その常識、変えてみせる。 SHIFT

Compliance

SHIFT, Inc. (hereinafter, the “company”) is a leader in software testing and quality assurance. In our aim to create a better society and remain useful, we intend to achieve further business growth. As we do so, we recognize the importance of fulfilling our social responsibilities, such as complying with laws and regulations.
Our executives, regular employees, contract employees, people on other employment contracts, and people working indirectly with us and operating under our supervision are all highly aware that we retain important customer information. We have formulated the compliance manual outlined below, which professes thorough compliance throughout the SHIFT Group. This fundamental policy is to be upheld without exception to ensure our operations are conducted smoothly and in an appropriate manner.

Masaru Tange, President and CEO, SHIFT Inc., March 2017

Compliance Manual

Introduction

Compliance is a given assumption for all companies that engage in business. We are highly aware that business that cannot be obtained without fraudulent acts and business that does not generate profits are unnecessary for a company and go against a company’s interests. Compliance is also prerequisite to a company’s perpetuity. A company must pursue sales and profits based on compliance with laws, regulations, and rules, and generated through sound corporate activity. Otherwise, a company undermines the expectations of business partners, shareholders, employees, and other stakeholders and, before long, will be compelled to withdraw from society.

Compliance is paramount for earning and maintaining the trust of society. Building the trust of customers, investors, and society at large requires an effort spanning years. However, trust that has been built up through constant effort can be destroyed in an instant through a single unjust act. A company must therefore remain vigilant to avoid being placed in such a difficult condition.

Our corporate philosophy states that “We seek out new value concepts and work sincerely to provide value to the world.” With the world “sincerely,” we indicate that we will conduct ourselves in a socially acceptable manner and that we are in line with compliance. We recognize that compliance in corporate activities goes without saying and is at the same time important, which is why we have embodied this aspect of our business activities in our corporate philosophy. For this reason, if forced to choose between profits and sincerity (justice) your choice should always be sincerity (justice).

This compliance manual lays out fundamental principles that are to be upheld without exception by all executives and employees who work at the company. We aim to manage the company in a manner that is fair, appropriate, and sincere and fulfill the social responsibility ascribed to our business (pursuing and providing new value).

In formulating the company’s compliance manual, we solemnly vow that we shall all—equally among members of the management team and general employees and without regard for job titles or work content—comply independently, proactively, and with true sincerity with this manual and the laws, regulations, and social norms related to our operations, in order to foster a more ethical corporate culture and a sound awareness of compliance.

Objectives and Basic Stance

This compliance manual summarizes matters for attention with respect to problems considered particularly important in relation to the company’s operations. Accordingly, this manual is not all-encompassing. Rather, it is meant to express our fundamental perspective.

For this reason, if you encounter a problem that this manual does not touch upon or a complicated issue that you are concerned about, we urge you to consult promptly with your direct superior, the department in charge of compliance, or the audit department.

When we speak of compliance, we refer not only to laws and regulations but also to compliance with society’s ethical codes. Simply complying with laws and regulations would make it acceptable to take advantage of legal loopholes and blind spots. Laws are created in response to actual issues, and even actions that are not legally proscribed may not be acceptable to customers, general consumers, and other members of society. For that reason, we believe compliance encompasses society’s ethical codes as expressed in the morals, ethics, and manners of customers, general consumers, and other members of society.

One important aspect of compliance is to always voice any concerns you have or doubts you may feel. For instance, commercial practices and procedures in our business may sometimes be considered to be separate from society and narrow in scope. At the same time, matters may not be limited to society’s general norms. Changing social circumstances can mean that things that had not been problems until then suddenly become problems.
When you encounter a problem, do not pretend you have not seen it. Pretending not to see is akin to enacting the problem behavior yourself or condoning it. It can be easy to forget to question or voice concerns when we become busy with our everyday activities, but it is important to always reflect on our behavior with an attitude of compliance, considering whether what we have done, what we are doing, and what we intend to do are correct.

Leaving things to other people (“This has nothing to do with me. Surely somebody else will fix the problem.”) and irresponsible attitudes (“As long as everyone is doing the thing, it must be acceptable.”) can only make the company worse. They can never make it better. To create a meaningful workplace that we can be proud to work in, we all need to courageously comply with laws, regulations, and society’s ethical codes.

