Internal Control System | Corporate Governance | Management Policy | Investor Relations

Basic Stance

TAIYO YUDEN's internal control activities form an integral part of the management framework and indeed management itself to ensure accurate reporting of financial results, compliance with laws and regulations, protection of assets and effective and efficient execution of business operations. Securing the effectiveness of internal controls is a top-level, important management priority at TAIYO YUDEN.

Basic Policy Concerning the Internal Control System Development

1. System for ensuring that Directors and employees of TAIYO YUDEN CO., LTD. (the “Company”) and its subsidiaries (collectively the “Group”) perform their duties in accordance with laws, regulations and the Articles of Incorporation

(1): As part of its social responsibilities and in order to comply with all laws and regulations governing the execution of business, the Company’s Articles of Incorporation, various rules and regulations, international agreements, and ethical norms, the Group shall establish the “CSR Charter (TAIYO YUDEN Group’s Charter on Social Responsibility),” formulate the “CSR Code of Conduct” as specific guidelines for behavior under this charter, and operate internal controls to ensure thorough compliance with said charter and code.
(2): An Internal Control Committee shall be established as a system to promote the Group’s compliance activities. The committee shall designate a responsible person for each of the items set forth in the “TAIYO YUDEN Group CSR Code of Conduct” and conduct compliance activities on an ongoing basis in accordance with the compliance management system.
(3): In order to detect and resolve issues such as violations of laws, regulations, or internal regulations at an early stage, the Group shall establish a whistleblower system that enables reports to be made directly through both internal and external channels, and also establish a framework to ensure whistleblowers shall not be unfavorably treated.
(4): Multiple independent Outside Directors shall be appointed to raise the objectiveness, neutrality, and transparency of the function for supervising the execution of business by the Board of Directors, which supervises the execution of duties by each Director and verifies compliance with laws, regulations and the Articles of Incorporation.
(5): An internal control system shall be established and operated to ensure the appropriateness and trustworthiness of financial reporting.
(6): Corporate information concerning the Group shall be disclosed fairly and appropriately.
(7): The Group shall take a firm and uncompromising stance on an organizational basis against anti-social forces or groups.

2. System for the storage and management of information with regard to the execution of duties by Directors of the Group

(1): Minutes of important meetings of the Board of Directors and other bodies, as well as approval documents made by each Director based on rules for approval and information concerning the execution of duties by Directors shall be recorded in the form of documents or electromagnetic media and stored appropriately in accordance with laws, regulations, and internal rules.
(2): In accordance with internal rules, Directors of the Company shall ensure that documents or electromagnetic media containing said information are always available for viewing.
(3): The Company shall prevent any leaks or illicit usage of information by establishing a system for the appropriate storage and management of said information and by informing and educating Group officers and employees through the provision of materials on information security.

3. Rules for managing risks of loss of the Group and other systems

(1): An Internal Control Committee shall be established as a system to promote the Group’s risk management activities. The committee shall designate a responsible person for each risk category. Risk management activities, which consist of risk identification, evaluation of risk levels, decision and execution of risk countermeasures and monitoring/review of the status of implemented countermeasures, shall be continuously performed as per the Group risk management system.
(2): The Company shall establish “Group Business Continuity Regulation” to anticipate the effects on business activities that could result from the occurrence of risks, including natural disasters, and to determine the possible formation of an emergency task force depending on the scale of expected adverse effects and take preventive measures in advance during normal circumstances. In case a business continuity problem arises, the Company shall establish a BCP (Business Continuity Plan) and take Group-wide countermeasures to enable the early resumption of business activities.

