Sumitomo Bakelite Co., Ltd.

Basic Policy on Internal Control System

Sumitomo Bakelite Co., Ltd. （hereinafter referred to as “the Company” ） has determined by resolution of the Board of Directors to develop the following basic policy on the development of a system to ensure that the Group conducts its business appropriately.

The details are as follows:

1. Basic Views

① The Company has established the Basic Policy on Sustainability Promotion, solves social issues and achieves sustainable growth and value creation under a structure comprised of the Sustainability Promotion Committee (which is chaired by the President) based on its Business Philosophy “Our company places prime importance on trust and sureness, and shall commit itself to contributing to the progress of society and enhancement of people’s welfare and livelihood through its business activities,” which upholds the Sumitomo Business Philosophy and sets forth its management principle.
② The Company, in the belief that the system necessary to ensure the appropriateness of business (hereinafter referred to as the “Internal Control System”) of the Company and its affiliated companies (hereinafter referred to as “the Group”) will become the foundation for promoting the above initiatives, shall develop the following Internal Control System and engage in management that proactively utilizes such system.

2. System to Ensure the Execution of Duties by Directors and Employees of the Company and the Group Complies with Laws and Regulations and the Articles of Incorporation

① The Company has established “Our Code of Conduct” and the “Code of Ethics for Group of Sumitomo Bakelite Co., Ltd.” as code of conduct and code of ethics applicable to the entire Group and makes officers and employees of the Group aware these codes. Basically, the Group officers and employees are required to uphold laws and regulations, the Articles of Incorporation, and established rules and not act in any way that would violate corporate ethics when executing Group business.
② The Company has established the Compliance Committee based on the Company’s Rules and Regulations for Compliance. The Compliance Committee, which is chaired by a person appointed by the President in accordance with Company regulations, promotes compliance, investigates the status of the Group’s compliance, makes improvements, and builds compliance awareness across the Group.
③ The Company has established the Compliance Reporting System, accessible to the entire Group, to detect and prevent non-compliance at an early stage, that allows Group officers and employees as well as any stakeholder to directly report non-compliance or the threat of non-compliance to an internal whistleblower contact or an external whistleblower contact. The information reported to the whistleblower contact will be processed appropriately by the Committee Chair of the Compliance Committee (Vice Committee Chair if the Committee Chair is the subject of the report), and the whistleblower will not receive detrimental treatment on account of making a report. Additionally, Group companies shall establish and operate their own internal reporting systems, as necessary, considering the legal and other requirements of the countries, in which they are located.
④ The Company shall maintain and strengthen its system for ensuring reliable financial reporting of the Group in accordance with its Basic Rules and Regulations for Internal Control over Financial Reporting, and shall appropriately implement, evaluate, report, and revise the internal control system and disclose corporate information in a timely and appropriate manner.
⑤ Each Group company establishes rules and necessary procedures regarding the elimination of relationships with anti- social forces and the prevention of illegal acts such as bribery or cartels in compliance with a common Group framework and strives to build a thorough awareness of those rules and ensure their appropriate management and operation.
⑥ The Company’s Internal Audit Department and the department that conducts internal audits relating to its own operations (hereafter referred to as “the Internal Auditing Departments”) examine and evaluate the systems for managing and operating business activities across the Group from the perspective of ensuring their legality and conformity with various standards, and to provide advice and proposals for potential improvements. The Company’s Internal Audit Department also reports the results of individual audits to the President and Corporate Auditors, as appropriate, while also regularly reporting the implementation status of audits on the execution of duties by the officers and employees of the Group to the Company’s Board of Directors and the Board of Corporate Auditors.

3. Systems for Storing and Managing Information Relating to the Execution of Duties by Directors in the Company and its affiliated companies, and for Reporting Matters Relating to the Execution of Duties at Each Group Company to the Company

① Any decisions made during the execution of duties by the Company’s officers and employees shall be made in accordance with the approval request procedures based on the Company’s Rules and Regulations for Internal Decision Making, and records of that approval request procedure shall be stored either in written or electronic form.
② Information on the execution of duties by the Company’s officers and employees shall be appropriately stored and managed in compliance with various regulations and relevant manuals such as the Company’s Rules and Regulations for Document, its Rules and Regulations for Document Retention, its Rules and Regulations for Confidential Information Control, its Basic Rules and Regulations for Personal Information Protection, and its Basic Policy for Information System Security, in addition to existing laws and regulations.
③ Each Group company shall determine and manage appropriate decision-making procedures and storage rules for the stores and management of information.
④ In the Administration Rules for Affiliated Companies, which determine the basic matters relating to the administration of the Group companies, the Company requires the Group companies to seek approval of the Company or report to the Company any important business matters conducted by each Group company and any events that will affect the financial position and business results of each Group company.
⑤ The Internal Auditing Departments audit the storage, management, and reporting of information relating to the execution of duties within the Group with reference to the various regulations, manuals, etc., and provide advice and suggestions regarding appropriate storage and management.