I would like to emphasize the point that standards for complying with laws, regulations, and society’s ethical codes are secondary to the need for each of us to uphold our individual consciences and maintain a noble spirit. No matter how detailed a compliance manual may be and no matter how many materials related to laws and regulations are distributed, they can never cover and comprehend everything.

Internationalization, computerization, and deregulation are driving the need to conduct business more swiftly than in the past. Against this backdrop, the most important things are to maintain a mental attitude of following this compliance manual in spirit, and to have a courageous conscience. To this end, it is important that ethical conscience-based judgements are the basis for business.

Making “ethical, conscience-based judgments” means taking a step away from our own personal interest or the interests of your workplace or business to consider what actions you would consider appropriate from an impartial, third-party perspective. An action that nobody could criticize or that they would consider acceptable is an action that presents no problems.

If you are concerned about your own action, ask yourself these questions.

  • Do I believe this action is correct?
  • Is this an action I would be proud to talk about with my family?
  • Would I like to see my child doing the same action?
  • Does this action go against my conscience?
  • If someone else did this action, what would I think of them?

If any one of these questions raises doubts, the action is problematic.

However, if circumstances are particularly complicated or deciding is difficult, please do not hesitate to consult with your direct superior or someone in the relevant department. Also, if you believe some action by the company deviates from or may be deviating from laws and regulations, the Articles of Incorporation, or the compliance manual, please report the matter promptly. We uphold the privacy of inquiries made to the department in charge of compliance and the audit department, so please do not be concerned about communicating with them.

If a person consulting about or reporting such matters experiences retaliation, we will examine the facts and respond swiftly and appropriately. Therefore, if you do see a problem, please come boldly forward and voice it. Doing so is the best way to ensure that our workplace is easy to work in and that our company earns the highest trust of society and the market.

We have only one objective: to contribute to society’s development by maintaining an appropriate working environment and fair and sound business relationships. By conducting our business in a fair manner, our mission is to make people around the world happy and make society more fulfilling through the services we create and provide.

○The company’s compliance system
Organizational Structure and the Status of Introduction of Regulations
  Person responsible for compliance: President and CEO (Article 3 of the Compliance Regulations)
  The figure below outlines the compliance structure.
  Compliance-related regulations include the Compliance Regulations and the Internal Reporting Regulations.

Compliance Promotion Structure

Compliance Promotion Structure

Roles of the Compliance Committee

  • To create, maintain, and administer the internal compliance system
  • To provide support and guidance to departments on creating, maintaining, or administering the internal compliance system
  • To formulate and maintain the compliance manual
  • To investigate and respond when problems arise

A.Chair of the Compliance Committee
The representative director chairs the Compliance Committee. The representative director shall establish a compliance secretariat.

B.Compliance secretariat
This secretariat takes overall charge of compliance, handling matters related to planning and promoting the practice of compliance, as well as planning and promoting compliance-related training.

C. People responsible for promoting compliance
General managers are the people responsible for promoting compliance.
General managers have the following roles in ensuring compliance in their departments.

  • To provide compliance-related training and guidance to members of their departments*
  • To correct matters raising compliance-related doubts in their departments
  • To respond appropriately to reports and consultations on matters related to compliance by members of their departments
  • To report to the compliance secretariat on matters related to compliance in their departments
  • To otherwise respond as quickly as possible to instructions and requests by the compliance secretariat

* The compliance secretariat conducts actual compliance training, but general managers are to take the lead in encouraging attendance.

○Penalties in the Event of Infractions to Laws and Regulations, Society’s Ethical Codes, or the Compliance Manual

In the event of infractions to laws and regulations, society’s ethical codes, or the compliance manual (below, referred to collectively as “Compliance Infractions”), please report such information promptly to the department in charge of compliance (or the audit department). Penalties are inevitable, but extenuating circumstances may make it possible to mitigate such penalties.

If you see a Compliance Infraction, please report it promptly to the department in charge of compliance.

A Compliance Infraction may be discovered via the employee hotline or following an audit by the audit department. If discovered following an audit, the matter may be handled severely. For this reason, please report any matters promptly.

Measures in response to violations may include disciplinary dismissal based on the Employment Rules.

