Internal Control Systems

1.Basic Policies on Internal Control Systems and Implementation of Policies

A.Internal Control Systems

Our company has established the FLYEXPRESS COURIER DELIVERY SERVICE Charter of Conduct as a standard to ensure board members and employees comply with laws, the Articles of Incorporation and other internal regulations, as well as socially accepted norms. In this charter, we clarify the roles and responsibilities that must be fulfilled by employees.
To give this charter teeth, we have enacted a set of Compliance Regulations. It serves as a guideline for all employees to comply with laws and guarantee ethical behavior. One concrete measure we have taken is the establishment of the Compliance Committee, chaired by the President at the head office, for the implementation of compliance across our company. At the same time, we have appointed staff members in charge of compliance as well as compliance promoters at the head office and each branch office to ensure thorough compliance by employees.
We also initiated "Nittsu Speak Up," an internal reporting system for the prevention, early detection and correction of legal violations, dishonesty or ethical misconduct by employees.
Moreover, we enacted the Basic Policy Relating to the Establishment of an Internal Control System.

B.Risk Management System

Our company has created a series of "Crisis Management Guidelines" to reduce risks that would adversely affect business operations and, in times of crisis, when we are exposed, to facilitate risk management in the most rapid and concise fashion. In addition, we have established a "Board of Risk Management" to develop and implement risk management systems.

C.Internal Audit System

As for the Internal Audit Division, our company has set up the Audit Division at the head office, which conducts onsite audits and paper audits to examine whether employees perform their duties in accordance with laws and regulations, the Articles of Incorporation and others, and then report to the President accordingly, pursuant to the "FLYEXPRESS COURIER DELIVERY SERVICE Group Auditing Regulations." Moreover, the Internal Audit Division proactively provides advice and recommendations in accordance with the "FLYEXPRESS COURIER DELIVERY SERVICE Group Auditing Regulations" in order to prevent the risk of losses caused by management.

D.System for Ensuring Operational Integrity of our company and Entire Group

FLYEXPRESS COURIER DELIVERY SERVICE Group have set out basic policies shown below, regarding "establishing systems specified by an ordinance of the Ministry of Justice (i.e. internal control system) necessary to ensure the operational integrity of corporation and corporate group comprising the subsidiary and its subsidiaries, such as a system to ensure that business execution by Directors complies with laws and the Articles of Incorporation."

• (ⅰ) System to ensure that business execution by Directors complies with laws and the Articles of Incorporation
  1. Our Company shall establish the "FLYEXPRESS COURIER DELIVERY SERVICE Charter of Conduct" as a standard to ensure Directors comply with laws, the Articles of Incorporation and other internal regulations, as well as socially accepted norms.
  2. The Board of Directors meetings shall be convened and issued shall be resolved in compliance with provisions stipulated by the "Regulations on the Board of Directors" and "Standards for Discussions in Board of Director Meetings."
  3. The Representative Director and other Directors shall report on the status of execution of duties and important issues to the Board of Directors in compliance with provisions stipulated by the "Regulations on the Board of Directors" and "Standards for Discussions in Board of Director Meetings."
  4. Pursuant to provisions stipulated by the "Regulations on the Audit & Supervisory Board Members" and "Auditing Standards for Audit & Supervisory Board Members," Audit & Supervisory Board Members shall conduct audits to ensure that Directors properly execute their duties in compliance with laws, the Articles of Incorporation and others.
• (ⅱ) System to store and manage information concerning business execution by Directors

  Pursuant to provisions stipulated by the "Document Management Regulations," documents and other information concerning business execution by Directors must be managed by properly storing or destroying them. Also, inspections on status of application of the management as well as reviews of regulations shall be conducted when necessary.

