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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. Believing that compliance is not merely about observing laws, but also fulfilling our social responsibility in accordance with corporate ethics, JTEKT has established the Ethics Code for Directors and Officers, Compliance Standards, etc.

Training and awareness-raising activities

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 workshops targeting our key corporate compliance officers (directors, auditors, managing officers, etc.). The themes for our FY2018 workshop were prevention of organizational fraud such as quality data tampering, and provided participants with the opportunity to refresh their awareness on these issues through a lecture by an external lawyer, etc. Moreover, we have established every July as "Risk Management 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

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 consultation desks (i)

JTEKT has the Corporate Ethics Consultation Desk and several other consultation desks (aimed 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 the JTEKT Group, including overseas group companies.

No. of whistleblowing made in past 5 years

FY 2014 2015 2016 2017 2018
No. of reports 51 51 45 50 49

Role of the internal reporting consultation desks

Compliance with competition laws / Prevention of corruption

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 (ii) as justifiable means to engage in business. 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. JTEKT also conducts regular training for officers and employees (iii) on an annual basis. (iv)
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 reporting to the management meeting. With support from JTEKT's Legal Department and other specific departments, the actions to reduce the risks on the 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, 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.
Moreover, when starting business with new business partners, JTEKT confirms their compliance by including a clause in JTEKT’s Basic Transaction Agreements in which each signing party pledges that it does and will not engage in conduct that violates the Anti-Monopoly Act and competition laws and regulations of various countries, not engage in corruption or bribery and, not itself be an antisocial force, nor be affiliated with an antisocial force in order to avoid misuse towards money laundering, etc. In the same way, any company acquisitions executed by JTEKT and JTEKT Group companies entail due diligence as an independent item in order to confirm these abovementioned non-compliance issues do and will not arise.

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. JTEKT and the JTEKT Group accurately conveys information on its businesses 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.

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 consultation desks of JTEKT and the 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 whistleblower will not in any way be treated disadvantageously by the company due to having reported a matter of concern.
  2. In order to avoid offering money or other gifts to public officials, etc., and offering or receiving excessive gifts and entertainment to/from private companies, JTEKT and JTEKT Group companies have defined these acts as corruption and bribery. Moreover, JTEKT 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. Over the past ten years, neither JTEKT nor any JTEKT Group companies have been exposed by the regulatory authorities of any country for non-compliance with laws and regulations relating to corruption or bribery.
  3. At JTEKT and JTEKT Group companies, the training is targeting at all employees regardless of employment status.
  4. These legal areas, while based on a common global philosophy, are regulated by the laws and regulations of various countries, and no single regulation can be applied across-the-board to suit the circumstances of individual regions. JTEKT shares the basic concept with JTEKT Group companies at the same time as promoting optimization in line with the laws and regulations and actual state of affairs in each individual region.