TOPPAN
TOPPAN PRINTING CO., LTD.

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Home > IR Information > Management Policy > Internal Control

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Internal Control

As of April 23, 2015

Basic policy on the construction of a system of internal control

1. Basic policy

In the year 2000, which marked 100 years since the company’s founding, The Company established TOPPAN VISION 21, which sets out a vision for the company in the 21st century. Part of this vision is the Corporate Creed, which describes the basic values that form the foundation of the Company’s corporate activities. All of the Company’s activities are to be implemented based on this Corporate Creed. For this reason, it is vital that we create structures for monitoring and controlling our business activities ourselves, and continuously implement activities that respond to changes in the operating environment.

Therefore, the Company’s Board of Directors has decided upon structures related to the performance of business operations by the Company and its subsidiaries, and structures related to audits as follows, and the Company aims to realize the Corporate Creed through activities based on these structures.

2. Structures related to the performance of business operations

1) Structures to ensure that the execution of the duties of directors of the Company and its subsidiaries complies with the law and the articles of association

The Company takes the form of a company with a Board of Corporate Auditors. Through the supervisory functions of the Board of Directors and the audit functions of the corporate auditors, we ensure the legality of the performance of work by the directors.

The Board of Directors operates in accordance with the law, the articles of association, and the Regulations of the Board of Directors, and the directors ensure legality by executing their duties based on resolutions of the Board of Directors.

The corporate auditors carry out audits based on the law, the articles of association, and the Regulations of the Board of Corporate Auditors.

The Company ascertains the execution of duties of directors of the Company’s subsidiaries and ensures legality based on the Related Company Administration Regulations.

In addition, the Company has established a Management Audit Office as an internal audit department that is independent of the business divisions. This office regularly carries out audits to assess the execution of duties of directors of the Company and its subsidiaries. It reports the results of these audits to the representative directors, the directors in charge of each division, and the Board of Corporate Auditors of the Company and its subsidiaries.

2) Structures related to the storage and management of information related to the execution of the duties of directors

Documents and records related to the execution of the duties of directors at the Company are stored and managed appropriately by the departments responsible based on the Toppan Group Basic Policy on Information Security and the Information Security Management Rules.

Directors and corporate auditors are able to view this information when necessary.

3) Structures for reporting matters related to the execution of the duties of directors of the Company’s subsidiaries

The Company receives reports by establishing the procedures for reporting, etc. for each control item based on the Related Company Administration Regulations in order to ensure the appropriate execution of the duties of directors of the Company’s subsidiaries while respecting the independence and autonomy of subsidiaries in their business operations.

4) Rules on risk of loss of the Company and its subsidiaries and other structures

In accordance with the Rules on Risk Management, the Company identifies risks requiring risk management throughout the group and design response plans once a year to appropriately manage them. In addition, the Company has constructed a structure for the management of different risks by different head office divisions. Responsibility for each risk that requires risk management is assigned to a specific division in the head office, and the directors in charge of each of these divisions are the people responsible for implementing prevention, avoidance, and resolution related to each specific risk. Each of the directors responsible for managing a risk appropriately ascertains business risks in the areas that they are responsible for and takes measures to prevent the occurrence of any significant loss due to each risk for the Company and its subsidiaries. The Company has created manuals and guidelines corresponding to each individual risk and keeps employees throughout the Group thoroughly informed through training and other activities.

If it is deemed that the risk of loss will have a significant impact on business, the company’s President or Vice President is made responsible for it, and the matter is handled by promptly forming an emergency task force that includes corporate auditors and outside experts such as lawyers.

The Company shall have no ties to antisocial forces or groups that threaten social order and safety, and shall respond resolutely and systematically, led by the head office’s Legal Affairs Division in cooperation with specialist external organizations such as lawyers and the police.

5) Structures to ensure that the duties of directors of the Company and its subsidiaries are executed efficiently

The Company holds regular Board of Directors meetings once a month in order to make decisions on matters requiring a resolution of the Board of Directors and oversee the execution of duties by each director. In addition, Management Committees made up of directors appointed by the President & Representative Director are held twice a month in principle in order to streamline and enhance the efficiency of management.

In order to implement thorough management of targets and improve the efficiency of management, the Company works to ascertain the progress by receiving performance reports regularly from the directors of the Company and its subsidiaries so that the effectiveness of measures taken across the group is enhanced.

6) Structures to ensure that the execution of the duties of employees of the Company and its subsidiaries complies with the law and the articles of association

The Company has established a set of Toppan Group Conduct Guidelines as basic rules for compliance. The legality of the execution of duties by employees is ensured by keeping employees thoroughly informed of these guidelines. For this reason, a Compliance Department has been established within the head office’s Legal Affairs Division and this department, in coordination with legal divisions of the Company’s subsidiaries, focuses on legal compliance and the observance of corporate ethics throughout the Group. In order to keep employees informed about the Conduct Guidelines in each workplace, a system of Conduct Guidelines Promotion Leaders has been introduced in the Company and its subsidiaries.

