Integrated Report 2020

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Foundation54LINTEC Integrated Report 2020Governance2 Internal Control SystemThe following is an explanation of the internal control system to ensure that the execution of directors’ duties is in compliance with laws and regulations as well as the Articles of Incorporation, and the system to ensure the appropriateness of the execution of other business. System to ensure that the execution of the duties of directors and employees is in compliance with laws and regulations as well as the Articles of IncorporationTo ensure that the execution of the duties of directors and employ-ees is in compliance with laws and regulations as well as the Articles of Incorporation and that a sense of ethics is maintained, the Company established its motto of “Sincerity and Creativity,” on which its Code of Conduct was based. To ensure the effectiveness of the compliance system with regard to laws and regulations as well as the Articles of Incorporation, the Audit Office—an organiza-tion under the president’s direct supervision—investigates and verifies, by means of audits based on the Internal Audit Regulations, whether all of the Company’s operations are being appropriately and reasonably implemented and pursuant to laws, the Articles of Incorporation, and internal rules and regulations. The results of those audits are regularly reported to the Board of Directors. System for storing and managing information related to the execution of directors’ dutiesDocuments are stored and managed in accordance with rules determined for each document type, including those documents stipulated by law. Regulations and other systems pertaining to management of risks of lossBy promoting the issuance of manuals by division and facilitating their thorough use, the Company makes preemptive efforts to reduce or avoid risk. In the case of specific risks, the Company promotes reviews of and improvements to response measures as risks arise. For emergency situations, such as the occurrence of a disaster, the Company has established the LINTEC Group Crisis Management regulations, in addition to a BCMS, which is based on these regulations. These are separate from risk management initiatives conducted through normal operations, and we strive to ensure that a crisis management organization can be quickly established in the event of an emergency. System to ensure that the execution of the duties of directors is efficiently conductedIn addition to setting out the duties for which directors are respon-sible for and that correspond to the allocation of roles of each organization, based on the Regulations on the Division of Duties, the Company works to separate management from execution and accelerate decision making by the introduction of an executive officer system. Moreover, the Company reviews internal organiza-tions as necessary to be able to respond to environmental changes and works to maintain efficiency in the execution of the duties of directors by such means as the setting up of cross-organizational committees on an as-required basis. System to ensure the appropriateness of business in the corporate group comprising the Company and its subsidiariesBased on the Affiliate Company Operational Regulations, the Company works to maintain the appropriateness of its operations as a Group entity by having each of its principal business divisions control the operations of Group companies. Based on the Affiliate Company Operational Regulations, the Company works to maintain a system for receiving corporate performance, risk, and other important reports from each Group company regularly or on an as-required basis. Providing business management and support from the appropriate division as necessary, the Company promotes management efficiency in each company. To ensure that Group companies are in compliance with laws and regulations as well as the Articles of Incorporation, audits are conducted by each com-pany’s internal audit system and by the Company’s Audit Office. Matters relating to the employees who are tasked to assist the duties of the Audit & Supervisory Committee, matters relating to the independence of said employees from directors, and matters relating to ensuring the effectiveness of Audit & Supervisory Committee instructions with respect to said employeesTo further raise the effectiveness of Audit & Supervisory Committee audits and maintain a system to carry out audit duties more smoothly, the Company has established the Audit & Supervisory Committee secretariat, which supports and takes on Audit & Supervisory Committee duties. It is assumed that the Audit & Supervisory Committee’s consent has to be obtained for transfers of personnel to the Audit & Supervisory Committee secretariat staff, personnel evaluations, and disciplinary action. The instruc-tions and orders given to Audit & Supervisory Committee secre-tariat staff are also deemed to be given by directors serving as Audit & Supervisory Committee members. With regard to said instructions and orders received from Audit & Supervisory Committee members, with the exception of those instructions and orders that are not necessary for the duties of Audit & Supervisory Committee members, it is assumed that Audit & Supervisory Committee secretariat staff do not receive instructions and orders from directors or other employees. System relating to the reporting of cases to the Audit & Supervisory Committee and system for ensuring that the submitting of such reports is not seen as reason enough for the person who submitted them to be subjected to disadvanta-geous treatmentWith regard to cases that are likely to significantly damage the Company or a Group company, such as violations of laws or regula-tions, all Group directors and employees are to report such cases to the Company’s Audit & Supervisory Committee. In addition, it is deemed that the Audit & Supervisory Committee will be able to directly demand business-related reports for all Group directors and employees. Under the Company’s Internal Reporting System Operation Regulations and its Global Internal Reporting System