In accordance with the Company Law and related legislation, enacted May 1, 2006 (Company Law, Article 362, Section 4, Item 6 and Section 5; Company Law Enforcement Regulations, Article 100; Government Ordinance on Temporal Measure to Enforce the Company Law, Article 14), I-O DATA established the following basic policy for the overhaul of its internal control system.
(1) To improve enterprise value and gain trust as a member of the community, I-O DATA places compliance with the law, its own Articles of Incorporation and community standards at the heart of its business. As part of this action policy, the Company has instituted the I-O DATA Action Charter and the I-O DATA Code of Conduct, which directors and employees are expected to follow in the course of their duties.
(2) We have established a Compliance Committee, chaired by a director, which deliberates on important compliance issues, provides training and raises awareness to maintain and improve the compliance system.
(3) The Compliance Helpline is a reporting mechanism created to enable quick discovery and response to violations of the law. Reporting to the Compliance Committee Chair, Compliance Secretariat and independent auditors, the Helpline effectively promotes compliance.
(4) The Audit Office reports directly to the president, conducting regular audits on the performance of operations and the status of compliance at each department, and reporting the results to the president and the statutory auditors.
The Company stores and manages information on the execution of directors’ duties based on document-handling guidelines and other internal rules.
(1)To ensure fast decision-making in response to changes in the market environment, I-O DATA introduced a system whereby executive rights and responsibilities are delegated to executive directors.
(2)The Board of Directors meets in principle once a month, to reach decisions on the most vital issues of the Company’s management and assess the performance of duties by directors up to the level of executive director.
(3)The Management Conference meets in principle once a week and consists of directors, statutory auditors, executive directors and department managers. The Conference reports and deliberates on the most important issues confronting the Company at that time.
(4)A system of internal regulations is established to clarify the division of duties and responsibilities among directors, executive directors and employees to ensure the effective and appropriate performance of duties.
(1) Directors and executive directors are appointed to ensure that subsidiaries are managed according to the regulations on management of affiliates and other in-house regulations, and to monitor and supervise the actions of directors in subsidiaries.
(2) Important decisions on the management activities of subsidiaries are reported to the Board of Directors of the Company for approval.
(3) Liaison meetings are held regularly with subsidiaries. These meetings provide a forum for sharing information and views among the Group, ensuring consistency in management policy.
(4) The Company’s Audit Office conducts regular audits of subsidiaries’ operations and internal controls and reports its findings to the president and full-time auditors of I-O DATA.
Employees and directors report and provide information as necessary to each auditor in accordance with the Board of Auditors Guidelines and the Auditors’ Auditing Standards. Also, in the event of the following emergencies, employees and directors must report them to auditors without delay.
1) A financial or legal problem that may significantly affect the Company’s management.
2) A situation that may otherwise significantly damage the Company.
(1) Meetings are held, as appropriate, for auditors to exchange views with the president and directors.
(2) The Audit Office confers with auditors annually to devise an auditing plan. The Audit Office and auditors stay in regular contact to enable plentiful opportunities for meetings and exchanges of views on the findings and proposals resulting from internal audits.
(3) The auditors and Audit Office exchange information and stay in regular contact with the account auditors.
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