Internal Control

(Basic Views)
Together with our stakeholders who support the Company, we aim to be a company that continuously produces appropriate results. The Company also recognizes that the establishment and maintenance of an internal control system is essential for the pursuit of operational effectiveness and efficiency, compliance, and reliable financial reporting, and has positioned it as a key management issue. The Company’s Board of Directors has established the following systems to ensure that the execution of duties by Directors complies with laws and regulations and the Articles of Incorporation, as well as other systems to ensure the propriety of the Company’s operations.

1．System to ensure that the execution of duties by Directors and employees of the corporate group complies with laws and regulations and the Articles of Incorporation

The Board of Directors of the Company shall establish the “Corporate Philosophy,” “EIZO Group Principles of Conduct,” “EIZO Group Human Rights Policy” and “Compliance Regulations” for all officers and employees of the Company and its group companies, and shall develop and enhance the compliance program as follows, so that the performance of duties by Directors and employees of the Company and its group companies shall comply with laws, regulations and the Articles of Incorporation and fulfill corporate social responsibility.

1. Establish a Compliance Committee to develop and operate a compliance program.
2. In order to ensure thorough compliance, the Company shall educate the Group’s Directors and employees, foster compliance awareness, and conduct audits and other activities to ensure the proper operation of the compliance program.
3. Through the development and operation of an Internal Whistle-Blowing System, the Company shall prevent the occurrence of serious incidents that could significantly damage corporate value, such as the loss of corporate credibility due to violations of laws and regulations.
4. No relationship with anti-social groups or organizations that threaten the order and safety of civil society. In addition, the Company shall take a firm stand against unreasonable demands from anti-social groups and organizations, and shall not engage in any acts that encourage their activities.

2. System for the storage and management of information related to the execution of duties by Directors

The following documents related to important decision-making and reporting concerning the execution of duties by Directors shall be stored and managed appropriately and securely in accordance with the “Document Management Regulations” and “Regulation Management Regulations,” etc.

1. Minutes of the Ordinary General Meeting of Shareholders, Board of Directors’ meetings, Management Committee meetings, and related documents
2. Minutes of important internal meetings and related materials
3. Documents regarding managerial decisions and other important internal application documents
4. Copies of accounting books, financial statements, important contracts, documents filed with government agencies or other public institutions or with financial instruments exchanges, and other important documents

3. Regulations and other systems for managing the risk of loss in the corporate group

Based on the “Basic Regulations on Risk Management,” the Company shall establish a system for the integrated and centralized management of risks that may affect the business activities of the group.

1. The Management Committee shall identify “important risks” that are judged to have a high impact on the Company’s business and determine risk countermeasures.
2. Establish a Risk Management Committee to analyze, identify, prevent, and control risks by category through the application of various regulations concerning accounting, information management, health and safety, quality assurance, and environmental management, etc.
3. With regard to business continuity activities, a business continuity plan (BCP) shall be formulated to ensure a prompt and appropriate response in the event of risk occurrence.

4. System to ensure the efficient execution of duties by Directors in the corporate group

The Company shall establish the following structure to accelerate the decision-making process for the group’s management strategies and to strengthen the management supervision and business execution systems.

1. Regular meetings of the Board of Directors: Meetings shall be held in accordance with a schedule to be arranged each fiscal year, and extraordinary meetings of the Board of Directors shall be held as necessary.
2. Operating Officer System: To separate management supervision from business execution, an Operating Officer System will be introduced for prompt business execution.
3. Management Committee: A Management Committee mainly composed of internal directors and operating officers shall be established to efficiently deliberate and discuss important management issues.
4. The status of business execution by group companies shall be reported regularly at regular meetings of the Board of Directors, and important matters shall be deliberated at meetings of the Board of Directors and the Management Committee.

5. System to ensure the appropriateness of business operations in the corporate group

The compliance and risk management systems of the group companies shall be managed by the Company in accordance with the “Compliance Regulations” and the “Risk Management Basic Regulations.” With respect to the execution of business by group companies, the Company shall manage group companies as necessary and appropriate according to their conditions by means of a reporting and approval system for important matters based on the “Group Company Management Regulations” and the “Approval & Report Policy” and by utilizing the internal audit system, etc.

6. Matters concerning Directors and employees to assist with the duties of the Audit and Supervisory Committee, matters concerning the independence of such Directors and employees from other Directors (excluding Directors who are Audit and Supervisory Committee members), and matters concerning the effectiveness of instructions given by the Audit and Supervisory Committee to such Directors and employees

The duties of the Audit and Supervisory Committee are assisted by the Internal Auditing Department. The Internal Auditing Department is required to follow the instructions of the Audit and Supervisory Committee with respect to such auxiliary operations. Those engaged in such auxiliary duties may concurrently perform other duties, but any personnel matters shall be subject to the prior consent of the Audit and Supervisory Committee.

7. Systems for Directors (excluding Directors who are members of the Audit and Supervisory Committee) and employees to report to the Audit and Supervisory Committee, and systems for Directors, auditors, etc., and employees of subsidiaries or persons who receive reports from these persons to report to the Company’s Audit and Supervisory Committee

Directors (excluding Directors who are members of the Audit and Supervisory Committee) and employees of the Company group shall promptly and appropriately report matters concerning the execution of business operations when requested by a member of the Audit and Supervisory Committee selected by the Company’s Audit and Supervisory Committee. If any Director (excluding Directors who are members of the Audit and Supervisory Committee) or employee of the Company group discovers any material fact in violation of laws, regulations, or the Articles of Incorporation, or any fact that may cause significant damage to the Company, such fact shall immediately be reported to the Audit and Supervisory Committee. The department in charge of the group’s Whistle-Blowing System shall report to the Audit and Supervisory Committee any whistle-blowing received from the group’s Directors (excluding Directors who are members of the Audit and Supervisory Committee) or employees. It should be noted that any person who reports to the Audit and Supervisory Committee, including those who use the Whistle-Blowing System, shall be prohibited from being treated unfavorably for making such a report, and this shall be made known to all employees.

8. Other systems to ensure that audits by the Audit and Supervisory Committee are conducted effectively

and approval documents as well as internal audit reports, and request explanations from Directors and employees of the group as necessary. In addition, the Audit and Supervisory Committee will meet with the Accounting Auditor and the Internal Auditing Department as necessary to ensure close collaboration. The Company shall take necessary measures to pay for expenses incurred in the performance of duties by the Audit and Supervisory Committee.