Compliance

Basic Approach

As any violation of laws and regulations or a scandal would hinder Hitachi High-Tech Group’s basic philosophy of being trusted by all our stakeholders and severely damage corporate value, the Group holds thorough compliance (complying with laws, company rules, social justice, public order, and standards of decency, etc.) as the premise for all our business activities. Through an approach of surely practicing judgement and conduct based on ethics and integrity, and on putting right and wrong over profit and loss, we are conducting initiatives including the operation of an internal reporting system and the implementation of compliance education and awareness-raising activities for employees in an effort to promote compliance activities throughout the Group.
In addition, our Group is committed to acting as a member of the Hitachi Group to follow the One Hitachi Compliance approach in our activities. These include complying with into the Hitachi Group Code of Ethics and Business Conduct as a unified Hitachi Group policy, establishing and strengthening our compliance framework, introducing and unifying a compliance notification system, preventing antisocial transactions and money laundering, preventing bribery and corruption, complying with competition laws, implementing rigorous export management, and so on.
Regarding Hitachi Group's compliance initiatives, which include our initiatives, please see here.

Organization

The Group has established the Compliance Committee, which meets regularly to discuss, on a Company-wide basis, the status of compliance risks, plans for countermeasures to reduce the risks, and the status of implementation of such measures. More specifically, responsibility for addressing each particular type of risk has been assigned to a specific department; the head of the department in charge of tackling a particular type of risk envisages and evaluates that risk, as well as implementing measures to deal with it, such as providing in-house education concerning relevant legislation and internal rules. In addition, the manager concerned identifies new compliance risks that are a concern. If a compliance related incident occurs, the Company will hold an ad hoc meeting to determine the facts, trace the causes, take corrective measures and discuss how to prevent recurrence.

In addition, the heads of business groups, branch offices, and Group companies appoint Compliance Managers for their respective organizations. The Compliance Managers work under the direction of the Chairperson of the Compliance Committee to manage the compliance system of their respective organizations by constructing compliance systems within their respective organizations, implementing compliance measures and reporting to the Compliance Committee. With regard to compliance risk, each organization conducts regular revisions and self-checks whether its risk activities are appropriate.
The Group has designated October as its annual Corporate Ethics Month, during which each managing unit conducts compliance education and other initiatives aimed at ensuring thorough awareness of the need for corporate ethics and compliance.

The Hitachi High-Tech Group has introduced the Hitachi Group unified whistleblowing hotline system (for Japan and overseas) for the purpose of quickly detecting and responding to incipient legal violations and improper conduct. The system can be used by executives, employees, senior employees, partner employees, temporary agency workers, retired personnel, and so on. We are taking these steps in order to enhance our self-correcting functions in order to quickly detect and respond to incipient legal violations or improper conduct.
In FY2022, there were 22 consultations and reports in the Group as a whole. Personnel with specialized knowledge confirmed the details of each report and responded appropriately, including implementing corrective measures and the like, while acting in accordance with the principles of the duty of confidentiality.

In accordance with the fundamental policies of the Hitachi Group, the Hitachi High-Tech Group clearly expresses its stance of not tolerating any corrupt conduct including bribery and kickbacks or any violations of laws and regulations by employees and business partners. With the participation of Hitachi High-Tech’s Board of Directors, we adopted the Hitachi Group Code of Ethics and Business Conduct, the common standards of the Hitachi Group that include anti-corruption provisions, and we inform personnel about the Code. The Hitachi Group has also established the Hitachi Group Bribery and Corruption Prevention Rules and other related rules, and these rules provide that in cases where officers or employees provide or receive entertainment or gifts or make political contributions (political donations), they may not exceed the scope permitted by anti-bribery related laws and regulations and that the internal rules of the Company and the Hitachi Group must be complied with. The rules also set specific limits on the amounts and number of times concerning entertainment and gifts provided to public officials, prohibit facilitation payments, and specify supplier screening procedures. The Group complies strictly with the anti-bribery laws of individual countries and regions, such as the United States Foreign Corrupt Practices Act (FCPA), which have been made even stricter in recent years.
To inform personnel about these anti-bribery and anti-corruption policies and rules, we require all Group employees to attend training that incorporates uniform Group-wide training measures at least once each year.