4. System for ensuring the duties of Directors of the Group are efficiently performed

(1): The Company shall adopt an Operating Officers system with the aim of making management more efficient by delegating authority for business execution to Operating Officers and separating management decision making and supervisory functions from business execution functions.
(2): The Board of Directors shall determine important matters such as basic policies concerning management, including the Group’s internal control system, and business strategy, and it shall supervise the appointment and dismissal of Operating Officers, as well as the execution of business by said officers.
(3): In order to make decision making and the execution of business by Directors more efficient, the Company shall establish a collegial body comprising Operating Officers to deliberate on important matters regarding the execution of business operations and personnel affairs.
(4): In order to ensure appropriate decision making by Directors, the Company shall formulate and implement internal regulations concerning the responsibilities and jurisdiction of each organization and position.
(5): In regard to the execution of business at subsidiaries, “Group Management Rules” which clarify the jurisdiction and decision-making process of subsidiaries shall be established with the aim of making Group management more transparent and efficient.

5. System for ensuring appropriate business operations within the Group

(1): The status of the business executed at subsidiaries shall be reported as per the “Group Management Rules” to encourage the sharing of information with relevant departments of the Company.
(2): The Company shall strive to understand the management circumstances of its subsidiaries by dispatching some of its employees to serve as Directors or Audit & Supervisory Board Members of the relevant subsidiaries.
(3): The Internal Audit Office of the Company monitors whether business operations of subsidiaries are conducted appropriately and efficiently from an independent standpoint. The monitoring results shall be provided appropriately as feedback to the relevant subsidiaries and to the President and Chief Executive Officer of the Company. The Internal Audit Office shall also cooperate with the Audit & Supervisory Committee of the Company.

6. Matters regarding Directors and employees appointed to support the operation of the Audit & Supervisory Committee of the Company, matters regarding the independence of said Directors and employees from Directors (excluding Directors who are Audit & Supervisory Committee Members), and matters to ensure the effectiveness of directions given to said Directors and employees

(1): The Company shall establish the Audit & Supervisory Committee Secretariat to support the operation of the Audit & Supervisory Committee. It shall appoint employees to support the operation of the Audit & Supervisory Committee and ensure that said employees receive the authority required to carry out investigations, a framework for cooperating with each department is in place, and other such matters.
(2): Human resources and organizational decisions concerning employees appointed to support the operation of the Audit & Supervisory Committee shall require the consent of the Audit & Supervisory Committee and said employees shall carry out duties under the direction of the Audit & Supervisory Committee.

7. System for reporting to the Audit & Supervisory Committee of the Company

(1): Directors and employees of the Group, if any of them recognize a fact that violates any laws, regulations, the Articles of Incorporation and/or internal regulations, or a considerably improper fact that could be such a violating fact, or a fact that is feared to cause significant damage to the Company, shall immediately report thereof to the Audit & Supervisory Committee.
(2): A whistleblower system shall be established that enables officers and employees of the Group to report directly to the Audit & Supervisory Committee. The status of this system shall be regularly reported to the Audit & Supervisory Committee.
(3): A framework shall be established to ensure whistleblowers using said system are not unfavorably treated.

8. Other systems for ensuring effective auditing by the Audit & Supervisory Committee of the Company

(1): The Company shall create a system that allows Audit & Supervisory Committee Members to participate in important meetings on managerial matters and audit the decision making of Directors, as well as the execution of duties by Directors.
(2): The Company shall create a system that allows the Audit & Supervisory Committee to collect information in a timely manner that is necessary for its audits through communication with Directors and employees, and also request, as necessary, reports therefrom regarding the execution of their duties and inspect the relevant documents.
(3): The Company shall create a system that allows the Audit & Supervisory Committee to periodically exchange information with the Internal Audit Office, and take close cooperation therewith.
(4): The Company shall create a system that allows the Audit & Supervisory Committee to periodically, or on an as-needed basis, exchange information with the Accounting Auditor, and request reporting therefrom, as necessary.
(5): Directors who are not Audit & Supervisory Committee Members shall strive to exchange information with the Audit & Supervisory Committee.
(6): The Company shall pay for expenses that derive from the execution of duties by the Audit & Supervisory Committee except in cases where it is recognized that such expenses are not necessary for the execution of duties by the Audit & Supervisory Committee.