Internal Control System Policy
TechnoPro Holdings, Inc. (“the Company”) has established Basic Policy on Internal Control Systems.
1. Internal Controls Structure
- The Company is a pure holding company, responsible for strategic planning and management support functions for TechnoPro Group companies. Accordingly, the Company’s basic policy for an internal controls system applies to the Company, Company subsidiaries (“the Group Companies;” “the TechnoPro Group” or “the Group” when including the Company).
- The Company maintains and operates the following structure of internal controls for itself and creates and imposes the following structure of internal controls for the Group Companies in accordance with laws and other rules and within a scope deemed rational.
1-1. Management Implementation Structure
- The Company’s Board of Directors shall make decisions regarding the TechnoPro Group controls environment (corporate philosophy, medium-term management plan, human resources, etc.). The Board shall obtain an understanding of the performance and internal controls status of the TechnoPro Group, exercising supervision over TechnoPro Group Directors to determine whether performance is conducted efficiently and appropriately.
- The Board of Directors shall implement an executive officer system that allocates authority and responsibility over daily operations to executive officers, enabling Directors to focus on strategic decision making and supervisory functions, thereby increasing business efficiency and strengthening business supervisory functions.
- In principle, TechnoPro Group Executive Officers shall serve concurrently as Group Companies Directors. The Group Management Committee, consisting of TechnoPro Group executive officers and others, deliberates basic policies and important matters related to the general management of the TechnoPro Group.
- The Company shall manage the Group Companies, clearly defining matters for Company approval and matters that are reported to the Company according to TechnoPro Group “Company Management Regulations”.
- TechnoPro Group executives and employees shall follow the decision-making rules, basis the priorities stipulated in the division role regulation, the authority regulation and the approval criteria of each company, in order to realize prompt decision-making and efficient business execution.
- The Company shall provide shared services (accounting, finance, human resources, legal affairs, information systems, etc.) for the TechnoPro Group to achieve operational efficiencies and ensure internal controls.
1-2. Internal Audit System
- The Company’s Internal Audit Department shall investigate the status and operations of the system of internal controls within the TechnoPro Group according to internal audit rules, etc., providing advice and proposals for the improvement thereof.
- To ensure the independence and objectivity of internal audits, the Company’s Internal Audit Department shall directly report to the Company’s President, Representative Director and CEO.
- The annual internal audit policy and internal audit plan for the Group shall be reported to the Board of Directors after approval by the Company’s President, Representative Director and CEO.
- The Company’s Internal Audit Department shall cooperate closely with the Audit & Supervisory Committee to ensure effective and practical audits.
1-3. Matters Necessary to Carry Out Duties of the Audit & Supervisory Committee and Auditors1-3-1. Matters Concerning Employees Assisting in Duties of the Audit & Supervisory Committee and Auditors (“Auditor Assistants”)
- The Company shall establish the Audit & Supervisory Committee Office and the Auditor Office, with appropriate staffing as Auditor Assistants, to exclusively assist the Audit & Supervisory Committee and the Auditors in carrying out their duties. In addition, the Group Directors shall cooperate in organizing the proper audit environment to ensure the effectiveness of audits by the Audit & Supervisory Committee, its members and Auditors.
- The Auditor Assistants shall not assume the positions of other departments and shall not be directed by any person other than the Audit & Supervisory Committee or the Auditors. Personnel matters related to the Auditor Assistants, including department transfers, performance evaluations, and rewards and penalties, shall require the consent of the Audit & Supervisory Committee or the Auditors of each Group company.
- The Auditor Assistants shall carry out their duties in accordance with the instructions of the Audit & Supervisory Committee or the Auditors.
- The Company's Audit & Supervisory Committee Members shall attend important meetings and committee meetings of the Group.
- The Group Directors (excluding those who are Audit & Supervisory Committee Members) and Auditor Assistants shall have regularly meetings with the Audit & Supervisory Committee, its members and Auditors to ensure mutual understanding between the Audit & Supervisory Committees, its members, and Auditors of each Group company.
- The Group shall establish the structure in which the Audit & Supervisory Committee, its members and Auditors can gather information directly through approval documents or other important documents, regular reports from the Company’s Internal Audit Department, shared information related to internal reporting, reports from executives and employees, etc.
- The Group shall determine and publicize clearly the rules to the effect that the Group executives and employees shall not be treated unfairly as a result of internal reporting to the Audit & Supervisory Committee, its members or Auditors.
