Kajima carries out its business appropriately and efficiently in thorough compliance with laws and regulations while managing risks. Furthermore, we establish a basic policy on the development of internal controls and systematic steps that also covers other Group companies to ensure the credibility of our financial reports.

1. Systems to Ensure That the Execution of the Duties of Directors and Employees Complies with Laws and Regulations and the Articles of Incorporation (Companies Act, Article 362(4)(vi) and Ordinance for Enforcement of the Companies Act, Article 100(1)(iv))
   • (1)
     The Kajima Group Code of Conduct is defined as the basis of Kajima's compliance framework. In addition, the Compliance and Risk Management Committee is formed with the President as its Chairman in order to establish corporate ethics and ensure the observance of laws and regulations.
   • (2)
     The Legal Department, which has jurisdiction over compliance-related matters, establishes and maintains a compliance framework by compiling a compliance manual and providing training to all officers and employees, and by other means. In addition, other departments establish bylaws and guidelines and conduct training in their respective fields as needed.
   • (3)
     The Audit Department, an internal audit organization independent from the operational organization, conducts internal audits on the establishment and implementation of compliance frameworks as part of operational auditing.
   • (4)
     As an internal reporting system for legally suspicious acts and other compliance matters, a whistleblower system is established with the Office of Business Ethics and external outsourcing companies as contact offices.
2. Systems Regarding the Retention and Management of Information Pertaining to the Execution of the Duties of a Director (Ordinance for Enforcement of the Companies Act, Article 100(1)(i))

   Minutes, requests, and reports of the Board of Directors and the Management Committee and other important documents concerning the execution of directors' duties are appropriately retained and managed based on the Document Handling Rules and the Information Security Regulations.

3. Rules and Other Systems Related to Management of the Risk of Loss (Ordinance for Enforcement of the Companies Act, Article 100(1)(ii))
   • (1)
     Rules related to risk management are defined in order to establish a risk management system for the Group.
   • (2)
     The Compliance and Risk Management Committee is formed with the President as its Chairman in order to decide on systems and policies related to risk management and provide evaluations and guidance on the risk management system of each department.
   • (3)
     Risk officers are assigned to departments at branches, divisions, and the Head Office, and they implement risk management autonomously at their respective departments.
   • (4)
     Special-purpose committees identify risks concerning important investments and loans and discuss countermeasures.
   • (5)
     In the event of unforeseen circumstances, the Emergency Response Headquarters is set up with the President as its head in order to lay out a framework to prevent additional damage and minimize damage.
   • (6)
     The Audit Department, an internal audit organization independent from the operational organization, conducts internal audits on the establishment and implementation of risk management systems.
4. Systems to Ensure That the Execution of the Duties of a Director Is Performed Efficiently (Ordinance for Enforcement of the Companies Act, Article 100(1)(iii))
   • (1)
     A Board of Directors meeting is held monthly and as needed in order to ensure that directors' duties are executed efficiently.
   • (2)
     Important matters concerning the execution of duties assigned by the Board of Directors are discussed at a weekly Board of Directors meeting chaired by the President, and execution is decided after a deliberation.
   • (3)
     An executive officer system is introduced to improve the soundness and efficiency of management, and to define the areas of responsibility of executive officers.
   • (4)
     Annual targets of the Company and Group companies are set and used to implement performance management. The status of target achievement is reported and evaluated at the monthly meeting of the Joint Committee of Directors and Executive Officers.
5. Systems to Ensure the Propriety of Business Activities in a Group of Enterprises Comprised of the Company and any Subsidiary Companies Thereof (Ordinance for Enforcement of the Companies Act, Article 100(1)(v))
   • (1)
     In order to ensure the propriety of business activities at Group companies, the Company establishes the Kajima Group Code of Conduct as action guidelines applying to all Group companies. In addition, each Group company also establishes and implements a compliance framework in line with that of Kajima, including the formulation of a compliance manual, the establishment of a whistleblower system, and the implementation of training programs.
   • (2)
     With respect to business management, as per the Regulations for Managing Affiliated Companies, the Company requests Group companies to carry out preparatory discussions and reports about decisions on important matters and, if needed, sends its officers and employees as directors and auditors of Group companies to conduct appropriate supervision and audits.
   • (3)
     Group companies report their performance, financial conditions, and other important matters as per the Regulations for Managing Affiliated Companies.
   • (4)
     The Company defines regulations concerning the risk management at the Group and demands that Group companies establish and implement autonomous risk management systems in line with those of the Company and carry out appropriate reports as per the Regulations for Managing Affiliated Companies.
   • (5)
     If a Group company identifies any legal doubt or problem with compliance found in a request from the Company, the Group company can issue a report to the Regulations for Managing Affiliated Companies (or the Overseas Operations Division) or a Group company employee can report such doubt or problem to the contact office of his/her company or of the Company.
   • (6)
     The Audit Department audits Group companies as needed.
6. Systems Related to an Employee That Should Assist with the Duties of the Company Auditor, Particulars Regarding the Independence of the Employee from the Directors, and Particulars Related to Ensuring the Effectiveness of Instructions Given to the Employee by the Company Auditor (Ordinance for Enforcement of the Companies Act, Article 100(3)(i), (ii), and (iii))
   • (1)
     The Office of Audit & Supervisory Board Members ("Office") is established as an organization to assist with the duties of the company auditor and the assistant auditors of the Office carry out duties under instructions from the company auditor.
   • (2)
     The assistant auditors of the Office are reshuffled and evaluated after prior consultation with the company auditor.
   • (3)
     Assistant auditors are not concurrently appointed to managerial posts that engage in the execution of business.
7. Systems for the Company's Directors and Employees and Group Companies' Directors, Auditors, and Employees or Persons Who Receive Reports from Them to Report to the Company Auditor, Other Systems Related to Reporting to the Company Auditor, and Systems to Ensure That Audits by the Company Auditor Are Performed Effectively (Ordinance for Enforcement of the Companies Act, Article 100(3)(iv), (v), (vi), and (vii))
   • (1)
     Company's directors and employees and Group companies' directors, auditors, and employees or persons who receive reports from them report every important matter that affects the operations or performance of the Company and Group companies to the company auditor. Notwithstanding the foregoing, the company auditor can request that the Company's directors and employees and Group companies' directors, auditors, and employees issue a report whenever needed.
   • (2)
     The Company prohibits the disadvantageous treatment of persons who issue a report to the company auditor under the preceding item due to issuing the report, and it fully informs the directors, auditors, and employees of the Company and Group companies about the prohibition.
   • (3)
     The company auditor may attend meetings of the Management Committee and other important meetings.
   • (4)
     Expenses or obligations that arise concerning the execution of the duties of the company auditor are processed quickly after a request is made.
   • (5)
     Efforts must be made to create an environment for the company auditor to execute his/her duties.
8. Systems to Establish, Implement, and Evaluate Internal Controls concerning Financial Reporting

   In order to establish, implement, and evaluate internal controls concerning financial reporting in the Group, the Internal Control Evaluation Regulations are established, and the Internal Control Evaluation Committee on Financial Reporting is set up as an organization to evaluate and deliberate on the effectiveness of internal controls.