Compliance: Policies and Basic Concepts

To achieve compliance-oriented management, the Inabata Group advocates compliance in its Sustainability Code of Conduct. We have also formulated the Inabata Declaration of Compliance and the Compliance Guidelines. Our corporate activities comply not only with laws and regulations but also with recognized social rules.

We also believe that, to foster a corporate culture that emphasizes compliance, it is essential to continue the spirit of love (ai) and respect (kei) for people that our founder set out. Hence, we strive to instill our Mission, our Vision, and the IK Values within the company.

Inabata Declaration of Compliance

Compliance: Systems

We have established a Compliance Committee chaired by the president. The committee is made up of the director in charge of compliance and heads of relevant administrative offices, and meets four times a year (plus extraordinary meetings as necessary). It not only discusses compliance concerns, but may also deliberate matters involving risks unrelated to compliance as needed. Important issues discussed by the committee may be reported to the Management Council and the Board of Directors for feedback, if necessary.

In addition, the compliance subcommittees for information security, private information protection, pharmaceuticals management have been established under the Compliance Committee to discuss each issue in greater depth.

Compliance: Training

To foster a culture that emphasizes compliance, it is our aim that all Group executives and employees in Japan and overseas understand and practice our Mission, our Vision, and the IK Values. We have printed these values on handy credo cards for internal distribution. In addition to Japanese, we have created English and Chinese versions for distribution to all overseas Group companies. We have also produced videos about our management philosophy while holding value-instilling workshops, global staff meetings, and other events to embed our values across the Group.

We believe that ongoing education for individuals is essential to ensure compliance. In addition to collective training when employees join the company, e-learning resources are accessible via the corporate intranet portal. We provided training on human rights awareness and insider trading in FY2020; and on the level of compliance required by the Pharmaceuticals and Medical Devices Act, as well as on the internal whistleblowing system and human rights awareness, in FY2021. The human rights awareness training was designed mainly to prevent harassment and instill our values.

To ensure that compliance is embedded in our business activities, we have posted the Compliance Guidelines and all other manuals (human rights, the Antimonopoly Act, the Subcontract Act, the Unfair Competition Prevention Act, insider trading regulations, bribery, personal information protection, and export control) on the corporate intranet portal for quick access by all employees as needed.

Internal Whistleblowing System

Inabata’s internal whistleblowing system consists of two separate routes. The “compliance hotline” is primarily for reporting violations of laws and regulations, such as bribery and other types of corrupt activities, and incidents of serious breaches of compliance, including organizational fraud. The “counseling desk” provides mediation and coordination to help employees resolve issues related to the work environment and work relationships.

Inabata operates its internal whistleblowing system in accordance with the Internal Whistleblowing Rules. As regulations common to the above two whistleblowing routes, the rules clearly stipulate that persons engaged in responding to whistleblowing are obliged to keep the provider anonymous, and that any attempts to identify the provider or any adverse treatment of the provider or those who cooperate with the investigation are strictly prohibited, ensuring that employees who use the system to provide information do not suffer consequences for whistleblowing.

The compliance hotline also allows for anonymous reporting to an external contact, specifically a designated lawyer or an English or Chinese speaking specialist, all of whom are independent of company management, or to an internal contact, including the general manager of the Audit and Supervisory Committee Office who supports the Audit and Supervisory Committee’ performance of duties.

The rules stipulate that in the case of the whistleblowing route where the general manager of the Audit and Supervisory Committee Office is serving as an internal contact, an outside officer or independent specialist may be designated to act as an investigating body to investigate matters, such as a conflict of interest concerning an executive director, for which the Audit and Supervisory Committee determines that Inabata’s standard investigative procedures would be unsuitable.
When information is received, the rules provide clear procedures for communicating and verifying the information promptly and appropriately. The president of Inabata, who chairs the Compliance Committee, regularly reports the operational status of the internal whistleblowing system to the board of directors.

Anti-corruption

The Inabata Group Sustainability Code of Conduct and the Inabata Declaration of Compliance advocate the prevention of corruption, such as bribery and illegal payments or other payoffs to foreign public officials. The Inabata Supply Chain CSR Action Guidelines for business partners and other stakeholders also highlight our commitment to preventing corruption.

To prevent corrupt practices by employees, we have developed Compliance Guidelines as well as manuals on the Antimonopoly Act, the Subcontract Act, the Unfair Competition Prevention Act, insider trading regulations, bribery, and so forth. We inform all employees of these documents and post them on the corporate intranet portal for quick access.

The Compliance Committee, which is chaired by the president, oversees statutory violations, such as bribery and other types of corrupt activities, and serious breaches of compliance including organizational misconduct and reports regularly to the Board of Directors.

Tax Transparency

The Inabata Group believes that paying taxes is one of the most fundamental and important corporate social responsibilities. To ensure tax transparency and improve tax compliance, we have set out the Inabata Group Global Tax Policy as follows:

Inabata Group Global Tax Policy

UK Tax Strategy

Introduction

In compliance with requirements of U.K. Finance Act 2016, Schedule 19, para 16, Inabata & Co., Ltd. (IKJ) prepares and announces the following U.K. tax strategy concerning Inabata UK Ltd. (IKUK).

IKUK is a limited company, domiciled in the U.K. and a wholly-owned subsidiary of IKJ, a listed company in Japan. IKJ is the ultimate parent of IKUK. IKUK is the sole U.K. entity in the Inabata Group headed by IKJ.

This tax strategy, which is effective for IKUK's fiscal year ending March 31, 2024, was approved by the board of directors of IKJ.

Governance

The board of directors of IKJ is responsible for the corporate governance, compliance as well as overseas accounting and tax operations of Inabata Group.

Director & senior managing executive officer in charge of financial management of IKJ is responsible for Inabata Group's tax management. General manager of Financial Management Office of IKJ is responsible for the day-to-day management of U.K. tax.

Tax Risk Management

IKJ takes a conservative approach to manage taxes and seeks to reduce tax risks within the range of complying with the relevant tax laws and regulations.

IKUK's objective of its tax risk management is to comply with U.K. tax laws and regulations and pay the correct amount of tax by the due date.
IKUK confirms the applicable tax treatment and reduces its tax risks by consulting with external independent professional firms. Advice is sought from them on the tax impact of significant transactions or any changes in business and company structure, as well as recent legislative changes. Furthermore, IKUK requests external advisors to prepare and review all tax returns.

Tax Planning

IKJ is involved in IKUK's tax planning, which is aligned with IKUK's business activities and in compliance with U.K. tax rules and regulations.

Inabata Group takes a conservative approach to tax risk and does not engage in purely artificial tax arrangements that lack economic substance. However, it evaluates business options in order to raise tax efficiency.

Relationship with HMRC

IKJ is committed to the principles of openness and transparency with relevant tax authorities.

IKUK engages with HM Revenue and Customs (HMRC), with honesty, integrity and mutual respect and works collaboratively to resolve disputes and obtain certainty. Day-to-day interactions with HMRC are managed by accounting & administration manager of IKUK under directions and guidance of Financial Management Office of IKJ.