Management Information

Basic Policy on Internal Control System

1. Corporate Philosophy

“With the commitment of all employees in creating what they can proudly present to the world (namely our organization with its products, and services), oRo’s goal is to continue to deliver more happiness and joy to more people (coworkers, families, business partners, shareholders and society), and lead all our employees to self-fulfillment through our efforts to achieve this goal.”

2. Internal system to ensure the performance of duties by Directors and employees should comply with laws and the Articles of Incorporation
  • According to the “Business Ethics,” the Company shall cultivate the spirit among all the officers and employees to comply with the relevant laws, the Articles of Incorporation, rules and social ethics, and make them understand the compliance with these laws and rules is precondition to the Company’s corporate activities.
  • In addition to its “Management Philosophy,” the Company shall establish the “Action Guideline” not only for the Company’s Directors and employees to comply with the relevant laws and the Articles of Incorporation, but also to build up a corporate culture to operate business with a sense of ethics.
  • The Company shall establish “Internal Reporting Rules” in order to take proper actions for reports of failures to comply with the relevant laws or other regulations, and manage the internal reporting system for the purpose of detecting early on and correct failure or possible failure to comply with the relevant laws and the Article of Incorporation and other internal rules, based on the Internal Reporting Rules. In addition, the person in charge of the hotline for internal reporting shall immediately report to the Audit and Supervisory Committee on the detail of the matters reported.
  • The Company shall propose the election of Outside Directors to improve and maintain the level of supervision of the Board of Directors.
  • The Audit and Supervisory Committee shall audit the status of performance of duties by each of Directors (excluding Directors who are Audit and Supervisory Committee Members), from its independent standpoint, including the status of developing and operating the internal control system, in accordance with the “Auditing and Supervising Standards for Audit and Supervisory Committee” and the “Audit Plan.”
  • The Internal Audit Office shall audit whether the Company appropriately performs the business processes in accordance with the relevant laws, the Articles of Incorporation and other rules.
  • As an initiative to ensure and strengthen sense of compliance, the Company shall provide workshops to study the basics of compliance and information management required for performance of duties for Directors and employees of the Company for the purpose of continuous education and its diffusion.
3. System to save and administer information regarding the performance of duties by Directors
  • As for information regarding the performance of duties by Directors, the Company shall produce, save and administer such information in written form (including electronic form) in accordance with the relevant laws and the “Document Management Regulations.” The Company shall verify the operation of this system or review the rules if necessary.
  • It shall be a system to save and administer the documents mentioned above so that anyone can immediately review the documents if it is necessary for Directors to do so for the purpose of performing their duties.
4. Rules and other systems for management of risks of loss
  • In accordance with the “Risk Management Regulations” providing for the basic rules for risk management, the Company shall establish a Risk Management Committee for comprehensive and systematic management of each risk.
  • Head of each department shall provide the risk-related information to the Board of Directors.
  • In case of unexpected incident or situation, the Company shall set up a task force under supervision of the Representative Director & President and take immediate and precise actions, jointly with the external specialized institutions, such as the office of corporate lawyer, if necessary, in order to minimize possible damages.
5. System to ensure the efficient performance of duties by Directors
  • The Company shall comply with the “Board of Directors Regulations” and hold once a month a meeting of the Board of Directors consisting of Directors including Outside Directors, and further hold an extraordinary meeting of the Board of Directors on a timely basis if necessary.
  • The Company shall prepare sufficient information materials in advance regarding items to be decided set force in the “Board of Directors Regulations” and make sure the items should be decided by the Board of Directors.
  • The Company shall identify targets of each department and its responsibility based on a business plan, and make efforts to achieve the initial business targets through the analysis of difference between the budget and the actual figures.
  • In order to accelerate the decision-making process, the Company shall establish and organize internal rules such as “Internal Regulations,” “Segregated Duties Regulations” and “Official Authority Regulations” to identify the role, authority and responsibilities of each Director.
  • As for the items out of duties and authority, the Company shall establish and operate a system of executing business to decide things based on the agreement among the Representative Director & President and officer(s) in charge after the expert opinions from the responsible department have been reflected.
6. System to ensure the proper business process among the corporate group consisting of the Company and its subsidiaries
  • The Company shall establish the “oRo Group Policy,” a system of philosophy such as the policy on human resources or the compliance policy in the oRo Group (corporate group) to share with and infiltrate the Management Philosophy into the corporate group and ensure its proper business process.
  • To ensure the proper business process, the Company’s subsidiaries shall report anything set forth in the “Affiliated Companies Management Regulations” requiring approval by and reporting to the Company, and report on a regular basis the progress of the performance of duties while sharing information both on their business and risk management.
  • The supervising officers of controlling functions of affiliated companies as set forth in the “Affiliated Companies Management Regulations” shall immediately inform the Board of Directors of the Company of the nature of risk, the extent of the possible damage and the impact on the Company’s business if the supervising officer found out that there is a risk of damage to be suffered by any subsidiary.
  • The Company’s subsidiaries shall be subject to a regular internal audit to be conducted by the Internal Audit Office of the Company and report the result of the audit to the Representative Director & President and Audit and Supervisory Committee of the Company.
  • Audit and Supervisory Committee members appointed by the Audit and Supervisory Committee shall visit subsidiaries to audit their business operations if necessary.
