to report to Teijin entity they belong or to the Group's holding company, i.e. Teijin Limited, any significant violations of laws or other serious information concerning compliance, in accordance with Group Ethics Regulations and others. CSRO shall direct and supervise investigations to confirm such facts and, upon consultation with President　(CEO), determine appropriate measures. (5)Teijin shall provide necessary means for directors, officers, employees and business partners to directly report any violation or doubtful activities of non-compliance. As one of such means, Teijin shall establish and operate a compliance hotline with outside counsel, so that any director, officer or employee can directly contact the outside counsel. The anonymity of the caller shall be protected, i.e. no name of the caller shall be disclosed without his/her consent, and any repercussions to the caller shall be prevented. (6)Important reports as well as measures taken by the relevant Teijin entity and their results shall be announced as appropriate to, and shall be recognized by, all directors, officers and employees of Teijin Group. (7)Teijin places Corporate Audit Office directly supervised by CEO, which performs internal auditing of Teijin Group's business operations as instructed by CEO and conducts the evaluation of the internal control system and proposes its improvement. (8)Teijin shall maintain a resolute attitude toward pressure from antisocial forces, including demands for payoffs from specific shareholders or interference by crime syndicates, and shall not allow such interference. CSRO shall be appointed as the person in charge of actions against antisocial forces and will supervise CSR Planning Office. CSR Planning Office shall, in collaboration with Human Resources and Administration Office, establish action policies and other rules and shall ensure observance of such policies and rules by directors, officers and employees within Teijin Group. Systems for the Preservation and Management of Information in relation with the Directors' Performance of Their Duties (1)Directors shall preserve and manage, in an appropriate manner as required by their respective duty and in accordance with the relevant company regulations, the following documents (including documents in electromagnetic media) and other important information concerning the performance of their duties: (a)Minutes and related materials of shareholders' general meetings; (b)Minutes and related materials of board of directors' meetings; (c)Minutes and related materials of, other important meetings convened by directors; (d)Documents (including decision making documents and any related documents thereof) concerning decisions made by any director; and (e)Other important documents concerning the performance of directors' duties. (2)The Chairperson of the board of directors shall act as the "Internal Control Supervisor", who shall supervise the preservation and management of the information specified in paragraph 1 above. (3)The General Manager of the Legal Office shall assist the Internal Control Supervisor, and shall provide Teijin Group with the guidance concerning the preservation and management of the documents listed in paragraph 1 above and other information. (4)The documents listed in paragraph 1 above shall be preserved for at least ten (10) years and shall be accessible whenever necessary. (5)In order to maintain and manage the system above-mentioned, the Group Rules for Handling Information Concerning the Duties of Directors shall be enacted and revised as necessary. Rules and Systems for Risk Management (1)According to the basic principles for total risk management declared in the Teijin Group "Corporate Governance Guide", the board of directors shall operate a total risk management system as described below to deal with every risk (uncertainty) that may threaten the mission of enhancing corporate value and achieving sustainable business development. (2)The Total Risk Management (TRM) Committee, to be established under the board of directors, shall mainly deal with both the business operational risks and the managing strategic risks, and shall propose basic policies and annual plans related to TRM to the board of directors. (3)CSRO in charge of the business operation risk shall undertake groupwide efforts for Teijin Group to enhance the Group's risk management system, identify problems and deal with risks upon occurrence thereof, all in accordance with the Group Risk Management Regulations. (4)CEO shall assess strategic risks, which is necessary for formulating management strategies and plans and making strategic decisions. CEO shall present his assessment to the board of directors so that the directors can use it in the course of making managerial decisions. (5)In addition, necessary measures shall be implemented to ensure the continuation of businesses when faced with the following events: (a)Significant losses due to disasters, such as earthquakes, floods, accidents and fire; (b)Significant problems affecting the production, sales and other business activities due to the inappropriate performance of duties of directors, officers and employees; (c)Significant damage due to technical problems in of the critical IT systems; and (d)Other events that may be deemed significant by the board of directors. Systems for Ensuring that Directors' Duties Are Performed Efficiently (1)More than one independent outside director shall be appointed as members of the board of directors in order to intensify the validity of the decisions to be made by the board of directors. These outside directors must satisfy the requirements for independence stipulated in the Rules for Independent Directors to be adopted by the board of directors (2)The board of directors shall ensure that the representative directors and other executive directors and corporate officers perform their respective duties within the scope of their responsibilities and in accordance with the managerial structure specified by the board of directors. (3)When the representative directors and other