Basic Internal Control System Policy
I. Basic Views on Internal Control System and the Progress of System Development
1．Structure to Ensure that the Execution of Duties of the Lion Group’s Directors and
Employees Complies with Legal Requirements and the Company's Articles of Incorporation
(1) Basic Stance
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The Lion Group Charter for Corporate Behavior and Behavioral Guidelines shall
provide the platform for the Company's compliance structure.
- The president shall provide constant reinforcement regarding the basic spirit and essence of the
Lion Group Charter for Corporate Behavior among directors, executive officers, Audit &
Supervisory Board members and employees with the aim of increasing awareness and understanding
of corporate ethics. Each and every member of the Lion Group shall adopt and pursue the credo
that compliance underpins every facet of the Group's business activities.
(2) Compliance Structure
- The Company shall maintain a Corporate Ethics Committee chaired by the director responsible for
corporate ethics, an appointee from the Board of Directors. Covering the entire Group, this
committee shall formulate and implement specific initiatives to ensure greater awareness of and
compliance with corporate ethics. In the event of a violation of the Lion Group Charter for
Corporate Behavior or Behavioral Guidelines, if deemed necessary by the Corporate Ethics
Committee, an Ethics Investigation Committee shall be established to work toward the resolution
of the issue. The Ethics Evaluation Committee shall comprise specialists from outside the Group,
including lawyers and certified public accountants.
- The Group shall designate a director of corporate ethics who reports to the director responsible for corporate ethics. The director of corporate ethics shall enhance and maintain the Group's compliance structure and work with the Human Resources Development Center to implement necessary training for the Group. Each department shall also formulate its own standards and manuals in line with relevant laws and regulations and operate in accordance with said rules and manuals.
- In an effort to reinforce the supervisory function of Lion’s Board of Directors, external
directors who do not engage in any executive function within the Group shall be appointed to the
board.
- The Group shall maintain an Advisory Committee, comprising outside experts, to provide
third-party opinions and advice on matters relating to legal compliance and management policy.
- Members of the Auditing Office, the director of corporate ethics, members of the Corporate
Planning Department and the Legal Department, and the Audit & Supervisory Board members shall
maintain close communications with each other. In this manner, Lion shall promptly identify
issues and problems relating to compliance and the compliance structure.
- Lion shall refer to its work regulations to determine the course of action in the event an
employee contravenes any law or the Company's Articles of Incorporation. The Corporate Ethics
Committee shall prepare and submit its final decision to the Board of Directors in the event a
director contravenes any law or the Company's Articles of Incorporation.
- Besides items (2) a. through i. above, the “AL Heart Hotline” has been established to provide
direct contact with the director of corporate ethics and external lawyers. This hotline forms a
part of the Group's internal communications system designed to address any legal breach or
matter concerning compliance. In addition, the “Quality Information Hotline” has been
established. In cases of doubt about product quality, personnel responsible for product
development may utilize this internal communications system to report directly to the director
of the Reliability Assurance Department. These hotlines shall be managed based on separately
prepared guidelines.
- In the event Audit & Supervisory Board members uncover an issue relating to the Group's
compliance structure or the management of its internal communications system (identified in item
(2) j. above), a report shall be presented to the board director responsible for corporate
ethics and the necessary corrective measures formulated.
- Members of the Auditing Office, the director of corporate ethics, members of the Corporate
Planning Department and the Legal Department, and the Audit & Supervisory Board members shall
maintain close communications with each other. In this manner, Lion shall promptly identify
issues and problems relating to compliance and the compliance structure.
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Besides items (2) a. through i. above, the “AL Heart Hotline” has been established to provide direct contact with the director of corporate ethics and external lawyers. This hotline forms a part of the Group's internal communications system designed to address any legal breach or matter concerning compliance. In addition, the “Quality Information Hotline” has been established. In cases of doubt about product quality, personnel responsible for product development may utilize this internal communications system to report directly to the director of the Reliability Assurance Department. These hotlines shall be managed based on separately prepared guidelines.
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In the event Audit & Supervisory Board members uncover an issue relating to the Group's compliance structure or the management of its internal communications system (identified in item (2) j. above), a report shall be presented to the board director responsible for corporate ethics and the necessary corrective measures formulated.