4. Regulations and Other Systems Concerning Managing the Risk of Loss in the Company and the Group

① The Company has determined its basic policy on Group risk management in its Basic Rules and Regulations for Risk Management and properly manages and operates measures to deal with various risks surrounding its business.
② The Company, upon establishing the Risk Management Committee as an organization tasked with discussing and approving issues and countermeasures that promote risk management by the Group, has assigned a department to be in charge of examining and implementing specific countermeasures for each evaluated individual risk issue, and that department submits progress reports to the committee.
③ The Company strives to promptly resolve any crisis that occurs in the Group and prevent the spread of any damage by establishing basic crisis policies, systems, and information transmission routes, etc.
④ The Internal Auditing Departments examine and evaluate management and operation systems and the status of business execution across the Group’s management activities, and provide advice and suggestions designed to preserve corporate assets.

5. Systems to Ensure the Execution of Duties by Directors in the Company and the Group is Carried Out Efficiently

① The Company formulates a Mid-term Business Plan for the Group that spans a period of three fiscal years and sets management targets to help implement the plan.
② The Company’s Board of Directors appoint Executive Officers, and Executive Officers execute duties as the persons responsible for business execution under the direction and orders of the President.
③ The Company holds regular Executive Officers’ Meetings attended by Directors, Corporate Auditors, and Executive Officers where it communicates the Group’s policies on and the progress of business execution.
④ Any themes that need to be tackled with a cross-sectional approach are dealt with, including the formulation of policies and plans, the promotion of measures, the examination of the implementation status, etc., under the direction of the chairperson of various committees, who is appointed by the President, and any important matters are reported to the Company’s Board of Directors.
⑤ The Company shall periodically hold meetings for those persons responsible for the execution of Group business to meet under one roof to convey management policy and improve communication within the Group.
⑥ The Company officers and employees shall also serve as Directors, etc. of each Group company and execute their duties in accordance with the Group’s management policies.
⑦ The Company shall clarify in the Administration Rules for Affiliated Companies the standards and the degree of Company involvement in decision-making by subsidiaries in order to ensure that the execution of the Group operations is appropriate.
⑧ The Company has formulated its Comprehensive Guidelines for Internal Control in Consolidated Subsidiaries, and thereby promotes the development of an internal control system and makes efforts to maintain and strengthen the system.
⑨ The Company takes the necessary measures against cyber and other risks, while proactively utilizing the latest IT technology to enhance the accuracy, efficiency, and effectiveness of Group operations in general, and promote business process reforms.
⑩ The Internal Auditing Departments examine and evaluate the management and operation systems and the status of business execution across the Group’s management activities, and provide advice and suggestions for improvements and streamlining designed to enhance management efficiency.

6. System to Ensure Audits by Corporate Auditors are Conducted Effectively

① The Company, in accordance with the Company regulations, assigns auditor assistants to assist with the duties of Corporate Auditors as instructed by Corporate Auditors, and the number and capabilities of those employees are reviewed when necessary based on requests from the Board of Corporate Auditors. The Company also coordinates in advance with the Board of Corporate Auditors regarding the transfer, etc. of any auditor assistants.
② The Company has developed and operates the following system for reporting to Corporate Auditors
i. The Group officers and employees shall provide the necessary reports if requested to do so by any of the Company’s Corporate Auditors.
ii. Any important decision-making that requires the approval of the President shall be passed on to the Standing Corporate Auditors and any information relating to matters to be resolved by the Board of Directors shall be conveyed to individual Corporate Auditors in advance.
iii. If any officer or employee of the Company becomes aware of any facts that may cause significant damage to the Group, that violates or may violate laws and regulations or the Articles of Incorporation, or are grossly unjust, they shall report those matters to the Corporate Auditors. If any officer or employee of each Group company becomes aware of any facts that may cause significant damage to the Group, that violates or may violate laws and regulations or the Articles of Incorporation, or are grossly unjust, they shall report those matters to the Company’s officers and employees and the Company’s officers and employees who received the report will then report the matter to the Corporate Auditors.
iv. Any facts received through the Compliance Reporting System, accessible to the entire Group, or whistle-blowing contact centers at each Group company’s internal whistleblower system that may cause significant damage to the Group and that violate or may violate laws and regulations and the Articles of Incorporation or any other important matters shall be reported to the Corporate Auditors, as appropriate, and the operation status of such reporting contacts shall be periodically reported through the Compliance Committee. In addition, in the Compliance Reporting System accessible to the entire Group, if the subject of the report is the Director or Executive Officer of the Company, then the reporting contact or the Compliance Committee shall be required to report to the Corporate Auditors.
v. The Company forbids any disadvantageous treatment of the Group officers and employees who submit various information to Corporate Auditors.
③ The Company shall promptly process the expenses required by the Corporate Auditors for the expenses of their duties.
④ The Company, in addition to the above, shall develop and operate the following systems to ensure that audits by Corporate Auditors are conducted effectively.
i. Corporate Auditors may participate in important meetings regarding the state of business management as well as important meetings on internal control and express their opinions.
ii. Corporate Auditors shall attend internal audit reporting meetings and accounting audit review meetings as much as necessary as part of their cooperative efforts with the Internal Auditing Departments and the Accounting Auditor.
iii. The Board of Corporate Auditors shall convey the annual audit plan and the priority audit-related items to the Directors and Executive Officers, and the Directors and Executive Officers shall cooperate with the audit activities based thereon.
iv. The President shall hold regular meetings with Corporate Auditors and the two parties shall share opinions in order to ensure the appropriate execution of business of the Group.


Established on May 9, 2006
Revised on March 1, 2023

Call or email us about Company Profile.