Internal Control System

Basic Views on Internal Control System and the Progress of System Development

The Company strives to maintain appropriate relationships with its stakeholders, including shareholders, customers, society, and employees, and to fulfill its social missions and responsibilities as a real estate agency to increase results and corporate value in the long term. To that end, the Company will build a sound and transparent internal control system and implement appropriate corporate governance.

（Revised February 14, 2023）

1．Regulations and other systems required to ensure compliance with laws and regulations and the Articles of Incorporation in the directors, executive officers and employees’ execution of their duties and to manage the risk of loss

(Article 362, Paragraph 4, Item 6 of the Companies Act, and Article 100, Paragraph 1, Items 2 and 4 of the Ordinance for Enforcement of the Companies Act)

(1)The Board of Directors will establish a risk management system and ensure that the execution of duties by directors and executive officers and employees complies with laws and regulations. Moreover, the Company makes efforts to prevent acts in violation of laws, regulations, etc. or detect them at an early stage by means such as the operation of the internal whistleblowing system prescribed in the Rules on Internal Whistleblowing. To promote risk management, the Company has established, based on the Rules on Internal Whistleblowing, the Risk Management and Compliance Committee which works to understand risks, discusses measures to mitigate risk and prevent the reoccurrence of incidents, evaluates and monitors the effectiveness of these measures, and reports results to the Board of Directors.
(2)The Board of Directors will strengthen the measures for preventing any response to unreasonable demands, etc. from any groups and individuals in consideration of the fact that severing all relationships with anti-social forces is essential for the Company’s protection.

2．Ensuring the directors’ efficient business execution and maintenance of information on the said business execution

(Article 100, Paragraph 1, Items 1 and 3 of the Ordinance for Enforcement of the Companies Act)

(1)To develop an environment enabling the directors, etc. to appropriately and efficiently execute their duties, the Board of Directors defines matters regarding the appropriate delegation of authorities and internal approval frameworks in accordance with the Rules on Administrative Authorities, the Rules on Division of Duties, etc.
(2)The Board of Directors will establish the rules for the management of documents and other necessary rules and properly maintain and manage the minutes of the major meetings and the materials thereof and the important documents and reports relating to business execution, among other matters. Records of the above matters are available for viewing by directors and audit & supervisory board members at any time.

3. System for ensuring the appropriateness of the operations of the corporate group consisting of the Company and its subsidiaries

(Article 100, Paragraph 1, Item 5 of the Ordinance for Enforcement of the Companies Act)

(1)The Board of Directors establishes departments and rules for the supervision of subsidiaries of the Company, ensures compliance with laws and regulations and the Articles of Incorporation in the execution of business by the corporate group consisting of the Company and its subsidiaries, and supervises the group’s risk management systems, thereby implementing appropriate and efficient business management.
(2)The Board of Directors will request reports from the subsidiaries of the Company on the state of the execution of duties by their officers and employees as necessary. Moreover, the Company and its subsidiaries maintain systems to secure appropriate business operations with in the corporate group by undergoing audits conducted by the internal audit division of the Company.

4. Appointment of assistant staff to the posts of audit & supervisory board members and ensuring their independence and the effectiveness of instructions provided to the assistant staff

(Article 100, Paragraph 3, Items 1, 2 and 3 of the Ordinance for Enforcement of the Companies Act)

(1)The Board of Directors will appoint the staff for the audit & supervisory board members at their request for the appointment of employees as their assistants.
(2)The staff for the audit & supervisory board members will work according to the orders and directions of the audit & supervisory board members. The transfer, appraisal and treatment of the staff for the audit & supervisory board members will be determined with the prior consent of the audit & supervisory board members.

5. System for reporting to the audit & supervisory board members, payment of expenses, etc. and ensuring the effectiveness of audits by the audit & supervisory board members

(Article 100, Paragraph 3, Items 4, 5, 6 and 7 of the Ordinance for Enforcement of the Companies Act)

(1)The directors of the Company and the officers of the subsidiaries and the employees of the Company and its subsidiaries will report on the important matters relating to company management and business operations and the state and results of business execution at the request of the audit & supervisory board members of the Company. Moreover, people who receive a report regarding such facts from officers or employees of subsidiaries shall immediately report these facts to the Company’s Audit & Supervisory Board members.
(2)The directors of the Company and the officers of the subsidiaries and the employees of the Company and its subsidiaries will report on any violations of laws and regulations and other circumstances that may cause material damage to the corporate group consisting of the Company and its subsidiaries to the audit & supervisory board members of the Company immediately upon the discovery thereof. Moreover, people who receive a report regarding such facts from officers or employees of subsidiaries shall immediately report these facts to the Company’s Audit & Supervisory Board members.
(3)The Company will prohibit the disadvantageous treatment of the persons who report to the audit & supervisory board members of the Company on account of the fact that they have made the said report and make the directors of the Company and the officers of the subsidiaries and the employees of the Company and its subsidiaries thoroughly aware of this prohibition.
(4)If the audit & supervisory board members request the advance payment or repayment, etc. of expenses from the Company pursuant to Article 388 of the Companies Act in relation to their execution of duties, the Company will promptly pay the expenses or obligations unless the said expenses or obligations subject to the request are not necessary for the execution of duties by the said audit & supervisory board members.
(5)The president will hold meetings with the audit & supervisory board members as necessary and ensure mutual understanding as well as establishing an environment in which the audit & supervisory board members can conduct effective audits.

6. With respect to the establishment/operations of the internal control system described above, the internal audit department will conduct internal audits of the corporate group consisting of the Company and its subsidiaries, and the audit & supervisory board members will audit the state of the execution of duties by the directors.

Basic Views on Measures of Eliminating Anti-Social Forces and Status of Development

While the movement toward the elimination of anti-social forces, which has been seen before, is becoming increasingly active, the Company has endeavored not to have any relationships with anti-social forces with the efforts of everyone from the president down to the employees.

Under these circumstances, to comply with the “Tokyo metropolitan ordinance for eliminating organized crime groups” that was enforced on October 1, 2011, the Company ensures the inclusion of the so-called “provisions for the elimination of anti-social forces” in the agreements for real estate trading to prevent any relationships with anti-social forces, and also provides under its internal rules that in a new transaction such as real estate trading, the placement of an order for work and the purchase of goods, new clients shall be checked by referring to the database of newspapers, etc. in advance. These checks are conducted in accordance with the procedures outlined in the operational manual.

In addition, with regard to the shareholders, there is a possibility that the anti-social forces may acquire the shares of the Company through transactions on the market. However, the Company will endeavor to ascertain whether or not any anti-social forces are included among the shareholders by regularly obtaining information from the shareholder register administrator.
When employing officers and employees, the Company conducts checking by referring to the database of newspapers, etc. before making an unofficial decision on employment.

In addition to the internal checking system described above, the Company joined the federation for special violence prevention measures within the jurisdiction of the Metropolitan Police Department, public interest incorporated association in April 2008 and has deepened its relationship with the competent police stations, and endeavors to obtain any and all information to prevent any relationships with anti-social forces by making inquiries as to whether the clients may come under anti-social forces, among other means.