Basic Policy on Internal Control of Dentsu Group

1. System to Ensure the Appropriateness of Operations throughout the Group

The Company will define matters that the four regions under the Company’s supervision, clusters and markets under the four regions’ umbrellas, and the Company’s subsidiaries must establish and operate as members of the Group, starting with the following items, and will ensure the appropriateness of operations throughout the Group through proper support, oversight, and management of the four regions under the Company’s supervision, clusters and markets under the four regions’ umbrellas, and the Company’s subsidiaries by the Company as a holding company.

1. The Dentsu Group Code of Conduct was drafted as the standard for acceptable corporate behavior and embraces the entire Group. Each subsidiary passes a resolution on the adoption of the Code.
2. 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 of the Group.
3. In addition to receiving periodic reports from the four regions under the Company’s supervision, clusters and markets under the four regions’ umbrellas, and the Company’s subsidiaries concerning their respective business operations, business results, and other significant matters, the four regions under the Company’s supervision, clusters and markets under the four regions’ umbrellas, and the Company’s subsidiaries will request advance approval, consult with, or report to the Company certain matters that may significantly impact the business operations or business results of the Company.
4. In order to ensure efficient and appropriate decision-making and business execution of the businesses, the Group Management Team controls, manages, and supervises the four regions through the Group Executive Management Meeting.
5. The Company will enforce the establishment and operation of the system described in the following on the four regions under the Company’s supervision, clusters and markets under the four regions’ umbrellas, and the Company’s subsidiaries.

2. Compliance System for Group Officers and Employees

1. The Company’s Directors, Executive Officers, Group Management Team Members, CEOs and CFOs of the four regions under the Company’s supervision, CEOs and CFOs of the clusters and markets under the four regions’ umbrellas, and Directors and Executive Officers of the Company’s subsidiaries must perform their duties appropriately, in accordance with rules such as the Board of Directors’ Rules, Rules for the Operation of the Important Committees, Directors’ Rules, Executive Officers’ Rules and Rules for Group Management Team Members, Executive Officers’ Rules, and various Group policies.
2. If a Company Director, Executive Officer, Group Management Team Member, CEO or CFO of the four regions under the Company’s supervision, CEO or CFO of the clusters and markets under the four regions’ umbrellas, or Director or Executive Officer of the Company’s subsidiaries 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 important committees. The Audit Committee of the Company or the corporate auditors, board of corporate auditors, audit committees, or similar bodies at the relevant subsidiary must also be immediately advised of the circumstances.
3. Directors, Executive Officers, and Group Management Team Members of the Company shall autonomously foster a corporate culture of compliance. They shall establish rules on compliance and, through the Group Compliance Committee established under the Group Management Board, monitor factors such as the status of compliance at each Group company, the expansion of compliance measures, and response to these measures, to maintain and enhance the Group’s compliance system.
4. The Company has set up a help desk for consultation regarding violations of laws and other compliance issues as well as internal and external contact points for whistleblowing as a system directly accessible to Group Officers and Employees, and operates them appropriately.
5. If the Audit Committee of the Company or the corporate auditors, board of corporate auditors, audit committees, or similar bodies at each company states opinions on the compliance system or requests improvements to the system, the Company’s Directors, Executive Officers, Group Management Team Members, CEOs and CFOs of the four regions under the Company’s supervision, CEOs and CFOs of the clusters and markets under the four regions’ umbrellas, and Directors and Executive Officers of the Company’s subsidiaries must respond without delay and make the requested 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"— 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.

3. Systems to Ensure Efficient Execution of Duties by the Company’s Executive Officers and Group Management Team Members as well as CEOs and CFOs of the four regions under the Company’s supervision, CEOs and CFOs of the clusters and markets under the four regions’ umbrellas, and Directors and Executive Officers of the Company’s Subsidiaries

1. The Group holds a wide variety of meetings of various committees in addition to a wide array of meetings of the Board of Directors, the Group Management Board, and the Group Executive Management Meeting, in order to ensure efficient execution of duties by the Company’s Executive Officers and Group Management Team Members as well as CEOs and CFOs of the four regions under the Company’s supervision, CEOs and CFOs of the clusters and markets under the four regions’ umbrellas, and Directors and Executive Officers of the Company’s subsidiaries, and makes decisions on important matters pertaining to management policy and strategy appropriately and flexibly.
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.

