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Corporate Governance

Taica maintains the internal control system to achieve transparency, safety and growth as a corporation. Based on this, Taica strives to gain the trust of various stakeholders; customers, business partners, communities and its employees.

We have established a “Basic Policy on Internal Control System” as our policy that our directors and employees must observe in the course of all business activities.

BASIC POLICY ON INTERNAL CONTROL SYSTEM

1. Structure to ensure that the execution of duties by directors and employees complies with the laws and regulations and the articles of incorporation

1.

Directors and employees shall, in execution of their duties, respect social norms and ethics and comply with the laws and regulations and the articles of incorporation.

2.

With the Board of Directors supervising the execution of their duties, directors shall report on the status of the execution of their own duties to the Board of Directors, and oversee and supervise mutually the execution of duties by other directors. The status of the execution of duties of directors shall be audited by corporate auditors, in accordance with the audit standards and the audit program.

3.

The internal audit office, independently of the business execution division, continuously conducts internal audits on the use of the internal control system in accordance with internal audit rules. Furthermore, the internal audit office timely reports on audit results to directors and corporate auditors, as well as provides feedback of results to the audited divisions.

4. To respond to instances of doubtful conduct concerning compliance with laws and regulations for execution of duties by directors and employees, Taica shall establish in-house contact and strive toward early detection and forestalling of misconduct. For infringement by employees of laws and regulations or the articles of incorporation, the General Affairs Department shall implement a specific punitive decision. For cases of infringement by directors of laws and regulations or the articles of incorporation, the Board of Directors shall execute a specific punitive decision.

2. Structure to preserve and manage information related to execution of duties by directors

1.

Information regarding execution of duties by directors, including the minutes of the Board of Directors meetings and other materials, shall be treated in compliance with the laws and regulations. In addition, such information shall be stored and managed, by meticulously recording via paper documents or electromagnetic media, in accordance with document management rules.

2. The status of the documentation, storage and management of information regarding execution of duties by directors shall be audited by corporate auditors. When necessary, information shall be disclosed in accordance with the laws and regulations or the stock exchange’s timely disclosure rules.

3. Rules and structure regarding management of the risk of loss

1.

To cope with all risks of losses arising from the operations of Taica or group companies, the Board of Directors shall comprehend foreseeable risks and establish the necessary rules and systems to keep losses to a minimum when a risk arises. Risk management shall be carried out and improved appropriately and continuously in order to properly manage risks at all times.

2.

Directors shall necessarily comprehend, analyze and evaluate management risks in order to execute their duties in charge, and provide their findings to the Board of Directors, etc., as important materials for referencing while making decisions. Employees shall review their duties in charge and comprehend, analyze and evaluate the underlying risk, as well as review risk management processes periodically, to monitor the status of risk management and take appropriate measures against risks.

3. When a significant risk has become obvious, the President shall setup a task force or assign persons in charge to quickly resolve such risks and mitigate damages resulting from risks.

4. Structure to ensure efficient execution of duties by directors

1.

Duties of each director shall be determined in accordance with resolutions of the Board of Directors and internal rules. Such internal rules shall be reviewed any time for the revision/abolition of laws and regulations, efficient execution of duties by directors, or other reasons.

2.

The Board of Directors’ meeting shall be held at least once a month, as the foundation for ensuring efficient execution of duties by directors. Important matters submitted to the Board of Directors’ meeting shall be discussed in advance at the Executive Committee meeting for improving management efficiency, and shall be resolved at the Board of Directors’ meeting based on the results of the discussion.

3. Directors shall execute their duties in order to achieve the targets set in the mid-term management plan and the annual budget drawn up under Taica’s management philosophy. The business results and remedial measures shall be reported and discussed at the Board of Directors’ meeting.

5. Structure to ensure the appropriate operations of Taica and its group companies

1.

Taica and its group companies shall respect social norms and ethics, as well as comply with laws and regulations and the articles of incorporation. Transactions between group companies shall be appropriate in the light of laws and regulations, accounting standards, tax laws, and other social norms.

2.

Maintaining a close collaboration and information sharing with Taica, each group company shall, in principle, maintain its internal control system autonomously, based on the size of business, nature of operations and other characteristics. Rules and other regulations of each group company shall be updated in keeping with Taica’s rules and regulations.

3.

Taica shall maintain management standards applied to subsidiaries and deliberate prior reports from subsidiaries in accordance with such standards for the corporate management of affiliated companies. Directors of subsidiaries shall exchange opinions and work together so that the internal control systems of the subsidiaries can be enhanced appropriately.

4.

The internal audit office, established to be responsible for the internal control of Taica’s group companies, shall periodically conduct or supervise internal audits of Taica and its group companies and ensure effective and appropriate internal control across the operations of group companies.

5. Corporate auditors of Taica, together with corporate auditors of subsidiaries, shall oversee and audit the execution of operations by subsidiaries and the appropriate operations of group companies under the consolidated management. In addition, corporate auditors shall maintain a close and proper relationship with accounting auditors and the internal audit office, so that audits may be conducted effectively and appropriately.

6. Matters related to employees in cases where corporate auditors request employees to be appointed to assist the auditor

1. In cases where corporate auditors requests employees to be appointed to assist the auditor, Taica shall take appropriate measures so that corporate auditors can perform their duties properly.

7. Matters related to the independence of those employees in item 6 above from directors

1. In cases where such employees are appointed, their appointment, transfer, evaluation and punishment shall be carried out in deference to the opinion of corporate auditors so as to ensure the independence of such employees from directors.

8. Structure for directors and employees to report to corporate auditors and other matters related to reporting procedures to corporate auditors

1.

When directors detect infringement of laws and regulations or the articles of incorporation regarding the execution of duties, instances of misconduct or facts that may cause material damage to Taica or the group companies, the directors shall immediately report such findings to the corporate auditors.

2.

When employees detect infringements of laws and regulations or the articles of incorporation regarding the execution of duties, instances of misconduct or facts that may cause material damage to Taica or the group companies, the employees shall immediately report such findings to corporate auditors through the internal audit office.

3.

Directors shall report, at important meetings such as the Board of Directors’ meetings, the status of the execution of duties and important matters both inside and outside of Taica that would be needed for management decisions. Corporate auditors may attend such meetings and be reported to on the execution of duties.

4. Corporate auditors may hold periodical meetings with the person in charge in the internal audit office and seek explanations from directors and employees or other persons concerned. When directors and employees are requested by corporate auditors to explain matters regarding the execution of duties, they shall report the matters to corporate auditors quickly and appropriately.

9. Other framework to ensure the effective audit by corporate auditors

1.

Half or more of the corporate auditors shall be outside corporate auditors so as to endorse the element of external transparency.

2.

Corporate auditors shall periodically exchange opinions with directors about important matters for the purposes of audits. When the corporate auditors request to attend an important meeting, this request shall be respected.

3. Corporate auditors shall periodically exchange opinions with the internal audit office, accounting auditors and corporate auditors of the group companies, and work together to ensure effective audits of Taica and group companies. Corporate auditors may request the internal audit office to carry out an investigation when deemed necessary.
 

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