Disciplinary Regulations
◎Employment Rules (for Regular Employees)
 Article 73 (Reprimands), Article 74 (Salary Reduction, Suspension, and Demotion), Article 75 (Disciplinary Dismissal) (conditions apply equally to contract employees and part-time workers)
◎Compliance Regulations
 Article 14 (Actions)
 2. If the president decides the action warrants treatment based on the Employment Rules, necessary actions will be taken in accordance with the disciplinary provisions.
◎Regulations Prohibiting Insider Trading
 Article 18 (Types of Sanctions)
 The sanctions the company imposes on employees whose activities are prohibited or limited by the company’s Regulations Prohibiting Insider Trading depend on the extent of the behavior.

Compliance Policy

  • In addition to following the letter of laws and regulations, we take into consideration their spirit and comply with society’s ethical codes.
  • We recognize the responsibility to society of our business and conduct our business in a fair, transparent, and sound manner.
  • We give topmost consideration to customer trust and satisfaction, and we sincerely provide value to society.
  • If faced with a choice between profits and sincerity (justice), we always choose sincerity (justice).
  • We engage with all stakeholders honestly and sincerely, and work to be a company that society continues to trust.
  • We respect the human rights of all people, strongly oppose any sort of discrimination or harassment, and foster a workplace environment that facilitates fair and equal corporate activity.
  • We respect the different cultural traditions, customs, values, and diversity of global society, and take other people into consideration.
  • We take a resolute stance against anti-social forces, and have absolutely no relations with anti-social forces.
  • We strive to satisfy aspirations and bring joy to many people around the world and endeavor to leave behind a fair and prosperous society brimming with hope.
  • We address difficult problems by gathering together the knowledge we possess and working proactively to create sincere solutions (value) that will satisfy all.

Compliance Matters

1) Our Code of Conduct toward Customers

Generating profits through improper means is not justified. We comply with the letter and spirit of laws and regulations, and conduct business with all customers in a fair and transparent manner. We act in this manner because we are convinced that this approach is in the interests of society.

1. (Duty of Confidentiality)
Protecting customer confidentiality is one of the most fundamental rules for executives and employees. Executives and employees may not leak to third parties any information obtained through business with customers without their consent or unless an appropriate reason exists based on laws and regulations. As well as to parties outside the company, this rule extends to other members of the company who have no need of such information in conducting their duties.

2. (A Sincere Attitude)
Executives and employees respond to a variety of customer requests and inquiries as part of their business, and must not respond irresponsibly to any such requests or inquiries. Even in the event of a customer complaint, we thoroughly study the facts of the situation and respond sincerely from a customer perspective.

3. (Avoidance of Collusion with Customers)
Executives and employees may not, through any of their actions, respond to requests that call into ambiguity the difference in stance between customers and the company. Respect for customers does not mean responding to all the requests of certain customers.

4. (Avoidance of Personal Considerations)
When executives and employees enter into contracts with customers with whom they are relatives, friends, or have other personal-interest relationships, they must report this information to their direct superior or department in charge of compliance and receive appropriate instructions. We aim to be a company that always conducts business fairly by anybody’s standards.

2) Our Code of Conduct toward Business Partners Other Than Customers and Other Institutions

To conduct business fairly, we must be fair and transparent in our relationships with suppliers, supervisory bodies, and the various other organizations and individuals with which we come into contact in the course of our duties.

1. (Fair Selection of Business Partners)
Executives and employees must determine and select business partners based on a comprehensive judgment of such factors as quality, service content, price, past performance, and trust. For this reason, they may not receive monetary or other items or entertainment from suppliers or other business partners with which the company has direct business dealings.

2. (Prohibition on Requests for Rebates)
It is not permissible to utilize one’s position to ask business partners for monetary or other items or entertainment, even using indirect expressions. Such actions contravene laws and regulations and damage trust-based business relationships. Even actions that are within the scope of permissibility should be avoided if they could appear unnatural to a third party. If you believe your actions may invite misunderstanding, hold back from the action. Strive for sincerity in your actions.

3. (Prohibition on Excessive Gift-Giving or Entertainment)
Executives and employees must refrain from giving gifts or entertainment that are beyond the bounds of common sense, even to parties with which they have no direct business relationships, as such actions could have a negative impact on future decisions. If you become unintentionally enmeshed in a situation you believe to be problematic, please report the situation to the department in charge of compliance or the audit department, and receive appropriate instructions.

