Corporate governance

Governance[Corporate governance structure]

Board of Directors

Our basic view on corporate governance
INOAC considers enhancing corporate governance as an importantmanagement issue to raise the Group’s performance, value and trustfrom society.
■ Corporate governance structure (management structure)

ComplianceCenter andSectional Leads

CrisisManagementCommittee

Executive
ManagementCommittee

Affiliatedgroupcompanies

Lines ofbusinessAccounting auditor[Internal Control System]
Cooperation

Supervision
CCO

President

The Board of Auditors is composed of three auditors including two external auditors. EachAuditor attends important meetings including the board meetings and supervises the businessexecution of Directors by inquiring about their business execution.

Internalaudit

Control
Board of directors

Appointment andcancellation

Appointment andcancellation
Appointment andcancellation

Shareholders’meeting

Board of Auditors

Audit

Business Auditors’
OfficeExecutive Officer System
In order to separate supervisory and executional responsibilities, INOAC has introduced its
Executive Officer System. Each Executive Officer endowed with his/her own authority from theBoard acts as the head of the business unit, group company or major functional organization
while he/she represents facilitating decision making and business execution.

Auditors’ committee (internal and external auditors)

Cooperation

Comprised of seven members, the Board of Directors decides important issues in INOAC’sbusiness. Each board member reports the execution, financial and performance statuses ofhis/her division, based on which the Board supervises and controls the business execution ofthe Company.

Measures are implemented to ensure the execution of the business complies with applicable laws
as well as the Company’s articles of incorporation.

Compliance

Information management

Compliance promotion structure andemployee education on the Corporate Codeof Conduct.

Control of documents with the Document
C o n t r o l P r o c e d u r e t h a t d e fi n e s t h e
responsible division and storage period foreach document.

Control structure as the corporate group
For affiliated companies, the Affiliated Company Document Control Procedure is developed.
Clarification of the execution rules and auditing by the Auditors as necessary.

Risk management
Accounting auditor

The Executive Management Committee manages each risk with the Crisis Management
Committee being held as necessary. Quickly obtain risk information and establish the response
structure through the permanent Negative Information Hotline.

GovernanceCompliance

Basic views on compliance
INOAC believes the compliancerequirement goes beyond following theapplicable laws to require each
employee act with a high level of ethics.
In order for INOAC to satisfy its
corporate responsibilities andexpectations from customers, only
following the applicable laws isi n s u f fi c i e n t ; e m p l o y e e s m u s t a l s orecognize their social responsibilities aspart of the corporation.

Compliance education

Consultation support

In addition to the development of the internal regulations, an
educational program aimed to raise awareness of thecompliance requirements is provided to sales reps, people incharge of procurement, new recruits and other new hires in all
business locations. The educational program includes casestudies assuming issues in the actual work environments, taking
hints from compliance issues of other companies anddiscussions on questions raised in the daily work, working toraise the awareness of the people being trained.

In case of any compliance violation, the Company must
immediately respond to the situation. For this purpose, INOAC
has established the Help Line through which anybody may
consult with both the Legal Group and the external law officeabout his/her concern. Internal Reporting and Whistleblower
Protection Regulations are also in place so that whistleblowers
are not subjected to any adverse treatments because of theiractions.

Compliance and Ethics Program

Internal audit

Box for Issues to be Addressed

The Compliance and Ethics Program has been
implemented with the Compliance Centerestablished within the Tokyo Headquarters.
A Chief Compliance Officer (CCO), to lead theCompliance Center, a Compliance Officer for each of
the domestic and overseas areas and businesslocations and a Compliance Leader for each division
have been appointed.
A structure to enhance employee consciousness
toward the compliance is being established withnecessary internal regulations being developed.

Internal audits are conducted on lines of businesses
as well as domestic group companies for thepurposes of compliance, risk management and law
observance. Items found during the audit to need
improvement are tracked regularly to raise thegovernance standards of the whole INOAC Group.

The Box for Issues to be Addressed (consultation contact) has been establishedso that the Company may immediately respond and take measures to prevent
any further damage, going beyond compliance issues alone to also address
issues on product quality, safety and environment, sales, procurement and more.
Quality problem
Global Quality Assurance Headquarters

Box forIssues to beAddressed

Safety and environmental issues
Safety and health hazard management officeInformation on complianceCorporate Planning Div., Legal Affairs

Information on sales, procurement and more
Corporate Planning Div.