Suntory Holdings Limited (the "Company") hereby establishes the Basic Policy on an Internal Control System outlined below to provide ongoing growth and maximize the corporate value of the entire Suntory Group while maintaining a good relationship with all stakeholders.
Ⅰ. System for Ensuring That the Execution of Duties by Directors, Executive Officers and Employees of the Company, as well as by Directors, Executive Officers, Others with Equivalent Duties and Employees of the Company’s Subsidiaries Conform with Laws and Regulations and the Articles of Incorporation
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1.In line with our corporate purpose, which is to “inspire the brilliance of life, by creating rich experiences for people, in harmony with nature,” and in accordance with the Suntory Group's Code of Business Ethics, each and every one of the Company’s Directors, Executive Officers, and employees shall follow a code of conduct that emphasizes complying with the requirements of the law and respecting social ethics when carrying out business activities by making decisions for the organization.
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2.The Directors and Executive Officers shall take the initiative in complying with laws and regulations, the Articles of Incorporation, and business ethics, and actively make efforts to maintain and improve compliance management.
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3.The Board of Directors shall establish a Global Risk Management Committee and individual risk management committees (the Global Risk Management Committee and each risk management committee at each Group company shall hereinafter be referred to as the "Risk Management Committee"), and the Risk Management Committee shall promote a compliance system and deliberate on priority issues. In addition, each Group company shall put in place a department in charge of compliance to conduct periodic education and training activities as well as establish and promote compliance systems throughout the Suntory Group with the Risk Management Committee at the core to ensure the comprehensiveness of activities.
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4.The Directors, Executive Officers, and Audit & Supervisory Board Members (hereinafter referred to as “Auditors”) of the Suntory Group shall report any compliance issues that are discovered immediately to the Risk Management Committee. In addition, the Company shall put in place compliance hotlines inside and outside of the Company to allow employees of the Suntory Group to report on compliance related issues to the department in charge of compliance, which will report to the Risk Management Committee as necessary. The Risk Management Committee and the department in charge of compliance shall investigate the contents of any report they receive, discuss the issue with relevant departments as necessary, take corrective action, establish measures to prevent any recurrence, and implement these measures. The Risk Management Committee and the department in charge of compliance shall report to the Board of Directors and the Audit & Supervisory Board as necessary regarding the content of their deliberations and their activities.
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5.Directors and Executive Officers shall be dispatched to subsidiaries as necessary to appropriately execute business, make decisions and perform supervision. In addition, the relevant departments of the Company shall provide advice, guidance and support to the subsidiaries.
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6.Auditors or equivalent persons (hereinafter referred to as "Auditors, etc.") shall be deployed to subsidiaries as necessary to perform audits. In addition, the Auditing Department shall carry out internal audits of subsidiaries.
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7.The Auditing Department shall carry out internal audits pertaining to the status of compliance and the appropriateness for operations of employees of the Suntory Group, and report the results of the audit to the Representative Director and President.
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8.Internal control systems shall be established and maintained to ensure the appropriateness of financial reporting.
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9.Directors and Executive Officers of the Suntory Group shall establish and promote a system to prevent any relations with antisocial forces and clearly reject any improper demands that are made.
Ⅱ. System for the Preservation and Management of Information Concerning the Execution of Duties of Company Directors
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1.Officers in charge of general affairs shall store and manage vital internal documents as well as revise and improve document management rules and other regulations as necessary.
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2.Directors and Executive Officers shall store and manage minutes of the shareholders meetings, minutes of Board of Directors meetings and documents pertinent to important decision-making (including electronic or magnetic records, the same applies hereinafter) as well as other important information related to the execution of duties by Directors and Executive Officers in accordance with laws and regulations as well as internal rules.
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3.The documents and other materials mentioned above shall be kept in a condition such that allows for Directors, Executive Officers, and Auditors to view them as necessary.
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4.The Risk Management Committee shall establish and promote an informational security system that does not only protect and preserve information, including personal information, but also increases corporate value by use of information.
Ⅲ. Regulations and Other Systems for Managing Risk of Losses of the Company and Its Subsidiaries
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1.The strategic decision-making related to the management of the Suntory Group shall be performed by the Board of Directors. With regard to major risks relating to group management, the Board of Directors shall select Directors or Executive Officers to be responsible for addressing these risks, who will then make decisions regarding the response to each risk.
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2.The Board of Directors shall put in place the Suntory Group’s risk management system and supervise the operation of this system. Besides the Risk Management Committee, the Board shall also establish other committees, including the Quality Assurance Committee and Global Sustainability Committee, and shall receive reports from these committees and issue instructions to them.
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3.The Risk Management Committee, Quality Assurance Committee and Global Sustainability Committee, etc., will undertake comprehensive, overall management of operational risks, quality risks, and sustainability issues for the Suntory Group as a whole. In addition, with regard to major risks, where necessary, they will formulate rules and guidelines for the management of the risk in question and implement related training activities, etc.
