SustainabilityGovernanceCompliance

Corporate Ethics and Behavior Guidelines

TOCALO officers and employees, in their daily activities, follow the Corporate Code of Conduct, which is based on our management philosophy, and the Corporate Ethics and Behavior Guidelines, which provide specific action guidelines for practicing the Code of Conduct. To ensure our actions accord with the Code of Conduct, we maintain internal rules and carry out activities necessary for ensuring full compliance with all laws and corporate ethical standards.

Compliance Handbook

We distribute our Compliance Handbook to all officers and employees to ensure full awareness and understanding of our policies. Acting in accordance with corporate ethical standards is fundamental to our corporate activities not for earning the trust of society and supporting sustaining growth that leads to profit, but also for complying with laws, social norms, ethics and morals, acting with environment awareness, and contributing to local communities.

Clean Line System

The Human Resources and General Affairs Department provides a “Clean Line System” for internal reporting. Available at all work sites, the system provides a contact point outside the immediate framework of a superior or manager to any employee seeking consultation concerning behavior that violates or possibly violates the law, internal rules, or the Corporate Ethics and Behavior Guidelines (such as false declaration or concealment related to business activities, security violations, bribery, corruption, discriminatory treatment, child labor, or forced labor). The consultation is strictly confidential and any unfavorable treatment to an employee seeking consultation is prohibited. The Clean Line System enhances our compliance management by enabling early discovery and correction of non-compliant actions.

• Number of consultations received through the Clean Line System: 3 (FY2023)

External reporting contact

The Company established an external reporting system in November 2021. The system provides a third-party organization for reporting or consultation of issues for which an employee is not comforting about discussing with a superior or through the internal Clean Line System. The external reporting contact handles reports concerning law violations, provides consultation on harassment issues, mental issues, opinions, requests, and proposals for improvement.

• Number of consultations received through the external reporting system: 13 (FY2023)

Harassment prevention

Harassment in the workplace is a socially unacceptable act that not only damages the working environment, but also violates an employee’s personal dignity and ability to effectively use their abilities. TOCALO makes it abundantly clear and ensures all employees are aware that the company prohibits and takes steps to prevent all forms of harassment, including power harassment, sexual harassment, and harassments related to pregnancy, childbirth, childcare leave, and family care leave.

Information security

As a specialized manufacturer of surface modification processing, we seek to be a “problem-solving company” that accurately and promptly responds to customer needs and an “R&D-driven company” that is constantly pursuing high-quality, high-functional coatings.

For us to be that kind of company, information security is critical. We ensure the security of our information with the following measures.

1. Information security management rules
2. Information security training for executives and employees
3. Confidential information safety management for subcontractors
4. Self-directed inspections and internal audits of compliance status
5. Regular review of the information security management system

We provide annual information security education and training to all employees and relevant parties to improve information security literacy and to ensure the proper management of the Group’s information assets.

Import and export procedures and security trade control

We maintain both Export Control Regulations and Import Control Regulations and also engage security trade controls to ensure we comply with export laws and regulations, such as the Foreign Exchange and Foreign Trade Act, which Japan adopted for the purpose of maintaining international peace and security. Our security trade controls include ongoing education programs on legal matters for relevant departments and regularly scheduled compliance audits by the Internal Audit Department.

Compliance Committee

A Compliance Committee composed of the general managers of each division, the manager of the HR & General Affairs Division, the manager of the Corporate Planning Division, and others has been established to oversee compliance with laws and regulations, the Articles of Incorporation, and the Company’s internal rules and to ensure our activities are in line with corporate ethical practices. The committee meets quarterly to monitor, deliberate, and assess measures related to risk in the areas of compliance, rejection of antisocial forces, the environment, natural disasters, quality, information security, credit management, and import/export management.

Group Audit & Supervisory Board Member Liaison Council

The Group maintains a Group Audit & Supervisory Board Member Liaison Council that meets for auditors from all Group companies to report on the current status of their companies and confirm and share management issues and other items. The council meets quarterly to report and exchange views on the management status of affiliated companies, credit management, internal reporting, litigation, and other issues, with the objective of enhancing the effectiveness of audits of the Group’s overall management, and improving the auditing skills of the corporate auditors at the Group companies.

Corruption prevention

TOCALO Group Anti-Bribery Policy

The TOCALO Group Anti-Bribery Policy was adopted to ensure compliance with the laws and regulations concerning the prohibition of bribery in each country and region where the Group conducts business activities, to conform to the rules and guidelines of each Group company, and to practice actions in accordance with corporate ethics.

1. Prohibition of bribery

   All Group officers and employees shall not engage in the following acts.
   (1) Bribery of public officials
   The provision of money or other benefits to public officials or other entities in connection with their duties. Includes facilitation payments (payments of small amounts of money to facilitate or expedite procedures for day-to-day administrative services).
   (2) Bribery to non-public officials
   The provision of money or other benefits to officers or employees of business operators with the intention that they would perform illegal or unfair practices so our business would receive beneficial business treatment.
   (3) Receiving bribery payment
   The demanding of money or other benefits from other business operators or public officials in exchange for beneficial business treatment.

2. Anti-bribery system

   The Group operates a fair and impartial whistleblowing hotline, regularly convents the Compliance Committee, and maintains an organizational structure to preclude bribery.

3. Education and training

   The Group conducts regularly scheduled education and training for officers and employees to ensure and heighten ethical awareness with the intention of preventing bribery and enhancing the effectiveness of the anti-bribery system.

4. Internal audits and system review

   The Group conducts regular internal audits to verify that the anti-bribery system is functioning properly and uses the results to improve, as necessary, the effectiveness of the system and the Anti-Bribery Policy.

5. Recording and archiving transaction data

   The Group complies with the Anti-Bribery Policy for accountability by operating an appropriate internal control system of maintaining accurate records and related forms reflecting actual conditions, such as accounting ledgers and other records related to expenditures.

6. Severe punishment

   The Group will severely punish officers and employees who violate the Anti-Bribery Policy in accordance with the employment regulations of each Group company.

June 16, 2023

• Number of employee disciplinary actions and terminations resulting from corruption-related violations: 0
• Cost associated with fines, penalties, and settlements related to corruption: 0