Internal Control System

  1. Systems to ensure compliance of the execution of duties by Directors, Executive Officers and employees with laws, regulations, and the Articles of Incorporation of the Company and the respective companies of the Group
    1. 1) The Board of Directors' meetings of the Company shall be held once every month, in principle, and, at the meetings, the Representative Director, etc. are required to report on the progress of their duties being executed. To enhance the auditing function, the Company shall take the necessary measures to ensure the effectiveness of the audits conducted by the Corporate Auditors, whereas the Corporate Auditors shall examine whether the independence of the Accounting Auditors is being strictly maintained.
    2. 2) The Company shall establish the Risk Management & Compliance Committee, which is directly controlled by the President as an organization to control the compliance-related activities of the entire Group. The Risk Management & Compliance Committee shall monitor the status of the streamlining and operation of the group-wide compliance systems through periodic reports from the respective group companies and deliberate on the policies and plans therefor. The Company shall also establish the Legal Department as a dedicated department for compliance-related disseminating activities. Furthermore, the Company shall promote thorough compliance by appointing responsible staff at major group companies.
    3. 3) The Company shall formulate the FamilyMart UNY Group Code of Conduct and the Compliance Rules. Directors, Executive Officers, and employees of the Group shall be required to comply with such rules.
    4. 4) The Company shall establish the Audit Office, which is directly controlled by the President. The Audit Office shall conduct regular audits to evaluate the Company's ethical and legal compliance.
    5. 5) An internal reporting system, etc. shall be adopted and a point of contact for the provision of information shall be established internally and externally by the Company and the respective group companies to promote the systems to rectify violations of compliance or prevent infringements. Furthermore, the Rules regarding Internal Reporting System shall prohibit any disadvantageous treatment against any person who does internal reporting on account of such report, and Directors, Executive Officers, and employees of the Group shall be required to comply with such rules.
    6. 6) To eliminate and discontinue relations with antisocial forces, the Company and the respective group companies shall declare internally and externally that they discontinue relations with such antisocial forces and take necessary measures to this end. Furthermore, the Company and the respective group companies shall endeavor to properly deal with such antisocial forces as a unified organization by strengthening collaboration with external bodies such as police and lawyers, as well as with industrial organizations and local communities.
  2. Rules and other systems regarding loss risk management of the Company and the respective group companies
    1. 1) The Company shall establish the Risk Management & Compliance Committee, which is directly controlled by the President, as an overall risk management organization to control the management of various risks that the Company and the respective group companies might face in the future. The Risk Management & Compliance Committee shall monitor the status of the streamlining and operation of the group-wide risk management systems through periodic reports from the respective group companies and deliberate on the policies and plans therefor. The Company shall also establish the Legal Department as a dedicated department to promote and thoroughly conduct risk management activities. Furthermore, the Company shall promote thorough risk management by appointing responsible staff at major group companies.
    2. 2) The Company shall formulate the Risk Management Rules and the Company and the respective group companies regularly analyze and evaluate the risks which they might encounter; based on which risk factors to be addressed shall be determined selectively and rules regarding the system and methods for minimizing the effects of the risks concerned shall be developed in an effort to manage risks appropriately.
    3. 3) The Company shall establish the Investment and Loan Committee as an advisory body to conduct preliminary reviews of important investment and loan subjects at the Company and the respective group companies, and shall submit its view on such subjects to the Management Meeting.
    4. 4) The Audit Office shall regularly conduct audits regarding the status of risk management, etc.
    5. 5) The Company and the respective group companies shall streamline the Risk Management Rules, a business continuity plan (BCP), etc., to take emergency responsive measures to fulfill their mission to customers even in the event of large-scale disasters and other emergencies.
  3. Systems to ensure propriety of our financial reporting
    1. 1) The Company shall establish the Unified Group Accounting Rules, the Accounting Rules, the Internal Control Rules regarding Financial Reporting and other necessary rules, appoint the Chief Financial Officer and develop necessary systems to ensure compliance with accounting standards and other related laws and regulations and the propriety and reliability of the financial reporting on a consolidated basis.
    2. 2) The Company shall regularly evaluate and improve the streamlining and operation of the systems for ensuring the propriety and reliability of financial reporting. The Audit Office shall regularly conduct audits on the Company's systems to ensure the propriety of its financial reporting.
  4. Systems to ensure efficient execution of Directors' duties of the Company and the respective group companies
    1. 1) The Company shall establish a Management Meeting as an advisory body for decision making on the execution of important business affairs, which is presided over by the President, and make decisions regarding the execution of business affairs at the Company and the respective group companies through rapid and careful deliberations.
    2. 2) The Company shall adopt an executive officer system, with which the execution of business affairs can be made more efficient by delegating such execution to the Executive Officers to the extent possible.
    3. 3) At the Company and the respective group companies, the Board of Directors shall determine the scope of job responsibility for each Director and establish the Rules on Operational Approvals, Functional Authority and Responsibility to clarify the functional authority and responsibility, etc. of the respective Directors for more appropriate execution of business affairs.
  5. Systems to keep and manage information pertaining to the execution of duties by Directors

    The Company shall establish and maintain its document-handling rules compliant with relevant laws and regulations with regard to the preparation, preservation, and management, etc.of information stated or recorded in important documents for approval (including electronic media), such as minutes of important meetings, including those of the Board of Directors and the Management Meeting; Ringisho; and authorized documents. Moreover, the Company shall put in place a system to allow Directors, Corporate Auditors, and other concerned parties to inspect the above documents

