Internal Control

Cybernet Group has been enthusiastic and making the best effort to support Japanese “Monozukuri” (manufacturing) as the leading company in CAE field, to contribute realization of creative and abundant society.

From the perspective of healthy continuation of business in order to realize that management policy, Cybernet Systems recognizes that appropriate establishment and operations of internal control system is the material management issue, and stipulates the basic policy in regards to basic policy in regards to internal control system at board meeting, as well as maintaining related internal rules.

Systems to Ensure that the Execution of Duties by Directors Conforms to Laws and the Articles of Incorporation

1. As the fundamantal of compliance system, stipulate “Cybernet Group Complience Principles”, maintain rules for complience and being thorough of such rules.
2. Each board member will report the status of duties and observe/supervise other members’duties each other at monthly regular board meeting or extraordinary meeting which will be held with its necessity.
3. Each auditor will audit directors’ duty by attending board meeting and submit opinion when necessary.
4. Establish whistle-blower system based on “Regulations in regards to the protection of whistle blower”, obviate violations of laws and Articles of Incorporation.
5. Secure legality for operation of duties and avoid inadequate risk regarding contract, establish “Legal review” system and place its contact window at General Administration Department. General Administration Department will be in charge of the legal revieocesss, cooperating with corporate lawer, if necessary.
6. Establish consulation window internally, based on “Sexual Harassment prevention rules” to reject and prevent sexual harassment.
7. Establish consulation window for employees who has concerns of working condiions, or any other issuesin order to secure adequateness of employees to operate.
8. Place Internal Auditing Department that is independent from executive department as Auditing body.
9. Maintain information security policy to enforce information security and to protect personal information.

System Concerning Storage and Management of Information Related to Execution of Duties by the Directors

Cybernet will establish the Document Management Regulations for the storage and management for documents (including electromagnetic records, the same hereinafter) and in accordance with the Regulation, Cybernet will appropriately store and manage the material documents that relates to the operation of board members including important documents for general management, and for executive decision and important meetings, or financial and accounting documents,etc.

Regulations and Other Systems Concerning Management of the Risk of Loss

1. Cybernet stipulates “Risk Management Basic Policy” and “Risk Management Regulations” to maintain related rules, and establsihes Risk Management Committee to appropriately recognize risk and lower the possibility of occurance of such risk and mitigate the loss by extract and manage any and all risk that relates to corporate activity.
2. In case of contingency, based on “Risk Management Regulations”, Cybernt sets up task force lead by president as the leader, to respond swiftly to minimize the loss and risk.

System to Ensure Efficient Execution of Duties by the Directors

1. Board member will delegate its authority significantly to corporate officers in order to perform swift decision making of corporate operation and to properly supervise other directors.
2. Hold regular board meeting monthly and extraordinary as necessity in order to perform expeditious decision making.
3. In order to perform the resolution of board meeting effectively and quickly, preliminarily deliberate for material agenda that relates to Cybernet’s management plan and management strategy at Directors’ meeting.
4. For duties and operations based on the resolution of board meeting, procedures are stipulated simply at “Regulations for segregations of duties” and “Regulations for administrative authority” in order to perform efficient performance of duties and operations.
5. Status for duties and operations of board members and directors to be reported from time to time.

System to Ensure the Appropriateness of Operations in the CYBERNET Group Comprising the Company and its Parent Company/Subsidiaries

1. Secure adequateness for operations of each Cybernet group company by stipulating “Cybernet Group Compliance Principles” as the princples applied for all Cybernet group companies.
2. Stipulate “Regulations for management of affiliated companies” and establish the system of decision making by Cybernet and reporting to Cybernet in order to secure adequateness of managing subsidiaries.
3. In case Cybernet board members find out any material issue in regards to compliance such as violation of law and Articles of Incorporation, or other ethical violating activities, they will report the fact to Cybernet’s auditor.
4. While Cybernet group companies will keep tight and cooperative relationship, secure and maintain each company’s independency.
5. In case any of subsidiary company recognize that management , direction from parent company violate the law and Article of Incorporation, or other ethical probrem exist, the subsidiary company will report the fact to auditor of the parent company.

Matters Concerning the System for Staff Assisting the Duties of the Corporate Auditors and the Independence of the Staff Assisting the Duties of the Corporate Auditors from the Directors

1. Cybernet requires to assign assistant among Cybernet employees, as a staff who will assist the duties and operations of auditor upon request from the auditor. In case assignment, dismissal, evaluation, transfer, revision of wage, etc., such decision will be made at board meeting upon consent from the auditor.
2. The assistant of the auditor must be dedicated to Internal Auditing Department and not concurrently assigned to operations or management.

Systems Concerning Reporting to the Corporate Auditors Including System for Reporting by the Directors and Staff to the Corporate Auditors, and System to ensure that the Audits of Corporate Auditors are Implemented Effectively

1. In case board members find out the violation of the law or any material fact in regards to compliance, they immediately report the fact to auditor and also report to directors meeting with its necessity of reminding attention or recurrence prevention.
2. Cybernet stipulate the items and timing of reporting from director and its assistant to auditors, and based on such regulation, the director and the assistant shall report any issue which affenct Cybernet business or achievement, to auditor from time to time. The auditor may require such report anytime to director or its assistant.
3. Cybernet sets whistle-blower system and other counsel windows, and ensure reporting system to auditor in regards to violation of law and Articles of Incorporation or other ethical probrem by operating such systems.
4. In case auditor recognize any probrem on law-compliance system of Cybernet, the auditor may submit opinion at board meeting and require improvement plan.

System to Ensure Reliability of Financial Reports

1. In order to ensure adequate accounting procedure and increase the reliability of financial reporting as Cybernet Group, stipulate regulation regarding accounting operation as well as maintaining environment for internal control and increasing effectiveness in regards to financial reporting.
2. Establish Internal Control Committee and evaluate internal control in regards to financial reporting every year. As a result of the evaluation, leading department and the department pointed out, take measurement for correction and improvement as its necessity.

Kuniaki Tanaka
President

Established on April 25, 2006.
Revised on March 30, 2010.