  • The Company shall dispatch its Director(s) to its subsidiaries to audit and supervise the performance of duties by Director(s) of the subsidiaries through such Director(s).
  • The Company shall establish the internal reporting system that allows Directors, Corporate Auditors and employees of the Company’s subsidiaries to report directly to the Company, and thereby detect early on and correct failure or possible failure to comply with the relevant laws and the Articles of Incorporation and other internal rules.
7. Matters concerning employees who are to assist the performance of the duties of the Audit and Supervisory Committee, matters concerning independence of such employee from Directors, and matters concerning measures to ensure effectiveness of instructions and orders by Audit & Supervisory Board Members to such employee.
  • The Company shall hire an employee for the Audit and Supervisory Committee to assist the performance of its duties as the Audit and Supervisory Committee if the Audit and Supervisory Committee needs to do so, and discuss its selection and appointment at the Audit and Supervisory Committee.
  • In order to ensure the independence of an employee who assists the performance of the duties of the Audit and Supervisory Committee from Directors (excluding Directors who are Audit and Supervisory Committee Members), the appointment, transfer, evaluation and dismissal of such employee shall be determined with the agreement of the Audit and Supervisory Committee.
  • An employee who assists the performance of the duties of the Audit and Supervisory Committee shall comply with instructions and orders given by the Audit and Supervisory Committee whenever he/she assists the Audit and Supervisory Committee, and shall not be subject to any instruction or order given by Directors (excluding Directors who are Audit and Supervisory Committee Members).
8. System for Directors (excluding Directors who are Audit and Supervisory Committee Members) and employees to report to the Audit and Supervisory Committee
  • System for Directors (excluding Directors who are Audit and Supervisory Committee Members) and employees of the Company to report to the Audit and Supervisory Committee
    • a. The Audit and Supervisory Committee Members have the authority to attend and request a report at the meetings of the Board of Directors and all other internal meetings if necessary.
    • b. Directors (excluding Directors who are Audit and Supervisory Committee Members) and employees shall report the status of business operation and internal controls to the Audit and Supervisory Committee on a regular basis, and the Internal Audit Office shall report the plans and results of its internal audits on a regular basis.
    • c. Directors and employees shall immediately inform the Audit and Supervisory Committee of the fact that there is a material breach of the relevant laws and the Articles of Incorporation and wrongful acts, or the fact that there is an incident that is likely to significantly damage the business of the Company whenever they came to know them.
  • System for Directors, Corporate Auditors, employees performing their duties and other employees of the Company’s subsidiaries or those who received a report from them to report to the Audit and Supervisory Committee of the Company
    Upon request from the Audit and Supervisory Committee of the Company, they shall report the status of the performance of their duties, and immediately inform the Audit and Supervisory Committee of the Company of the fact that there is a material breach of the relevant laws and the Articles of Incorporation and wrongful acts, or the fact that there is an incident that is likely to significantly damage the business of the Company and its subsidiaries.
9. System to ensure that a person who reported the fact as described in the preceding item would not be unfavorably treated just because that person reported it
The Company shall prohibit the unfavorable treatment of Directors and employees who reported to the Audit and Supervisory Committee due to their reports to such committee.
10. Matters regarding the policy on the settlement of expenses or debts arising out of the performance of duties by an Audit and Supervisory Committee Member
The Company shall set forth a billing and settlement system for expenses arising out of the performance of duties by an Audit and Supervisory Committee Member, and when the Audit and Supervisory Committee Member asks for advance payment or redemption for such expenses, the Company shall settle the payment or redeem them following the designated procedures unless the Company clearly decides these expenses are not necessary for the Audit and Supervisory Committee Member to perform his/her duties.
11. Other systems to ensure that audits by the Audit and Supervisory Committee are conducted effectively
  • The Company shall call on a person who has a plenty of experience or an expert in corporate management, or a qualified person such as a certified public accountant as Audit and Supervisory Committee Member and keep their independence from those who execute operations, such as the Representative Director & President or Directors (excluding Directors who are Audit and Supervisory Committee Members) of the Company.
  • Audit and Supervisory Committee shall hold a meeting with the Representative Director & President of the Company on a regular basis to exchange opinions and information with each other.
  • The Audit and Supervisory Committee and the Internal Audit Office shall closely cooperate with each other and develop an audit plan. The Audit and Supervisory Committee may also instruct the Internal Audit Office to conduct investigations if necessary. The Internal Audit Office shall follow the instructions and orders of the Audit and Supervisory Committee in performing its duties as directed by the Audit and Supervisory Committee, and shall not be subject to the instructions and orders of the Representative Director & President.
  • The appointment, transfer, evaluation, dismissal, etc. of personnel of the Internal Audit Office shall be discussed in advance with the Audit Committee and its consent shall be obtained.
12. Development of a system to ensure the reliability of financial reporting
The Company shall establish and organize accounting rules and set forth the “Basic Policy on the Improvement of the Internal Control System related to Financial Reports” in order to manage possible risks of fraud or error in financial reporting, organize, operate and evaluate the prevention and check-and-balance functions, and correct them if there is any defect or fault.
13. System to eliminate antisocial forces
The Company shall take actions against antisocial forces posing a threat to the public order or sound corporate activities in a resolute attitude across the Company including cooperation with related entities, and sever all relationship with them. The Company shall continue to enhance the development of the system to eliminate antisocial forces while cooperating with the police and related entities as well as expert institutions such as lawyers.