1. System to ensure the appropriateness of business operations

The Company has established and promoted corporate ethics through the establishment of the Corporate Code of Conduct, and the Board of Directors has adopted the following basic policy regarding the development of internal control systems.

(1) Systems to ensure that the execution of duties by directors and employees complies with laws and regulations and the Articles of Incorporation

  • Directors shall comply with the Group's Code of Conduct, take the initiative in properly executing operations in accordance with laws and regulations, the Articles of Incorporation, the Board of Directors' Regulations, and other internal regulations, and shall ensure that all employees are fully aware of the Code of Conduct.
  • The risk managers of each Avant Group company, appointed by the chairman of the Risk Management Committee, shall deliberate and review important issues and responses at the Risk Management Committee, and report to the Board of Directors.
  • The Compliance Committee shall confirm the status of compliance and deliberate and examine important issues and responses at the Compliance Committee meetings, and report to the Board of Directors.
  • The Company shall establish and operate an internal whistle-blowing system, with outside attorneys and directors who are members of the Audit and Supervisory Committee as contact persons, to report violations of laws and ordinances and other legally questionable acts, etc.
  • The Audit & Supervisory Board Members shall audit the execution of duties by the Directors by attending meetings of the Board of Directors and other important meetings and by investigating the status of business execution, etc., in accordance with the audit policy determined by the Audit & Supervisory Board.

(2) System for the storage and management of information related to the execution of duties by directors

  • The information related to the execution of duties by directors shall be properly stored and managed in accordance with laws and regulations, the Board of Directors Regulations, the Document Management Regulations, and other related regulations.

(3) Regulations and other systems for managing risk of loss

  • To prevent risks as well as to properly manage operations and funds by monitoring performance status through rolling forecast management in a cycle appropriate to the business environment, with respect to the progress of business performance and thorough control of expenses.
  • The Risk Management Committee shall be established, chaired by the Representative Director, and the risk management managers of each Avant Group company appointed by the chairperson shall deliberate and review important issues and responses at the Risk Management Committee, and report to the Board of Directors.
  • The Company shall manage risks related to compliance, information assets, and other business matters by preparing and disseminating necessary rules, manuals, etc.
  • Establish an Information Security Committee to strengthen the management of information assets and its response.
  • The Company shall consult with and receive advice and guidance from third parties with expertise, such as lawyers, accounting auditors, tax accountants, etc., as necessary in the performance of its business operations.

(4) Systems to ensure the efficient execution of duties by directors

  • The Company's Board of Directors shall meet once a month as a general rule, and as necessary, the Board of Directors shall meet as needed to make decisions and promptly execute business operations, and to supervise the status of important management decisions and business operations by the directors.
  • The various meetings and committees, of which directors are in charge or are members, shall deliberate and decide on business execution within the scope of their authority as stipulated in the rules and regulations.
  • Promote decentralization of management through organization based on management policies and business plans.
  • The term of office of directors who are not members of the Audit and Supervisory Committee shall be one year in order to clarify management responsibility and to respond to changes in the business environment.

(5) System to ensure the appropriateness of operations of the corporate group consisting of the Company and its subsidiaries

  • The Company shall support the development and improvement of internal control systems and promote them in cooperation with subsidiaries, while respecting the autonomy of the subsidiaries.
  • The Company's subsidiaries shall enter into a management guidance and business management agreement and establish a system under which the Company receives reports on important matters concerning the execution of duties by Directors and others. Although the board of directors of the Company's subsidiaries make decisions on important matters, the Company shall obtain approval from the Board of Directors of the Company for three matters that have a significant impact on the Group: (a) investment, (b) personnel of directors and officers, and (c) financing, including capital policy.
  • The Company's subsidiaries shall hold regular meetings of the Board of Directors once a month as a basic rule and hold meetings as necessary for decision-making and prompt business execution, and the Company's Group Legal Affairs Office shall confirm the status of the meetings.
  • Employees of the Company's subsidiaries are required to report or consult with the internal reporting system office if they become aware of any violation of laws, the Articles of Incorporation or internal rules, or any conduct that is contrary to socially accepted norms.
  • The Compliance Committee shall provide support for legal compliance and other compliance-related issues of subsidiaries.
  • The Company shall also strive to prevent risks by appropriately managing operations and funds and reporting to the Company.
  • The internal audit group will conduct internal audits on a regular basis and report the results to the Company's directors and the Audit and Supervisory Committee for necessary control to ensure the appropriateness of operations of the Company's subsidiaries.