Response to the Conflict Minerals Issue

Hitachi High-Tech Group's policy is to not use conflict minerals in our products and commercial goods. Conflict minerals include columbite-tantalite, cassiterite, gold, and wolframite, mined in the Democratic Republic of Congo (the "DRC") and adjoining countries (together the "DRC countries"), which may be used to finance conflicts. Hitachi High-Tech has constructed a conflict minerals survey for suppliers and is promoting it within the company. We will continue our efforts to procure minerals that are not mined in conditions of armed conflict and human rights abuses.

Export-Import Management

We comply with the Foreign Exchange and Foreign Trade Act (Foreign Trade Act) and agreements related to international trade in order to contribute to international peace and safety through export management.
In addition to respecting the laws, regulations, and other such requirements in foreign countries where we have business connections, at the same time we are also improving our system of control and our in-house regulations, and we are managing our export-related operations.

We have put in place independent export management departments consisting of director with representative authority as chief executives of export management. We also establish auditors and authorizers at each headquarters. They judge whether it is necessary to apply for export permission for products and technology in a department, and they conduct audits of transaction contents.

• We will formulate plans for training and audits.

• We check for concerns about the customer or purpose in all transactions.
• We determine whether any products or technology to be exported are subject to legal restrictions.
• Instructions are issued for appropriate procedures in accordance with the results from audits of transaction contents.

• We regularly carry out audits to confirm conformity with laws and internal regulations concerning exports.
• Upon discovering an event that could lead to an export management incident or grounds for confusion in decision making in terms of only laws and regulations, we investigate the cause, consider necessary measures to avoid risk, and take improvement and corrective actions.

• We provide education on export management to employees in response to the circumstances and considering their knowledge, experience, and field, in line with the latest laws and regulations, in order to increase awareness of export management and prevent incidents. In order to provide flexible support for remote working, we have also introduced e-Learning to make it possible to receive export management education at any time and any place, and we are working to improve the content of that education.
• We are developing infrastructure such as by making a database of information on determining applicability and making an electronic system for internal processes.

• We are improving business management through proactive participation in external organizations’ events related to security export controls, obtaining the latest information and ascertaining industry trends at an early stage and conveying them in the company and throughout the Group, and revising internal regulations when necessary.
• We are working hard to have the opinions of private enterprises and industry reflected in laws and regulations.

FY2022 Activity Results (Export Management)

1. Conducted export management training for employees of the Company and Group companies (total of more than 14,000 participants)
2. Conducted export management audits at 10 Company and Group Company sites (on-line remote audits were conducted due to effects of the COVID-19 pandemic)

Fundamental Approach Concerning Import Management

We created import management mechanisms to ensure rigorous compliance with domestic laws and regulations concerning import controls. Specifically, we established internal rules on import transactions established clear review procedures requiring confirmation of whether cargo is subject to regulation under domestic laws and regulations before importation and if so, ensuring legal compliance. We also support on-site import-related operations and perform compliance management so that application for permits, approvals, and so on can be applied for without omission in accordance with established laws and regulations.

Results of Activities in FY2022(Import Management)

1. Education to maintain awareness of compliance in import management provided in the company and Group companies in Japan (more than 2,100 participants in all)
2. Consultation on legal research and compliance provided concerning direct import transactions
3. Audits of compliance with import management laws implemented in the company and at four sites in Group companies in Japan(Remote audits conducted online was implemented due to the impact of the COVID-19 pandemic)

Tax Transparency

The Hitachi High-Tech Group is cognizant that ensuring tax transparency is a part of its corporate social responsibility and it is addressing the below matters:

The Hitachi High-Tech Group complies with tax laws and regulations in all countries and regions where it conducts business, it further conforms to standards and guidelines published by OECD and other such organizations, and it pays the proper taxes in observance of the spirit of those laws and regulations.

The Group does not make improper use of tax havens or countries with low tax burdens or improperly use tax structuring for the purpose of tax avoidance and contributes to the economic development of all countries and regions where it conducts business by fulfilling its duties as a responsible tax payer. With regard to transactions within the Group, it implements management of transfer pricing in accordance with OECD transfer pricing guidelines and the transfer pricing tax systems in the countries or regions where the companies are located.

The Hitachi High-Tech Group strives to build, maintain, and develop honest and positive relations with the tax authorities in all the countries and regions where it conducts business. The Group further maintains healthy and sound relations with tax authorities and does not engage in the provision of improper benefits.

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