Epson 2016 Annual Report Download - page 38

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37
continuously sought to enhance and strengthen corporate governance to ensure that decision-making is
transparent, fair, fast, and decisive. The election of multiple outside directors and the establishment of
discretional advisory committees to nominate officers and determine compensation are some of the ways this is
being achieved.
With the approval of a resolution at the June 28, 2016 general shareholders’ meeting, Epson transitioned to a
company with an Audit & Supervisory Committee, as we believe this is the best structure for Epson to further
improve the supervisory function of the Board of Directors, improve discussions, and speed up
decision-making.
Internal control system
Epson’s Board of Directors approved a basic policy on the internal control system (a system for ensuring that
business is conducted suitably by the corporate group), and Epson has implemented the approved internal
control system. The Board of Directors also passed a resolution at the June 28, 2016 meeting of the Board of
Directors to partially amend Epson’s basic internal control system policy in conjunction with the transition to a
company with an Audit & Supervisory Committee. The content of the revised basic policy is described below.
Basic internal control system policy
The Company considers its Management Philosophy to be its most important business concept, and to realize it
Epson has established “Principles of Corporate Behavior” that are shared across the Group, including at
subsidiaries. The Company will establish the following basic policy regarding the internal control system (a
system for ensuring that business is conducted suitably by the corporate group) and provide an improved
internal control system for the Epson Group as a whole.
Compliance
(1) The Company will establish “Principles of Corporate Behavior” as a guide for putting the Management
Philosophy into practice. The Company will also establish regulations that spell out things such as basic
compliance requirements and the organizational framework.
(2) The Company has created a Compliance Committee to serve as an advisory body to the Board of Directors.
The Compliance Committee is chaired by a full-time member of the Audit & Supervisory Committee and
is composed of outside directors and members of the Audit & Supervisory Committee. The Compliance
Committee meets regularly and as needed to hear and discuss important matters concerning the Company’s
compliance program. It reports its findings and offers opinions to the Board of Directors. Accounting
auditors can attend meetings of the Compliance Committee as observers.
(3) A Chief Compliance Officer (CCO) is elected and supervises and monitors the execution of all compliance
operations. The CCO periodically reports the state of compliance affairs to the Compliance Committee.
(4) Compliance promotion and enforcement will be supervised by the president of Seiko Epson. Group-wide
compliance programs will be carried out by Head Office supervisory departments with the cooperation of
departments in the various operations divisions and subsidiaries. Compliance programs of the divisions and
their related subsidiaries will be promoted by the respective chief operating officers of the divisions. The
compliance management department helps to ensure the completeness and effectiveness of compliance
programs by monitoring compliance across the Epson Group and by taking corrective action or making
adjustments where needed.
(5) The Corporate Strategy Council, an advisory body to the president comprised of members of the Board of
Directors, etc. of the Company, will address important matters with respect to compliance promotion and
enforcement in the Epson Group as a whole, including subsidiaries. The Council will strive to ensure the
effectiveness of compliance by exhaustively discussing and analyzing the implementation of programs for
assuring observance of statutes, internal regulations, business ethics, and initiatives in high-risk and other
key areas.
(6) The Company, including its subsidiaries, will strive to provide an effective whistleblowing system.
Employees are encouraged and are able to easily and immediately report compliance violations using
internal and external hotlines and e-mail addresses. Controls are in place to protect whistleblowers from
reprisal, and allegations are reported to the Company’s Audit & Supervisory Committee, the Compliance
Committee, and the Corporate Strategy Council in a way that whistleblowers cannot be identified.
(7) The Company strives to enhance legal awareness by providing Epson Group employees with web-based
training and other educational opportunities.