Internal Control System
Basic views on Internal Control System
and the progress of system development
The Company makes decisions on the following matters at the Board of Directors meetings in accordance with the Companies Act and an ordinance of the Ministry of Justice with regard to the system to ensure that the execution of duties by directors is in compliance with laws, regulations, and the Articles of Incorporation and the system to ensure the appropriateness of operations.
The system to ensure appropriateness of the operations
The Company has established to prescribe the Compliance code of conduct to be followed by all directors and employees to ensure that corporate activities are appropriate based not only on compliance with laws and regulations, but also on high ethical standards, and has established the following structure to continuously reinforce the compliance system:
- （1）A chief compliance officer (CCO) is appointed. The CCO proposes and carries out measures required to establish and enhance the Company's compliance system.
- （2）Compliance Office is established. The Compliance Office assists the CCO.
- （3）The person responsible for the Compliance Department and the person to promote compliance are placed in each department for thorough compliance.
- （4）Internal and external hotlines (the reporting contact office for compliance) are established for direct reporting and consultations by directors and employees, to quickly identify, rectify, and prevent the reoccurrence of any inappropriate issues in corporate activities. The Company ensures that persons who have reported or consulted on the hotlines will not be treated disadvantageously by prohibiting the disadvantageous treatment of persons on the grounds of having reported or consulted on the hotline in the Compliance Regulations.
- （5）Audit & Supervisory Board Members and the Audit & Supervisory Board request measures for improvements to the Board of Directors, if they identify issues in the system for compliance with laws, regulations, and the Articles of Incorporation.
System for the storage and management of information
regarding the execution of duties by directors
The Company has established the following system to appropriately store and maintain documents and other important information related to the execution of duties by directors including minutes and proposals of the Board of Directors meetings and requests for approval:
- （1）The Company determines retention periods and methods and measures to prevent accidents, based on the Information Management Regulations, and classifies and appropriately stores these documents according to their degree of confidentiality.
- （2）A chief information security officer (CISO) is appointed as the person responsible for information security management, and persons responsible for information security are placed in each department to establish a system to store and maintain information, based on the Information Security Basic Regulations.
Regulations and systems related to risk management
The Company has established the following system to avoid or minimize risk and to implement necessary measures related to the variety of risks in its business operations:
- （1）Responsible divisions are designated to address various risks, manage risks in each responsible division and work to reduce risks and prevent its occurrence based on the Risk Management Regulations. When an emergency situation arises, an Emergency Response Department will be established according to the escalation flow designated in the Risk Management Regulations, and efforts will be made to minimize the damage (loss) based on the instructions of the Emergency Response Department.
- （2）The Risk Management Department summarizes the status of risk evaluation, analysis and response at each responsible division, and periodically reports its findings to the board of directors.
System to ensure the efficiency of directors
in the execution of their duties
The Company has established the following structure to maintain an efficient management system:
- （1）The Company has set out the Board of Directors Rules to clarify matters to be resolved and reported by the Board of Directors, and the Internal Approval Regulations and other regulations related to institutional decision-making to clarify decision-making authority.
- （2）To strengthen functions for overseeing the execution of duties and enhance objectivity in management, the Board of Directors includes external directors who are independent of the Company.
- （3）To ensure that the directors can discuss matters fully at Board of Directors meetings, they are provided with materials for the meeting in advance, and with additional or supplementary materials upon their request.
- （4）The scope of operations, authority and responsibilities necessary for operations are clearly defined in the Regulations on Segregation and Authority of Duties.
System to ensure appropriateness of the operations
of the Company and the Group
The Company shares fundamental concepts and policies throughout the Group and reinforces the management system and compliance in accordance with the SoftBank Charter of Corporate Behavior, etc. established by its parent company. In addition, the following systems have been established to apply Group-wide rules to directors and employees of the Company and its subsidiaries:
- （1）In establishing and reinforcing the compliance system of each Group company as well as implementing compliance, CCO gives advice, instructions, and orders to CCO of each Group company to ensure that such activities comply with the Group's basic compliance policy. The reporting contact office for compliance has also been established to receive reports and provide consultation to directors and employees of each Group company to quickly identify, rectify, and prevent the reoccurrence of any inappropriate issues in corporate activities. The Company ensures that persons who have reported or consulted on the hotline will not be treated disadvantageously by prohibiting the disadvantageous treatment of persons on the grounds of having reported or consulted on the hotline in the Compliance Regulations.
- （2）The Group Information Security Committee, composed of the persons responsible for information security in each Group company, shall be established to share information on system responses and the status of measures, knowledge and technology related to information security. This Committee is headed by the Chief Information Security Officer (CISO) who is responsible for information security in the Company.
- （3）The representative of each Group company must submit a Representative Oath pertaining to the financial reports submitted to SoftBank Corp., which ensures the accuracy of the annual securities report and other reports submitted by the Group as a whole.
- （4）The Internal Audit Department comprehensively judges the results of past internal audits, financial position, and carries out internal audits of Group companies deemed as having a high risk.
- （5）Each Group company addresses risks in an effort to reduce and prevent any possible risks. In addition, in the event of emergency, each Group company will be requested to immediately report to the Company based on the Incident Management Regulations, and efforts will be made to minimize damage (loss) through cooperation between the Company and Group companies depending on the circumstances.
