Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail. The Company assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising from the translation.
Business Report
Overview of Systems for Ensuring Appropriateness of Operations and Operational Status
Consolidated Financial Statements Consolidated Statement of Changes in Equity Notes to the Consolidated Financial Statements
Non-consolidated Financial Statements
Non-consolidated Statement of Changes in Equity Notes to the Non-consolidated Financial Statements
(From April 1, 2024 to March 31, 2025)
OKUMURA CORPORATION
Overview of Systems for Ensuring Appropriateness of Operations and Operational StatusBasic Approach
The Company has established and operates an internal control system to manage risks associated with its businesses and increase profits while fulfilling its corporate social responsibility in the midst of an ever-changing business environment.
Basic Policy
Systems to Ensure that the Execution of Duties by Directors and Employees Is in Compliance with Laws, Regulations, and the Articles of Incorporation.
Following the provisions of laws, regulations, the Company's Articles of Incorporation, and the Regulations of the Board of Directors, the Board of Directors shall establish a policy for the Company's business execution and continually supervise the execution of duties by the Directors and Executive Officers.
In order to ensure that decision-making at the Board of Directors and the execution of duties by the Directors, Executive Officers, and employees comply with laws, regulations, and the Articles of Incorporation, the Company shall seek confirmation and advice from experts such as attorneys, certified public accountants, etc. as appropriate.
Considering compliance as one of the highest management priorities, the Company shall establish a Compliance Committee as an advisory body for decision-making and executing duties by the Board of Directors and Representative Directors. The committee is chaired by a Director that the Company appoints, including attorneys at law.
In order to ensure thorough compliance with the Antimonopoly Act, the Company shall establish an expert committee on preventing collusion consisting of outside experts under the Compliance Committee to propose measures to prevent violation of the act and verify and ensure the appropriateness and effectiveness of those measures.
In order to promote penetration and firm establishment of compliance awareness and ensure the properness of business execution by internal organizations, the Company shall establish and implement Basic Regulations on Compliance and related regulations based on the Management Philosophy and Corporate Code of Conduct while the Internal Audit Division shall carry out monitoring as appropriate.
The Representative Directors shall focus on internal education and awareness-building activities to ensure thorough compliance, including severing relationships with antisocial forces.
Following Internal Whistleblowing Regulations, the Company shall swiftly and firmly respond to complaints lodged with contact points inside the Company and the attorney's office.
Systems to Store and Manage Information Related to the Execution of Duties by Directors
The Company prepares and stores information related to the execution of duties by the Directors following laws and regulations and manages it so that the Directors, Accounting Auditor, and others can access it as needed.
Through the operation of an integrated management system and monitoring by the Internal Audit Division, the Company verifies the retention period for legal documents, etc., and the organization, storage, etc. of documents requesting approval related to decision-making.
In addition to protecting information assets from threats such as loss, theft, destruction, and unauthorized access, the Company manages information based on an Information Security Policy and Privacy Policy in order to protect personal information.
The persons in charge of handling information and the IR Team verify the information and disclose it according to the Disclosure Policy in order to provide shareholders and investors with timely, accurate, and unbiased information.
Regulations and Other Systems to Manage the Risk of Loss
In order to ensure the effective functioning of internal control over financial reporting, the Company continually reviews its systems following the Basic Policy on Financial Reporting.
The Company prepares and manages a natural disaster response manual, a crisis communication manual, etc. and works on continuously improving the Business Continuity Plan (BCP) to prevent the spread of losses.
In order to keep track of the risks that significantly impact the business daily and take the necessary measures to address them, the Company continuously reviews the risk management system and takes swift and appropriate action when risks manifest themselves.
Systems to Ensure the Efficient Execution of Duties by Directors
The Company adopts an executive officer system to expedite decision-making by the Board of Directors and enhance the execution of duties by Executive Officers.
The Company establishes a Management Committee with Representative Directors at the core to deliberate on and decide matters related to the execution of the Company's business other than those matters to be submitted to the Board of Directors and those matters to be decided by the Board of Directors.
The Board of Directors establishes management targets, business plans, etc., based on the Management Philosophy, and the President and Representative Director and Executive Officers carry out duties to achieve them, while the Board of Directors supervises the status of execution.
In order to maintain a governance structure suited to the business environment, the Company continuously reviews its organization and operations.