4. (Response to the Provision of Other Benefits)
Relationships with business partners may go beyond monetary or other items or entertainment and involve the offering of a variety of other benefits. For example, another party may make the offer of a position when changing careers or upon retirement, the offer of such a position to a family member or friend, or an offer to transfer real estate at a favorable price. Under such circumstances, you must first communicate the situation to your direct superior and receive appropriate instructions.

5. (Sound Relationships with Civil Servants and Politicians)
You must pay attention to maintaining sound relationships with civil servants and deemed civil servants. For example, entertainment having a common-sense value may be left to the employee in charge, while entertainment exceeding such a value requires reporting to and approval from a general manager. You should even refrain from common-sense entertainment if such entertainment could be considered unnatural given the position or authority of the civil servant.
For example, if the company receives subsidies from a country or region, any donations to politicians of that country or region could be considered inappropriate.

3) Our Code of Conduct toward Investors

We conduct business by using funds provided by shareholders and bondholders. Accordingly, we have a responsibility to conduct our business in a stable and efficient manner, as well as a responsibility to explain the details of that business accurately. To fulfill these responsibilities, we make appropriate accounting reports, conduct thorough internal audits, and take a proactive stance toward disclosure.

1. (Disclosure)
Executives and employees must accurately communicate to investors our business details and, above all, important information affecting investment decisions. Much of this information must be provided in a format that investors can understand. For example, when announcing information on non-performing loans, it is necessary to also explain disclosure standards on non-performing loans.

2. (Accurate Records)
Accurate records are necessary for disclosure. Various business-related information must be recorded accurately and in accordance with laws, regulations, and rules. Executives and employees are asked to pay appropriate attention to ensure that various internal documents are not false or mistaken, and that they are stored for the designated period.

3. (Emphasis on Internal Audits)
To protect investors’ interests, we have put in place and operate an internal audit system to check the status of our business from a neutral perspective. If you believe the audit mechanism has become a mere façade, please call attention to the situation by reporting it promptly to the relevant department.

4. (Communication with Investors)
We communicate to investors our stance that “if faced with a choice between profits and sincerity (justice), we always choose sincerity (justice),” believing this to be in the interests of society. We do so because we believe creating a full-fledged compliance system starts with investors’ understanding.

4) Our Code of Conduct toward Society

In addition to customers, business partners, and investors, we have legal, social, and ethical responsibilities to an uncountable number of interested parties. Of these, our minimum responsibility to society is to comply with the laws, regulations, and rules that are based on social agreement.

1. (Worker Dispatching Act and Contracting)
Executives and employees must accurately understand and comply with the Worker Dispatching Act as it applies to our business. In particular, we must pay due attention to secondary dispatching, in which we send dispatch workers from partner companies to other companies. Also, when assigning dispatch workers from partner companies on a secondment basis to outsourcing companies, doing so as part of business would be deemed fraudulent and impermissible.. Furthermore, limits to the scope of dispatching exist depending on the location of the person responsible for dispatching.
In addition, when assigning employees to work full-time at business partners on an outsourcing (contracting) basis, these employees report to the person in charge at the company, from whom they must receive work instructions and commands. Reporting that does not pass through the person in charge at the company is recognized as being in circumvention of the Worker Dispatching Act. For this reason, you should pay attention to ensure lines of reporting are via the appropriate person in charge.

2. (Subcontract Act, Contract Work)
When placing orders with partner companies, if the regulations of the Subcontract Act apply you must accurately understand and comply with the obligations and prohibitions of this act. In particular, you must pay appropriate attention to the payment of outsourcing fees.
Also, when employees are continuously present at a partner company under a contracting format within the company, you must pay appropriate attention to ensure against false contracting.

3. (Compliance with Relevant Laws)
Executives and employees must accurately understand and comply with laws, regulations, and guidelines other than 1. and 2. that relate to the company’s business. You must remain constantly aware of laws and regulations and pay attention to legal reforms.

4. (Compliance with the Antimonopoly Act)
Executives and employees may not enter into discussions or agreements with peer companies in the advancement of business activities. You should also refrain from any behavior that could give rise to doubts. Acts that could be construed as abuse of a superior position or excessive interference in the appointment of executives are also not permitted. Such acts have a high likelihood of contravening the Antimonopoly Act.

