Basic Internal Control Policy
In accordance with the Companies Act and the Ordinance for Enforcement of the Companies Act, Ubiquitous AI Corporation hereby establishes the following Basic Internal Control Policy to ensure the propriety of operations within the corporate group comprising the Company and its subsidiaries (hereinafter referred to as the "Group Companies").
1. System to Ensure that the Execution of Duties by Directors and Employees of the Company and Its Subsidiaries Complies with Laws, Regulations, and the Articles of Incorporation
(1) Corporate Governance
① Board of Directors
The Board of Directors shall make important decisions regarding management in accordance with applicable laws, regulations, the Articles of Incorporation, resolutions of the General Meeting of Shareholders, and the Board of Directors Regulations, and shall supervise the execution of duties by Directors. The Company shall also appoint outside directors to maintain and strengthen the Board of Directors' oversight functions.
② Directors
Directors shall execute the business of the Company in accordance with laws, regulations, the Articles of Incorporation, resolutions of the Board of Directors, the Duties and Authority Regulations, and other internal regulations, based on the roles determined by the Board of Directors.
③ Representative Director
The Representative Director shall report on the status of business execution to the Board of Directors.
④ Audit & Supervisory Board Members
Audit & Supervisory Board Members shall exercise the powers vested in them by law and, in collaboration with the Internal Audit function and the Accounting Auditor, conduct audits of the propriety of Directors' execution of duties in accordance with the Audit & Supervisory Board Regulations and the Audit & Supervisory Board Member Auditing Standards.
⑤ Directors of Subsidiaries
Directors of subsidiaries shall execute the duties of their respective subsidiaries in accordance with applicable laws, regulations, the Articles of Incorporation of the subsidiaries, and other internal regulations, based on the roles determined by the Board of Directors of the Company.
⑥ Audit & Supervisory Board Members of Subsidiaries
Audit & Supervisory Board Members of subsidiaries shall exercise the powers vested in them by law and, in collaboration with the Company's Internal Audit function and the Accounting Auditor, conduct audits of the propriety of the execution of duties by the directors of the respective subsidiaries.
(2) Compliance
The Company shall establish Compliance Regulations and a Compliance Secretariat, and shall endeavor to enhance its compliance framework through the planning and implementation of compliance education and training, and the development of an internal reporting system. Decisions regarding compliance initiatives and monitoring of progress shall be made by the Board of Directors, with the President serving as the overall responsible officer.
(3) System for Ensuring the Accuracy of Financial Reporting
The Company shall comply with the Accounting Regulations, other internal regulations, applicable accounting standards, and all relevant laws and regulations, and shall enhance the framework for ensuring the accuracy of financial reporting.
(4) Internal Audit
In accordance with the Internal Audit Regulations, the Company shall conduct regular internal audits covering all business activities, examining compliance with applicable laws, regulations, the Articles of Incorporation, and internal regulations, as well as the appropriateness of the procedures and substance of duty execution.
2. System for the Storage and Management of Information Relating to the Execution of Directors' Duties
(1) Storage and Management of Information
Directors shall appropriately store and manage, in accordance with the Document Management Regulations and other internal regulations, not only statutory documents such as minutes of General Meetings of Shareholders and minutes of Board of Directors meetings, but also documents (including electromagnetic records; the same applies hereinafter) containing important information related to the execution of their duties, together with related materials.
(2) Access to Information
Directors and Audit & Supervisory Board Members may access the information referred to in the preceding section at any time.
3. Regulations and Other Systems for Managing the Risk of Loss
Recognizing that risk management is a critical management challenge, the Company shall establish a Sustainability Committee and put in place necessary risk management frameworks and methodologies — including various management regulations, operational standards, investment criteria, risk limits, transaction limits, and reporting and monitoring systems — to address market risk, credit risk, country risk, investment risk, CSR and compliance risk, information security risk, and other various risks. The Company shall manage all risks across the organization both comprehensively and individually.
4. System to Ensure the Efficient Execution of Directors' Duties
Clarification of Duties, Authority, and Responsibilities
To ensure the proper and efficient execution of duties, the Company shall maintain various internal regulations, including the Business Allocation Regulations and the Duties and Authority List, and shall clarify the authority and responsibilities of each officer.