(3) Response in the Event of Emergency
- The Emergency Response System shall apply to any emergency relating to legal requirements and
corporate social responsibility (CSR). Under the system, the General Manager of the General
Affairs Department shall report any such incident to the president, the director responsible for
corporate ethics and the Audit & Supervisory Board members. The director of the relevant
department or the Emergency Response Committee, chaired by the president, shall implement
appropriate measures to resolve the situation, formulate measures to prevent recurrences and
submit a report to the Executive Committee and the Board of Directors.
- The procedures outlined above in item (3) a. shall be adopted in the event a director or
employee of a Group company uncovers a serious breach of any legal requirement or any
significant matter relating to compliance by a Group company.
- In the event that Group companies recognize that management guidelines or instructions from Lion
contravene the law or raise issues relating to compliance, the matter shall be immediately
reported to the Company's president, the board director responsible for corporate ethics, and
Audit & Supervisory Board members. The board director responsible for corporate ethics, in
collaboration with the Audit & Supervisory Board members, shall resolve the situation and
formulate measures to prevent recurrences.
2．Management Structure for Maintenance and Storage of Information Concerning the
Execution of the Duties of Lion’s Directors
(1) Representative directors and executive directors shall report on the status of
their own executive duties to the Board of Directors in accordance with legal requirements.
(2) The representative director shall formulate information preparation, maintenance
and storage rules relating to the execution of directors' duties as a part of the Company’s
Information Management Regulations.
(3) Directors shall maintain and store information pertaining to the execution of
their duties in accordance with the Information Management Regulations.
(4) Directors and Audit & Supervisory Board members may view and copy this
information at any time.
3．The Lion Group’s Rules and Other Structures Relating to the Management of Risk
(1) Response under Normal Conditions
- The director responsible for the Corporate Planning Department shall have overall responsibility for risk management for the Group. The Corporate Planning Department shall exhaustively and comprehensively manage the Group's risk.
- The Executive Management Board identifies and evaluates management risks that have the potential to significantly impact business activities, and the whole Group works to mitigate or otherwise address these risks. For management risks that arise during the fiscal year, the director responsible for the relevant risk area investigates countermeasures, which are deliberated by the Executive Management Board for risk management.
- For the management of risk related to the environment, quality assurance, accidents and disasters, the Sustainability Promotion Council; CS/PL Committee;* and Safety, Hygiene and Disaster Prevention Meeting respectively consider preventive countermeasures, which are deliberated by the Executive Management Board and the Executive Committee as necessary, for risk management.
- Each department identifies and works to mitigate or otherwise address its own risks. In addition, all Group plants have received ISO 9001 and ISO 14001 certification and are actively working on quality management and environmental conservation.
- The director responsible for risk management reports on the progress of risk management to the Executive Committee and the Board of Directors. The Auditing Office audits the status of risk management for each department in the Group and reports its findings to the Executive Committee and the Board of Directors.
(2) Response in the Event of Emergency
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In the event of an incident occurring due to a natural disaster or accident, in accordance with
the Emergency Response System (the respective manuals for countermeasures again earthquakes or
influenza and other infectious diseases), details of said incident shall be reported to the
president and Audit & Supervisory Board members. At the same time, the director of the relevant
department shall collect all relevant information, formulate response measures, clarify causes
and determine countermeasures, submitting a report on these actions to the Executive Committee
and the Board of Directors.
4．Structure to Ensure that Directors' Duties are Executed Efficiently
The following business management system shall be used to improve the efficiency of
the execution of directors’ duties.
(1) Decision-Making Rules
- Board of Directors meetings shall be held regularly once a month, with extraordinary meetings convened when necessary, as the foundation for ensuring the efficient execution of directors' duties. With the exception of the regular Board of Directors meetings, the written approval of each director shall be deemed to constitute a resolution of the Board of Directors, pursuant to regulatory requirements.
- Executive Management Board meetings shall be held three times a month, and the Executive Committee meetings shall be held once a month. At each meeting, the committees shall make decisions on fundamental and other important matters in an agile manner. Through these means, Lion shall strive to promote speedy operations and strengthen the Board of Directors' functions.
- Matters of importance relating to the management policies and strategies of the overall Group shall be deliberated on in advance by the Executive Management Board. Thereafter, recommendations shall be ratified by the Board of Directors.
- The autonomy of each company within the Group shall be respected; however, each Group company shall regularly report on its business activities to Lion and discuss important matters with Lion before taking action. In addition, matters of significance that may substantially impact the assets and earnings of Group companies are subject to approval by Lion's Board of Directors or the Executive Management Board.
