Governance, Regulatory Compliance, and Other Compliance
Commitment to corporate governance
Corporate Governance System
JATCO is a “Company with Board of Company Auditors” as defined in the Companies Act, and is established as a legal entity with a General Meeting of Shareholders, a Board of Directors, and a Board of Auditors. In principle, the Board of Directors convenes once a month to decide on important management matters as well as to preside over the details of the operations being executed. The Board of Directors is composed not only of the directors who execute our operations, but also directors from outside the company in order to create a system that allows for objective supervision of the execution status of our operations. A Corporate Officer system has also been introduced to facilitate efficient and flexible management, and authority has been delegated to Corporate Officers in clearly defined ways in the management of the business.
Strengthening our internal control system
JATCO maintains and strengthens its internal control system based on the Basic Policy on Internal Control System passed by our Board of Directors in order to ensure proper and efficient corporate activities. This policy lays out the following items as its major items and checks are conducted every six months to verify that the internal control system is functioning effectively, and the results are reported to the Board of Directors.
Major items of the Basic Policy on Internal Control System
- Compliance with laws and regulations and the Articles of Incorporation in the execution of work by the directors and employees
- Storage and management of information pertaining to the execution of work by the directors
- Appropriate risk management
- Efficient execution of the work of the directors
- Ensuring that the work in the corporate group (the parent company and the subsidiaries) is performed properly
- Ensuring the effectiveness of the audits by the auditors, etc.
Important operational matters and decisions
The authority standards pertaining to important operational matters and decisions are stipulated in the Delegation of Authority (DOA). The objectives of establishing the DOA are clarification of the responsibilities of the relevant parties, ensuring the transparency of the decision-making procedures, and smooth management of the operations.
Strengthening compliance
Basic stance on compliance
The JATCO Group considers strict compliance with the laws of each country and region to be a minimum requirement for being trusted by society. In addition to strict compliance with laws, we consider it important for all employees of our Group to act fairly and honestly with a strong sense of ethics. JATCO has instituted a Global Code of Conduct, and we put effort into ensuring thorough compliance by providing action guidelines for all employees to abide by.
Standards in the Global Code of Conduct
- Comply with all laws and rules
- Promote Safety
- Avoid Conflict of Interest
- Preserve Company Assets
- Be Impartial and Fair
- Be Transparent and Accountable
- Value Diversity and Provide Equal Opportunity
- Be Environmentally Responsible
- Be Active; Report Violations
Promotion system for compliance
The compliance activities of the JATCO Group are promoted through (i) formulation of the activities policy, (ii) monitoring of the status of the activities, (iii) internal reporting response, and (iv) compliance education and enlightenment, with the Compliance Secretariat organized by the Legal & Intellectual Property Department and the Human Resources Development & General Administration Department as the center. Furthermore, the Compliance Secretariat supports the promotion of each individual activity in collaboration with the compliance promoters appointed to the respective divisions and each subsidiary.
Overview of the compliance system
Governance
JATCO has organized a Global Compliance Committee (GCC) comprised of representative executives from each division and the presidents of Group Companies in Japan and overseas, and meetings of the GCC are held four time a year by the Compliance Secretariat. The GCC puts effort into ensuring the proper implementation of the PDCA cycle, such as by sharing common global matters related to compliance, sharing specific cases of incidents that have actually occurred, and checking the details of the compliance activities of each company.
Monitoring
Every year, as a part of a comprehensive compliance inspection, we implement confirmations, etc., with respect to the division with jurisdiction over the laws and regulations, which is the second line, regarding the process for responding when there is a violation of laws or regulations, and implement monitoring of the status of the activities.
Internal reporting response
As an internal reporting system that allows employees and others to report compliance violations and conduct with concerns about potential violations, we have established the Easy Voice System, an in-house reporting channel, and SpeakUp, a window outside the company (Nissan Group), to create an environment where compliance violations and other issues can be detected and corrected at an early stage.