5. (Compliance with Insider Trading Regulations)
Executives and employees should have a sufficient understanding of the gist of insider trading regulations. When handling important information, please comply strictly with these regulations, referring to the Regulations Prohibiting Insider Trading, provided separately. No executives or employees, regardless of position, may buy or sell shares in a company based on important facts that were learned in the course of business and have not been publicized. You also may not buy or sell shares in the company or competitor companies based on important facts learned about the company. Providing advice to others based on such information is also a problem.
To purchase shares in the company, you must first submit a form requesting to buy or sell shares in the company and receive approval. A permissible period for buying or selling shares is also set. Please check and abide by these rules.

6. (Compliance with Tax Law)
The company pays taxes in accordance with legal obligations indicated in relevant laws and regulations. Executives and employees who are involved in these matters are asked to perform the necessary activities with sincerity. We absolutely do not engage in tax evasion.

7. (Respect for Intellectual Property Rights)
Executives and employees must respect copyrights and other intellectual property rights held by others. Specifically, computer software and publications may not be copied illegally. When downloading information from the internet, you must check copyright-related conditions. When internally using media containing information about the company, please be sure to check with the copyright holder to ensure against copyright problems.

8. (Severance of Connections with Anti-Social Forces)
Executives and employees must take a resolute stance against anti-social forces. Specifically, you must not give in to demands by sokaiya (corporate extortionists) or provide property related to the exercise of shareholder rights. Furthermore, you must avoid any relationships that might be considered to involve opaque collusion. Before engaging in any business transaction, be sure to check that the other party is not a member of anti-social forces. If you determine that the other company is a member of anti-social forces, have no relations with it. If you become inadvertently involved with any such organization or individual, promptly report the facts to the relevant department and receive appropriate instructions on further action. Contractually, it is possible to sever ties with another party if such party is determined to be a member of anti-social forces.

9. (Reporting to the Authorities and Cooperation with Investigations)
If the company violates laws or regulations, if a socially impermissible problem occurs, or if any doubts exist about such an activity, we will report to the authorities and cooperate fully with any investigations. Individual executives and employees are asked to please act responsibly and in accordance with this basic stance.

5) Our Code of Conduct to Create a Better Corporate Culture

Ensuring compliance is paramount in an open corporate culture. Each of us works together to create a better corporate culture.

1. (Ban on Discrimination)
Employment and treatment must be evaluated fairly in accordance with individual work details and performance. We do not tolerate discrimination based on sex, race, nationality, religion, beliefs, gender, physical handicap, other personal characteristic, or any other aspect. Please also refrain from any behavior that may not exactly be discriminatory but could be construed as such. Jokes based on an individual’s physical characteristics are contrary to the objective of creating a rewarding workplace.

2. (Ban on Sexual Harassment)
The company endeavors to create an appropriate workplace environment in accordance with the Labor Standards Act and other related laws and regulations. Accordingly, the use of one’s own position or standing to force sexual relations is impermissible. Furthermore, repeating jokes that are offensive to the opposite sex are also prohibited as acts that debase the working environment.

3. (Ban on Workplace Bullying)
The company aims for a sound working environment. Accordingly, in no circumstances is a person permitted to use superior rank or position to engage in inappropriate behavior. However, conventionally appropriate encouragement is permitted. Please do your best to always be considerate of others and behave appropriately.

4. (Ban on Other Sorts of Harassment)
We prohibit all other forms of harassment, in addition to the sexual harassment and workplace bullying mentioned above. We strive to respect the values and diversity of people around the world, be considerate to others, form equal interpersonal relationships, and create a rewarding working environment.

5. (Protection of Personal Information)
The company rigorously manages the personal information it possesses and does not use such information for purposes other than that for which it was intended. We do not disclose personal information to third parties unless ordered to do so by a public agency for an appropriate reason or upon receiving the individual’s consent.

6. (Compliance with Labor Laws and Regulations)
The company complies with the Labor Standards Act, the Industrial Safety and Health Act, the report of agreement on overtime and holiday labor (the so-called “36 Agreement”), and other labor laws and regulations, giving the greatest possible consideration to the safety and health of its employees. Doing everything possible to prevent death from overwork, we engage in timely and appropriate efforts to determine and manage employees’ hours. At the same time, we provide guidance and support on highly productive working practices to ensure against long working hours—particularly for personnel at the management level. We encourage people to take their annual paid leave, create an environment making it easy for them to do so, and put in place other necessary measures.

