Compliance

The term "compliance" or "to comply" is generally used as a meaning "comply with legal regulations." At the Hitachi Chemical Group, however, we interpret this term with a broader meaning: to comply with our Standards of Corporate Conduct including corporate ethics when making decisions, and acting as a corporation that is a responsible member of society. Our "CSR Guidebook", which is the business conduct guidelines for our employees, requests to conduct fair business activities.

Enhancement of Corporate Governance and Internal Control

CSR and Compliance are characterized as a part of corporate governance.

Hitachi Chemical and 6 of our group companies adopted a "Company with Committee System" in 2003. This system focuses on enhancing transparency and supervisory functions. We set up three committees, which are nominating, compensation and audits committee, in which the Outside Directors share majority.

Also, as a member of Hitachi Group, we adopted the COSO framework* to fulfill the duty of disclosing the effectiveness of internal controls under the Sarbanes-Oxley (SOX) Act, from 2004.

^* COSO framework: The integrated control framework announced by the Committee of Sponsoring Organizations of Treadway Commission (COSO); currently the de facto standard for evaluating internal control.