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Compliance

Basic concept
All employees exhibit correct judgment and conduct in line with corporate ethics

JTEKT positions compliance as the premise and foundation of corporate value, therefore essential to realizing our corporate philosophy. JTEKT established various compliance related company rules including "Officer Ethic Rule" "Standards for Compliance Management" and JTEKT shows conduct guidelines of our directors and employees with "JTEKT Global Conduct Guidelines". In addition to sharing with all group companies the "JTEKT Global Conduct Guidelines", JTEKT holds up a promotion activity of corporate compliance as one of the important items of "Corporate Management Guidelines for the JTEKT Group", and supports them while promoting the construction of the promotion system which balanced with the business content of each company.

Training and awareness-raising activities for all JTEKT Group Companies

JTEKT conducts ongoing training and awareness-raising activities targeting its directors, employees and all group companies regarding how compliance is deeply intertwined with our operations. We conduct annual training targeting our key corporate compliance officers (directors, auditors, Senior Executive Officer, etc.). The themes for our FY2020 training were “The legal role of officers in corporate compliance”, and provided participants with the opportunity to refresh their awareness on current status and issues for compliance of JTEKT. Moreover, we have established every July as "Compliance Awareness Month", during which our president sends out a message to all JTEKT employees, including group companies both in Japan and overseas, and compliance training materials are distributed for e-learning and workplace perusal, etc. in an effort to support compliance activities in each workplace. Even regarding internal training planned by our HR department, etc., compliance is addressed so that each employee can take the necessary cautions suitable to their rank and job type.

Compliance Self-check by all JTEKT Group companies

At JTEKT, we carry out regular check targeting all departments of JTEKT and domestic/overseas JTEKT Group companies to assess the management status regarding compliance affecting our operations.

Whistleblowing system (i)

JTEKT has set up the Corporate Ethics Consultation Desk and several other consultation desks (including those are informed to Auditors directly) to enable fine-tuned response to each matter of consultation, and making efforts prevention, early detection and recurrence prevention of scandals. Consultation desks are also individually established across JTEKT Group, including overseas group companies.

No. of whistleblowing made in past 5 years

FY 2016 2017 2018 2019 2020
No. of reports 45 50 49 35 47

Role of the internal reporting consultation desks

Compliance with competition laws / Prevention of corruption

1.Policy
With consideration to a global trend of placing importance on fairness in the transactions, features and transactions of JTEKT and JTEKT Group companies’ businesses form and products, as well as the current trend of tightening of laws and regulations and their enforcement, JTEKT places particular importance on compliance with the Anti-Monopoly Act of Japan, the laws and regulations of various countries relating to competition and acts of corruption and bribery.
In concrete terms, JTEKT’s President pledges that JTEKT and JTEKT Group companies respect fair trade practices and do not tolerate cartels, corruption and bribery (including offering money or other gifts to public officials, and offering or receiving excessive gifts and entertainment to/from private companies) as justifiable means to engage in business. JTEKT also prohibits facilitation payments (payments to facilitate or expedite regular administrative services by public officials) as conduct that could be suspected as non-compliant to laws and regulations of various countries.
In consideration with the industry-specific matters of JTEKT and JTEKT Group companies, JTEKT establishes, under the supervision of officers including directors, "Rules for Contact with a Competitor", "Anti-corruption Rules" and their guidelines as concepts to prevent non-compliance, codes of conduct and rules stipulating internal procedures. In addition, in order to prevent non-compliance with laws and regulations due to a lack of understanding of officers and employees, JTEKT’s Legal Department takes a primary role in maintaining a system allowing them to consult on any doubts in their regular day-to-day tasks.
2.Communication and Training
JTEKT conducts regular communication and training for officers and all employees (meaning all employees regardless of employment status such as permanent employment or temporary employment) on an annual basis. While the laws and regulations relating to competition or corruption and bribery are based on the universal philosophy, they are regulated by the laws and regulations unique to each country, and uniform regulations may not be familiar to the actual conditions of each region. JTEKT shares the basic ideas with each JTEKT Group companies and promote optimization in accordance with the laws and regulations of each region and the actual situation.
In regards to the status of these implementations, independent items are established and confirmed in the annual compliance self-check and audited by the internal auditing department and company auditors, in addition to periodical oversight by the Management Meeting attended by board members.
3.Risk assessment and response
With support from JTEKT's Legal Department and other specific departments, the actions to reduce the risks on the elements or types of operations which are assessed as having high risks of cartels or corruption and bribery are taken in a systematic way.
Such behaviors breaching the laws are, by the Whistle Blowing Protection Act and internal rules, subject to the whistleblowing protection system, which ensures anonymity of whistleblowers and keeping the contents of the report confidential. The system also guarantees that whistleblowers are not given any disadvantageous treatments by their companies because of their report. In addition, we state prevention to corruption on the policy of procurement activities and, in our basic contracts, provisions for both parties that mutually declare avoidance to violate antitrust or competition laws, to commit corruption or bribery, and to be used for money laundering by antisocial forces. JTEKT also has a process to confirm that there are no violations of these laws and regulations by counter party when starting a new transactions. Similarly, in the case of corporate acquisitions involving JTEKT or JTEKT Group companies, JTEKT confirm that there are no violations of these laws and regulations as an independent item of due diligence.
4.Disclosure of related information
Over the past ten years, neither JTEKT nor any JTEKT Group companies have been exposed by the regulatory authorities of any country for violations with laws and regulations relating to corruption or bribery, and there is also no expenditure associated with violations. In addition, no officer or employee has been disciplined or retired for violating corruption or bribery policies in JTEKT and JTEKT Group companies.