executive directors and corporate officers have been delegated decision-making powers, their decisions shall be made through the organization, and in compliance with the procedures, stipulated in the Group Organization Regulations and the Group Rules of Responsibility and Authority. These regulations shall be revised as may be necessary to reflect any revision and/or abolition of laws and/or to increase efficiency. (4)The board of directors shall organize the basic structure of Teijin Group, and shall promote efficient management and supervision of these organizational bodies. Systems for Ensuring that Proper Business Operations Are Conducted within the Group of Companies, including Subsidiaries and Parent Companies (1)Teijin shall prepare Group Regulations that encompass all the rules and standards by which the Teijin Group entities must abide to ensure appropriate and efficient business operations, in addition to taking measures to ensure that the conduct of activities are in compliance with the relevant laws and regulations and the Articles of Incorporation. (2)Teijin Group entities shall conduct business transactions among themselves in an appropriate manner according to the relevant laws, accounting principles, tax regulations and other social norm. (3)The representative directors and other executive directors and corporate officers shall provide necessary instructions within the scope of their responsibilities to ensure that Teijin Group entities have appropriate internal control systems. For example, CEO shall provide instructions to the directors of the Teijin Group entities for enhancing systems and measures to preserve and manage information concerning the performance of directors' duties. (4)Corporate Audit Office shall operate and supervise internal audits of Teijin Group's business operations to ensure the efficiency and validity of internal control functions over the entire business of Teijin Group. Annual plans for, and the status and results of, internal audits must be reported to specified bodies, including the board of directors, according to the audit's level of importance. (5)Corporate Auditors shall, by themselves or through Board of Group Auditors, establish appropriate systems, such as those for close cooperation with outside accounting auditors and Corporate Audit Office, to ensure effective and appropriate supervision and auditing of Group's entire business operations that concern the consolidated management of Teijin Group. (6)To ensure the reliability of its financial reporting, Teijin shall enact Teijin Group Regulations for Internal Control over Financial Reporting and establish a general internal control system over Financial Reporting covering the general operation of Teijin Group and specific internal control systems covering individual operational processes, which shall be properly and efficiently operated and assessed. Provisions Concerning the Individuals Assisting the Corporate Auditors in Performing Their Duties (1)Corporate Auditors shall appoint, as a general rule, two or more Auditor Assistants to assist them in performing their duties. Auditor Assistants shall work full-time and have proficient accounting abilities required for that purpose. Auditor Assistants may concurrently serve as corporate auditors of Teijin Group entities. (2)The Auditor Assistants shall perform their duties under the direction of the Corporate Auditors. Auditor Assistants shall also function as secretariat for the Board of Teijin Group Auditors. Provisions Concerning the Independence from Directors of the Individuals Assisting the Corporate Auditors in Performing Their Duties (1)To secure the independence of Auditor Assistants above, all decisions concerning the appointment, transfer and other personnel issues affecting Auditor Assistants require the prior consent of the full-time Corporate Auditors. (2)The full-time Corporate Auditors shall assess the performance of Auditor Assistants. (3)No Auditor Assistants can assume any executive post or function in any Teijin Group entity. Provisions for Directors' and Employees' Reporting to Corporate Auditors and Other Forms of Reporting to Corporate Auditors (1)Representative directors, other executive directors and corporate officers shall report at the meetings of the board of directors and other important meetings the status of the business operations they are in charge. (2)Representative directors, other executive directors and corporate officers shall immediately report the followings to Corporate Auditors: (a)Incidents that have significantly eroded or might erode public trust of the Company; (b)Incidents that have caused or might cause adverse effects on the performance of the Company; (c)Incidents that have caused or might cause any significant damage to the environment, safety and health (ESH) and product liability (PL); (d)Significant violations of the Corporate Standards of Conduct, Group Ethics Regulations and other internal rules; and (e)Other events similar to items (a) through (d) above. (3)Directors, corporate officers and employees shall promptly and appropriately respond to requests made by Corporate Auditors on the business operations or inquiries on the conditions of the assets and business operations of Teijin Group. Other Provisions for Ensuring that the Audits of Corporate Auditors Are Conducted Effectively (1)The majority of Corporate Auditors shall consist of independent and outside auditors to secure the transparency. The outside Corporate Auditors must satisfy the requirements for independence to be stated in the Rules for Independent Auditors determined by the board of directors, and approved by the board of Corporate Auditors. (2)Corporate Auditors shall enter into advisory agreements with outside law firms in order for themselves and Teijin Group entities' corporate auditors to form independent opinions. When they consider it necessary in the course of conducting audits, the Auditors can, at their own discretion, retain outside advisers, including Certified Public Accountants and other consultants. Page Top