Regulations on Prevention of Bribery of Domestic and Foreign Public Officials

Article 1 (Purpose)

These Regulations on Prevention of Bribery of Domestic and Foreign Public Officials (these “Regulations”) are aimed at enabling HOCHIKI CORPORATION and its foreign and domestic group companies (collectively the “Group”) to conduct its activities based on the principle of fair competition, by providing for the Group’s systems for working on compliance with Anti-Bribery Laws, as well as laying down rules the Executives and Employees of the Group(the “Group E&E”) need to comply with.

Article 2 (Scope of Application)
These Regulations shall apply to any and all of the Group’s activities conducted globally, and that have any connection with Public Officials as defined in the following Article.

Article 3 (Definition)

(1) Public Officials
“Public Officials” shall mean any individual who is engaged in public duties as exemplified below, as well as individuals belonging to the government or the public organization, whether the government or the public organization is domestic or foreign, and whether the government or the public organization has judicial, legislative, administrative or other properties:
(i) staff of state or local governments (such state or local governments shall be collectively referred to as the Governments”);
(ii) staff of Governments’ organization that the Governments are entitled or empowered to control (such organization includes private enterprises that the Governments are considered substantially to be entitled or empowered to control, as well as state-owned enterprises and state-run enterprises);
(iii) members of the Diet, chief and members of the assembly of local governments;
(iv) persons indicating his/her intention to take public offices indicated in items (i) to (iii) above of this paragraph;
(v) staff of political parties ;
(vi) staff of international organizations;
(vii) any other persons carrying out office work entrusted by Governments or international organizations;
(viii) any staff of the court, as well as judges and clerks of the courts; or
(ix) any other persons deemed Public Officials under the Anti-Bribery Laws.

(2) Service Providers
“Service Providers” shall mean legal entities or individuals that provide the Group with information, that act as intermediary, agent or broker on the Group’s behalf in any transactions, or that provide the Group with any other services, whether in the capacity of agent, distributor, attorney-in-fact, consultant, dealer or others.

(3) Executives and Employees
“Executives and Employees” shall mean directors, auditors, executive officers, advisers and employees (including contract employees and dispatched employees).

(4) Anti-Bribery Laws

“Anti-Bribery Laws” shall mean any and all other foreign and domestic laws and ordinances that prohibit bribery of Public Officials.

(5) bribery of Public Officials

If any person has bribed a Public Official, this shall mean that the person has, with an improper intention, provided or offered to provide the Public Official, whether directly or via a third party, with money or any other tangible or intangible benefit that satisfies people’s demands or desires.

(6) improper intentions

Improper intentions behind bribery shall include the following:
(i) an intention to influence Public Officials’ public activities or decisions;
(ii) an intention to induce Public Officials to commit illegal acts;
(iii) an intention to cause Public Officials to exercise their influences over Governments,
for the purpose of influencing the Governments’ public activities or decisions; or
(iv) an intention to gain unfair profit from Public Officials on behalf of the Group or third parties.

(7) Facilitation Payment

“Facilitation Payment” shall mean an act of paying Public Officials a small amount of money, for smoothly receiving ordinary administrative services.

Article 4 (Matters to be Complied with)

(1) Prohibition on Bribery
The Group E&E shall never bribe Public Officials, whether directly or via a third party. The Group E&E shall also not instruct Service Providers to bribe Officials, nor shall they consent to, assist in or connive at Service Providers’ bribery of Officials. The same shall apply to commercial bribery in countries where persons who have bribed Executives and Employees of private enterprises (i.e., persons who have committed commercial bribery) will be punished.
The Group E&E shall comply with each of the following Paragraphs, in light of the purpose of prohibiting bribery under this Paragraph.

(2) Prohibition on Provision of Money for Public Officials

The Group E&E shall not provide Public Officials with money or its equivalents (such as securities or cash vouchers), regardless of their amounts. The Group E&E shall also not use money or its equivalents to entertain, to give gifts to, or to offer other advantages to, the Public Officials, or to incur expenses to be borne by the Public Officials, in such manner as provided for in this Article.

