Compliance

This Policy defines the prevention of corrupt practices in the business activities of KE Group that complements the KE Group’s corporate philosophy, “KOKUSAI ELECTRIC Way,” in order to promote honest and fair business activities in accordance with laws and corporate ethics. This Policy embodies the concept, “Accurately identify various risks and take preventative measures to ensure business continuity," which is declared in “KOKUSAI ELECTRIC Way.” It plays an important role in fulfilling KE Group's social responsibility.

All directors, officers, and employees of KE Group shall understand that compliance in KE Group means not only complying with the laws and regulations of each country and KE Group's company rules, but also conducting honest and fair business activities in accordance with social norms and corporate ethics.

KE Group shall recognize that any and all compliance violations are detrimental to KE Group's corporate value and shall take strict disciplinary action, including dismissal or termination of employment, against any person involved in such violations, regardless of his/her position.

In addition, when initiating new transactions, KE Group shall conduct due diligence on the counterparty with respect to various risks, including Corruption, and shall take appropriate measures (including not conducting transactions) to reduce such risks with respect to the counterparty with whom such risks are identified.

Under no circumstances shall KE Group provide, offer, or promise to give bribes (including having a third party do so).

KE Group shall not make payments to public servants to speed up routine government actions (so-called facilitation payments), and shall establish and ensure compliance with appropriate procedures, including prior approval and authorization, for acts that are deemed to have a high risk of being linked to bribery, such as payments to business partners, provision of entertainments and gifts, provision of donations and political funds.

KE Group shall not engage in anti-competitive acts that violates competition laws, including cartel and bid rigging, or unfair acts, including insider trading, and shall promote fair and free competition.

KE Group shall not have any relationship with anti-social forces that disrupt international and social order and shall firmly reject any unreasonable demands from anti-social forces.

In all transactions, KE Group shall confirm that the counterparty is not such anti-social forces and require the counterparty to declare that it is not such anti-social forces.

KE Group shall provide necessary company rules in accordance with the Basic Policy set forth herein.

Company rules must be based on a risk-based approach and must be capable of achieving KE Group's compliance by establishing procedures, including documentation, for those items that are deemed to have a typologically high risk of Corruption.

Based on the Basic Policy set forth herein, KE Group shall develop the organizational structure set forth in each of the following items.

1. Establishment of Sustainability committee and Compliance committee.

2. Designation of Corporate Vice President and Executive Officer responsible of compliance as the highest representative of KE Group’s compliance.

3. Establishment of an external whistleblowing contact point where anonymous whistleblowing is possible, the content of the whistleblowing is kept confidential, and disadvantageous treatment due to the whistleblowing is prohibited.

4. Establishment of a crisis management system in case of emergency.

5. Establishment of an appropriate management system for recorded documents related to KE Group's business activities, finance, accounting, etc.

6. Implementation of continuous support to group companies based on a risk-based approach.

7. Periodic reporting to the Board of Directors on KE Group's compliance system and its continual review.

8. Establishment of all other systems necessary to achieve KE Group’s compliance.

KE Group will continuously provide all directors, officers and employees with effective education on the laws and regulations of each country that regulate Corruption, and will inform them of the purpose and content of the company rules and the organizational structure established in accordance with this Policy and ensure the thorough compliance with them.

KE Group shall conduct regular or irregular audits to ensure that its business activities are in compliance with the provisions of this Policy and shall evaluate the implementation status. The Board of Directors shall supervise the operational status of this Policy.

If KE Group, through audit or other means, identifies areas that need improvement in the effectiveness of the company rules or organizational systems established in accordance with this Policy, KE Group shall promptly make improvements.

KOKUSAI ELECTRIC CORPORATION (“KE”) and its group companies (“KE Group Companies”) (collectively referred to as "KE Group") are committed to “strengthening governance system (enhancement of corporate governance, thorough compliance, thorough management of critical business risks, ensuring transparency in management) toward realizing sustainability management” as one of the priority issues (materiality) to be addressed through the business activity, based on KOKUSAI ELECTRIC Way, KE Group's corporate philosophy. Compliance for KE Group shall be taking the correct action as a company or individual that is trusted by society in light of corporate ethics, considering observing laws, regulation and the article of incorporation as a matter of course. With regard to taxation, KE Group shall strive to maintain and improve compliance through development of guidelines and internal group rules, and training for employees.

This Tax Management Policy shall apply to all officers and employees of KE Group.

KE Group shall comply with the laws and regulations of all countries and regions in which the business activities are conducted and comply with the criteria published by international organizations such as the OECD*1 Transfer Pricing Guidelines and the BEPS*2 Action Plan to ensure proper tax reporting and payment. In addition, KE Group shall not engage in intentional acts for the purpose of tax avoidance that are not in line with the actual business objectives, nor shall KE Group develop tax strategies that deviate from normal business activity.

*1 OECD (Organization for Economic Co-operation and Development)

*2 BEPS (Base Erosion and Profit Shifting)

KE has established “Basic Policy on Governance System” to deal with various risks including taxation as well as supervision by Board of Directors. The roles of each company in KE Group with respect to taxation are as follows:

1. KE (Parent Company): Establish tax-related guidelines and internal group rules, and properly perform the tax-related duties in cooperation with KE Group Companies. In particular, with respect to tax risks associated with international transactions between Group Companies, KE shall work with Group Companies and outside international tax specialists to address the issues.

2. KE Group Companies: Properly perform the tax-related duties such as tax reporting and payment in accordance with the guidelines and internal group rules established by the Parent Company. In addition, provide reports and submit tax-related documents to the Parent Company.

KE Group shall ensure tax transparency by strengthening tax governance and implementing fair and timely disclosure of financial status.

KE Group shall be committed to establishing, maintaining and developing honest and good cooperative relationships with tax authorities in all countries and regions where KE Group conducts business activities through increased transparency. In addition, KE Group shall take appropriate corrective and remedial measures for items that have been pointed out by the tax authorities in the past to prevent recurrence.

Amendment or repeal of this policy shall be by resolution at Board of Directors meeting.