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4.The Global Risk Management Committee will take on the role of promoting risk management activities for the Suntory Group as a whole, and will identify risks affecting the Suntory Group, draw up strategies to respond to these risks, and monitor the progress made in responding to risks.
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5.The Quality Assurance Committee will take on the role of promoting quality assurance activities throughout the Suntory Group, and will identify quality assurance issues affecting the group, draw up strategies to respond to these issues, and monitor the progress made in responding to issues.
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6.The Global Sustainability Committee will take on the role of promoting sustainability-focused management throughout the Suntory Group, and will identify sustainability-related issues, draw up strategies to respond to these issues, and monitor the progress made in responding to issues.
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7.Each Executive Director and Executive Officer shall hold responsibility for addressing risks inherent in business execution. Moreover, material risks shall be analyzed and evaluated, and improvement plans shall be discussed and determined by the Board of Directors.
Ⅳ. System for Ensuring that Directors of the Company and Directors and Executive Officers of the Company’s Subsidiaries as well as Others with Equivalent Duties Execute Their Duties Efficiently
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1.The Board of Directors shall determine the basic management policy and Company-wide goals of the Suntory Group, and the Directors and Executive Officers in charge shall specify efficient methods for achieving such goals, such as specific targets and appropriate allocation of authority aimed at achieving the Company-wide goals.
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2.Directors and Executive Officers in charge shall confirm progress made in achieving goals and report the specific measures to achieve the goals to the Board of Directors and the Management Committee.
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3.Each Director and Executive Officer shall be in charge of appropriately executing business operations and shall strive to make decisions efficiently under the Responsibility and Authority Rules.
Ⅴ. System for Reporting to the Company Matters Related to the Execution of Duties by Directors and Executive Officers of the Company’s Subsidiaries
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1.The status of the business execution of Directors and Executive Officers at subsidiaries shall be regularly reported to the Board of Directors and the Management Committee.
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2.Directors and Executive Officers in charge of subsidiaries shall request reports on the status of business execution from the Directors and Executive Officers of the subsidiaries as necessary.
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3.Directors and Executive Officers in charge of subsidiaries shall, in the event of a risk emerging that could potentially affect that subsidiary or the Suntory Group, speedily report the risk to the department responsible for responding to such risks, and shall, if necessary, report it to the Global Risk Management Committee.
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4.Certain matters concerning management of subsidiaries must be consulted with and reported to the relevant departments, or otherwise must receive approval from the Board of Directors of the Company under the Responsibility and Authority Rules.
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5.The Auditing Department shall report the internal audits results of subsidiaries to the Representative Director and President as necessary.
Ⅵ. Other Systems for Ensuring the Appropriateness of Business of the Group Consisting of the Company, Its Parent Company and Its Subsidiaries
Dealings between Group companies, including the parent company and public subsidiaries, shall ensure appropriateness in matters such as conducting business and deciding on business matters to provide objective and rational content.
Ⅶ. Matters Regarding Auditors of the Company and Employees Who Are Requested to Assist in their Duties, Matters Regarding the Independence of Such Employees from Directors and Executive Officers, and Matters Related to Ensuring the Effectiveness of Instructions Given to Such Employees
The Company shall place employees to assist the duties of Auditors after deliberation if necessary for the Auditors .
In addition, the Company shall respect and execute directions of the Audit & Supervisory Board such as the transfer and evaluation of such employees, and ensure the independence of such employees from Directors and Executive Officers.
Moreover, such employees shall follow the instructions and directives from the Auditors when assisting in the duties of Auditors.
Ⅷ. Systems for Directors, Executive Directors and Employees of the Company and Directors, Executive Directors, Auditors, Others with Equivalent Duties and Employees of the Company's Subsidiaries or Other Persons Who Receive Reports from Such Persons to the Company’s Auditors and Other Systems Related to Reporting to the Auditors
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1.Auditors shall attend Board of Directors meetings, and the Representative Director and President as well as the Directors and Executive Officers in charge shall provide reports of business execution that they are in charge as necessary.
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2.Directors, Executive Officers and Employees of the Suntory Group shall promptly and clearly respond to inquiries about operations and assets when requested by Auditors to report on businesses.
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3.The Auditing Department of the Suntory Group shall regularly hold liaison conferences between Auditors and the Audit & Supervisory Board of the Company to report the current status of matters such as internal audits.
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4.The departments in charge of internal reporting systems shall report the status of internal reports to Auditors and the Audit & Supervisory Board of the Company as necessary.
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5.In the case of internal reports that relate to Suntory Group Directors, Auditors, Executive Officers or Advisors, the contact window that received the internal report in question shall report the matter to the Auditors of the company where the reported behavior occurred, and shall liaise with them regarding the strategy to be adopted in response.
