Governance

Corporate Governance

Corporate Governance

Risk Management

Overview

The MODEC Group prepares and operates a risk management system based on the "Regulation for Risk Management" and its related regulations. Under the supervisions of Board of Directors (BOD), we establish Enterprise Risk Management (ERM) conference" in order to deliberate significant risk.

The risks identified in the BoD or the Management Board (MB), as the risks to be managed with special attention due to the particularly significant impact on management without sufficient countermeasures. BoD monitors the ERM conference, and regularly receive reports form Chief ERM Organizer regarding the significant risks, and the progress and the implementation results of the responses.

Risk Management Structure of the MODEC group

We recognize all internal and external factors that adversely affect its management, such as finance loss, loss of brand image, discontinuance or suspension of our business activities, climate change, as a risk. In order to manage them, we are grasping the serious risk of the whole company and implementing countermeasures systematically and on a scheduled basis according to priority. In addition, each group company evaluates and analyzes the risk and manages it.

We prepare for the crisis such as natural disasters and categorize into three levels; Emergency (Level one), Regional Crisis (Level two), Group Crisis (Level three), and control the crisis based on its level.

Under the supervisions of Board of Directors, we monitor "CSR (ESG) Risk" as one of the categories of "ERM Risk Scenarios", and assess its impact with reviewing it regularly.

Risk Management Process of the MODEC group

<Example of CSR risk (ESG risk)>

Biodiversity conservation, Climate change, Water Use, Pollution and resource management
Accountability for Stakeholders, Health and Safety, Human rights and Local Communities, Labor Standards

Tax Transparency, Anti-Corruption, Corporate Governance

Anti-corruption

Our approach to anti-corruption and bribery

The MODEC Group conducts business free from the influence of bribery and corruption. Every employees, third party intermediaries and business partners are expected to be aware of and follow all anticorruption and bribery laws everywhere we conduct business. We must never - directly or indirectly- offer, give, promise, or authorize an unlawful, improper, or corrupt payment or bribe to or for the benefit of any person, including any Public Official.

Management Structure

  1. 1Communication and training on anti-corruption policies and procedures
    The MODEC Group conducts due-diligence on Anti-Corruption before retaining or renewing an agreement with third party intermediary and business partners based on our "Vender Vetting Policy" and "Group Third Party Intermediary and Business Policy". In parallel, we conduct training on anti-corruption through E-learning system for our directors, officers and employees once a year.
  2. 2Corruption risk assessment or management system to deal with third party intermediaries and business partners
    The MODEC Group conducts anti-corruption risk assessments on third party intermediaries and business partners at the time of contract and periodically during business term based on our "Group Third Party Intermediary and Business Partner Policy".
  3. 3Communication with third party intermediaries and business partners related to anti-corruption policies
    The MODEC group stipulates in the "Group Third Party Intermediary and Business Partner Policy" that contracts with third party intermediaries and business partners must include the anti-corruption contractual provisions provided in, or substantially similar to, the Policy.

Performance

  1. 1Training
    The MODEC Group conducts training on anti-corruption for our directors, officers and employees once a year. In 2022, a total of approximately 6,300 employees and officers have attended this training.
  2. 2Donation for the political parties and funding organizations
    The MODEC Group prohibits the use of MODEC corporate funds or resources for Political Contributions in accordance with our "Group Social Contributions Policy."

Tax Transparency

General principle

The MODEC Group's "Code of Business Conduct and Ethics" mentions the importance of fulfilling our corporate social responsibilities through compliance with laws, regulations and various international rules (such as the OECD Transfer Pricing Guidelines for Multinational Enterprises) and adhering to ethical business conduct in accordance with social norms at our international and domestic operating locations. With respect to tax affairs, the directors and employees of our group acknowledge that it is one of our important social responsibilities to contribute to the socioeconomic development of various countries. We ensure the proper payment of tax in accordance with the applicable laws and regulations of the countries and territories in which we operate, and are committed to conducting our tax affairs in a transparent manner.

Tax risk management and governance

Within our group operating a global business, departments in charge of tax affairs are responsible for understanding tax laws and practices and identifying issues within their respective countries and regions, and strive to mitigate taxation risks. Under the supervision of the Board of Directors (BoD), the CFO (Chief Financial Officer) executes operations and reports to BoD.
We make effective use of our external advisor's expertise in relation to mitigating tax risks.

Tax planning

Based on the premises outlined in this General Policy, and from the standpoint of ensuring protection of shareholder profits, we endeavor to ensure appropriate tax payments through utilizing tax incentives to the extent that such incentives are applicable for our business activities or through eliminating double taxation.

We shall not follow a strategy of avoiding taxation through utilizing tax havens.

Relationship with tax authorities

We seek to develop relationships of trust with tax authorities through various means, for example, by using available methods to obtain certainty from tax authorities such as rulings or the use of advanced pricing arrangement programs (for international transactions).