Operation of the Internal Controls System
To provide unparalleled service to the customers, increase corporate value, and contribute to the betterment of society, JAL Group has established the Fundamental Policies of Corporate Governance. To increase its effectiveness, we have established rules and organizations concerning the following systems and matters, and ensure that business operations are conducted appropriately in accordance with the Companies Act and Companies Act Enforcement Regulations. We evaluate and verify development and operation of the internal control system and implement corrective action when correction is required.
01.We have developed a system to ensure compliance with the Articles of Incorporation and laws and regulations governing the execution of the duties of directors and employees.
- We conduct JAL Philosophy Education seminars according to the fiscal year plan.
- We revise regulations such as Fundamental Policies on Corporate Governance appropriately and implement all the corporate governance principles in adherence to the spirit of the Corporate Governance Code. Thus, the Company has put in place a system of corporate governance. At the same time, we submit a Corporate Governance Report reflecting these matters to the Tokyo Stock Exchange and disclose the report on the corporate website and other media.
- We have established Fundamental Policies on the Internal Controls System and JAL Group Internal Control Guidance, and have developed, operate and evaluate internal control concerning the Companies Act and Financial Instruments and Exchange Act.
- We disseminate our Compliance Hot Line (internal and external contacts) to staff in a compliance information newsletter issued every three months in principle and on the Intranet.
- We inspect attributes of new business partner candidates, and conduct a review every three years as a regular inspection to verify whether there are any changes in attributes and/or information.
- Legal considerations are explained to Directors to ensure that they are aware of their duties, authorities, and responsibilities including the fiduciary duty of loyalty and the duty of care as a prudent manager. We provide education courses for employees, etc. to ensure that they acquire the necessary knowledge to perform their duties.
- The Audit Department inspects the development and operation of the internal controls system stipulated by JAL Group Internal Control Guidance according to the fiscal year plan. It reports audit results of each audit to management and regularly reports progress of audits and audit results to corporate auditors.
- The Maintenance Audit Department conducts inspections to verify that maintenance work is performed according to laws, regulations, and internal rules.
- The Corporate Safety and Security Department holds meetings of the Group Council for Safety Enhancement, inspects deliberations, involvement, instructions, etc. on safety by management through submitted reference materials, etc. according to the Safety Audit Plan. It conducts Safety Roving of branch offices and operational audits, etc.
02.We have developed a system concerning the preservation and management of information concerning the execution of the duties of directors.
- We prepare information (documents, minutes) on decision-making of the Board of Directors and other important meetings, and information (circular 'Ringi' documents) on important approvals according to laws, regulations, Regulations for the Board of Directors, regulations of various meeting structures, and Regulations for Kessai and Administrative Authority, and retain and manage them according to Regulations for Retention and Storage of Documents.
- We make efforts to safely manage and appropriately operate the e-Ringi system (Kessai and Ringi system).
03.We have developed regulations and other systems concerning risk management of losses.
- We nurture risk management consciousness of each staff to prepare ourselves for unexpected situations, such as conducting a group-wide notification exercise using the safety confirmation safety twice a year in principle.
- We have established an Operation Control Center branch in Osaka, assuming that an earthquake could directly strike beneath the Tokyo metropolitan area where Head Office central functions are integrated. We are also working to improve the effectiveness of the Business Continuity Plan and our business continuity ability through training, while applying the knowledge of outside experts.
- We maintain a system to regularly extract risks in the JAL Group including status of compliance with laws and regulations through a risk assessment, extract potential and apparent risks facing the JAL Group, and report to management through the Risk Management Council.
- We are reinforcing our ERP system to implement speedy, effective and efficient crisis management responses in case of an aircraft accident or event, and are continuously training Care Staff to assist accident victims and their families and members of the Accident Command Board.
04.We have developed a system to ensure that the duties of directors are executed efficiently.
- We have established a corporate governance system to ensure quick, appropriate management decisions, and at the same time, demonstrates high management transparency and strong management monitoring according to the JAL Group Corporate Policy, and strive to increase corporate value and fulfill accountability. The Board of Directors has established Fundamental Policies on Corporate Governance, which are important fundamentals next to the Companies Act, related laws and regulations, and the Articles of Incorporation, to ensure corporate governance.