Ⅸ. System for Ensuring the Person Who Has Reported to the Company's Auditors Are Not Treated Adversely Based on the Fact Such a Report has Been Made by the Person
The Directors, Executive Officers and employees of the Suntory Group shall prohibit any adverse treatment based on a report to the Auditors through a department in charge of compliance or another reporting system.
Ⅹ. Systems for Ensuring Advance Payment or Reimbursement of Expenses Arising in Conjunction with the Execution of Duties by Auditors of the Company and Other Policies for Processing Expenses and Obligations Arising with Respect to Execution of Such Duties, and Other Systems for Ensuring That the Auditors Effectively Performs Audits
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1.If Auditors, in conjunction with the execution of its duties, asks the Company for advance payment, etc. of expenses under Article 388 of the Companies Act, the Company shall promptly process such expenses or obligations, unless they are not necessary for the Auditors to execute their duties.
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2.Auditors shall strive to communicate and exchange information with the Auditors, etc. of Company subsidiaries or the Auditing Department.
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3.Auditors shall put in place opportunities to exchange opinions with the Representative Director and President as well as accounting auditors.
Overview of the Operational Status of Internal Control Systems
Given the Company aim of being a “global food and alcoholic beverage company,” we are well-aware of the importance to that end of maintaining and operating internal control system encompassing Group-wide risk management and compliance, in order to further ensure ongoing growth and maximize the corporate value of the entire Suntory Group. The following is a summary regarding the operational status of the Company’s internal control system.
1) Operational status of the risk management system
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-The Global Risk Management Committee and the various risk management committees within the Suntory Group have been holding meetings on a regular basis, and have accordingly been identifying risks facing the Suntory Group, formulating measures for addressing such risks, and checking on progress made with respect to taking action in that regard.
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-Details regarding activities carried out by the Global Risk Management Committee have been reported to the Board of Directors.
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-With respect to quality risks, the Quality Control Committee has been holding meetings on a regular basis, and has accordingly been identifying issues involving matters of quality control pertaining to the Suntory Group, formulating measures for addressing such concerns, and checking on progress made with respect to taking action in that regard.
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-To ensure information security, we have been implementing information management education and awareness activities, and have otherwise been taking steps geared toward discouraging unsuitable means of information management and preventing leakages of confidential information.
2) Status of initiatives related to compliance
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-We have established the Suntory Group’s internal and external compliance hotlines, including our Group companies overseas, and make the hotlines’ availability known to our employees by means that include providing details via our intranet and on posters. When it comes to reports and consultations regarding incidents, the relevant departments have been taking responsibility to investigate the facts at hand, and then accordingly taking corrective measures and implementing measures to prevent recurrence, as necessary. Moreover, our “Rules on the Suntory Group’s Whistleblowing System” prohibit adverse treatment of whistleblowers for having reported incidents or for otherwise having sought consultation in that regard, and we are implementing these rules. Suntory Holdings has been awarded certification to recognize its whistleblowing system (system for self-declaration of conformance), which was introduced by the Consumer Affairs Agency.
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-Our Compliance Department has been playing a central role in efforts geared toward further heightening awareness of compliance practices, through initiatives that include carrying out surveys of employees and others to gauge their awareness of matters such as compliance issues and the corporate culture, and then providing feedback on survey results. In addition, our Compliance Department strives to further raise compliance awareness by conducting educational activities on compliance, including harassment and anti-bribery.
3) Status of Initiatives to Improve the Efficiency of Business Execution
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-The Board of Directors has been holding meetings on a regular basis where they engaged in tasks that included formulating the Mid-Term Plan, drafting budgets, and making managerial decisions involving mergers and acquisitions, capital investment and other such matters.
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-At their meetings, the Board of Directors was provided with reports on the Suntory Group’s business performance, and accordingly verified and discussed matters such as progress made in achieving the Suntory Group’s business objectives, its management challenges, along with measures in that regard.
4) Status of audits by the Audit & Supervisory Board Members
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-Audit & Supervisory Board Members have been attending important meetings of the Board of Directors, Risk Management Committee and other such bodies, through which they have been able to obtain reports on business execution provided by Directors, Executive Officers and others.
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-Audit & Supervisory Board Members share information and collaborate with the internal audit divisions, and the Audit & Supervisory Board members and internal audit divisions carry out joint audits as necessary.
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-Audit & Supervisory Board Members have been communicating and exchanging information with Audit & Supervisory Board Members of subsidiaries of the Company, or internal audit divisions of the Company.
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-Audit & Supervisory Board Members has been providing opportunities for the exchange of opinions with the Representative Director and President, Outside Directors and the Accounting Auditor.
5) Operational status of internal audits
The internal audit divisions have been conducting internal audits of the Company’s respective divisions as well as its subsidiaries in Japan and overseas on the basis of audit plans. In so doing, the internal audit divisions have been providing directives or otherwise making recommendations geared toward enabling those entities to make improvements when necessary, and have also been reporting results of the internal audits, as needed, to the Representative Director and President.