Systems to Ensure the Appropriateness of Business Operations of the Corporate Group Consisting of the Company and Its Subsidiaries
The Internal Audit Division plays a central role in auditing and instructing subsidiaries so that the Company's basic approach to and initiatives for internal control continually spread throughout the entire Group.
The Company's Audit and Supervisory Committee requests business reports from subsidiaries as necessary and/or investigates the status of their operations and assets.
The Company dispatches its Executive Officers and/or employees to subsidiaries to serve as Directors or Corporate Auditors. In addition to monitoring and supervising the status of business execution, the Company's Internal Audit Division reports to the Company's Board of Directors, Representative Directors, and Audit and Supervisory Committee as necessary on the results of audits, including those of subsidiaries.
Matters Related to Employees Who Are Requested to Assist the Audit and Supervisory Committee in Their Duties
The Company assigns dedicated and non-dedicated staff to the Internal Audit Division to assist the Audit and Supervisory Committee with its duties.
Staff assigned to the Internal Audit Division shall be recommended by departments executing business and approved by the Audit and Supervisory Committee beforehand. If the Audit and Supervisory Committee makes a request concerning the personnel assigned as staff, the Company addresses the request as appropriate.
To ensure independence, the Internal Audit Division is clearly distinguished from departments executing business, and confirmation is obtained from the Audit and Supervisory Committee concerning staff goal management and performance evaluations.
Staff belonging to the Internal Audit Division that receive instructions from the Audit and Supervisory Committee do not receive instructions from Directors (excluding Directors who are Audit and Supervisory Committee Members) when executing said instructions and report the results only to the Audit and Supervisory Committee.
Systems to Report to the Audit and Supervisory Committee
Representative Directors make arrangements to exchange opinions with the Audit and Supervisory Committee on policies related to business execution and other such matters.
In order to contribute to the audit policies and sharing of duties established by the Audit and Supervisory Committee, Audit and Supervisory Committee Members are requested to attend meetings of the Management Committee and other important meetings.
When so requested by the Audit and Supervisory Committee, Directors (excluding Directors who are Audit and Supervisory Committee Members), Executive Officers, and employees report on the status of execution of their duties and present the important approval documents as well as investigate and report on the status of operations and assets at the head office, branch offices, and subsidiaries.
When discussions are conducted on the effectiveness of the internal control system, compliance violations or whistleblowing at meetings of the Compliance Committee, the content is reported to the Audit and Supervisory Committee via the Internal Audit Division.
If a Director (excluding Directors who are Audit and Supervisory Committee Members), Executive Officer or employee learns of something that will bring significant damages to the Company and its subsidiaries or a serious violation of the laws and regulations or Articles of Incorporation in the execution of duties, they report it immediately to the Audit and Supervisory Committee.
The Internal Whistleblowing Regulations apply to those who report to the Audit and Supervisory Committee, and they are not to be treated unfavorably because of the report.
Systems to Ensure that the Audit and Supervisory Committee Conducts Audits Effectively
In order to contribute to the duties of the Audit and Supervisory Committee, the Internal Audit Division discusses audit policies and plans with the Audit and Supervisory Committee and reports on the results of internal audits in a timely manner.
In order to strengthen coordination between the Audit and Supervisory Committee and the Accounting Auditor, opportunities are provided for discussing the audit plan and the status of implementation.
The ERP backbone system, etc. are continuously reviewed to provide an environment in which the Audit and Supervisory Committee can monitor the Company's financial status and profit and loss situation in a timely manner.
Four of the five members of the Audit and Supervisory Committee are made Outside Directors to ensure soundness and transparency of management.
The Company bears the costs arising from the execution of duties by the Audit and Supervisory Committee and accepts advance payment thereof.
Overview of Operational Status
Execution of duties by Directors and employees
The Company's Board of Directors consists of 13 Directors. In principle, the Board of Directors meets once per month. It also holds extraordinary meetings as necessary and makes decisions on important matters concerning management, including the Medium-Term Business Plan. Five of the members are Independent Outside Directors in order to strengthen the management supervision function.
Independent Outside Directors are brought on as members of the Management Committee (consisting of the Representative Directors and members selected by the Board of Directors), which deliberates on and decides important matters related to the execution of the Company's business other than those matters to be decided by the Board of Directors and matters to be submitted to the Board of Directors to increase management transparency. During the fiscal year under review, the Management Committee met 13 times.