(2) The Board of Directors
- The Board of Directors shall determine Companywide objectives and targets common to all
directors and employees and promote understanding and awareness of and formulate management
plans based on said objectives and targets.
- In order to make management plans more concrete, the Board of Directors shall establish business
plans and set operating budgets on the basis of said management plans. Investments for
marketing, research and development, capital expenditure and new businesses are also allocated
on the basis of management plans.
- The Board of Directors shall determine the delegation of authority regarding important matters to organizations, the President, responsible officers and directors of each division or department.
- The Board of Directors shall review monthly business results. In the event of a discrepancy
between established targets and actual performance, the director responsible for each division
shall provide an analysis of the discrepancy and recommend measures to reduce or eliminate
negative factors to the Board of Directors. When necessary, targets may be revised.
(3) Business Operation Structure
- The directors responsible for each department shall establish efficient business operation
structures for their departments, including concrete measures to be implemented.
- Monthly business results shall be collated for management accounting purposes in a timely
fashion utilizing the Group's IT systems and submitted to the director responsible for the
relevant department and the Board of Directors.
- Subject to item (2) d. above, each director responsible for a department shall implement
improvements to increase the efficiency of the department's business operation structure as
needed.
5．Matters Relating to Employees Assigned to Support Audit & Supervisory Board Members and the
Independence of Such Employees from Directors in the Case that Auditors Request Such Employees
(Including Items Related to Ensuring the Effectiveness of Audit & Supervisory Board Members’
Directions)
(1) At least one employee shall be allocated to the Auditing Office to support the
duties and functions of the Audit & Supervisory Board.
(2) Employees allocated for this purpose to the Auditing Office are subject to the
instructions of the Audit & Supervisory Board and not to the instructions of board directors or the
director of the Auditing Office.
(3) The aforementioned employees are independent of board directors. The personnel
evaluation, transfer and disciplining of these employees are determined after agreement by the Audit
& Supervisory Board.
6．Structure for Reporting to Audit & Supervisory Board Members by Directors and Employees and Other
Matters Relating to Procedures for Reporting to Audit & Supervisory Board Members as well as
Structure for Ensuring that Such Reporting Will Not Result in Disadvantage to the Reporter
(1) Lion Group directors and employees shall quickly report to the Audit & Supervisory Board any
matters that may significantly impact the Group as well as any significant violations of legal
statutes or the Articles of Incorporation. In addition, the directors shall report the following
matters to the Audit & Supervisory Board.
- Significant breaches of the law and other important compliance matters.
- Emergencies relating to natural disasters or accidents as well as emergencies concerning legal
requirements or corporate social responsibility.
- The implementation status of Group internal audits
- The status and details of communications reported through the Group's internal reporting
hotline.
- Matters determined by the Executive Management Board and the Product Planning Executive Committee.
- Matters determined by directors and executive officers based on designated delegated
authorities.
- The status of Group company activities, as well as activities by their Audit & Supervisory Board
members.
- The details and impact of any change in important accounting policies or standards adopted by
the Company and its Group companies.
(2) The reporting methods for the matters described above in (1) a. through h. (the
reporter, recipient, timing and other matters) are determined through deliberations involving
directors and the Audit & Supervisory Board members.
(3) Notwithstanding item 6. (1) above, Audit & Supervisory Board members may request
information from directors and employees as and when necessary.
(4) The Lion Group shall establish Behavioral Guidelines to protect those who report
matters of concern to the Audit & Supervisory Board members from suffering any disadvantage as a
result of making such a report, and organizationally ensure that this is enforced Groupwide.
7．Procedure for Pre-Payment and Reimbursement of Costs Arising in the Execution of
the Official Duties of Audit & Supervisory Board Members and Policy for Processing Other Costs or
Liabilities Arising from the Execution of Such Duties
(1) Costs and liabilities necessary for the execution of Audit & Supervisory Board
members’ duties shall be promptly paid or otherwise processed in accordance with the request of the
Audit & Supervisory Board member.
(2) In addition, Audit & Supervisory Board members may receive the advice of outside
experts as required to execute their duties. Related payments or other processing shall be handled
in accordance with 7. (1), above.
8．Structure to Ensure Effective Auditing by Lion’s Audit & Supervisory Board Members
(1) At the request of the Audit & Supervisory Board, the Board of Directors shall
ensure that the Audit & Supervisory Board is able to appoint legal, accounting or taxation
specialists to receive advice relating to audit activities.
(2) Audit & Supervisory Board members may attend management meetings and discussions
of the Company and Group companies as necessary.