The Management Audit Office, the internal audit department, also regularly carries out audits to assess the performance of operations in each business division and subsidiary. It reports the results of these audits to the representative directors, the directors in charge of each division, and the corporate auditors of the Company and its subsidiaries.

In order to promptly identify and appropriately respond to any legal violation, a Toppan Group Helpline has been established in accordance with the company’s Whistle-Blowing Rules.

7) Other structures to ensure the appropriateness of operations of the corporate group consisting of the Company and its subsidiaries

A meeting of the presidents of related companies is held regularly to share information, work to maintain and develop compliance structures, and enhance management efficiency as a group.

In addition, meetings by different divisions of the Company and its subsidiaries are held regularly in an effort to share information and to execute duties appropriately and efficiently.

In addition, the Company implements appropriate and efficient group management by regularly discussing and considering the management policies and business positions of group companies through activities such as the holding of policy briefings.

3. Structures for audits

1) Matters related to employees who are requested by corporate auditors to assist with their duties

In order that corporate auditors are able to function effectively, the Company has established a Corporate Auditors Office as a supporting organization for the execution of their operational activities, and appoints permanent corporate auditor staff to support corporate auditors.

2) Matters related to the independence from directors of employees assisting with the duties of corporate auditors

Corporate auditor staff assisting corporate auditors are dedicated solely to such positions on a full-time basis and are not subject to directions and orders from directors.

The opinions of the Board of Corporate Auditors are also respected with regard to the personnel treatment of corporate auditor staff.

3) Matters related to the assurance of the effectiveness of directions given to employees assisting corporate auditors

The Company has established a set of audit standards, and corporate auditors have a right to consent to the personnel transfer, evaluation of personnel and disciplinary actions.

Under these standards, the corporate auditor staff are allowed to attend important internal meetings to keep themselves informed as per directions from corporate auditors, as well as to request reports from business divisions as per directions from corporate auditors.

4) Structures for directors and employees to report to corporate auditors and other structures related to reporting to corporate auditors

The Board of Corporate Auditors meets regularly with representative directors to exchange opinions on matters such as challenges in management, environment development for audits by corporate auditors, and important audit-related issues. In addition to items stipulated by law, the corporate auditors shall receive reports from directors on matters for which reporting is deemed to be necessary through discussion with the representative directors.

The Board of Corporate Auditors can request reports on business from directors or employees at any time. In addition, the Senior Corporate Auditor shall directly receive internal reports (whistle-blowing) from employees via the Toppan Group Helpline.

5) Structures for persons who received a report from directors and employees of the Company’s subsidiaries to report to corporate auditors

The Board of Corporate Auditors regularly holds the Toppan Group Board of Corporate Auditors Meetings, consisting of corporate auditors from principal subsidiaries, to exchange and share information with corporate auditors of respective companies. It can also request reports directly from directors and employees of the Company’s subsidiaries, where necessary.

The Board of Corporate Auditors shall be able to directly request reports from the Company’s directors and employees who received reports from subsidiaries, in accordance with the Related Company Administration Regulations.

In addition, the Management Audit Office, the Company’s internal audit division, shall regularly report the results of audits of subsidiaries to corporate auditors.

Senior Corporate Auditor shall directly receive internal reports (whistle-blowing) from directors and employees of the Company’s subsidiaries via the Toppan Group Helpline.

6) Structures to ensure that persons who reported to corporate auditors will not be unfairly treated for reasons of such report

the Company has established a set of Whistle-Blowing Rules, whereby directors and employees of the Toppan Group can make internal reports (whistle-blowing) via the Toppan Group Helpline, and a whistle-blower will not be unfairly treated because of his/her report but be protected from any reprisals or discrimination against the act of whistle-blowing when the report is deemed to be sincere based on objective and reasonable grounds.

7) Matters related to policies on the procedures for expenses or reimbursement incurred in the execution of duties of corporate auditors and handling of expenses or claims incurred in the execution of their other duties

The Board of Corporate Auditors shall be allowed to record a budget in advance for expenses deemed to be required for the execution of the duties. In addition, it shall be able to claim emergency or extraordinary expenses to the company retrospectively.

8) Structures to ensure that other audits by corporate auditors are performed effectively

Corporate auditors shall attend meetings that are necessary for auditing and oversee the legality and efficiency of management.

They also cooperate closely with account auditing firms and internal audit departments through activities including regular meetings.

They are also able to coordinate through activities such as receiving the opinions of and exchanging information with lawyers and other external experts when necessary.

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