Anti-Corruption and Compliance

Yokogawa has a basic policy for performing its business activities with high ethical standards, putting the highest priority on “compliance,” defining the basic principles of compliance as “Yokogawa group companies’ code of conduct,” and following laws, regulations, ordinances, and other social norms. Matters of problems one may face in his/her daily work are defined in “Yokogawa Group Compliance Guideline” and thoroughly disseminated to the group companies to observe and spread the corporate ethics of Yokogawa. To prevent wrongdoings and scandals, two pillars, “Creating a corporate culture that prevents misconduct” and “Creating system that prevent unethical conduct,” are made up to promote healthy business activities that every employee is encouraged to take part in.

Two-pillars Structure

Provision of Compliance Promotion Structure

To create “Creating a corporate culture that prevents misconduct” and “Creating system that prevent unethical conduct,” Yokogawa group powerfully promotes business management complying with laws and regulations by setting up a department in charge of corporate ethics to prepare a system of compliance and find and work out problems. It also moves forward with creation of a global compliance promotion system that is closely related to work places.
On domestic front, a compliance promoter, who also serves as a consultant, is carrying out promotion activities for get all the employees to become aware of compliance and to actually act in compliance with laws and regulations. The compliance secretariat and the representative of the compliance promoter of each organization participate in a periodically held “compliance committee meeting” to share information and manage progress in activities.

Provision of Compliance Promotion Structure

Anti-Corruption and Bribery

Yokogawa is grappling with prevention of corruption in any form, including coercion and bribery, in which power is abused to personal interest, by stipulating in its code of conduct, the relations with suppliers, politicians, and administrators, and prohibiting conflicts of interest. Specifically, rules such as “Yokogawa Group Compliance Guideline” and “Bribery Prevention Guideline” are laid down and operated, and enlightenment activities and surveys into awareness of compliance are conducted as a part of promotion of compliance to spread the awareness and thoroughly follow laws and regulations.

Anti-Bribery

Yokogawa follows the bribery prevention law of each country where its group company performs business activities, in order to prevent bribery involving public servants and private citizens both at home and abroad.
It also assesses and controls risks of bribery with the group companies. In addition, “Anti-Bribery Guideline” is established and disseminated to all the employees to prevent bribery and carry out fair and appropriate business activities. “Supply Chain CSR Guideline” stipulates how to prevent bribery in cooperation with suppliers.
No case of bribery, violation of laws, or sanctions was reported in fiscal 2017.

Measures to Prevent Anti-Competitive Practice

Yokogawa considers that conformance to the competition law is important for management of the group and holds up fair, transparent, and free competition with competitors as a basic policy of the group in “Yokogawa Group Corporate Code of Conduct.”
To ensure compliance with the competition law, concrete rules are formulated in “Yokogawa Group Compliance Guideline” and “Competition Compliance Code” and internal education on the competition law is provided to the employees to improve their awareness.
Yokogawa did not receive any legal action concerning anti-competition or anti-trust conduct, or monopolistic practice in fiscal 2017.

Strict Prohibition of Insider Trading

To prevent insider trading, we have established the "Code of Conduct for the Prevention of Insider Trading" as an internal regulation and have included a section on prohibition of insider trading in our "Compliance Guidelines." Additionally, we have established a group-wide compliance structure and provided education, etc., to strictly prohibit insider trading.

The directors or employees in each Yokogawa Group company who buy and sell the stocks of Yokogawa Electric follow the prior confirmation procedure through the "insider trading prevention staff" in each company.

Moreover, the following people are uniformly prohibited from the buying and selling during the period from the end of a quarterly accounting term (the end of June, September, December, or March) to each date of the release of business results.

  1. Directors and management in each company of Yokogawa Electric, Yokogawa Solution Service, Yokogawa Manufacturing, and Yokogawa Test & Measurement
  2. Those who are directly engaged in the preparation and announcement of quarterly account settlement in Yokogawa Electric and its domestic subsidiaries

Tax Compliance and Policy

Yokogawa, due to globalization of our business, shall fulfill its social responsibility, make contributions to a sustainable economy and satisfy the tax liabilities of the countries and regions where Yokogawa operates.

