Information for Investors
An Overview of Our Progress and Achievements in Corporate Social Responsibility

Basic Policy on Internal Control (for FY2018)

The Internal Control System at Dentsu is designed to encourage compliance among directors, executive officers, and employees while it supports continuous corporate development as the Company strives to meet its social responsibilities.
The Company has chosen the Dentsu Group Code of Conduct to define the parameters of acceptable behavior, which ensures that directors, executive officers and employees of Dentsu and its subsidiaries comply with all laws, regulations, and the Articles of Incorporation during the course of their duties and that business is conducted appropriately. The Internal Control/Compliance Committee is charged with creating, operating, and improving the System.

1. Compliance System for Directors, Executive Officers and Employees

  • (1) Directors and executive officers must perform their duties appropriately, in accordance with rules such as the Board of Directors’ Rules, Rules for the Operation of the Group Executive Management Committee, Directors’ Rules, and Executive Officers’ Rules.
  • (2) If a Director or an Executive Officer discovers a violation of the prevailing laws or comes across any other serious compliance-related issue, it is imperative that he/she reports it without delay to the Board of Directors or the Group Executive Management Committee. The Audit and Supervisory Committee must also be immediately advised of the circumstances.
  • (3) The departments reporting to the CSR Committee create internal policies and manuals and conduct training to improve and enhance the compliance system for employees. The Internal Audit Office, which reports directly to the President & CEO, conducts internal audits.
  • (4) The Company has set up an internal reporting and proposal system to respond appropriately in the event a law is broken or some other internal compliance issue arises.
  • (5) If the Audit and Supervisory Committee states opinions on the Company's compliance system or require steps to improve the system, directors and executive officers must respond without delay and make the recommended improvements.
  • (6) The Company has established a department to facilitate the termination of business relationships with organized crime groups and elements thereof—termed "antisocial forces" in Japan—when a link is discovered and to resolutely refuse any and all future transactions. This department functions as the liaison between the affected in-house divisions and the relevant authorities to expedite an appropriate course of action.

2. Systems to Ensure Efficient Execution of Duties by Directors and Executive Officers

  • (1) In addition to meetings of the Board of Directors, Dentsu holds meetings of the Board of Group Executive Management Committee, Dentsu Domestic Board, the Dentsu Aegis Network Board of Directors and Various Committees. These meetings provide opportunities to discuss important matters pertaining to management policy and strategy, and to make executive decisions expeditiously.
  • (2) Items resolved at such meetings are transmitted to all employees through the corporate structure for prompt reflection in the execution of duties. Urgent items are posted on the internal electronic bulletin board in the interest of rapid dissemination.

3. Storage and Management of Information Related to the Execution of Duties by Directors and Executive Officers

Information concerning the execution of duties by Directors and Executive Officers is stored and managed appropriately, in accordance with the Company's Documentation Management Rules and Information Management Rules.

4. Risk Management System

  • (1) Dentsu establishes risk management regulations to maintain and improve a structure that precludes the spread of damage or loss and minimizes the impact of risk progression in the event risks become reality. The Company performs self-checks with regard to the situation of risk management under the Internal Control/Compliance Committee, selects key risks to be handled, and implements risk management based on concrete response plans.
  • (2) The response policy for material risks in management and other material items concerning risk management are reported to the Board of Directors and the Audit and Supervisory Committee.

5. Internal Structure to Support the Audit and Supervisory Committee and their Independent Status

The Company maintains an Audit and Supervisory Committee Office, which consists of employees who assist the Audit and Supervisory Committee in their duties. This office reports directly to the Audit and Supervisory Committee, thereby preserving its independence from Directors (excluding Directors who are Members of the Audit and Supervisory Committee) and Executive Officers and effectiveness of instructions from Audit and Supervisory Committee.

6. System for Reporting to the Audit and Supervisory Committee and Improving Audit Effectiveness

  • (1) Policies are in place to define issues that Directors (excluding Directors who are Audit and Supervisory Committee members), executive officers, and employees (hereinafter called “officers and employees”) of Dentsu and its subsidiaries are required to report to the Audit and Supervisory Committee, while at the same time, the system ensures that significant matters that have an impact on Dentsu’s business operations or business results are reported by executives and employees to the Audit and Supervisory Committee in a certain and prompt manner.
  • (2) In the event that the Audit and Supervisory Committee request information other than that indicated above, executives and employees of Dentsu and its subsidiaries are still required to respond without delay.
  • (3) It will be ensured that parties who report under the condition of the previous items do not receive harmful treatment as a result of reporting.
  • (4) Pursuant to laws and regulations, a policy will be defined to account for expenses, etc., incurred during the course of execution of duties by the Audit and Supervisory Committee, and this information will be disseminated to concerned parties.
  • (5) To enhance audit effectiveness, the Internal Audit Office and Independent Auditors collaborate.

7. Internal Control System for the Dentsu Group, Including Subsidiaries

Starting with the following items, matters that subsidiaries must establish and operate as members of the Dentsu Group will be defined, and the establishment, operation, and improvement of the Dentsu Group’s internal control system will be promoted.

  • (1) The Dentsu Group Code of Conduct was drafted as the standard for acceptable corporate behavior and embraces the entire Group, including subsidiaries. Each subsidiary passes a resolution on the adoption of the Code.
  • (2) In addition to receiving periodic reports from subsidiaries concerning the business operations, business results, and other significant matters that may have a significant effect on the business operation or business results of Dentsu, subsidiaries will request advance approval or report to Dentsu.
  • (3) Through Dentsu Aegis Network, which oversees each subsidiary outside of Japan within the Dentsu Group, decision-making and business execution in business operations outside of Japan will be made in an efficient manner.
  • (4) Subsidiaries will define standards pursuant to the Dentsu Group Code of Conduct, and by resolution of a meeting of the Board of Directors, etc., will ensure compliance and risk management as members the Dentsu Group.

8. System to Ensure Appropriateness of Financial Reporting

  • (1) Through the Internal Control/Compliance Committee, Dentsu continually supports a system that ensures appropriateness in financial reporting by the Group.
  • (2) Subsidiaries and departments involved in business activities perform self-checks through the course of day-to-day operations to determine if internal controls are functioning properly.
  • (3) The Internal Audit Office monitors the Internal Control System from a perspective free of operational bias to assess the effectiveness of internal controls related to financial reporting.