Initiatives for appropriate tax payment

JTEKT and the JTEKT Group understands that making the appropriate tax payments for each country and region in which business is conducted is important in order to support corporate value and realize our Corporate Philosophy. In accordance with this understanding, we respect the laws relating to taxes of each region and country we do business, as well as a spirit of cooperating with such laws.
JTEKT and JTEKT Group sets "JTEKT Global Conduct Guideline" as a result of an action by Board of Directors. This is behavioral guidelines for all executive officers and employees including President (equivalent with CEO) and Chief of Corporate Division (equivalent with CFO), and JTEKT and JTEKT Group ensure tax transparency by stipulating the following description within the guideline.
"3. Company
We will perform accounting and financial management duties in accordance with laws, regulations, internal rules, etc. in order to appropriately process accounts and pay taxes."
JTEKT and the JTEKT Group conducts businesses in approximately 30 countries and regions throughout the world and engages in trade between group companies across countries and regions. In regards to the transfer pricing during such transactions, we have established a group policy conforming to the OECD Transfer Pricing Guidelines and endeavor to appropriately declare any income gained through our businesses in each relevant country and region. Moreover, neither JTEKT nor the JTEKT Group engages in tax planning leading to tax base erosion or income transfer that abuses tax havens or tax treaties, etc. in countries or regions outside of where our business sites are located.
Furthermore, if doubts arise or are predicted to arise regarding appropriate tax payments, JTEKT and the JTEKT Group will fully cooperate with the tax authorities in each country and/or region as required. In such cases, JTEKT and the JTEKT Group accurately conveys information on its businesses to the tax authority and exchanges information with sincerity as it promotes initiatives aimed at appropriate tax payment.
Moreover, the annual securities report shows not only income tax amount as JTEKT Group but also a factor of difference between the amount and effective tax rate.
For appropriate tax payment, Chief of Corporate Division, who concurrently serves as Director, is responsible for the tax management, while the tax personnel of JTEKT and each Group company work to ensure appropriate tax management on a daily basis. In order to minimize tax risk, JTEKT and the JTEKT Group work with our external tax advisors and have given due consideration in operations where we need highly specialized expertise and experience.
JTEKT maintains a system whereby the Chief of Corporate Division reports important matters regarding risk about tax payment to the Board of directors as appropriate, then follows instructions given by the Board. Moreover, the Auditing Guidelines stipulate that the duty of our Auditors is to perform audits examining the legality of our directors’ duty execution and decision-making by the Board of Directors, etc. The Board of Auditors also performs audits of important matters regarding tax payment as appropriate.

  1. The whistleblowing system of JTEKT and JTEKT Group, in accordance with the laws such as Whistleblower Protection Act etc. and internal company regulations, protects the informant and details of reported matters as confidential information and ensures a system whereby the whistlebolwer will not in any way be treated disadvantageously by the company due to having reported a matter of concern.