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Basic Policy for Building an Internal Controls System

We passed a resolution to establish the following Basic Policy for Building an Internal Controls System at a meeting of our Board of Directors held on June 15, 2011 based on the provisions in Article 362, Paragraph 5 of the Companies Act. Based on this resolution, we will establish an effective internal controls system to ensure fairness, transparency and efficiency in the execution of our corporate operations and to improve our corporate quality.

1. Corporate Governance

  • (1) Board of Directors
    • (i) The Board of Directors will be comprised of Directors including Outside Directors, will make decisions on the important matters stipulated in laws, ordinances and other regulations based on the Rules of Board of Directors and the Standards for Agenda Items, and will supervise to ensure the appropriate execution of duties by Directors.
    • (ii) Information pertaining to the execution of duties by Directors will be appropriately stored and managed in accordance with our internal regulations.
  • (2) Structure for the Execution of Operations
    We will clarify our authorities and responsibilities structure, and will execute operations effectively and efficiently. In addition, we will discuss and determine important matters relating to the execution of operations with a collective decision-making process.
  • (3) Structure to Ensure Effectiveness in the Execution of Duties by Corporate Auditors

    • (i) Corporate Auditors may attend meetings of the Board of Directors, and may also attend other major internal meetings.
    • (ii) The Board of Directors and the Internal Controls Division will provide the information necessary for the execution of duties by Corporate Auditors in an appropriate and timely manner. At the same time, they will exchange opinions and work together.
    • (iii) We will create a structure to assist with the duties of Corporate Auditors. We will listen to the opinions of the Corporate Auditors about the personnel affairs of employees engaged in this structure.

2. Compliance

  • (1) We will formulate JPIX of Conduct stipulating the basic principles which all our officers and employees must comply with in the execution of their duties. Based on this Code, we will always maintain high ethical standards and appropriately execute duties. Moreover, we will take a resolute response to anti-social forces and work to cut off all relationships with them.
  • (2) We will ensure compliance by appropriately coordinating the following organizational structures.
    • (i) We will work to quickly detect and deal with serious violations of laws/ordinances and other compliance-related problems and incidents at meetings relating to corporate ethics.
    • (ii) We will appropriately operate compliance-related whistleblowing systems established both internally and externally.
    • (iii) We will strive to raise understanding and awareness of compliance by providing internal and external training, engaging in internal awareness activities, and taking other measures.

3. Risk Management to Appropriately and Efficiently Achieve Management Targets

All our divisions, officers and employees will work together to appropriately manage risks based on the relevant internal regulations centered on the various meetings comprised of Directors and other officers and the Risk Management Division which periodically identifies risk information and then centrally manages it. Each division will then autonomously work to appropriately and efficiently achieve management targets.

  • (1) Risk Management Structure
    • (i) We will analyze business risks and formulate appropriate management strategies and plans to realize sustainable growth in meetings relating to business strategies and other areas. To achieve that, we will monitor business risks and thoroughly manage performance on a monthly basis at meetings relating to performance management.
    • (ii) We consider all our stakeholders to be our customers. Accordingly, all our officers and employees will engage in total customer satisfaction (TCS) activities aimed at improving customer satisfaction. At the same time, we will evaluate and improve activities to promptly and appropriately respond to customer needs and grievances. Moreover, we will comply with all laws/ordinances relating to product safety to provide customers with safe and high-quality products and services which offer peace of mind. We will provide easy-to-understand information and appropriately display it when providing products and services to allow customers to be able to select and use products and services appropriately. Through these company-wide efforts, we will gain support and trust from our stakeholders to improve customer satisfaction and to strengthen and expand our customer base.
    • (iii) We will strive to further enhance our public relations and investor relations activities, ensure transparency in management, and gain understanding and trust from all our stakeholders. We will fairly identify the business risks we face in meetings relating to information disclosure. We will then disclose those risks in a timely and appropriate manner. Furthermore, we will promote environmental initiatives, social contribution and other efforts in regards to social responsibility-related matters.
    • (iv) We will consider measures to reduce risks such as those which may result in interruptions to business as far as possible and formulate a business continuity plan (BCP) for matters which may have a significant and long-term impact on our corporate business.
  • (2) Promotion Structure to Improve Quality of Operations
    • (i) We will further improve the reliability of our financial reporting by evaluating and improving our company-wide internal controls situation and important operational processes on a consolidated basis for our internal controls relating to financial reporting in accordance with our internal controls reporting system based on the Financial Instruments and Exchange Act implemented by KDDI.
    • (ii) We will establish and enhance the structure necessary to improve the quality of operations. This will include improving the effectiveness and efficiency of operations and appropriately acquiring, storing, disposing and otherwise handling assets.
  • (3) Structure as a Telecommunications Carrier
    • (i) Protection of confidentiality in communications: Protecting confidentiality in communications is at the core of our corporate management. We will thoroughly protect confidentiality in communications.
    • (ii) Information security: We will formulate measures to prevent the leak of customer information, to protect against cyber terrorism in networks for telecommunication services and otherwise manage all our information assets in meetings relating to information security and other bodies. Our officers and employees will work together to ensure information security.
    • (iii) Restoration of Networks and Services in the Event of a Disaster or Similar: We will take measures to improve network reliability and to prevent service outages to reduce the risk as far as possible of communication service suspension, interruption and other issues due to serious incidents and failures and large disasters or similar. We will establish a task force as soon as possible to promptly restore and otherwise repair services in the event of an emergency or disaster.

4. Internal Audits

We will conduct internal audits on all our operations to periodically verify the appropriateness and effectiveness of our internal controls structure. We will report the results of our internal audits to the President together with recommendations for improving and correcting problems. We will also report those results to Corporate Auditors.

5. Structure to Ensure the Appropriateness of Operations in Our Corporate Group

We will maintain an appropriate relationship with KDDI about important matters relating to management by periodically sharing and discussing information with the company. At the same time, we will work with KDDI to ensure the appropriateness of operations over our entire group.


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