Rules Concerning Items Necessary for the Performance of Duties by the Audit Committee

Rules Concerning Items Necessary for the Performance of Duties by the Audit Committee

• Article 1
  The purpose of these rules is to establish items necessary for the performance of duties by the Audit Committee of the Company, in accordance with Companies Act Article 416 Section 1 Part 1 Subparagraph b), as well as the Ordinance for Enforcement of the Companies Act Article 112 Section 1.

  • 2
    In these rules, “ENW” means a group of corporate entities consisting of the Company and its subsidiaries and affiliates, and “ENW Entity” means each entity within ENW.

• Article 2
  The Company shall establish a Management Audit Department to assist in the duties of the Audit Committee of the Company. The Directors of the Company shall not be assigned to assist in the duties of the Audit Committee of the Company.

  • 2
    The director and staff of the Management Audit Department shall follow employment and work regulations for items not established by these rules.

• Article 3
  The Management Audit Department shall be organized independent of the Corporate Officers of the Company.

  • 2
    The director and staff of the Management Audit Department shall perform their duties under the direction of the Audit Committee and Audit Committee Members of the Company.
  • 3
    The director and staff of the Management Audit Department shall be appointed, reassigned and disciplined by the Representative Corporate Officer and CEO of the Company with the consent of the Audit Committee of the Company.
  • 4
    The decision on personnel evaluation of the director and staff of the Management Audit Department will be conducted by the Audit Committee of the Company.

• Article 4
  The Corporate Officers of the Company shall report monthly to the Audit Committee of the Company regarding the following items related to their assignments and organization under their oversight, supervision or management, including whether or not such relevant items exist, and shall report immediately highly important matters of the items such as incidents that cause or may cause ENW significant damage, or that violate or may violate laws or the Articles of Incorporation to the Audit Committee.

  (1) Disasters and accidents related to operations;

  (2) The fact that operations have been stopped for a half day or longer;

  (3) The fact that a lawsuit has been brought, and its status;

  (4) Cases that violate compliance policies (including facts subject to investigation);

  (5) Requests for cooperation in an investigation, investigation, summons, visits (excluding regular investigations), warnings, guidance, orders, recommendations, suspension of operation, or other measure taken by public officials;

  (6) Infringement or the danger of infringement of assets or rights by a third party;

  (7) Bankruptcy, the danger of bankruptcy, or termination of a contract, by a major customer;

  (8) Matters or information other than the above (1) through (7) that may cause the ENW Entity serious damage or have significant effect ;

  (9) Facts that Officers and employees of the ENW Entity, who made reports or provided information pursuant to Sections through 2 to 6 of this Article, were treated disadvantageously because they made the reports or provided the information; and

  (10) Other matters to be reported as stipulated by the Audit Committee of the Company.

  ^*1　“oversight” shall mean having the general oversight responsibility as the head of the reporting line.

  ^*2　“supervision” shall mean having supervision of the relevant organization or business not as the head of the reporting line.

  ^*3　“management” shall mean having a grasp of the situation by receiving report(s) from the relevant business or organization.

  • 2
    If the Officers and employees of the ENW Entity become aware of any item provided in each item of Section 1 of this Article, they shall immediately report to the Corporate Officer of the Company who oversees, supervises or manages such item. In the case where it would be inappropriate to report to the Corporate Officer of the Company because the Corporate Officer himself/herself is concerned in the event, for example, the Officers and employees of the ENW Entity shall report to (i) the Corporate Officer of the Company other than the Corporate Officer at issue or (ii) the Compliance Counter.
  • 3
    The Corporate Officer who supervises the promotion of ENW’s compliance shall immediately make a report to the Audit Committee of the Company in the case of highly important matters, out of the matters which are reported to the Compliance Counter, such as incidents that cause or may cause ENW significant damage, or that violate or may violate laws or the Articles of Incorporation.
  • 4
    The Officers and employees of the ENW Entity may report to the Audit Committee of the Company concerning the above item (4) of Section 1 of this Article, which is related to the Corporate Officers of the Company.
  • 5
    The Auditors or the Audit Committee of the ENW Entity in Japan, the People’s Republic of China, Korea and Taiwan, except for the Company, shall periodically report information regarding audit results by the auditors, etc. in such ENW Entity to the Audit Committee of the Company.
  • 6
    The Officers and employees of the ENW Entity shall promptly make a proper report when a report on items regarding the execution of business is requested by the Audit Committee of the Company.
  • 7
    The Corporate Officers and employees of the Company shall inform the Audit Committee of the Company of the schedules of important meetings.

• Article 5
  The Representative Corporate Officer and CEO of the Company shall prepare and operate a system in order to ensure that the Officers and employees of the ENW Entity who make a report to the Audit Committee or Corporate Officer of the Company or contact the Compliance Counter under the preceding Article do not receive disadvantageous treatment on the grounds of having made such report or contact.

• Article 6
  The Company shall process such expenses or obligations for the execution of duties of the Audit Committee Members of the Company which are recognized as necessary by the Audit Committee of the Company under the Companies Act Article 404 Section 4.

• Article 7
  The Representative Corporate Officer and CEO of the Company shall prepare a system between the ENW Entity under which the Audit Committee of the Company enables the investigation, etc., of the accounting and operations of the ENW Entity.

  • 2
    Departments and officers in charge of audits, including the internal audits of the ENW Entity, shall share necessary information regarding audit activities with the Audit Committee, Audit Committee Members, and the Management Audit Department of the Company through regular meetings, etc., in order to operate an efficient and suitable auditing system.
  • 3
    The Company’s accounting auditor shall report to the Audit Committee regarding audits by the accounting auditor, as well as other investigations, on a regular basis or as requested by the Audit Committee.

• Article 8
  The Representative Corporate Officer and CEO of the Company shall take measures to familiarize the Officers and employees of the ENW Entity with the content of these rules.

• Article 9
  These rules can be revised through resolution by the Board of Directors.
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Supplementary Provisions

• Article 1
  These rules shall enter into force on June 24, 2004.

• Article 2
  These rules shall be revised June 24, 2005.

• Article 3
  These rules shall be revised April 27, 2006.

• Article 4
  These rules shall be revised June 20, 2014.

• Article 5
  These rules shall be revised May 1, 2015.

• Article 6
  These rules shall be revised June 21, 2017.

• Article 7
  These rules shall enter into force on June 19, 2020.