5. System to Ensure the Propriety of Operations within the Group Companies
(1) The Company shall dispatch Directors or Audit & Supervisory Board Members of the Company to serve as directors or audit & supervisory board members of subsidiaries, in order to monitor, supervise, or audit the execution of duties by the directors of such subsidiaries.
(2) The Company shall ensure timely awareness of the overall operational status of the Group by requiring the directors of subsidiaries to report to the Company's Management Meeting or Board of Directors regarding subsidiary business plans, management status, and operational execution status, and shall provide guidance on improvement measures to subsidiaries as necessary.
(3) The terms and conditions of transactions between the Company and its subsidiaries shall be determined in a manner that does not result in a significant disadvantage to either party or give rise to arbitrariness, as compared with general transaction terms.
6. Matters Concerning Employees Assisting in Audit & Supervisory Board Members' Duties, Their Independence from Directors, and the Effectiveness of Their Instructions
(1) Appointment of Assisting Employees
Regarding assisting employees, the Board of Directors shall consult with the Audit & Supervisory Board Members and appoint and place such employees as necessary. Audit & Supervisory Board Members may instruct assisting employees on matters required for audit duties.
(2) Authority of Command and Personnel Authority over Assisting Employees
During the period designated by the Audit & Supervisory Board Members for assistance, the authority of command over assisting employees shall be transferred to the Audit & Supervisory Board Members, and Directors shall have no authority of command over such employees. Additionally, performance evaluations, personnel transfers, and disciplinary actions concerning assisting employees shall require the prior consent of the Audit & Supervisory Board.
7. System for Directors and Employees of Group Companies to Report to the Audit & Supervisory Board Members
(1) Directors and other officers shall regularly report on the status of their own duty execution to the Audit & Supervisory Board Members.
(2) Directors shall report to the Audit & Supervisory Board Members, in addition to matters prescribed by law, on the following matters as they arise:
- Details of decisions that materially affect financial and business conditions
- Contents of announcements regarding business performance and performance outlook
- Findings and results of internal audits, and countermeasures for identified issues
- Details of administrative actions
- Other matters requested by the Audit & Supervisory Board Members
(3) Employees may report directly to the Audit & Supervisory Board Members if they find any fact that may cause material harm to the Company or serious violations of laws, regulations, or the Articles of Incorporation.
8. System to Ensure that Individuals Who Have Made Reports to the Audit & Supervisory Board Members Are Not Subject to Unfavorable Treatment
The Company shall prohibit unfavorable treatment of individuals who have made reports to the Audit & Supervisory Board Members on the grounds of having made such reports, and shall ensure that this prohibition is thoroughly communicated to all Directors and employees.
9. Policy Concerning the Advance Payment or Reimbursement of Expenses Arising from the Execution of Audit & Supervisory Board Members' Duties
When a request is received from an Audit & Supervisory Board Member for advance payment or reimbursement of expenses arising from the execution of their duties, the Company shall promptly process such expenses or liabilities so as not to impede the execution of the Audit & Supervisory Board Member's duties.
10. Other Systems to Ensure the Effectiveness of Audits Conducted by the Audit & Supervisory Board Members
(1) Collaboration Between Internal Audit and Audit & Supervisory Board Members
The Audit & Supervisory Board Members shall consult with the Internal Audit department on the annual internal audit plan, hold regular meetings to discuss and exchange views on internal audit results and identified issues, and thereby ensure close information sharing and coordination.
(2) Engagement of External Specialists
When the Audit & Supervisory Board Members deem it necessary in conducting audits, they may independently engage lawyers, certified public accountants, or other external specialists.
11. Basic Policy on Exclusion of Antisocial Forces and Current Status
(1) The Company has established Guidelines for Responding to Antisocial Forces and is committed to establishing a corporate culture that maintains no relationship whatsoever with antisocial forces, including organized crime groups. The Company has no ties of any kind with antisocial forces.
(2) Severing all ties with antisocial forces is an absolute requirement from both a compliance perspective and a corporate defense standpoint. The Company is committed to ensuring that all officers and employees are thoroughly aware of the potential risks associated with antisocial forces.
Ubiquitous AI Corporation