(3) General Prohibition on Act of Entertaining, Giving Gifts to, or Offering Other 
Advantages to, Public Officials
In principle, the Group E&E shall not, whether directly or via a third party, entertain, give gifts to , or provide other kinds of tangible or intangible advantages (collectively “Advantages”) to, the Public Officials, or offer to provide Advantages to the Public Officials, regardless of whether the expenses are borne by the Group or the Group E&E himself/herself; provided,
however, that this shall not apply when appropriate internal approval has been obtained in advance, pursuant to the Detailed Rules on Prevention of Bribery of Public Officials separately laid down (the “Detailed Rules”).

(4) General Prohibition on the Group’s Incurrence of Expenses to be Borne by Public Officials

In principle, the Group E&E shall not incur expenses to be borne by the Officials (“Expenses”), nor shall they personally bear expenses for Expenses; provided, however, that this shall not apply when appropriate internal approval has been obtained in advance, pursuant to the Detailed Rules.

(5) General Prohibition on Donation or Contribution to Public Officials

In principle, the Group E&E shall not donate or contribute money to Public Officials, nor shall they personally bear expenses for such donations or contributions; provided, however, that this shall not apply when appropriate internal approval has been obtained in advance, pursuant to the Detailed Rules.

(6) General Prohibition on Facilitation Payment
In principle, the Group E&E shall not make Facilitation Payment, nor shall they personally bear expenses for Facilitation Payment. In case an Employee faces a Public Official’s demand for Facilitation Payment, he/she shall follow procedures provided for in Detailed Rules.

(7) Engagement of Service Providers
If a Group E&E intends to engage a Service Provider, the Group E&E shall comply with the following provisions, for the purpose of preventing the Service Provider from committing bribery; provided, however, that this shall not apply to Service Providers based in Japan who are unlikely to contact Public Officials:
(i) The Group E&E shall, to the maximum extent possible, conduct prior investigations into, inter alia, the Service Provider’s identity, history, business, relationships with Public Officials.
(ii) Before deciding to engage the Service Provider, the Group E&E shall obtain appropriate internal approval.
(iii) When entering into a master transaction agreement with the Service Provider to be engaged, the Group E&E shall include in the agreement a provision that prohibits bribery of Public Officials. If there is any other Service Provider already engaged by the Group , the Group E&E shall, when renewing a master transaction agreement with that Service Provider, include the same provision in the agreement.
(iv) Even after engaging the Service Provider, the Group E&E shall regularly check if the Service Provider ensures its compliance with laws, ordinances and the contractual provision for anti-bribery as set forth in the preceding Paragraph.

(8) Merger and Acquisition

(i) If the Group intends to invest in, merger with or acquire other company, the Group shall, in advance, conduct an appropriate due diligence check on the company, in order to confirm that the company is not in breach of and has never breached Anti-Bribery Laws.
(ii) In the event that a prior due diligence check on a company the Group plans to invest in, merge with or acquire, reveals that the company is in breach of or has breached an Anti-Bribery Law, or in the event that the Group detected, after its investigation, merger or acquisition of a company, that the company is in breach of or has breached
the Anti-Bribery Law, the Group shall immediately take appropriate actions.

(9) Receipt of Advantages from Public Officials
In principle, the Group E&E shall not be receive Advantages from Public Officials, nor shall they have Public Officials incur expenses to be borne by the Group; provided, however, that this shall not apply when the Public Official who has offered an Group E&E any Advantages is unlikely to demand bribery on the Group E&E in return for the Advantage.

(10) Compliance with Detailed Rules and Circular Notices

When the Company has laid down any detailed rules or circular notice concerning compliance with Anti-Bribery Laws, in addition to these Regulations, the Group E&E shall comply with them.

