Corporate governance

Governance［ Corporate governance structure］

Board of Directors

Our basic view on corporate governance
INOAC considers the improvement of corporate governance as an importantmanagement task to raise the group’s performance, value and social credibility.

Comprised of 10 members, the Board of Directors decides important issues in INOAC’s business. Eachboard member reports the execution, financial and performance statuses of his/her division, based on
which the Board supervises and controls the business executions of the company.

Executive 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 the Board, acts as thehead of the department, group company or major functional organization to speed up decision-making,
optimize business operations and handle critical business executions.

■ Corporate governance structure (management structure)

Board of Auditors (including outside company auditors)

The Board of Auditors is composed of three company auditors including two outside company auditors.
The company auditors attend important meetings, such as board meetings, and audit the execution ofduties by the directors by inquiring about the status of their operations on the business.

Internal audit

Audit

Compliance OfficeandCompliance Officers

Executive
ManagementCommittee

Associated/affiliated groupcompanies［ Internal Control System］
Cooperation

Supervision
CCO

President

Board of Directors

Appointment and dismissal

Election and dismissal

Shareholders’meetingBusiness
Auditors’ Office

Board of Auditors

Control

Cooperation

Various measures are implemented to ensure that business executions comply with applicable laws as wellas the company’s articles of incorporation.

ComplianceSystem promoting compliance, and employeeeducation on the Corporate Code of Conduct.

Election and dismissal

Businessunits

Crisis ManagementCommittee

Information management
Management of documents with the Document
Control Procedure that defines the responsible
unit and storage period for each document.

Control structure as a corporate group
Establishment of the Associated Company Document Control Procedure for associated and affiliatedcompanies. Clarification of the execution rules and auditing by the company auditors when necessary.
Accounting audit

Accounting auditor

Risk management
The Executive Management Committee manages each risk and Crisis Management Committee meetings
are held when necessary. The Negative Information Hotline is always ready to obtain risk information
quickly and establish a response structure.
INOAC CSR REPORT 201927

GovernanceCompliance

Basic views on compliance
INOAC believes that the compliance requirement
goes beyond simply following the applicable laws
and requires each employee to act with a highlevel of ethics. In order for INOAC to satisfy its
corporate responsibilities and expectations fromcustomers, only following the applicable laws isinsufficient; employees must also recognize theirsocial responsibilities as part of the corporation.

Compliance and Ethics Program and Policy
The Compliance and Ethics Program and Policy
has been implemented with the Compliance Officeestablished within the Tokyo Headquarters. A
Chief Compliance Officer (CCO) to lead theCompliance Office and Compliance Officers foreach business location in Japan and overseas andeach unit have been appointed. A structure toenhance employee consciousness toward
compliance is being established with necessaryinternal regulations being developed.

Compliance education

Internal reporting system

In addition to the development of the internal regulations, an
educational program aimed to raise awareness of the compliancerequirements is provided to sales representatives, staff in charge ofprocurement, new employees and mid-career hires at all INOAC
business locations. The educational program looks at examples ofcompliance issues that occurred in other companies and conducts
case studies of how such issues could occur in one’ s own
workplace. The program also spends time discussing anyquestions that arise during day-to-day work operations. Throughthese efforts, we are working to raise each individual’ s awarenessof compliance.

Internal audits
Internal audits are conducted at each unit
and domestic group company to inspectcompliance, risk management and law
observance. Areas that are deemed inneed of improvement are tracked regularly
to raise the governance standards of thewhole INOAC Group.

In order to thoroughly enforce compliance, thecompany must act immediately if a violation occurs byany chance. To this end, INOAC has established theHelp Line through which anybody may consult withboth the legal department and the external law firm
about his/her concer n. Inter nal Reporting andWhistleblower Protection Regulations are also in placeso that whistleblowers are protected from any furtherretaliation.

Negative Information Hotline
The Negative Information Hotline (consultation line) has been established so that
employees can report not just compliance issues, but also any issues regarding
product quality, safety and environment, sales, procurement and more. When such
issues arise, the company will be able to respond immediately and take measures
to prevent damages fromspreading.
Quality issues
Global Quality Assurance Division

NegativeInformationHotline

Safety and environmental issues
Safety and Health Hazard Management Section

Information on compliance
Legal Department

Information on sales, procurement and more
Corporate Planning Div.
INOAC CSR REPORT 201928