(3) Audit & Supervisory Board members may review and copy important information
concerning Group companies as necessary.
(4) Audit & Supervisory Board members may conduct individual interviews with the
directors responsible for business execution and important employees regarding the status of the
execution of their duties in accordance with audit plans formulated by the Audit & Supervisory
Board.
(5) The Audit & Supervisory Board shall periodically convene meetings with the
representative directors and accounting auditors to promote the exchange of information, opinions
and views.
9．Structure to Ensure the Reliability and Appropriateness of Financial Reporting
(1) For the purpose of ensuring the reliability of the financial reporting of Lion,
its subsidiaries
and affiliated companies that forms the Group’s consolidated financial statements, the president
shall develop, operate and evaluate internal control regarding financial reporting based on the
“Internal Control Policies Regarding Financial Reporting” set forth by the Board of Directors. The
president shall also report the status of internal control and submit an internal control report to
the Board of Directors on a regular basis.
(2) The Auditing Office shall, through its internal auditing, understand and evaluate
the status of the development and operation of the Company’s internal control system (including any
problems and the status of improvements made to address problems) regarding the financial reporting
and report its findings to the president and Audit & Supervisory Board members.
(3) As a part of their performance audits, Audit & Supervisory Board members shall
audit the
execution of directors’ duties related to the development and operation of internal control
regarding financial reporting. In addition, Audit & Supervisory Board members shall audit the status
of development and operation of internal control regarding financial reporting through audits of the
appropriateness of the methods and results of accounting audits conducted by accounting auditors.
Development Status of the Internal Control System
Lion has established the Lion Group Charter for Corporate Behavior and Behavioral Guidelines,
centered on the reinforcement of legal compliance and corporate ethics. To ensure strict compliance
with the charter and guidelines on the part of all directors, Audit & Supervisory Board members and
employees, the Group has established a Corporate Ethics Committee chaired by the board director
responsible for corporate ethics. The committee promotes concrete initiatives to ensure the
penetration and entrenchment of corporate ethics awareness. In the event of a violation of the Lion
Group Charter for Corporate Behavior or Behavioral Guidelines, the committee develops proposals to
resolve the issue and prevent recurrences. The committee also works to strengthen the Group’s
compliance systems, including the internal reporting systems. In addition, the Group maintains
various rules and procedures to ensure the efficiency and effectiveness of operations, including
standards for delegating decision-making authority to the president or the responsible executive,
operating processes for each stage of product development, and product management systems that
specify quality assurance procedures.
The Audit & Supervisory Board members and Auditing Office conduct regular audits to monitor whether
these systems are functioning appropriately.
Regarding the timely disclosure of corporate information, Lion seeks out the opinions of the
standing Audit & Supervisory Board members regarding the necessity of disclosure, endeavoring to
ensure appropriate disclosure.
With regard to the development status of internal control related to financial reporting, Lion has
established the “Internal Control Policies Regarding Financial Reporting” and standards for
determining the scope of evaluation and targets of evaluations. Furthermore, the Group has assigned
responsible staff to take charge of each operational process.
Operational Status of the Internal Control System
The Board of Directors examines the operation of the internal control system as
necessary. An outline of the operational status for each year is given in that year’s annual
business reporting.
II. Basic Views on Eliminating Anti-Social Forces
Basic Approach
In accordance with the Lion Group Charter for Corporate Behavior, the Company shall
maintain a stance of staunch opposition to any antisocial forces that pose a threat to public order
and safety.
Status of Related Efforts
Having positioned its General Affairs Department as its office for handling issues relating to
antisocial forces, Lion has appointed a person responsible for the prevention of undue claims
against the Company and strives to coordinate efforts between each operational site of the Group as
well as external institutions. To facilitate coordination with the police and relevant authorities,
Lion participates in and shares information through specialized outside institutions, such as
public-private partnerships for the prevention of undue claims.
To define and ensure compliance with procedures for handling antisocial forces, Lion has established
an Undue Claim Prevention Manual.
The person responsible for the prevention of undue claims implements the necessary training at each
operating site of the Group. The person responsible for the prevention of undue claims and the
persons in charge of the prevention of undue claims at each operating site shall execute their
duties in accordance with the Undue Claim Prevention Manual.
Established May 30, 2006
Amended June 29, 2006
Amended January 1, 2008
Amended February 7, 2008
Amended March 28, 2008
Amended January 1, 2009
Amended June 30, 2016
Amended April 1, 2024
