Corporate Governance
Internal Control System
AOC Holdings, Inc., has implemented the following internal control system -- pursuant to the stipulations of the Companies Act of Japan -- to ensure efficient corporate management and a stringent level of compliance with laws and regulations.
I. System to Ensure Proper Execution of Duties by Directors
The Company shall formulate a Charter of Corporate Behavior and make clear its strong commitment to strict compliance with all relevant laws and regulations, both in Japan and in overseas jurisdictions, as well as its Articles of Association and various internal rules. The Board of Directors shall be responsible for making decisions regarding the Company's compliance system and internal control system. This specifically includes the formulation of policies and plans and the execution of such plans.
The Company shall appoint outside directors in order to maintain and enhance the function of the board of directors in supervising directors' execution of duties. In addition, corporate auditors shall audit the directors' execution of duties.
II. System to Ensure Proper Execution of Business Operations
1. System for the storage and management of information
With regard to information relating to the execution of duties by directors, important documents shall be recorded, stored and managed in accordance with internal rules, and such documents shall be available for subsequent inspection as necessary.
2. Risk management system
Risks that may have a significant impact on the Company's management shall be comprehensively recognized and quantified, and a set of rules for managing risk shall be established. A system shall also be developed for risk prevention and reduction during normal business operations. Should an unforeseen or emergency situation arise, a crisis management center shall be rapidly deployed.
3. System to ensure efficient execution of business operations
The Board of Directors shall determine core management policies and important matters relating to management, and shall supervise the directors' execution of duties. The Executive Committee, comprising the full-time directors, full-time corporate auditor and executive officers, shall share information covering all aspects of management and shall undertake resolutions to ensure the efficient execution of business operations, in accordance with decisions of the Board of Directors. Each department and division of the Company shall receive instructions from directors and executive officers and shall carry out business operations efficiently and in accordance with internal rules and shall report the results of their respective operations.
4. System to ensure proper execution of business operations by employees
The Company shall formulate a Charter of Corporate Behavior and maintain a thorough level of compliance with all laws and regulations, both in Japan and overseas, as well as its Articles of Association and internal rules. The Company shall also conduct training programs for directors and employees covering compliance issues. The Company shall establish a help line for employees to facilitate the reporting and discussion of matters relating to legal or internal rule violations.
5. System to ensure proper execution of business operations of Group companies
The Company shall establish clear criteria for subsidiaries and affiliates on matters that must be reported to the Company and matters that require approval from the Company. There shall be close liaisons and exchange of information between departments and divisions of the Company and subsidiaries and affiliates. The Company shall maintain thorough control over subsidiaries and affiliates.
6. System to assist corporate auditors' execution of duties
The Company shall establish the Office of Corporate Auditors as a department dedicated to assisting the corporate auditors in the execution of their duties. The division of duties and operations shall be determined in accordance with the views of the corporate auditors.
7. Independent assistance for corporate auditors
Staff assigned to the Office of Corporate Auditors shall follow the orders and instructions of corporate auditors.
8. System of reporting to corporate auditors
The directors and employees shall provide reports to the corporate auditors on a regular basis as well as when specifically requested by a corporate auditor.
9. Other systems to ensure effective auditing
The directors and corporate auditors shall convene regular meetings to ensure the maintenance of sound communications between them. To ensure that the corporate auditors are able to carry out their duties appropriately, the directors shall cooperate to facilitate the corporate auditors' communication with directors and corporate auditors of subsidiaries and affiliates, information gathering and information exchange, research of major customers and suppliers, and receipt of advice from certified public accountants, attorneys and other outside specialists.
Corporate Governance Structure