Article 5 (Internal Structures)

(1) Supervisor Responsible for Compliance with Anti-Bribery Laws
The officer in charge of legal affairs of HOCHIKI CORPORATION (the “Legal Officer”) shall act as supervisor responsible for compliance with Anti-Bribery Laws. For this purpose, the Legal Officer shall fulfill the following duties:
(i) to promote measures to prevent bribery of Public Officials; and
(ii) to command E&E to take action against bribery of Public Officials.
(2) Manager Responsible for Compliance with Anti-Bribery Laws
The general manager of the Overseas Division of HOCHIKI CORPORATION (the “Overseas General Manager”) shall act as general manager responsible for compliancewith Anti-Bribery Laws. For this purpose, the Overseas General Manager shall cause the manager of each section to fulfill the following duties:
(i) to monitor onsite the matters to be complied with under these Regulations;
(ii) to consult and seek advice from the Legal Section of HOCHIKI CORPORATION about any unclear points or doubts concerning Anti-Bribery Laws that have arisen in the ordinary course of business; and
(iii) to appoint an Employee as training instructor who will be responsible for regularly providing training in complying with Anti-Bribery Laws, in order to familiarize these Regulations with all of the Group E&E.

(3) Section Responsible for Compliance with Anti-Bribery Laws

The Legal Section of HOCHIKI CORPORATION shall function as section responsible for compliance with Anti-Bribery Laws. For this purpose, the Legal Section of HOCHIKI CORPORATION shall be responsible for fulfilling the following duties:
(i) to propose and implement, company-wide measures to prevent breaches of Anti-Bribery Laws and to take appropriate actions against breaches detected, according to the Legal Officer’s instructions,;
(ii) to function as the Group’s advice center designed to respond to inquiries about prevention of bribery of Public Officials; and
(iii) to provide regularly necessary training in complying with Anti-Bribery Laws, for the Group E&E appointed as training instructor pursuant to the preceding Paragraph.

(4) Internal Audits
(i) Compliance with Anti-Bribery Laws shall be included in areas of the Group’s internal audits. The manager of each section shall submit necessary documents, at the request of the Internal Audit Office. The details of audits shall be provided for in audit plans.
(ii) The head of the Internal Audit Office shall, at least once a year, report to the Legal Officer and the Legal Manager of HOCHIKI CORPORATION results of internal audits of compliance with Anti-Bribery Laws.

Article 6 (Internal Reports and Actions to be Taken)

(i) When a Group E&E considers he/she has committed an act that breaches or threatens to breach an Anti-Bribery Law, or when a Group E&E has witnessed or heard about an act that breaches or threatens to breach an Anti-Bribery Law, the Group E&E shall, via a section manager the Group E&E works under, immediately report such breach or threat in writing to the Overseas General Manager, the officer in charge of risk management at HOCHIKI CORPORATION, and the bureau of the Risk Management & Compliance Committee at HOCHIKI CORPORATION.
(ii) If necessary, the Group E&E may, instead of written reports under the preceding Item, utilize the internal reporting system (the hotline system) as a means of reporting or informing breach or threaten of breach to the Legal Manager of HOCHIKI CORPORATION or to an external attorney-at-law. Under no circumstances shall the Group mete out disadvantageous treatment to reporters or informants on the grounds of their provision of reports or information.
(iii) Upon receipt of a report under Item (i) above, the Overseas General Manager shall immediately report it to the Legal Officer.
(iv) The Legal Manager of HOCHIKI CORPORATION may, if necessary, order related divisions to conduct investigations aimed at confirming the facts concerning bribery of
(v) Once the Legal Officer has concluded that there is a breach of an Anti-Bribery Law, he/she shall immediately hold a consultation with the President and the Legal General Manager of HOCHIKI CORPORATION, and shall take necessary actions promptly.

Article 7 (Disciplinary Sanctions)

When a Group E&E has acted in breach of Anti-Bribery Laws or these Regulations, he/she shall receive a strict and impartial punishment in accordance with the rules of employment and other internal rules. A punishment for this breach by a Group E&E may be specifically severe, if the Group E&E’s breach was willful, if the Group E&E, against Article 6 above, failed to report or significantly delayed in reporting the breach despite his/her knowledge of the breach, or if the
Group E&E falsified his/her reports or concealed a fact to be reported.

Article 8 (Amendments to and Repeal of these Regulations)
These Regulations shall be amended or repealed only by a resolution of the board of directors of HOCHIKI CORPORATION; provided that amendments to and repeal of the Details Rules shall require approval of the Legal Officer.

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