In order to strengthen the internal control function and verify the status of implementation, the Company has a structure in which the Audit Office, which is in charge of accounting audits, and the Compliance Office, which is in charge of auditing other general business execution, coordinate to perform internal audits. The results of those audits are reported to the Board of Directors, the Management Committee, Representative Directors, and the Audit and Supervisory Committee in a timely manner so that they can be reflected in decision-making, business execution, and management supervision.
The Company has established a Compliance Committee comprised of Independent Outside Directors, the General Manager of Marketing & Sales Headquarters, the General Manager of Civil Engineering Headquarters, the General Manager of Building Headquarters, the General Manager of Administration Headquarters, the General Manager of the Human Resources Department, Attorneys, and the Manager of the Audit Office, who is responsible in the Internal Audit Division and the Manager of the Compliance Office. The committee works to educate and instruct officers and employees. During the fiscal year under review, the Compliance Committee met eight times.
In order to spread and establish compliance awareness, the Company has prepared Basic Regulations for Compliance, Internal Whistleblowing Regulations addressing the Whistleblower Protection Act, and Manual on Responding to Organized Crime Groups, etc. At the same time, the Company informs all officers and employees of the "Guide on Compliance," which provides the code of conduct for business execution, the methods and means of achieving that, and the legal grounds as a summary, distributing it directly to them as necessary and carrying out education and training.
The Representative Directors focus on internal education and awareness-building activities to ensure thorough compliance. During the fiscal year under review, training was carried out on the themes of "preventing power harassment," "preventing data falsification and other fraud," "cost reassignment and other fraudulent acts and the whistleblowing system," and "optimizing construction system."
Managing the risk of loss
The Company has developed and implemented proper internal control over financial reporting following the Basic Policy on Financial Reporting. In addition, through supervision by the Board of Directors and internal audits conducted by the Internal Audit Division, the Company verifies and evaluates the effectiveness of internal control over financial reporting and carries out ongoing review of the system, as necessary.
The Company identifies risks related to business, etc. that may have a significant impact on stakeholders' judgment. The Compliance Office regularly checks, verifies, and reports to the Representative Directors on the status of relevant efforts at divisions of the head office and branch offices, etc. By reporting to the Representative Directors and providing internal notification of matters requiring attention, the Company works to prevent the manifestation of risks.
Based on the disaster response know-how cultivated to date, the Company has developed a Business Continuity Plan (BCP) and is working to enhance its effectiveness through ongoing review and regular training and verification.
Ensuring the effectiveness of audits
The Company holds an audit and supervisory committee (with five Directors who are Audit and Supervisory Committee Members) and elects a full-time Audit and Supervisory Committee Member to ensure the effectiveness of audits. The Audit and Supervisory Committee is comprised of one full-time Audit and Supervisory Committee Member and four Independent Outside Directors. The Chair is elected from among the Outside Directors.
A monthly report is provided at the Audit and Supervisory Committee on the status of audits covering general management conducted by the full-time Audit and Supervisory Committee Member, and each Audit and Supervisory Committee Member confirms and examines the report.
The Audit and Supervisory Committee coordinates with the Company's Internal Audit Division following the audit policies and the sharing of duties. By attending important meetings, asking Directors (excluding Directors who are Audit and Supervisory Committee Members) and employees about the status of execution of their duties, reviewing important approval documents, and interviewing the Representative Directors, the committee expresses its opinion and investigates the status of operations and assets at the head office and major workplaces, seeking business reports from group companies as necessary as well.
In order to strengthen coordination with the Audit Office (three members), which is the Internal Audit Division, and the Compliance Office (eight members), the Audit and Supervisory Committee discusses audit plans and the status of implementation and has monthly opportunities for sharing information and opinions. In addition, the Audit and Supervisory Committee receives reports on the results of internal audits conducted by the Internal Audit Division in a timely manner. The Audit and Supervisory Committee also provides opportunities, as necessary, for exchanging information and sharing understanding with Outside Directors (excluding Directors who are the Audit and Supervisory Committee Members).
In order to strengthen coordination between the Audit and Supervisory Committee and Deloitte Touche Tohmatsu LLC, the Accounting Auditor, opportunities are provided for discussing the audit plan and status of implementation, and information and opinions are shared in a timely manner.