System for excluding organized crime and other criminal elements
The Company clearly states in the Regulations on Countermeasures against Antisocial Forces its policy of having absolutely no association with antisocial forces that pose a threat to public order and safety. The Company establishes an internal system against antisocial forces and has a responsible division in place to carry out overall management. For dealing with unfair requests from antisocial forces, the Company will firmly refuse those requests in a resolute manner in cooperation with the police and other external specialist institutions.
Matters relating to the relevant employees when Audit & Supervisory Board Members request to have support staff that assists the Audit & Supervisory Board Members, matters relating to the independence of the relevant employees from the directors, and matters relating to ensuring the effectiveness of instructions given to
the relevant employees.
The Company has established the Assistant to Audit Department as an organization to support the work of the Audit & Supervisory Board Members, and assigns dedicated staff to this department. The appointment of the support staff is notified to the Audit & Supervisory Board Members, and any personnel changes, evaluations, or other such actions require the agreement of the Audit & Supervisory Board Members. In addition, directions and instructions to the support staff are issued by the Audit & Supervisory Board Members to ensure the effectiveness of the instructions.
System for reporting to the Audit & Supervisory Board Members by directors and employees and other systems for reporting
to the Audit & Supervisory Board Members
Directors and employees will report the following matters to the Audit & Supervisory Board Members or the Audit & Supervisory Board without delay (or immediately for any urgent matters including facts that may potentially cause severe damage to the Company):
- （1）Matters related to the compliance system or use of the reporting contact office for compliance.
- （2）Matters related to finance (including financial reporting and actual status to budget planning).
- （3）Matters related to human resources (including labor management).
- （4）The status of work related to risk matters on information security.
- （5）The status of work related to large-scale disaster and network disruption, etc.
- （6）The development status of internal control.
- （7）The status of work related to external fraud investigations.
- （8）Matters related to violations of laws, regulations, or the Articles of Incorporation.
- （9）Results of audits conducted by the Internal Audit Department.
- （10）Other matters which could cause significant damage to the Company and other matters that the Audit & Supervisory Board Members have decided that need to be reported in order for them to execute their duties.
Other systems to ensure that the audits by the Audit &
Supervisory Board Members are conducted effectively
The following matters are provided as other systems to ensure that the audits by the Audit & Supervisory Board Members are conducted effectively.
- （1）When the Audit & Supervisory Board Members deem it necessary, opportunities shall be provided for them to interview directors or employees of the Company and Group companies. In addition, the Audit & Supervisory Board Members periodically meet with the Independent Auditor and the Audit & Supervisory Board Members of major subsidiaries and other entities for an exchange of information and to ensure cooperation, and also attend important meetings.
- （2）The Company ensures a system that persons who have reported or consulted with the Audit & Supervisory Board Members will not be treated disadvantageously on the grounds of having reported or consulted with the Audit & Supervisory Board Members.
- （3）The Company shall pay expenses relating to the Independent Auditor, the attorneys and other professionals, and other expenses associated with the execution of duties by the Audit & Supervisory Board Members.
Overview of the implementation status of the system to ensure the appropriateness of the operations
Matters concerning compliance
The Company continues to conduct compliance training for its directors and employees, as well as offering information and giving advice, and so forth, as necessary, for enhancing the compliance system. In addition, the Company works to ensure the effectiveness of compliance of the Company by establishing and operating hotlines so that directors and employees of the Company and its subsidiaries can report and consult directly. The effects of these measures are reviewed to make improvements, as necessary.
Matters concerning risk
Based on the SoftBank Group's Risk Management Rules, departments responsible for each risk at the Company manage risks and continuously work on reducing them and preventing the occurrence thereof. In addition, the Risk Management Office summarizes the status of risk evaluation and analysis, as well as countermeasures against and responses to risks implemented in each responsible department and periodically reports its findings to the Board of Directors. Group companies also manage risks individually and continuously work on reducing risks and preventing the occurrence thereof.
Matters concerning internal audits
The Internal Audit Department carries out audits on the effectiveness of the system for compliance with laws, regulations, and the Articles of Incorporation as well as the risk management process at the Company. In addition, the department continuously carries out audits of Group companies deemed as having a high risk and reports the results of the audits to the CEO each time.
Matters concerning the execution of duties by directors and employees
The Company ensures efficiency in the execution of duties by its directors and employees based on internal regulations such as the Board of Directors Rules, Internal Approval Regulations and Regulations on Segregation and Authority of Duties. The Company also ensures an environment where matters can be fully discussed at the Board of Directors meetings by directors.
Matters concerning the execution of duties by Audit &
Supervisory Board Members
The Audit & Supervisory Board Members attend the Company's important meetings and arrange opportunities to interview directors and employees of the Company and the Group, as necessary. In addition, they continue to enhance cooperation by holding regular meetings with the Independent Auditor and Audit & Supervisory Board Members and other personnel of major subsidiaries. Through these efforts, the Audit & Supervisory Board Members ensure the effectiveness of audits.
- *The contents of this page are based on information contained in Corporate Governance Report which was revised on November 1, 2019.