Overview of the Easy Voice System
Compliance education and awareness-raising
Code of Conduct training is provided every year for all employeesin the Group.
The attendance rate at Code of Conduct training is reported in the Global Compliance Committee and follow-up is carried out until the implementation rate reaches 100% every year.
As compliance education other than the above, with regard to information security policies, harassment, export and import control, the Anti-Monopoly Act, prevention of the giving or acceptance of a bribe, trade secrets, DOA, the Subcontract Act, and company rules, etc., the division with jurisdiction over the laws and regulations, which is the second line, draws up and implements programs to educate employees.
Risk management initiatives
Promoting risk management
In order to respond to the diversifying risks accompanying the global expansion of our business, JATCO carries out a risk management audit as part of its internal control system. Specifically, we hold interviews with the relevant parties, including the officers, regarding the 12 items of the risk universe, identify risks each year, determine the items that should be tackled in the Executive Committee meetings, assign personnel to take charge of each item, and formulate and implement measures to mitigate the risks. The progress of initiatives for each item is reported at the Executive Committee meetings, and a control-level assessment for each item is conducted at the end of the fiscal year.
(i) Product strategies,
(ii) Production strategies,
(iii) Sales and marketing strategies,
(iv) Business continuity,
(v) Product and service quality,
(vi) Information quality,
(vii) Management quality,
(viii) Ethics and wrongful acts,
(ix) Human resources,
(x) Finance and market risks,
(xi) Adaptability to external environmental changes,
(xii) Legal risks,
identify risks each year, determine the items that should be tackled in the Executive Committee meetings, assign personnel to take charge of each item, and formulate and implement measures to mitigate the risks. The progress of initiatives for each item are reported at the Executive Committee meetings, and a control-level assessment for each item is conducted at the end of the fiscal year.
| Annual Plan for Corporate Risk Management | |
|---|---|
| Risk identification through officer interviews, etc. | January to February |
| Evaluation through risk assessment and selection of issue candidates |
February |
| CRM＊ issues definitions and determination of the issue owners (Executive Committee) |
March to April |
| Interim report: agreement of the direction of measures |
September to October |
| Final report: completion of execution of measures | March |
- CRM: Corporate Risk Management
Initiatives through the BCM＊ Committee
There are scenarios that endanger business continuity, such as earthquakes, typhoons, or other natural disasters. JATCO predicts the various risks that may arise, and has established a BCM Committee to implement measures to eliminate risks before they develop and to mitigate risks when incidents do occur. If a situation arises that has continuous impact on production, the relevant parties are notified immediately, and the BCM Committee takes a central role in resolving the problem with the cooperation of the respective divisions across the company. BCM simulation training is carried out every year to help employees learn how to react to a large-scale earthquake, and how to appropriately respond in order to achieve quick recovery.
- BCM: Business Continuity Management. This involves determining the countermeasures to take in situations where the company becomes unable to continue operations due to large-scale disasters, epidemics and the like and conducting the needed training and other activities to execute these countermeasures.
Risk management system for JATCO Group companies
In the JATCO Group, we implement comprehensive risk management for each company’s unique risks at Group companies, including our overseas production bases. We disseminate the experience and know-how built up through BCM activities throughout the entire Group, and for risks that are common across the globe, each company works in cooperation to respond.
In order to realize appropriate and efficient management, domestic and overseas Group companies conduct their business in close cooperation with each division in charge at the HQ. To ensure the effectiveness of the governance system, we regularly dispatch auditors and internal audit office staff to continuously verify the effectiveness of each company’s internal control system.
As specific initiatives, we have introduced the Easy Check List for Group company presidents to verify the soundness and efficiency of management themselves, utilize support tools that systematize check items from the perspective of maintaining and improving governance, and implement governance education for newly appointed directors including those at Group companies, to improve governance awareness throughout the entire Group. Through these initiatives, we are promoting the securing of management transparency and soundness throughout the entire JATCO Group.
