Corporate Governance

• Linical has established a “Code of Conduct” and provides education on and promotes this code so that Directors and employees can carry out their activities in compliance with the law, the Articles of Incorporation and internal regulations. In addition, Directors and employees sign a document stating that they pledge to comply with the “Code of Conduct” and submit it to the company each year.
• The President and CEO of the company appoints a Director as the general manager responsible for the compliance system, and this Director promotes and supervises compliance within the organization and strives to ensure compliance with the law and the company’s policies, etc.
• In addition to the Board of Directors, members of Linical’s Audit and Supervisory Committee participate in important internal meetings to develop the compliance system and confirm the state of its operation.
• Linical has established an Internal Audit Department as an organization under the direct control of the President and CEO, and this department works with the Audit and Supervisory Committee to monitor the state of compliance with the law and various regulations, and reports to the Board of Directors.
• Linical has established and operates internal controls related to financial reporting in accordance with standards generally recognized to be fair and appropriate, and evaluates their effectiveness appropriately to ensure the reliability of financial reporting.
• Linical has established an internal reporting contact based on the “Internal Reporting Manual” to prevent and detect promptly misconduct resulting from violation of the law or other wrong-doing, and strives to ensure public trust. When a report is made, Linical provides thorough protection so that the reporter is not treated disadvantageously due to making the report.
• In accordance with the “Code of Conduct” and the “Manual for Responding to Anti-Social Forces,” Linical does not respond to unfair or unwarranted demands from anti-social forces, organizations or groups, takes a resolute approach and cuts off all relationships.
• Linical has established a Nomination Committee and a Remuneration Committee, the majority of whose members are independent Outside Directors, to improve transparency and objectivity related to the nomination of candidates for Director and the determination of the remuneration of Directors and Executive Officers.

Linical records information related to the execution of duties by Directors in documents such as minutes and circulated requests for approval and stores them appropriately in accordance with internal regulations such as the “Board of Directors Regulations,” the “Management Committee Regulations,” the “Business Approval Regulations,” the “Regulations on Administrative Authority,” the “Regulations on the Division of Duties,” the “Regulations on Circulated Requests for Approval” and the “Information Security Management Regulations.” Directors are able to view these documents at all times.

• Linical anticipates the risks that could affect its business activities and strives to prevent the occurrence of problems. The Risk Management Committee formulates risk management policies and plans for all risks that may affect our corporate activities. Each division identifies risks, looks into risk control measures and responses, and evaluates them every fiscal year. The Risk Management Committee confirms the results of evaluations and reports to the Board of Directors. In addition, with regard to business opportunity risks such as environmental changes and lost opportunities that interfere with sustainable business growth, the President and CEO leads the determination of countermeasures and instructed by the President and CEO, each unit, division, etc., implements measures and reports on their status to the Management Committee. The Management Committee is consulted with regard to important decisions, which are made finally by the Board of Directors.
• Linical has established a Sustainability Committee to monitor the state of action taken in response to important issues concerning sustainability and report to the Management Committee and the Board of Directors.
• In the event that a serious risk materializes, we will set up a task force headed by the President and CEO to take measures to minimize damage in accordance with the “Crisis Response Regulations.” In the event of any other significant problem, the Crisis Response Committee will work to resolve the problem.

• Linical has clarified the administrative authority of Directors and the submission standards for meeting bodies through internal regulations such as the “Board of Directors Regulations,” the “Management Committee Regulations,” the “Business Approval Regulations,” the “Regulations on Administrative Authority,” the “Regulations on the Division of Duties” and the “Regulations on Circulated Requests for Approval” to realize more efficient and appropriate decision-making.
• In principle, Linical holds a meeting of the Board of Directors once a month, and also holds special meetings of the Board of Directors from time to time as required. In addition, Linical holds meetings of the Management Committee at least once a month to accelerate decision-making by fully considering matters to be submitted to the Board of Directors in advance and making advance decisions on matters to be reported to the Board of Directors.

• Linical and its group companies share the “Code of Conduct” and an Ethics and Compliance Program as a basic compliance policy to ensure compliance across the group. In addition, the Compliance Committee implements activities to guarantee that the Linical Group executes business with a high level of ethics and sincerity.
• Linical and its group companies implement internal controls related to financial reporting in accordance with the Financial Instruments and Exchange Act to ensure the reliability of financial reporting.
• Linical and its group companies establish risk management systems in accordance with regulations related to risk management.
• Linical clarifies the objectives to be achieved by the company and its group companies in management plans, and evaluates and manages the state of business execution.
• Based on the “Regulations on the Management of Affiliates,” Linical receives reports on the operating results and financial data of group companies as well as other important information regularly to grasp their situations.

Linical’s Board of Directors may, in consultation with the Audit and Supervisory Committee, appoint an employee to assist the Audit and Supervisory Committee if the committee requests an employee to assist with its duties. In addition, if that employee has received instructions from the Audit and Supervisory Committee in relation to their duties, Linical ensures the effectiveness of those instructions.

The appointed employee is independent from the Directors (excluding directors who are members of the Audit and Supervisory Committee) with regard to the duties designated by the Audit and Supervisory Committee to assist it, and executes those duties under the instructions of the Audit and Supervisory Committee.

• Linical’s Directors report immediately to the Audit and Supervisory Committee if they discover any fact that may cause substantial harm to the company or a subsidiary.
• Linical’s Directors and employees report on business regularly and as requested by the Audit and Supervisory Committee.
• Linical’s Directors and employees report important internal communications to the Audit and Supervisory Committee regularly and as required.
• Linical protects people who report to the Audit and Supervisory Committee so that they are not treated disadvantageously for reason of making such reports.

If a member of the Audit and Supervisory Committee requests the advance payment, etc., of expenses required for the execution of their duties, Linical processes such expenses or debts promptly.

• Members of the company’s Audit and Supervisory Committee may attend important meetings such as meetings of the Management Committee or the Board of Directors, view important documents related to the execution of business such as circulated requests for approval, and request explanations from Directors and employees in order to grasp important decision-making processes and the state of execution of business. Directors and employees may not block these requests.
• Linical’s Audit and Supervisory Committee ensures the effectiveness of audits through its independence and authority based on the “Audit and Supervisory Committee Regulations” and the “Audit and Supervisory Committee Standards,” and works closely with Internal Audit Department to ensure the effectiveness of audits by the Audit and Supervisory Committee.