4. Storage and Management of Information Related to the Execution of Duties by the Company’s Executive Officers and Group Management Team Members as well as CEOs and CFOs of the four regions under the Company’s supervision, CEOs and CFOs of the clusters and markets under the four regions’ umbrellas, and Directors and Executive Officers of the Company’s Subsidiaries

Information concerning the execution of duties by Executive Officers and Group Management Team Members of the Company, CEOs and CFOs of the four regions under the Company’s supervision, CEOs and CFOs of the clusters and markets under the four regions’ umbrellas, and Directors and Executive Officers of the Company’s subsidiaries is stored and managed appropriately, in accordance with laws, regulations, and the Company's Documentation Management Rules and Information Management Rules etc.

5. Risk Management System

1. The Executive Officers and Group Management Team Members of the Company adequately address the risks in uncertain factors in the future that may impede the achievement of the Group’s management targets by avoidance and reduction of the risks or any other actions and establish risk management regulations to make use of addressing the risks as opportunities for improvement. The Group Risk Committee, set up under the Group Management Board, performs self-checks with regard to the situation of risk management, selects material 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 discussed primarily by the Group Risk Committee or Risk Committee, etc. in the four regions and are reported to the Board of Directors and the Audit Committee of the Company or the board of directors, corporate auditors, board of corporate auditors, audit committees, or similar bodies at each company based on necessity.

6. Internal Structure to Support the Audit Committee and its Independent Status

The Company has an Audit Committee Office, which consists of employees who assist the Audit Committee in its duties. This office reports directly to the Audit Committee, thereby preserving its independence from Executive Officers and Group Management Team Members and the effectiveness of instructions from the Audit Committee.

7. System for Reporting to the Audit Committee and Improving Audit Effectiveness

1. Policies are in place to define issues that Group Officers and Employees (excluding the Company’s Directors who are members of the Audit Committee, the same applies hereinafter in this section) are required to report to the Audit Committee, while at the same time, the system ensures that significant matters that have an impact on the Group’s business operations or business results are reported by Group Officers and Employees to the Audit Committee in a certain and prompt manner.
2. In the event that the Audit Committee requests information other than that indicated in the previous item, Group Officers and Employees 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 disadvantageous 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 Committee, and this information will be disseminated to concerned parties.
5. To enhance audit effectiveness, the Company has established a Group-wide auditing system composed of audit committees that audit the organizations controlling business operations in Japan and overseas and the Company’s Audit Committee. These audit committees report to the Company’s Audit Committee and the Company ensures coordination with internal audit functions and external auditors.

8. System to Ensure Appropriateness of Financial Reporting

1. The Representative Executive Officer and President (Global CEO), the Global Chief Financial Officer (Global CFO), and the Global Chief Governance Officer (Global CGO)^*1 of the Company shall maintain and continuously improve a system that ensures appropriateness in financial reporting by the Group under the supervision of the Board of Directors.
2. The Company’s departments involved in business activities, the four regions under the Company’s supervision, the clusters and markets under the four regions’ umbrellas, and subsidiaries of the Company shall perform self-checks through their everyday operations to ascertain whether the established internal controls are functioning appropriately. The four regions under the Company’s supervision, the clusters and markets under the four regions’ umbrellas, and subsidiaries of the Company shall report the results of these self-checks to the Company.
3. The Group Internal Control Office and the Group Internal Audit Office shall monitor the Internal Control System from a perspective free of operational bias to assess the effectiveness of internal controls related to financial reporting.

*1 As of May 2024, the Global CFO and Global CGOs are concurrently served by the Executive Vice President who is also Representative Executive Officer