  6. Systems to ensure the propriety of business operations conducted by the corporate group consisting of the Company and group companies
    1. 1) The Company shall dispatch Directors and/or Corporate Auditors to the respective group companies, as the case may be, to monitor their management and make their business operations more appropriate while respecting their independence.
    2. 2) The Company shall provide the respective group companies with business administration and management guidance in accordance with the Management Rules regarding Associated Companies. In addition, the Company shall strive to ensure the propriety of business operations based on the Basic Policy by entering into management guidance agreements with major group companies.
    3. 3) The Company shall clarify guidelines for business administration, etc., in the Management Rules regarding Associated Companies; determine the decisions on important managerial matters at the respective group companies as matters that require the Company's prior approval; determine matters that need to be reported to the Company; oblige the respective group companies to report such matters to the Company; and receive reports therefrom, as required.
    4. 4) The Company shall support the respective group companies to streamline and operate their internal control systems with regard to major internal control items while respecting their independence, and control such operations depending on individual circumstances. The Company shall also make the respective group companies formulate various rules depending on actual business conditions thereof for the purpose of streamlining systems in accordance with such rules, and provide education and training thereto so that the internal control systems of the entire Group can be streamlined.
    5. 5) Audit departments of the respective group companies and the Company's Audit Office shall collaborate with each other and the Corporate Auditors of the respective group companies and the Company's Board of Corporate Auditors shall have regular liaison meetings for regular exchanges of information and the combined or interlocked execution of measures to streamline the group-wide internal control systems.
    6. 6) The Audit Office of the Company shall conduct audits of the respective departments of the Company. The Audit Office shall also monitor and give advice regarding the establishment of appropriate internal controls at the Company and the respective group companies by conducting or controlling audits of the respective group companies. Furthermore, the Audit Office shall regularly report the established status of the group-wide internal controls to both the Board of Directors and the Board of Corporate Auditors.
  7. Employees in cases where a Corporate Auditor requests the Company to dispatch employees to support his/her duties

    The Company shall establish the Corporate Auditors' Secretariat and appoint several dedicated employees thereto to assist in the execution of the Corporate Auditor's duties. A Corporate Auditor may give directions or orders to such employees in respect of matters required for audit duties.

  8. Independence from Directors for employees who are to assist the Corporate Auditors in the execution of their duties and assurance of effectiveness of their instructions

    Employees who assist the Corporate Auditors in the execution of their duties shall obey only the directions or orders given by the Corporate Auditor concerned in carrying out their duties and shall not take directions or orders from any Directors, Executive Officers, and/or other employees. With regard to the exercise of authority over personnel affairs, including personnel ratings, personnel changes, and disciplinary measures, the Company shall discuss with the Corporate Auditors in advance, and shall exercise such authority only after the Company has obtained the consent of the Corporate Auditors.

  9. Systems to help Directors and employees, etc. of the Company and the respective group companies report to the Corporate Auditors and other systems relating to reporting to the Corporate Auditors
    1. 1) The Corporate Auditors of the Company shall attend the Board of Directors' meetings; attend other important meetings, such as those of the Management Meeting; receive explanations from the Directors, Executive Officers, and employees; and examine associated materials.
    2. 2) The Directors, Executive Officers, and employees of the Company shall periodically report to the Corporate Auditors the results of the internal audit, the status of the execution of the internal reporting system, information about transactions involving competitors, or self-dealing transactions, etc.
    3. 3) The Directors, Executive Officers, and employees of the Company, as well as the Directors, Corporate Auditors, and employees of the respective group companies, shall, either directly or through the department in charge, swiftly report to the Corporate Auditors of the Company if they discover facts that could cause significant damage to or have a material impact on the Company or any of the respective group companies. Furthermore, the Corporate Auditors may from time to time request that a relevant Director or others at the Company or the respective group companies make a report to such Corporate Auditors if necessary.
    4. 4) Following the rules such as the Internal Reporting Policy Provisions, an individual who makes a report to the Corporate Auditors shall not receive any disadvantageous treatment due to the fact that he or she reported the issue. The Directors, Executive Officers, and employees involved must abide by this rule.
  10. Policies on prepayment or procedures for amortization of the expenses incurred in executing duties as a Corporate Auditor and processing of expenses and liabilities incurred in executing duties as a Corporate Auditor

    In the event that a Corporate Auditor makes a claim to the Company in connection with the execution of his or her duties such as prepayment of expenses, the Company shall promptly process the invoices for such expenses through the internal system unless the Company has proved that such expenses are not necessary for the execution of the duties of such Corporate Auditor.

  11. Other systems to ensure effective audits by the Corporate Auditors
    1. 1) The Corporate Auditors of the Company shall periodically meet the Representative Director to receive reports from the Representative Director on managerial issues, various risks surrounding the Company, and other subjects, and to exchange opinions with the President. Meanwhile, the Corporate Auditors shall receive reports about the method and results of the accounting audit from the Accounting Auditors and reports about the internal audit from the Audit Office.
    2. 2) Any Corporate Auditor may delegate research to or seek advice from independent outside experts if it is deemed necessary in connection with an audit.