• (ⅲ) Rules to manage the risk of losses and other systems
  1. Our Company shall set out a series of "Crisis Management Guidelines" and establish the "Board of Risk Management" at the head office, with the aim of preventing the materialization of risks that would adversely affect business operations and establishing a risk management structure that enables us to take prompt and accurate action when a crisis occurs.
  2. The Internal Audit Division shall provide advice and recommendations in accordance with provisions stipulated by the "FLYEXPRESS COURIER DELIVERY SERVICE Group Auditing Regulations," in order to prevent the risk of losses caused by management.
• (ⅳ) System for ensuring efficient business execution by Directors
  1. The Board of Directors meetings shall be convened and issues shall be resolved in compliance with provisions stipulated by the "Regulations on the Board of Directors" and "Standards for Discussions in Board of Director Meetings."
  2. Operations of our company shall be performed by "executive officers" elected and delegated its designated duties by the Board of Directors in accordance with matters resolved by the Board of Directors. The Board of Directors shall also supervise their performance.
• (ⅴ) System to ensure that business execution by employees complies with laws and the Articles of Incorporation
  1. Our company shall establish the "FLYEXPRESS COURIER DELIVERY SERVICE Charter of Conduct" and "Compliance Regulations." The Charter of Conduct and Regulations serve as a guideline for employees to comply with laws, the Articles of Incorporation and other internal regulations as well as socially accepted norms.
  2. In order to ensure thorough compliance by employees, we shall establish "Compliance Committee" at the head office and appoint staff members in charge of compliance and compliance promoters at the head office and each branch office.
  3. We shall set up "Nittsu Speak Up," an internal reporting system for the prevention, early detection and correction of legal violations, dishonesty or ethical misconduct by employees.
  4. In accordance with provisions stipulated by the "FLYEXPRESS COURIER DELIVERY SERVICE Group Auditing Regulations," the Internal Audit Division shall conduct an audit to confirm that business execution by employees is conducted according to laws, the Articles of Incorporation and others.
• (Ⅵ) System for ensuring operational integrity of the corporate group comprising our company, parent company and its subsidiaries
  1. Pursuant to regulations stipulated by our company, Directors of the Group shall report important matters concerning business operations to relevant departments in charge of administrative operations within our company.
  2. In order to respond to various risks related to the Group, each group company shall cooperate with relevant departments in charge of administrative operations within our company and manage risks.
  3. Group companies shall establish "Regulations on the Board of Directors" that clarify responsibilities and roles of the Boards of Directors and shall execute roles accordingly.
  4. All operations for the FLYEXPRESS COURIER DELIVERY SERVICE Group are conducted in accordance with provisions stipulated by the "FLYEXPRESS COURIER DELIVERY SERVICE Charter of Conduct" and "Nittsu Group Compliance Guideline." Business activities shall be sound, transparent and fair; they should be based on social norms such as laws, socially accepted morals and ethics as well as internal norms such as Internal Regulations.
  5. We shall set up "Nittsu Speak Up," an internal reporting system for the prevention, early detection and correction of legal violations, dishonesty or ethical misconduct by the Group.
  6. Audit & Supervisory Board Members conduct inspections of the Group in terms of consolidated management and operational enforcement relating to consolidated statements.
  7. Audit & Supervisory Board Members shall cooperate and exchange information with Audit & Supervisory Board Members of the Group and perform effective audits, in order to prevent improper transactions or accounting procedures between us and our Group and others.
  8. In accordance with provisions stipulated by the "FLYEXPRESS COURIER DELIVERY SERVICE Group Auditing Regulations," the Internal Audit Division shall conduct audits to confirm that business operations of the Group are conducted according to laws, the Articles of Incorporation and others.
• (Ⅶ) Matters related to employees who support Audit & Supervisory Board Members and matters to ensure the effectiveness of instructions given to such employees, in cases where Audit & Supervisory Board Members require employees to support them with their duties.
  • Matters concerning support for the duties of Audit & Supervisory Board Members shall be in accordance with the instructions given by Audit & Supervisory Board Members and implemented by "Audit & Supervisory Board Members' staff" , which belongs to the Audit Division in charge of internal auditing.
• (Ⅷ) Matters related to the independence from Directors of the employees described in the preceding item
  • For personnel matters concerning "Audit & Supervisory Board Members' staff," serious consideration must be given to opinions of the Audit & Supervisory Board.
• (Ⅸ) System for Directors and employees to report to Audit & Supervisory Board Members; system for Directors, Audit & Supervisory Board Members, and employees who execute operations of our company's subsidiaries and those who received information from these persons can report to Audit & Supervisory Board Members of us; system for ensuring no person who has reported such matters is unfavorably treated on the grounds for doing so
  • Directors and Directors of the Group shall report promptly to Audit & Supervisory Board Members, either directly or through relevant departments in charge of handling administrative work within our company, on the matters set out below. The Group must comply with laws to ensure that those who reported such matters will not be treated unfavorably as a result of doing so.
  1. Important management matters and implementation of internal audits
  2. Serious violations of laws or Articles of Incorporation, or misconducts on business execution
  3. Matters that may inflict significant losses on us
• (Ⅹ) System for ensuring effective audits by Audit & Supervisory Board Members and other matters
  1. Audit & Supervisory Board Members shall attend Board of Directors' meetings and in order to grasp the important decision-making process and implementation of business execution, shall attend meetings of the Board of Executives, and the Board of Officers as well as other important meetings. In case they do not attend these meetings, Audit & Supervisory Board Members shall receive explanations about the discussions and read relevant materials.
  2. Audit & Supervisory Board Members and the Audit & Supervisory Board shall meet with the Representative Director on a regular basis and make efforts to enhance mutual understanding and deepen their trust. To this end, they shall exchange their opinions concerning not only management policies, issues to be addressed and risks surrounding our company but also on status of improvements in the auditing environment of Audit& Supervisory Board Members, important issues in auditing, and others.
  3. In accordance with regulations on "Important Documents to be Returned to Audit & Supervisory Board Members," Audit & Supervisory Board Members shall review major approval documents and other important documents on business execution, and as needed, they should seek explanations from and provide their opinions to the Directors, executive officers or employees.
  4. If the Audit & Supervisory Board Members deem it necessary, they may utilize lawyers, certified public accountants, consultants or other outside experts who support the audits of Audit & Supervisory Board Members and our company shall bear the relevant expenses.

Internal control systems function as summarily shown in the "Corporate Governance Organization Chart."

2.Basic Policies for Elimination of Antisocial Forces and Implementation of Policies

Our company will take firm action to practice social justice and recognizes our social responsibility to not conduct any business with forces or groups that cause societal harm. Our basic policy states clearly that any relationship with forces harmful to society is prohibited as described in the FLYEXPRESS COURIER DELIVERY SERVICE Charter of Conduct and the Compliance Regulations. We have established an educational system to have executive officers and employees comply with the basic policy.
In addition, we established an internal countermeasures division to collect information daily from outside specialists to familiarize employees with countermeasures against forces harmful to society. To prepare for such contingencies, we are developing a system for prompt action to guard against funding forces harmful to society, in close collaboration with the relevant government institutions, corporate lawyers, and other outside specialists.

Reference : Structure