- The annual budget shall be set for the audit expenses for the Audit & Supervisory Committee and the Auditors, payable by each Group company unless proven to irrelevant to the execution of duties.
- The Audit & Supervisory Committee shall cooperate with the Auditors through the Group Audit Liaison Meeting, etc., which is held for the purpose of enhancing the effectiveness and fairness of the audits, and shall monitor the establishments and operations of the internal controls systems.
- The Audit & Supervisory Committee Members shall, in principle, serve concurrently as the Auditors of important Group companies.
1-4. Information Retention Management System
- The Group as a whole shall establish a system for the appropriate retention and use of information related to the operation of the structure of internal controls described above.
- The Group shall properly create and retain documents based on the General Meeting of Shareholders minutes, the Board of Directors meeting minutes, and other legally mandated documents.
- Information related to decisions made at major meetings and information related to major decisions and/or the execution of duties by Directors shall be recorded, retained and/or destroyed, either in physical or electronic media, according to the document management regulations and the document retention regulations.
- The Group shall establish a system for quickly searching and viewing these documents to confirm the existence and retention status of said documents. This system consists of document digitization and entry into a database.
- The Group as a whole shall strengthen internal controls related to the following matters, according to the structure of internal controls described in the prior paragraphs.
2-1. Internal Controls Related to Risk Management
- TechnoPro Group executives and employees shall execute their duties within the scope of authority and responsibility based on responsibility the authority and scope of responsibility defined for the individual. Said individual is responsible for managing the events that may affect the Group’s ability to achieve its strategic and business objectives (“Risks”).
- The Group shall establish the Enterprise Risk Management (ERM) regulations and other related rules in order to reasonably guarantee the formulation of strategies and the achievement of business objectives.
- The Group shall conduct a comprehensive assessment of the identified Risks and establish a risk response policy at the ERM Committee based on the Group’s risk appetite.
- The Group shall establish a risk management monitoring system to collect information within the Company related to group-wide Risks, providing a prompt and effective response.
- The Group shall provide ongoing education and training related to risk management to TechnoPro Group executives and employees.
- On an annual basis, the Board of Directors identify Risks related to the execution of duties, revising corresponding risk management structure.
2-2. Internal Controls Related to Compliance
- Recognizing the compliance with relevant laws and statutes is prerequisite as an entity engaged in labor dispatch, paid placement services, and other businesses, the Group as a whole shall establish structures for strict compliance with laws, statutes, and the Articles of Incorporation, as well as with corporate ethics (“Compliance”).
- The President, Representative Director and CEO of the Company shall assume ultimate responsibility for Company Compliance. In addition, the Company shall establish a Compliance Committee, which is chaired by the executive officer in charge of General Affairs and CSR and whose members consist of the general manager of each division and officers and employees of the Group appointed by the Chairperson. The Compliance Committee deliberates important matters related to organization-wide compliance structure planning and operations.
- By setting and operating Compliance rules, the Group shall maintain compliance structure, identify issues, and improve issues that must be addressed.
- The Group shall institute an internal reporting system (adding to internal reporting desk, establish third-party report desk independent of management), making this reporting system known to executives and employees for the prevention, early detection, and prompt and effective response to acts in violation of Compliance. At the same time, reports from executives and employees related to Compliance shall be reflected in the Group’s business management.
- In the event that an act in violation of Compliance is discovered, the Group shall take appropriate response measures in cooperation with external experts and in accordance with the Compliance regulations and the internal reporting regulations. Further, the Group shall institute and operate disciplinary actions against those who violate or knowingly conceal the violation of Compliance.
2-3. Internal Controls Related to Financial Reporting
- To ensure the reliability of the Group’s financial reporting, the Group shall make internal controls over financial reporting to function at the group-wide and at the business process level in accordance with the Financial Instruments and Exchange Act and other relevant laws and regulations.
- The Group shall conduct annual assessment of Risks at the ERM Committee in order to strengthen internal control functions related to the Group’s financial reporting. The ERM Committee shall assume responsibility for important decisions to create and operate internal controls systems related to financial reporting.
2-4. Internal Controls Related to Information Systems and Information Security
- In light of the possibility that the Group executives and employees may have access to confidential information related to customer research and development, or personal information related to job candidates or executives and employees of the Group, the Group shall implement a strict information security management system.
- The Group shall create and operate regulations related to information systems and information security, providing education and training to executives and employees in order to instill the appropriate handling of information and information equipment.
- The Group shall engage in measures against data loss or leakage by strengthening the infrastructure of network security, etc.
Published: August 24, 2012
Revised: January 1, 2023