  1. Making tax payment properly in accordance with tax laws and its related regulations of each country.
  2. Taking appropriate actions in executing tax-related accounting treatment and measures.
  3. Establishing tax governance structure and raising tax compliance awareness.
  4. Taking actions in compliance with the international tax standards such as OECD (Organization for Economic Cooperation and Development) Transfer Pricing Guideline, BEPS (Base Erosion and Profit Shifting) Action Plan.
  5. Attaining the transactions with foreign affiliates in arm’s length price by properly allocating profit for their contributions made in accordance with the function and risk analysis of each affiliate.
  6. Not utilizing tax planning nor tax heaven aiming for tax avoidance.
  7. Taking actions in optimizing tax costs by avoidance of double taxation, utilization of tax incentives, etc.
  8. Reducing tax risk by obtaining advices from the external professionals when application/interpretation of the law is uncertain.
  9. Building, maintaining and developing sincere and good cooperative relationships with the tax authority in each country.

Actions to be Taken to Counter Anti-Social Forces

The whole Yokogawa group is taking action to eliminate anti-social forces, describing in “Yokogawa Group Compliance Guideline” “responses to anti-social forces that threaten social order and safety.” Its employees are also informed of the basic attitude toward and philosophy of responding to unreasonable demand through compliance seminars and a company journal.
In conformance to the Tokyo Metropolitan Ordinance for Eliminating the Organized Crime Groups, “Basic business agreements” include clauses concerning elimination of anti-social forces and “Memorandum on elimination of anti-social forces” is concluded with the existing suppliers, contractors, and customers.

Enlightenment Activities

Yokogawa conducts compliance education and training to foster employees' awareness of compliance and a corporate culture that emphasizes fair, clear and open business conducts.

Compliance Training/Education

A seminar on compliance was held in domestic and overseas group companies in fiscal 2017 to spread and have awareness of compliance taken root in all the group companies. Domestically, training suitable for the role of each employee is provided when he/she is promoted to a managerial position or travels abroad or when the newly employed join the company. Moreover, education using e-learning is provided mainly to overseas group companies so that their employees can learn comprehensively and acquire knowledge necessary as group employees.

Use of the Compliance Guidelines

A compliance guideline concretely stipulating corporate code of conduct and putting together matters to follow is laid down and disseminated to the employees. This guideline is distributed to new employees when they join the company. It is translated into English, Chinese, and Portuguese from Japanese and used in group companies.

Compliance News

“Compliance News” is issued once in two months to improve the employees’ awareness of compliance, choosing timely topics suitable to the culture of each workplace and recent scandals of other companies.

Revision of the Misconduct Case Studies

We have a handbook called "Misconduct Case Studies" for the purpose of preventing compliance violations. The handbook is updated each year with the addition of new examples that serve as real-life lessons collected from inside/outside the group. The revised editions are issued and made available to all employees.

Compliance Week

“Compliance Week” campaign was conducted to “spread and get compliance mind to take root in” all the employees of the domestic group companies and to provide education through e-learning and invite compliance slogans.

Conducting Survey into Awareness of Compliance

A survey to check all employees’ awareness of compliance is conducted every year. From the result of the questionnaire, awareness of compliance at each work place and position is visualized and reflected on the annual activities at group companies at home and abroad.

Use of Consultation and Reporting System

To quickly identify and address compliance issues, a channel for reporting and inquiries has been established. In Japan, two hotlines are available: the internal hotline and the external hotline, which is staffed with lawyers.

An employee can contact the internal hotline anonymously or with his/her real name in order to report or consult on a compliance issue. The personal information of the employee who has contacted the external hotline will not be made available to the company. Both the internal and external hotline can be contacted by e-mail, over the phone or in writing. Each case will be investigated by keeping the identity of the reporting employee in strict confidence and in an expedient manner, in compliance with the manual on investigation.

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