- We have clarified basic matters for managerial staff of the Company according to Regulations for Managerial Staff, to ensure that duties are executed efficiently according to Regulations for Meeting Structures and Regulations for Kessai and Administrative Authority, Segregation of Duties Regulations.
- We review Regulations for Kessai and Administrative Authority, delegate authority, create an organization climate that allows a high degree of autonomy, and build speedy decision-making processes, while securing governance.
- We provide Transactions Education courses for staff mainly engaged in transaction operations
05.We have developed a system to ensure that duties in JAL Group are executed appropriately.
- We have established JAL Group Company Management Regulations and Guideline for JAL Group Internal Control, and the General Affairs Department mainly monitors the appropriateness of duties.
- We make efforts to safely manage and appropriately operate the e-Ringi system.
- Information on the execution of the duties of directors of subsidiaries is stored and managed appropriately according to laws, regulations, and internal rules.
- We coordinate and share information with staff in charge of compliance in each division and administrative departments of each company on a daily basis and provide them with instructions on compliance and risk management. Furthermore, we deal with events and establish preventive measures, and thus continuously provide guidance which contributes to improving the compliance and risk management system of each company and division.
- We clarify basic relationships of business operations with the Company.
- We have established Regulations for the Board of Directors, an Administrative Authority Criteria Table, etc. to ensure that duties are executed efficiently.
- We inspect priority items of the JAL Group Medium Term Management Plan and fiscal year operating policy through Roving, Expanded Earnings Announcement Sessions, etc. and conduct monitoring to ensure that initiatives to achieve our targets are implemented properly.
- We strive to develop an environment to ensure that duties are executed surely and efficiently, such as holding meetings of administration directors.
- We have established Guideline for JAL Group Internal Control and developed a system to ensure that duties are executed appropriately.
- We conduct JAL Philosophy Education seminars according to the fiscal year plan.
- We share information on compliance with administration departments and release relevant information to staff and organizations as necessary. We assemble staff in charge during Compliance Month and hold seminars.
- We disseminate and reinforce matters relating to legal affairs to directors, employees, etc. of JAL Group subsidiaries, as is the case with JAL.
- The Audit Department conducts auditing appropriately.
- The Maintenance Audit Department verifies that maintenance work is performed according to various laws, regulations and internal regulations.
- The Corporate Safety and Security Department holds JAL Group Safety Enhancement Meetings and checks discussions, involvement, instructions, etc. relating to safety by management through submitted reference materials, etc., in accordance with the Safety Audit Plan. It conducts Safety Roving of branch offices and operational audits, etc.
- We hold training for new managers and seminars on legal affairs as necessary, and have established a system to ensure that the execution of duties fulfills laws, regulations, and the Articles of Incorporation.
06.We have developed a system concerning employees in case corporate auditors require the assignment of employees to support their duties, a system concerning independence of such employees from directors, and a system to ensure that instructions by corporate auditors to those employees are effective.
To increased effectiveness of audits by corporate auditors and execute audit duties smoothly, we have established an organization independent from directors and assigned employees (corporate auditor staff). Corporate auditor staff receive work instructions and orders from corporate auditors, and they are appointed with the consent of corporate auditors.
07.We have developed a system concerning reports, etc. to corporate auditors.
- Corporate auditors attend board meetings and other important meetings, read Ringi documents requiring approval from director and above, and audit the status of execution of corporate duties through interviews with the President, hearings with related departments, visits to internal departments, etc.
- Corporate auditors exchange opinions and information regularly with corporate auditors of subsidiaries and visit subsidiaries.
- We have established internal and external Compliance Hot Lines, and have established a system to provide consultation on compliance issues and protect staff who report violation of laws, regulations, and internal rules by organizations or individuals.
08.We have developed a system for advance payment or repayment of costs arising from the execution of the duties of corporate auditors and the policy for processing of costs or liabilities arising from the execution of other duties.
Necessary expenses for audits by corporate auditors are paid appropriately.
09.We have developed other systems to ensure that audits by the Board of Corporate Auditors or corporate auditors are executed effectively.
Corporate auditors exchange opinions and information regularly with the Audit Department and auditing company and increase effectiveness of audits.
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