Internal Control System Basic Policy (full text)
Article 1 This policy, in accordance with provisions in Article 362, Paragraph 4, Item 6 and Article 362, Paragraph 5 of the Companies Act (hereinafter the “law”), and Article 100, Paragraphs 1 and 3 of the Regulation for Enforcement of the Companies Act (hereinafter the “enforcement regulation”), stipulates the establishment of a system (internal control system) that ensures the appropriateness of business operations by the corporate group (hereinafter "DBJ Group”), made up of DBJ, its subsidiaries and other entities.
System to ensure that the execution of duties by directors and employees is in line with laws and regulations and complies with the Articles of Incorporation
Article 2 The directors and Board of Directors recognize that management of the DBJ Group in compliance with laws, ordinances, and other regulations is a key issue. To ensure the compliance of duties executed by directors (or persons with equivalent rank at companies or entities that are not public companies; same hereafter) in accordance with laws and ordinances and the Articles of Incorporation, the basic policy stipulates conformance with the corporate philosophy and laws and ordinances as outlined below.
Establish a system to ensure that directors and employees comply with laws and ordinances through the establishment of a compliance manual, a compliance program, and internal regulations.
Set up a committee to promote and manage legal compliance, select a director to be in charge of legal compliance, and set up a supervisory department.
Establish a compliance hotline system to grasp and solve matters that require attention from the perspective of preventing actions that violate laws and ordinances as well as enforcing legal compliance. The department in charge of this system shall report on whistleblowing details to corporate auditors in the event of an internal report. Moreover, whistleblowers shall not be treated disadvantageously due to whistleblowing.
Establish a system that shuts out anti-social forces that threaten the order and safety of society.
The Board of Directors shall establish an internal audit basic policy, including guidance on compliance with laws and ordinances. An internal audit department independent from the departments executing operations shall report audit results in a timely and appropriate manner.
System related to the storage and management of information concerning the execution of director duties
Article 3 Information concerning the execution of director duties shall be properly saved and stored, and shall be available for viewing when necessary.
Regulations and other systems related to the management of loss risk
Article 4 Risk shall be properly managed using a Risk Management process comprising the identification, evaluation, monitoring, and control of risks in accordance with the characteristics of various risks that arise during the execution of operations to ensure the soundness of DBJ Group management as outlined below.
Set up a committee to handle Risk Management, assign a director and department to be in charge of Risk Management, and establish a management system to conduct integrated Risk Management.
Categorize risks as follows and stipulate Risk Management policies respectively:
(1) credit risk, (2) investment risk, (3) country risk, (4) marketable credit risk, (5) market risk, (6) market liquidity risk, (7) capital liquidity risk, (8) settlement risk, and (9) operational risk.
Quantify the above risks in an integrated manner using the best possible approach, and establish and manage risk guidelines.
Economic loss and credit loss that arise in tandem with a disaster shall be minimized and a necessary system shall be established to ensure business continuity and a speedy recovery of normal functions during an emergency situation.
The Board of Directors shall establish an internal audit basic policy related mainly to an internal audit system, including Risk Management. Audit results from the Internal Audit Department shall be received in a timely and appropriate manner.
System to ensure the efficient implementation of director duties
Article 5 The Board of Directors shall establish a management plan for the DBJ Group and properly conduct corporate management of the DBJ Group as outlined below.
An executive committee shall be established and entrusted with the decision-making for certain matters. Among its entrusted matters, the executive committee shall discuss, in advance, Board of Director resolutions to contribute to the decision-making of the Board of Directors. In addition, various committees shall be established as advisory bodies to the executive committee and as entities entrusted with particular matters.
Regulations, including those related to the organizational structure, shall be established and the execution of duties shall be adequately divided to efficiently carry out the execution of duties in accordance with decisions by the Board of Directors.
An executive office system shall be introduced to speed up the decision-making process. The responsibilities and roles shall be in compliance with executive office regulations.
System to ensure the fairness of operations of the DBJ Group
Article 6 The Board of Directors shall establish a corporate philosophy and properly ensure operations of the DBJ Group as outlined below.
The Board of Directors shall properly manage operations commensurate with the scale and characteristics of operations of subsidiaries and other entities. The Board shall implement appropriate measures from the perspective of legal compliance, customer protection, and Risk Management.
The Board of Directors shall conduct preliminary discussions with subsidiaries and other entities related to business operations, request reports, and establish a management system that includes the provision of guidance.
The Board of Directors, in addition to overseeing the previous three items related to subsidiaries and other entities (hereinafter “key subsidiaries”) for which business operations should be managed in particular, commensurate with the scale and characteristics of operations of said subsidiaries and other entities, shall implement necessary measures to properly establish the systems listed below.
System for reporting to regulatory authorities on the execution of duties by directors at key subsidiaries
System for coordinating regulations and rules related to the management of loss risk at key subsidiaries
System for ensuring the efficient execution of duties by directors at key subsidiaries
System for ensuring that duties executed by directors and employees at key subsidiaries are in compliance with laws and ordinances and the Articles of Incorporation
The Internal Audit Department shall implement internal audits of subsidiaries as needed within the scope of laws and ordinances. The department shall report the audit results to the Board of Directors in a timely and appropriate manner.
System related to employees that assist the duties of corporate auditors
Article 7 As an organization that is dedicated to assisting the duties of corporate auditors, at the request of corporate auditors, an audit office shall be established and placed under the authority of the Board of Auditors.
Matters related to securing the independence of employees who should assist the duties of corporate auditors and the efficiency of instructions given to said employees
Article 8 Employees that assist corporate auditors with their duties shall comply with the instructions and orders of corporate auditors and shall handle these duties full time. In addition, the intentions of the Board of Auditors shall be respected for matters related to securing the efficiency of instruction given to said employees and the independence of said employees, including personnel affairs related to said employees.
System for DBJ Group directors to report to DBJ corporate auditors and system for other reports to DBJ corporate auditors
Article 9 Directors and employees of the DBJ Group shall directly or indirectly report on the status of operations and other necessary information to corporate auditors as outlined below.
Directors and employees of the DBJ Group shall directly or indirectly report to the corporate auditors in the event they discover a matter that will or could potentially have serious consequences on the DBJ Group’s credibility or earnings.
Corporate auditors at DBJ can request at any time that DBJ Group directors and employees report on matters required for the execution of duties, and the person asked to make said report shall comply and report the said matters to the corporate auditors.
Persons that report to the DBJ corporate auditors in terms of the three items above shall not be treated disadvantageously due to said reporting.
System to ensure audits are effectively carried out by other auditors
Article 10 Other particular matters of audit policy are outlined below.
Corporate auditors shall attend Board of Director meetings. They shall also be permitted to attend executive committee and other important meetings. When necessary, they shall provide their opinions.
Representative directors shall regularly meet with corporate auditors and exchange opinions at the request of the corporate auditors. In addition, representative directors shall cooperate in establishing the audit environment for corporate auditors.
The Internal Audit Department shall develop an internal audit plan with corporate auditors. The department shall exchange opinions on the internal audit results and provide cooperation at the request of corporate auditors.
Directors and employees shall cooperate with the audit activities carried out by corporate auditors and respect the regulations and standards for corporate auditors, as well as other matters.
Directors and employees shall cooperate with the establishment of a system that preserves the independence of accounting auditors to ensure the appropriateness and credibility of accounting audits.
Invoices submitted by corporate auditors for costs necessary for executing duties shall be smoothly processed.
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