Internal Control System

Basic Policy for Building an Internal Control System

Following is a summary of the content of the “Basic Policy for Building an Internal Control System” resolved by the Board of Directors.

Framework to ensure that the execution of duties by directors complies with laws and regulations and the Articles of Incorporation

  • JUKI shall strive to expedite the execution of duties by transferring a part of the directors’ authority to execute their duties to managing officers and excecutive officers by adopting an executive officer system and an executive position system (covering excecutive officers (executive positions equivalent to managin officers other than executive officers with specific titles)).
  • JUKI shall establish a “JUKI Group Employee’s Code of Conduct” as a specific standard of conduct for employees in the performance of their duties, and shall ensure that employees thoroughly comply with laws and regulations.
  • The structure and operation of compliance for the entire corporate group consisting of JUKI and its subsidiaries (hereinafter referred to as the “Group companies”) shall be stipulated in the “Compliance Regulations.”
  • JUKI shall take a firm stand against antisocial individuals and groups that adversely affect social order and sound corporate activities.

Framework for the storage and management of information related to the execution of duties by directors

  • JUKI shall store and manage information related to the execution of duties in accordance with the “Important Document Storage Regulations.”

Regulations and other frameworks for managing the risk of loss to which JUKI and Group companies are subject

  • JUKI shall establish a set of “Risk Management Regulations” to manage the risks to which JUKI and Group companies are subject as a whole.
  • JUKI shall establish a “Risk Management Conference” to examine and take measures against important company-wide risks and to manage the risk countermeasure activities of each department.
  • In the event of a crisis, JUKI shall establish either a “Crisis Measures Headquarters” or “Crisis Response Task Force,” as merited by the scale of the crisis, and shall take prompt measures to deal with any risks that materialize.

Framework to ensure the efficient execution of duties by the directors of JUKI and Group companies

  • JUKI shall transfer some of the directors’ rights in the execution of duties to Managing Officers and Executive Officers to try and speed up the execution of duties using the Managing Officer System and Executive Officer System.
  • JUKI shall transfer some of the directors’ rights in the execution of duties to employees in the “Regulation on Authority,” and improve the efficiency of decision-making.
  • JUKI shall discuss important decision-making matters in the “Management Strategy Council,” and President shall give his or her final approval on such matters.
  • JUKI shall establish the respective roles in the execution of duties in the “Regulations on Organization” and make efforts toward the efficient execution of duties.

Framework to ensure that the execution of duties by the employees of JUKI and the directors and employees of Group companies comply with laws and regulations and the Articles of Incorporation

  • JUKI shall establish a “JUKI Corporate Code of Conduct” to define its basic way of being as a company and clearly outline its commitment to legal and regulatory compliance.
  • JUKI shall establish a “JUKI Group Employee’s Code of Conduct” as a specific standard of conduct for employees in the performance of their duties, and shall ensure that employees thoroughly comply with laws and regulations.
  • The division in charge of legal affairs shall conduct activities to manage compliance and educate employees and disseminate information on compliance, in order to ensure compliance with laws and regulations.
  • JUKI shall establish an officer in charge of internal control and compliance to take charge of legal compliance and to oversee related organizations and activities.
  • The system and operation of compliance for JUKI and Group companies shall be stipulated as a whole in the “Compliance Regulations.”
  • JUKI shall establish an “Employee Consultation Desk” as a contact point through which employees can consult directly with persons in charge of compliance who may answer any compliance questions they may have.

Framework for reporting to JUKI on matters pertaining to the execution of duties by directors, etc. of Group companies

  • Group companies shall report their management policies and plans to JUKI at a “Group Management Meeting” for the purpose of checking and coordinating on the same.
  • Group companies shall report to JUKI periodically and as necessary in accordance with the “Regulations for the Management of Group Companies.”
  • Directors, etc. of Group companies shall promptly report to the officer in charge of internal control and compliance at JUKI any facts that may cause significant damage to the company, any misconduct in the performance of duties by directors, or any material facts constituting violations of laws, regulations, or the Articles of Incorporation.

Other frameworks to ensure the appropriateness of operations of the corporate group consisting of JUKI and Group companies

  • JUKI shall stipulate a management control system based on functional organizations in the “Organization Regulations” and the “Regulations for the Management of Group Companies.”
  • The rules for decision-making on the allocation of management resources in Group companies shall be defined in the “Regulations of Authority.”
  • The Group Audit Department shall conduct internal audits of JUKI and Group companies as necessary.

Matters concerning employees who are requested by the audit & supervisory board members to assist them in the performance of their duties

  • An “Auditor’s Office” that reports directly to the audit & supervisory board members shall be established as an organization to assist the audit & supervisory board members.

Matters set forth in the preceding paragraph with regard to the independence of the employees from directors, and matters concerning the steps taken to ensure the effectiveness of instructions given to such employees by the audit & supervisory board members

  • The audit & supervisory board members may express their opinions regarding the personnel transfer and evaluation of employees belonging to the “Auditor’s Office.”
  • Employees belonging to the “Auditor’s Office” shall follow the instructions and orders of the audit & supervisory board members and promptly collect information necessary for the audits performed by the audit & supervisory board members.