(6) Matters related to employees assisting the duties of Audit Committee members and matters related to ensuring the effectiveness of instructions to such employees

  • In the event that the Audit Committee requests the Board of Directors to establish a secretariat to assist it in its duties, the secretariat shall be established by appointing appropriate personnel from inside and outside the Company. In the case of employees, the Audit Committee shall make it known to them that they are subject to the Audit Committee's instructions and orders.

(7) Systems for reporting to the Audit Committee by Directors and employees who are not Audit Committee members, and systems for reporting to the Audit Committee by Directors, Audit & Supervisory Board Members, employees of subsidiaries, or persons who receive reports from these persons.

  • The Audit Committee members may attend meetings of the Board of Directors and other important meetings, inspect documents necessary for auditing, and request explanations from directors and employees.
  • The Company and its subsidiaries' directors, corporate auditors, and employees shall report to the Company's Audit Committee on matters that have a material impact on the Company's operations and performance.

(2) The Company shall prohibit any disadvantageous treatment of a person who makes a report to the Audit Committee by reason of the fact that such report is made to the Audit Committee.

(8) Other systems to ensure that audits by the Audit Committee are conducted effectively

  • The Audit Committee shall meet regularly with the President and Representative Director to exchange opinions on business execution policies, risks and issues to be addressed, and important audit issues.
  • The Audit Committee shall regularly exchange opinions with the accounting auditor.

(2) In the event that any Audit Committee member requests advance payment or reimbursement of expenses incurred in the performance of his/her duties, such expenses shall be borne by the Company, except in cases where such payment or reimbursement is found not to be necessary.

(9) Basic Policy on Elimination of Antisocial Forces

  • With respect to the exclusion of antisocial forces, in addition to the basic policy regarding the internal control system, the Company shall endeavor to develop a system as follows.
  • The Group's Code of Conduct declares the exclusion of antisocial forces and the prohibition of antisocial activities, and the Group receives written pledges from directors and employees regarding the Code of Conduct and the management of confidential information every year.
  • The General Affairs Department shall be in charge of appointing a person in charge of preventing unjustified demands, and shall cooperate with the competent police to eliminate antisocial forces, etc. In addition, we will confirm the antisocial forces of our business partners at the time of signing the basic agreement, and strive to thoroughly inform and strengthen our response to the exclusion of antisocial forces.

2. Status of operation of the system to ensure the appropriateness of business operations

With respect to the system to ensure the appropriateness of business operations, the Company has continuously investigated the status of the development and operation of the internal control system since the system was first established, and reports the results of the investigation to the Board of Directors. In addition, corrective measures are being taken for problems identified as a result of the investigation, and efforts are being made to establish and operate a more appropriate internal control system.

 

  • The following is a summary of operations during the fiscal year ended June 30, 2024.
  • The Company has chosen to establish a company with an Audit Committee in order to strengthen the supervisory function of the Board of Directors and further enhance corporate governance.
  • The Risk Management Committee met regularly to review risks and consider countermeasures in response to the changing business environment across the Group, and the Board of Directors received reports from the Group CRO to ascertain the status of risk management.
  • The Compliance Committee met regularly to promote corporate ethics and compliance, and the committee discussed and deliberated on important issues and responses.
  • The Information Security Committee met on a regular basis to strengthen information asset management and information security across the Group.
  • During the period under review, the Board of Directors held 13 meetings, focusing on the steady implementation of the medium-term management plan and the agenda to strengthen governance and oversight.
  • The Audit Committee members attended meetings of the Board of Directors, the Group Management Committee, the Board of Directors of subsidiaries, and other important meetings, and regularly exchanged opinions with the President and Representative Director and the independent auditors to ensure the effectiveness of audits.