7. (Freedom of Opinion)
In all circumstances, the company encourages the free expression of opinion, both in vertical relationships (from superior to subordinate and from subordinate to superior) and in horizontal relationships. We aim for an open and positive working environment in which all are free to voice their opinions to others, and work to create such an environment.

6) Code of Conduct as Members of an Organization

Executives and employees are responsible for acting in the interests of the company. Accordingly, you must refrain from actions that would benefit you personally or a third party at the company’s expense or from making personal use of tangible or intangible company property.

1. (Compliance with Internal Regulations)
Executives and employees have a duty to uphold the compliance matters specified in the Employment Rules and act faithfully in accordance with the company’s regulations. When decisions are necessary, please check the table of standards for administrative authority and receive the appropriate decisions. When enforcing job-related and other judgments, you must take into consideration the fact that actions may not contravene internal rules and must accord with the interests of the company.

2. (Ban on Conflict-of-Interest Actions)
Executives and employees must avoid actions that put their own interests in conflict with those of the company. For instance, executives and employees are not permitted to seek personal gain by making use of business opportunities, customer lists, or customer credit information obtained in the course of their work.

3. (Respect for Company Property)
Executives and employees must distinguish between public and private and respect company property. All company property has been loaned or provided for work purposes. Accordingly, please do not divert company equipment and consumables for personal use.

4. (Fair Handling of Expenses)
Executives and employees must accurately report travel and entertainment expenses. If you are uncertain about the appropriate level of expenses to submit for reimbursement, please ask your direct superior or related department.

5. (Handling of Non-Public Information)
Executives and employees must maintain the confidentiality of non-public information obtained in the course of their work. You must also pay attention to prevent information from being leaked outside the company due to carelessness. For instance, faxing confidential information can be dangerous, so in principle please refrain from such actions.

6. (Awareness of Routine Information Management)
Executives and employees must carefully manage customer information, trade secrets, and all other confidential information obtained in the course of their work to prevent leaks outside the company as well as to unrelated people inside the company. Notably, information can leak outside the company as the result of discussions of personal and company matters with friends and work colleagues in elevator halls, on elevators, or in restaurants.

7. (Cautions Related to the Use of Social Media)
When using social media, executives and employees must never post about matters related to business partners. Such actions can cause a loss of trust with customers. When posting information related to the company on social media, please be certain that such information is not confidential, and give due consideration to checking that the information is not inappropriate. In addition, please be certain that the information you post does not infringe on the privacy of others or defame their character. You may think that problematic information you have posted on social media can be quickly erased, but it is possible for such information to remain on the internet, being passed on through retweeting or the use of 2ch Summary. For this reason, social media is said to be media that effectively cannot be erased. For that reason, please review any personal information you post, as well.

8. (External Affairs)
There is no problem with using your own social media to share information about company events and company systems to be shared externally.
On the other hand, leaks of personal information can affect the company’s operating performance. Information that could affect the company’s brand, such as information needed to deliver an impact from the perspective of public relations strategy, is considered significant. This sort of company information must be disclosed officially, via the public relations department. If outside news agencies or analysts request interviews, any personal opinions you express may be taken as company opinions. Such interviews also raise the potential for publicizing information that should not be shared. For these reasons, when executives and employees encounter such situations, they are asked to communicate with their direct superiors and the public relations department and receive appropriate instructions. In situations such as these, in principle information should only be disclosed outside the company via the public relations department. If you are uncertain about a decision, please contact the public relations department.

Pledge

From the standpoint of social responsibility, we must conduct our corporate activities in a responsible manner. Society also requires us to perform our corporate activities responsibly. Pursuing a direction contrary to these expectations could cause a loss of trust not only for the company but also for the industry as a whole. For this reason, we bear a double or triple burden of responsibility for conducting our corporate activities in a fair and sincere manner, being at the same time an individual company, an industry member, and a member of society.

Being keenly aware of this responsibility, to ensure the trust of society and to create a rewarding working environment, we pledge to respect and practice compliance and strive for the sincere implementation and sound development of our business.

SHIFT, Inc., March 1, 2017

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