Framework for reporting to the audit & supervisory board members by the directors, etc. and employees of JUKI and Group companies

  • The full-time audit & supervisory board member shall attend important meetings such as the Board of Directors, the Management Strategy Council, the Group Management Meeting, and the Risk Management Conference, and shall gather necessary information on their own.
  • The directors, etc. and employees of JUKI and Group companies shall promptly report to the audit & supervisory board members any facts that may cause significant damage to the company, any misconduct in the performance of duties by directors, or any material facts constituting violations of laws, regulations, or the Articles of Incorporation.
  • The audit & supervisory board members shall receive reports directly from the responsible departments of JUKI and from the directors, etc. and employees of Group companies on any information deemed necessary by the audit & supervisory board members.

Framework to ensure that any person who makes a report set forth in the preceding paragraph is not subjected to any disadvantageous treatment on the basis of such report

  • JUKI shall stipulate in its “Compliance Regulations” that a person who reports to the audit & supervisory board members shall not be treated disadvantageously on the basis of such report, and shall ensure that the directors, etc. and employees of JUKI and Group companies are informed of this fact.

Matters concerning procedures for prepayment or reimbursement of expenses incurred in the performance of duties by the audit & supervisory board members, and policies concerning the treatment of other expenses or liabilities incurred in the performance of other duties

  • JUKI shall set aside a budget planned by the audit & supervisory board members each year to pay for expenses, etc. incurred in the performance of their duties.
  • If JUKI foresees expenses that are not included in the budgets mentioned in the preceding item but are deemed necessary by the audit & supervisory board members to ensure the effectiveness of their audits, JUKI shall take appropriate measures to cover the same.

Other frameworks to ensure effective audits by the audit & supervisory board members

  • The audit & supervisory board members shall attend the Board of Directors to express their opinions and exchange opinions with representative directors from time to time in order to enhance the effectiveness of audits by the audit & supervisory board members.
  • The audit & supervisory board members shall collaborate with the Group Audit Department as necessary to conduct their audits.
  • The audit & supervisory board members shall collaborate with corporate lawyers and certified public accountants as necessary to conduct their audits.

Framework to ensure the reliability of financial reporting

  • JUKI shall establish and operate a system for the effective functioning of internal control over financial reporting to ensure the reliability of financial reporting.

Summary of Operation Status

The following summarizes the operational status of the framework to ensure the appropriateness of operations implemented in fiscal 2024.

Compliance System

  • In accordance with the “Compliance Rules”, the Company and its Group companies have been rigorously applying the system to ensure compliance.
  • The “JUKI Group Employees’ Code of Conduct” has been enacted, the contents of which have been made simple and universal so that the Group employees can easily understand, and which has been distributed to ensure that each Group employee has a thorough understanding of compliance.
  • The Company has made a “Declaration with Regard to Antisocial Forces”, which is reflected in clauses of contracts.

Risk Management Structure

  • In accordance with the “Risk Management Rules”, the Company held the Risk Management Committee meetings once every quarter in principle to identify, evaluate and take measures to risks including those at Group companies.
  • The Company improved the system by establishing the “Crisis Control Headquarters” and the “Crisis-Management Task Force” to address risks depending on the regions, scale, and content of the emerged risks, and carry out deliberation and reports to the Board of Directors.

Framework for the execution of duties by directors

  • Under the “Board of Directors Rules”, “Director and Managing Officer Rules”, “Corporate Officer Rules”, “Authorization Rules”, and “Organization Rules”, the Company strives to ensure that duties are executed promptly and efficiently by Directors.
  • The Management Strategy Committee is held once a month in principle, and decisions on important matters are made promptly.
  • The “Sustainability Promotion Committee” is held four times a year, in principle, and it deliberates and decides on sustainability-related policies, plans, and measures, confirms progress, and reports and makes proposals to the Board of Directors, etc.

Group Company Management Structure

  • The Company has determined the reporting system, and the management control system by functional organization in its “Organization Rules” and “Group Companies Management Rules”. The Group Management Conference was held three times in the current fiscal year to report on management policies and management plans of Group companies, and to check and adjust their implementation.

Internal Audit

  • Internal audits of the Company and its Group companies were conducted in accordance with an internal audit plan.
  • Self-assessments centered on key matters and individual topics were carried out, targeting Group companies and sites, and guidance for improvement was given based on the outcomes of these selfassessments.

Structure for the Activities of the Audit & Supervisory Board Members

  • The “Audit & Supervisory Board Members Section” has been established as an organization to assist the Audit & Supervisory Board Members and has been collecting necessary information.
  • The Audit & Supervisory Board Members have been exchanging opinions with the Representative Director once every three months. The Audit & Supervisory Board Members have been regularly exchanging information with certified public accountants regarding accounting audits, to ensure the effectiveness of the audits.

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